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Speed to market in New Product Development and commercialization is a competitive advantage and booster.  There are specific functional tasks, skills & accountabilities which make up essential ingredients of a successful New Product Development recipe. 

The need for New Products: The logic is simple and real, like humans, an organization can grow or die, there is no status quo.  If an enterprise does not innovate and develop new products the market will not let it survive.  Some can survive short term but in the long run, competition, disruptive technology, changing regulations and customer expectations will make them history to be studied in business schools.  An enterprise as successful as Coca Cola with a proprietary recipe of the beverage cannot afford to stand still in the dynamic environment of changing customer needs.  New products bring higher sales, top line growth; and higher margins and profitability, higher bottom line to the enterprise.  Higher profitability translates to higher EPS, share holders are pleased, new demand for the share is rewarded with higher PE. 

In a commercial organization, there are no sacred cows, refreshing the product portfolio is the name of the game. Product life cycle determine obsolesce and introduction of new products.  Three year vitality rate of 25%-35% for industrial products is a fair target.  There are many factors which determine product success in the market, internal factors can be controlled (discussed in next section), but external factors cannot be influenced. All new launches do not succeed; therefore it is imperative to have a pipeline of New Product Development (NPD).  Market hit rate of 30%-40% is healthy ROI.

New Product Development Engine: New products are critical for survival of a business; their development should be managed through a mature and robust business process.  The fabric of New Product Development is interwoven by six functions of an organization, see Table 1.  The closest and most appropriate analogy for NPD process is a six cylinder engine of an automobile.  All cars need an engine, even the famous Rolls Royce ‘could go only so far on goodwill’.  Similarly, businesses need the NPD engine to get to the top on the road of commercial success.  The six functions of the organization are six cylinders; each cylinder contributes to the speed and power of the engine and should ‘fire’ at the right time for the car to gain maximum speed.  Each cylinder (function) reaches its maximum output at different phase of combustion (development) cycle.  All cylinders (functions) stay in sync with each other to move the car forward, if even one cylinder is out of sync the vehicle can stall or the product fail.  All functions are considered in sync when all parallel activities are completed before moving to next phase.

Table 1

In the six functions above there are 30 activity elements in execution of NPD.  All elements are important for speed to market and success of a product launch.  The degree of maturity in each of the elements differentiates the first to the market from laggards.  The risk of failure rises exponentially per missing or week element.  To some the list may seem overwhelming and may tempt them to take short cuts.  Short cuts are short lived and have not proven to be sustainable.

Common Functional Factors in NPD: Fuel provides chemical energy to the engine which is converted to mechanical power in the cylinders.  The engines need fuel to generate motion and speed.  Similarly, NPD process (engine) requires human factors (fuel) within all functions (cylinders) to be successful.  Absence of these human factors breed organizational dysfunction and lack of NPD culture, and that is a death spiral for a business.  The common factors are:

·         Leadership

·         Resources

·         Collaboration

·         Skills & Competencies

Best Practices & Traps to Avoid:  For speed to market or early revenue realization there are best practices which have enabled many enterprises to beat the clock.  There are pitfalls which have had businesses ‘spinning their wheels’ stuck in the ‘mud’.  It should be the endeavor of all functions to adopt the best practices and avoid the pitfalls, see Table 2

Table 2

New products and innovation is the key to enduring success of an organization.  Incumbent resistance, organizational inertia, lack of competencies derails the efforts.   Annual fund and resource allocations, priorities, reward systems and sponsorship keep the momentum.  How good is your business in New Product Development? What is helping or hurting your organization to become a leader in its space?  I will be glad to get your feedback.