READY,  FIRE…  AIM:  BALANCING SPEED AND ACCURACY IN NEW PRODUCT DEVELOPMENT Meg Sheehan  Principal, Global Solutions June...
Key Discussion Points <ul><li>How to improve “speed to market” </li></ul><ul><li>But, speed isn’t everything </li></ul><ul...
Stage-Gate International <ul><li>Founded by Dr. Bob Cooper and Dr. Scott Edgett, creators of Stage-Gate ® </li></ul><ul><l...
New Product Development Research <ul><li>Based on the NewProd Studies and APQC Benchmarking Studies of almost 2000 new pro...
The Innovation Diamond And the  Four Points of Performance Stage-Gate ®  is a trademark of Product Development Institute I...
The Innovation Diamond And the  Four Points of Performance Stage-Gate ®  is a trademark of Product Development Institute I...
The Four Drivers of Performance: #1:  Climate, culture and leadership <ul><li>The right climate and environment for innova...
The Four Drivers of Performance: #2  The Stage-Gate ®  Process <ul><li>Stage-Gate is the world’s most widely cited, peer r...
Ten Critical Success Factors for Winning <ul><li>A unique & superior product </li></ul><ul><li>Strong market orientation t...
Critical Success Driver #3 <ul><li>More pre-development work – the homework or ‘up-front’ activities – must be done before...
Does More Homework Mean  Longer Times to Market? <ul><li>More time and money spent up-front greatly improves the odds of s...
Critical Success Driver #4 <ul><li>Sharp and early product and project definition (before Development)  separates  winners...
Impact of Sharp, Stable Product Definition Percent of Businesses That Have a Good Product Definition Before Development St...
The Innovation Diamond And the  Four Points of Performance Stage-Gate ®  is a trademark of Product Development Institute I...
The Four Drivers of Performance:  #3:  Strategy <ul><li>Top performers put a product innovation and technology strategy in...
Why Bother With NPD Strategy? <ul><li>“ I find the great thing in this world is not so much where we stand, as in which di...
The Importance of a New Product Strategy for Your Business <ul><li>Businesses that are most likely to succeed at new produ...
A Product Innovation Strategy to Guide the NPD Effort 51.7% 38.1% 34.6% Best performers articulate a product innovation st...
What Is a Product Innovation Strategy? <ul><li>The goals for your business’s total product development efforts </li></ul><...
The Four Drivers of Performance: #4 Portfolio Management <ul><li>Resource investment and focusing on the right projects – ...
Some food for thought … <ul><li>“ You gotta know when to hold ‘em. </li></ul><ul><li>Know when to fold ‘em. </li></ul><ul>...
Portfolio Management Is Fundamental To Successful Product Development <ul><li>How should you invest your R&D    or Develop...
Why Portfolio Management Is Vital <ul><li>Eight key reasons why portfolio management is fundamental to innovation success:...
Portfolio Management:  A Major Problem Area <ul><li>Portfolio Management is typically poorly handled: </li></ul><ul><ul><l...
Breakdown of Projects By Project Best Performers focus more on innovative & game-changing projects 40% 16% 25% 24% 10% 24%...
Some More Provocative Facts <ul><li>Not only are portfolios unbalanced </li></ul><ul><li>Portfolios contain too many low v...
Five Goals in Portfolio Management <ul><li>To allocate resources so as to  maximize the value  of the portfolio  </li></ul...
Five Goals in Portfolio  Management  (continued) <ul><li>To obtain the  right number  of projects </li></ul><ul><ul><li>Ba...
Balancing Speed  and Accuracy in NPD Focus on the  Four Points of Performance Stage-Gate ®  is a trademark of Product Deve...
Thank You Meg Sheehan  Principal, Global Solutions  [email_address] +1-905-304-8797 www.stage-gate.com
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  1. 1. READY, FIRE… AIM: BALANCING SPEED AND ACCURACY IN NEW PRODUCT DEVELOPMENT Meg Sheehan Principal, Global Solutions June 23, 2009
  2. 2. Key Discussion Points <ul><li>How to improve “speed to market” </li></ul><ul><li>But, speed isn’t everything </li></ul><ul><li>How do you bring focus to your product development efforts </li></ul>
  3. 3. Stage-Gate International <ul><li>Founded by Dr. Bob Cooper and Dr. Scott Edgett, creators of Stage-Gate ® </li></ul><ul><li>25+ years of highly-recognized research and implementation experience </li></ul><ul><li>Focused exclusively on product innovation </li></ul><ul><li>World’s top provider of research-based solutions to improve innovation performance </li></ul><ul><li>Maximum-value portfolio of consulting expertise and “accelerator” products </li></ul>
  4. 4. New Product Development Research <ul><li>Based on the NewProd Studies and APQC Benchmarking Studies of almost 2000 new product launches in 500+ firms* </li></ul><ul><li>*Studies conducted by Robert G. Cooper, Scott J. Edgett </li></ul>Ten Critical Success Drivers that separate the winners from the losers The Innovation Diamond
  5. 5. The Innovation Diamond And the Four Points of Performance Stage-Gate ® is a trademark of Product Development Institute Inc. Product Innovation & Technology Strategy for the Business Idea-to-Launch System: Stage-Gate ® Climate, culture, teams & leadership Resources: Commitment & Portfolio Management Business’s new product performance
  6. 6. The Innovation Diamond And the Four Points of Performance Stage-Gate ® is a trademark of Product Development Institute Inc. READY AIM Product Innovation & Technology Strategy for the Business Idea-to-Launch System: Stage-Gate ® Climate, culture, teams & leadership Resources: Commitment & Portfolio Management Business’s new product performance
  7. 7. The Four Drivers of Performance: #1: Climate, culture and leadership <ul><li>The right climate and environment for innovation: </li></ul><ul><ul><li>Senior managers in top performing businesses create a positive climate and culture for innovation and entrepreneurship </li></ul></ul><ul><ul><li>They foster effective cross-functional NPD teams </li></ul></ul><ul><ul><li>And are properly engaged in the NPD decision-making process </li></ul></ul>
  8. 8. The Four Drivers of Performance: #2 The Stage-Gate ® Process <ul><li>Stage-Gate is the world’s most widely cited, peer reviewed and implemented New Product Development process </li></ul><ul><ul><li>PDMA Best Practices Report, 1997: “68% of organizations participating in this study use a Stage-Gate system” </li></ul></ul><ul><ul><li>AMR Research, 2005: “71% of organizations surveyed confirmed use of the Stage-Gate process; 85% for organizations with 5,000+ employees” </li></ul></ul><ul><ul><li>Booz-Allen Hamilton study/report: “100% of the Global 1000 Innovators use a disciplined Stage-Gate process” </li></ul></ul><ul><ul><li>Stage-Gate has gone through 20+ years of evolution & refinement </li></ul></ul><ul><li>A disciplined decision-making framework to drive product success </li></ul><ul><li>Defined, cross-functional contribution from teams and executives from Idea through to Launch, at the right pace and level of detail </li></ul><ul><li>A risk management model outlining the right information at the right time for objective evaluation and alignment </li></ul><ul><li>An investment management model with tough Go/Kill decisions </li></ul>
  9. 9. Ten Critical Success Factors for Winning <ul><li>A unique & superior product </li></ul><ul><li>Strong market orientation throughout </li></ul><ul><li>More up-front research </li></ul><ul><li>Sharp & early product definition before development </li></ul><ul><li>The right organizational structure - Teamwork </li></ul><ul><li>An innovative & supportive environment </li></ul><ul><li>Leadership support </li></ul><ul><li>Creating a funnel not a tunnel </li></ul><ul><li>Managing product development as a process </li></ul><ul><li>Sufficient resources for product development </li></ul>
  10. 10. Critical Success Driver #3 <ul><li>More pre-development work – the homework or ‘up-front’ activities – must be done before ‘Development’ gets underway </li></ul><ul><li>The steps that precede Development – screening, market studies, tech feasibility, build business case – are critical to success </li></ul><ul><li>New product failures are most often the result of weaknesses in the ‘up-front’ activities – errors of omission or commission </li></ul><ul><li>But little time and effort are spent here: 7% of money and 16% of effort (Japanese and highly successful US firms spend considerably more here) </li></ul><ul><li>Homework answers key questions before Development begins : </li></ul><ul><ul><li>Is the project economically attractive? </li></ul></ul><ul><ul><li>Who is the target customer? What positioning? </li></ul></ul><ul><ul><li>What should the product be – features, attributes, performance – to make it a winner? </li></ul></ul><ul><ul><li>Can it be developed? At the right cost? How? </li></ul></ul>
  11. 11. Does More Homework Mean Longer Times to Market? <ul><li>More time and money spent up-front greatly improves the odds of success – there is clear evidence for this! </li></ul><ul><li>More homework results in better and sharper product and project definition – this speeds up the Development phase (less recycling and wasted time) </li></ul><ul><li>Homework done up-front anticipates product problems and design changes – these product design changes are made early in the game (rather than as the product is going to market) </li></ul>NO! The message is: “ Do It Right the First Time” – DIRTFooT
  12. 12. Critical Success Driver #4 <ul><li>Sharp and early product and project definition (before Development) separates winners from losers </li></ul><ul><li>Consistently cited as a key to success in success/ failure studies </li></ul><ul><li>This definition includes: </li></ul><ul><ul><li>Project scope </li></ul></ul><ul><ul><li>Target market definition </li></ul></ul><ul><ul><li>Product concept & benefits to be delivered: value proposition </li></ul></ul><ul><ul><li>Positioning strategy (including price point) </li></ul></ul><ul><ul><li>Features, attributes, requirement & specs </li></ul></ul><ul><li>Why so critical? </li></ul><ul><ul><li>Forces homework to be done up-front ( Success Driver #3 ) </li></ul></ul><ul><ul><li>Communication tool & commitment between functions </li></ul></ul><ul><ul><li>Provides clear targets for Development – the ‘goal posts’ are defined </li></ul></ul>
  13. 13. Impact of Sharp, Stable Product Definition Percent of Businesses That Have a Good Product Definition Before Development Stage Begins Worst Performers Average Business Best Performers
  14. 14. The Innovation Diamond And the Four Points of Performance Stage-Gate ® is a trademark of Product Development Institute Inc. READY AIM Product Innovation & Technology Strategy for the Business Idea-to-Launch System: Stage-Gate ® Climate, culture, teams & leadership Resources: Commitment & Portfolio Management Business’s new product performance
  15. 15. The Four Drivers of Performance: #3: Strategy <ul><li>Top performers put a product innovation and technology strategy in place </li></ul><ul><ul><li>Different than business strategy </li></ul></ul><ul><li>Driven by the leadership team and the strategic vision of the business </li></ul><ul><li>This product innovation strategy guides the business’s NPD direction </li></ul><ul><li>And helps to steer resource allocation & project selection </li></ul><ul><ul><li>Defines the role that new products and technologies will play in achieving the business’ overall goals, and what “arenas” or battlefields will be entered as a result. </li></ul></ul>
  16. 16. Why Bother With NPD Strategy? <ul><li>“ I find the great thing in this world is not so much where we stand, as in which direction we are moving: To reach the port of heaven, we must sail sometimes with the wind and sometimes against it but we must sail, and not drift, and not lie at anchor.” </li></ul><ul><ul><ul><li>Oliver Wendell Holmes, The Autocrat of the Breakfast Table, 1858. </li></ul></ul></ul><ul><li>“ Plans are nothing. Planning is everything.” </li></ul><ul><ul><ul><li>Dwight D. Eisenhower, US General and Supreme Allied Commander at D-Day </li></ul></ul></ul><ul><li>“ In the absence of a clear strategy, what you are working on is your strategy.” </li></ul><ul><ul><ul><li>Me </li></ul></ul></ul>
  17. 17. The Importance of a New Product Strategy for Your Business <ul><li>Businesses that are most likely to succeed at new products are those 1 ... </li></ul><ul><ul><li>that implement a company-specific new product idea-to-launch process </li></ul></ul><ul><ul><li>driven by business objectives & strategies </li></ul></ul><ul><ul><li>with a well-defined new product strategy at its core </li></ul></ul><ul><li>Our benchmarking studies reveal that 2 ... </li></ul><ul><ul><li>having an articulated new product strategy for the business is one of the four most important drivers of NP performance </li></ul></ul>1 Source: Booz-Allen & Hamilton 2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study The need for an articulated product innovation strategy is clear But how well-defined is the innovation strategy for your business?
  18. 18. A Product Innovation Strategy to Guide the NPD Effort 51.7% 38.1% 34.6% Best performers articulate a product innovation strategy Percentage of Businesses 10% 20% 30% 40% 50% 60% 70% 80% 37.9% 27.6% 19.2% Product roadmap in place 41.4% 26.9% 15.4% Strategic buckets 69.0% 64.8% 53.8% Strategic arenas defined 58.6% 38.1% 23.1% Long term commitment 58.6% 46.3% 30.8% Role in Business goals Clearly defined NPD goals Worst Performers Average Business Best Performers
  19. 19. What Is a Product Innovation Strategy? <ul><li>The goals for your business’s total product development efforts </li></ul><ul><li>The role of product development: how new products tie into your business's overall goals </li></ul><ul><li>Arenas of strategic focus – the battlefields </li></ul><ul><li>Attack plans – how you plan to win here </li></ul><ul><ul><li>Strategic stance or approach </li></ul></ul><ul><ul><li>Entry strategy (for new arenas) </li></ul></ul><ul><li>Resource Commitment & Strategic Portfolio Decisions </li></ul><ul><ul><li>Deployment </li></ul></ul><ul><ul><li>Strategic buckets </li></ul></ul><ul><ul><li>Strategic product roadmap </li></ul></ul>More than high level goals and a list of development projects!
  20. 20. The Four Drivers of Performance: #4 Portfolio Management <ul><li>Resource investment and focusing on the right projects – portfolio management: </li></ul><ul><ul><li>Top performers commit sufficient resources to effectively undertake their new product projects </li></ul></ul><ul><ul><li>And they boast an effective portfolio management system that helps the leadership team effectively allocate these resources </li></ul></ul><ul><ul><ul><li>To the right areas </li></ul></ul></ul><ul><ul><ul><li>To the right projects </li></ul></ul></ul><ul><li>Portfolio Management: How you operationalize your strategy </li></ul>
  21. 21. Some food for thought … <ul><li>“ You gotta know when to hold ‘em. </li></ul><ul><li>Know when to fold ‘em. </li></ul><ul><li>Know when to walk away. </li></ul><ul><li>Know when to run.” </li></ul><ul><li>Kenny Rogers, The Gambler </li></ul><ul><li>“ Take calculated risks. That is quite different from being rash.” </li></ul><ul><li>George S. Patton, U.S. General </li></ul>
  22. 22. Portfolio Management Is Fundamental To Successful Product Development <ul><li>How should you invest your R&D or Development funds & people? </li></ul><ul><li>What is your investment portfolio? </li></ul><ul><li>Portfolio Management: </li></ul><ul><ul><li>Is about resource allocation </li></ul></ul><ul><ul><li>Which Development projects should the business resource from among many opportunities (Go/Kill)? </li></ul></ul><ul><ul><li>The relative prioritization of these (e.g., accelerated development; Go vs. Hold for now) </li></ul></ul><ul><li>PM is how you put into practice your Business Strategy </li></ul>Strategy becomes real when you start spending money! Technology Impact to Business HIGH LOW Likelihood of Commercialization Within Next 5 Years LOW HIGH
  23. 23. Why Portfolio Management Is Vital <ul><li>Eight key reasons why portfolio management is fundamental to innovation success: </li></ul><ul><ul><li>Financial – to maximize return </li></ul></ul><ul><ul><li>To maintain competitive position </li></ul></ul><ul><ul><li>To properly allocate scarce resources </li></ul></ul><ul><ul><li>To forge link between project selection & business strategy </li></ul></ul><ul><ul><li>For focus </li></ul></ul><ul><ul><li>For balance </li></ul></ul><ul><ul><li>To communicate priorities </li></ul></ul><ul><ul><li>To provide objectivity in project selection </li></ul></ul>Top performers emphasize the link between project selection & business strategy
  24. 24. Portfolio Management: A Major Problem Area <ul><li>Portfolio Management is typically poorly handled: </li></ul><ul><ul><li>Rated as weakest area in new product management in recent benchmarking study* </li></ul></ul><ul><ul><li>Management confessed to... </li></ul></ul><ul><ul><ul><li>No serious Go/Kill decision points </li></ul></ul></ul><ul><ul><ul><li>No criteria for making the Go/Kill decision </li></ul></ul></ul><ul><ul><li>The result: a tunnel, not a funnel </li></ul></ul><ul><ul><ul><li>Also indicated poor project prioritization </li></ul></ul></ul><ul><ul><li>Too many projects for limited resources available </li></ul></ul><ul><li>Major business challenge </li></ul><ul><ul><li>Many different approaches </li></ul></ul><ul><ul><li>No easy answers </li></ul></ul><ul><ul><li>A problem many companies are addressing </li></ul></ul>* Source: Cooper/Kleinschmidt Vital for success – but no quick fixes
  25. 25. Breakdown of Projects By Project Best Performers focus more on innovative & game-changing projects 40% 16% 25% 24% 10% 24% 22% 33% 10% Average Business 7% New To The World Products 19% Major Product Revisions 20% New To The Business Products 28% Incremental Product Improvements & Changes 6% 12% Promotional Developments & Package Changes Best Performers Worst Performers   ~65% ~55% ~45% 10 Point Steps
  26. 26. Some More Provocative Facts <ul><li>Not only are portfolios unbalanced </li></ul><ul><li>Portfolios contain too many low value-to-the-company projects </li></ul><ul><li>And far too many projects for the limited resources available </li></ul><ul><li>A small minority of businesses have a systematic & formal portfolio management process in place </li></ul><ul><li>But hi-productivity businesses suffer much less from these deficiencies </li></ul>Worst Performing Businesses Average Business Best Performing Businesses Percentage of Businesses
  27. 27. Five Goals in Portfolio Management <ul><li>To allocate resources so as to maximize the value of the portfolio </li></ul><ul><ul><li>Against some company goal </li></ul></ul><ul><ul><ul><li>Long term profitability; or return-on-investment </li></ul></ul></ul><ul><li>To achieve a desired balance of projects </li></ul><ul><ul><li>Between long term and short, fast ones </li></ul></ul><ul><ul><li>Between high risk and low risk </li></ul></ul><ul><ul><li>Across different project types & market sectors </li></ul></ul><ul><li>To link the new product effort to the Business Strategy </li></ul><ul><ul><li>Ensuring that projects are ‘on strategy’ </li></ul></ul><ul><ul><li>That spending reflects the strategic priorities of the Business </li></ul></ul><ul><ul><li>That the business’s strategy will be realized thru the list of active projects </li></ul></ul>
  28. 28. Five Goals in Portfolio Management (continued) <ul><li>To obtain the right number of projects </li></ul><ul><ul><li>Balancing resource demands with resource availability </li></ul></ul><ul><ul><li>Not overloading the pipeline with too many projects </li></ul></ul><ul><li>Sufficiency: ensuring that projects will enable business to reach its NPD goals </li></ul><ul><ul><li>Question: If we do these projects, will we achieve our Sales (or Profit) goals for NPD for the next few years? </li></ul></ul>
  29. 29. Balancing Speed and Accuracy in NPD Focus on the Four Points of Performance Stage-Gate ® is a trademark of Product Development Institute Inc. READY AIM Product Innovation & Technology Strategy for the Business Idea-to-Launch System: Stage-Gate ® Climate, culture, teams & leadership Resources: Commitment & Portfolio Management Business’s new product performance
  30. 30. Thank You Meg Sheehan Principal, Global Solutions [email_address] +1-905-304-8797 www.stage-gate.com
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