The next big thing

The com­plete Idea­log guide to new prod­uct de­vel­op­ment, in­clud­ing how to get it right, and what can go wrong

Idealog - - CONTENTS - IL­LUS­TRA­TION BY GREG STRAIGHT

SOME­TIMES IT SEEMS your com­peti­tors are launch­ing a new prod­uct ev­ery month. There they go again with a new flavour, a clever new ac­ces­sory, a why-didn’t-we-think- of-that so­lu­tion, or a per­fectly timed re­sponse to the latest trend.

Mean­while, you’re fo­cus­ing on keep­ing the busi­ness run­ning. You have a few ideas float­ing around, but no time or re­sources to de­velop them into any­thing. Do you re­ally need to jump on the new prod­uct de­vel­op­ment band­wagon when de­mand for your ex­ist­ing of­fer­ing is still strong?

Ab­so­lutely, says Spark Ven­tures boss Rod Sn­od­grass. Speak­ing at the re­cent IdealogLive net­work­ing event, he gave busi­nesses four years to dis­rupt or fail.

Bet­ter by De­sign coach and new prod­uct de­vel­op­ment (NPD) con­sul­tant Saskia Van der Geest agrees. She’s spent 15 years help­ing com­pa­nies – from Fisher & Paykel Healthcare and GE Plas­tics to small star­tups – launch new prod­ucts into the mar­ket.

“New prod­uct de­vel­op­ment is es­sen­tial,” says Van der Geest. “In some in­dus­tries you need to do it be­cause the mar­ket or your cus­tomers are ask­ing for it. In oth­ers, it’s vi­tal just to stay rel­e­vant. NPD is what keeps you rel­e­vant and ahead of the com­pe­ti­tion. And, when it’s done well, it also brings in new rev­enue streams.”

She says in the food and bev­er­age sec­tor there’s an ex­pec­ta­tion for com­pa­nies to bring out new prod­ucts ev­ery six months.

“The re­tail­ers ask for fresh new things and it’s of­ten driven more by them than by the con­sumers. New prod­ucts are new news, and from a sales per­spec­tive it’s a lot eas­ier to ap­proach a client with some­thing new.”

In­no­va­tion and NPD also serves to in­vig­o­rate your com­pany from within, says Van der Geest. It helps re­tain the best and bright­est staff be­cause it’s more ex­cit­ing to work for a com­pany that’s do­ing new things.

GLOBAL COM­PE­TI­TION

Craig Armstrong from New Zealand Trade & En­ter­prise (NZTE) also has a long track record of help­ing com­pa­nies de­velop and com­mer­cialise new prod­ucts.

To­day, he leads an NZTE team ad­vis­ing 222 busi­nesses in the agritech, biotech, food and bev­er­age, and re­tail spa­ces with a fo­cus on ex­port mar­kets.

The way we do busi­ness has changed sub­stan­tially, he says, and in­no­va­tion is crit­i­cal. How­ever, some of the same old prin­ci­ples for busi­ness still ap­ply.

“What’s changed, and what causes a re­fram­ing in many cases, is the fact that New Zealand as a coun­try – and many busi­nesses – have be­come more glob­alised.

“For Kiwi busi­nesses, there are still many un­tapped mar­kets and chan­nels. Most com­pa­nies have lit­tle ex­po­sure to that global mar­ket, and new mar­kets open up ev­ery day. Can you just keep do­ing what you’re do­ing? Sure, for a while. But global com­pet­i­tive­ness means you need to in­no­vate and fo­cus on emerg­ing trends to stay rel­e­vant. That can be both about mov­ing away from your core prod­uct, and ex­pand­ing within that area.”

Armstrong says Ki­wis fre­quently get stuck on one good thing.

“We can com­mer­cialise a sin­gle idea very well, but it’s how to get the next idea or com­pet­ing op­tions and ideas that’s of­ten more dif­fi­cult for us.

“We’re quite mono in terms of our cul­ture and per­spec­tive and our con­nect­ed­ness to mar­kets. It’s only more re­cently that we’ve started to em­brace a dif­fer­ent kind of di­ver­sity.”

Mak­ing it hap­pen

New prod­uct de­vel­op­ment projects are gen­er­ally man­aged by a vari­a­tion of one of two dif­fer­ent pro­cesses: StageGate de­vel­op­ment (a term coined by au­thor and in­no­va­tion thought leader Dr Robert Cooper, and also known as phas­ing ); and “learn­ing first (or lean) prod­uct de­vel­op­ment” (LFPD).

THE STAGED MODEL

Around 80% of com­pa­nies adopt the Stage-Gate process. In a nut­shell: you come up with an idea, de­velop it into a con­cept, test the con­cept, and out of that comes a pro­to­type, which you take through to pro­duc­tion, launch and dis­tri­bu­tion.

Most New Zealand com­pa­nies use a ver­sion of that process and few do it by the book as Cooper in­tended, Saskia Van der Geest says. She likens it to build­ing a house, where a landowner might ap­proach a de­signer, ask for a con­cept draw­ing and if they like it, pay to have the de­sign de­tailed fur­ther.

“The gate idea is to con­trol the qual­ity, mak­ing sure you’re still OK with the scope of the work, the timeline and bud­get. That’s the in­ten­tion of Stage-Gate. In re­al­ity, com­pa­nies do this part on the ba­sis of a check­list – have you done this and this? Yes. Then we can go on.

“But prob­lems crop up when no one asks: are we all com­fort­able to go to the next phase? Have we got the knowl­edge to move to the next stage? Typ­i­cally, there are a cou­ple of engi­neers who would say ‘I don’t think we should go on, we’re re­ally miss­ing some­thing’ but they’re not be­ing asked and so the pro­ject moves for­ward.”

LEAN PROD­UCT DE­VEL­OP­MENT

“Learn­ing first prod­uct de­vel­op­ment” (LFPD) – also called “lean prod­uct de­vel­op­ment” – is a newer ap­proach, where the goal is to test first, then de­sign based on what works.

When the Wright broth­ers were work­ing on their fly­ing ma­chine, for ex­am­ple, they started by re­ally un­der­stand­ing the crit­i­cal pieces of the puz­zle – lift, bal­ance, drag, propul­sion etc. Only af­ter that could they de­sign a plane that flew, Van der Geest says.

Armstrong be­lieves the learn­ing-first model is the best ap­proach for most NZ com­pa­nies. He re­om­mends spend­ing the bulk of the de­vel­op­ment time on un­der­stand­ing cus­tomers and mar­kets, and col­lect­ing in­sights to test and break that un­der­stand­ing – or add value to it. Only then should a com­pany bring those learn­ings to­gether with a new de­sign.

“Fo­cus on do­ing as much as you can up front be­fore you start cost­ing your or­gan­i­sa­tion se­ri­ous pro­duc­tion and ma­te­rial time. If you’ve done all the ob­ser­va­tion you can and you’re try­ing to gen­er­ate dif­fer­ent op­tions and ideas

and do some ini­tial de­signs, you want to fail then – be­fore you take it into a de­vel­op­ment and test­ing stage where you’ll be us­ing fac­to­ries, work­shops and peo­ple.”

RE­SEARCH RULES

Mar­ket re­search is the key part of this earlystage process, but one New Zealand com­pa­nies with a strong op­er­a­tional or en­tre­pre­neur­ial mind­set of­ten skimp on, says Armstrong.

“They just push an idea or a prod­uct they’ve got out into the mar­ket in the hopes it will sat­isfy a will­ing and ready mar­ket,” he says. “That’s of­ten not the case.”

Con­sumer re­search is about vis­it­ing your mar­kets, hang­ing out with your cus­tomers and get­ting to know them, and talk­ing to your sup­pli­ers and dis­trib­u­tors.

“Com­pa­nies un­der­es­ti­mate the im­por­tance and the cost of mar­ket re­search,” says Armstrong. “It’s never a sin­gle trip or as easy as buy­ing a re­port. Those kinds of ac­tiv­i­ties re­quire time in mar­ket, time in gro­cery aisles, if it’s a food prod­uct, walk­ing around fac­tory floors or the cor­ri­dors of busi­nesses to ob­serve how peo­ple use a prod­uct, talk­ing to op­er­a­tors and han­dlers, and dif­fer­ent types of cus­tomers who might make the de­ci­sion to pur­chase the thing in the first place.”

Lis­ten, com­mu­ni­cate and build re­la­tion­ships is the over­rid­ing mes­sage.

“If there’s one prin­ci­pal in busi­ness, it’s al­ways the same: lis­ten more than you speak,” says Armstrong.

“While I was at Cad­bury, we made sure all the peo­ple in­volved in NPD and mar­ket­ing went into peo­ple’s homes to see how they pre­pared lunches in the morn­ing and how they treated them­selves and fam­ily dur­ing the day; and into schools to see how the kids ate their lunch in the play­ground, how food was traded back and forth, and what teach­ers thought about the snack choices kids were mak­ing. It’s that kind of im­mer­sion and em­pa­thy that has to hap­pen, whether you’re B2C or B2B.”

Van der Geest agrees. The more peo­ple in the com­pany that are tuned to the con­sumer, the more suc­cess­ful your pro­ject will be, she says.

“It’s not just your mar­ket­ing team; ev­ery­one in the pro­ject team should be able to de­scribe the cus­tomer, who they are, what they like or don’t like and why they want things a cer­tain way.”

Don’t for­get your dis­tri­bu­tion and sup­ply chain, Armstrong says.

“If your dis­trib­u­tors are hear­ing mes­sages from re­tail­ers about why some­thing isn’t selling or why a com­peti­tor is stronger, you def­i­nitely want to know that and build it into your eval­u­a­tion process.”

While there’s no sub­sti­tute for be­ing in

Con­sumer re­search is about vis­it­ing your mar­kets, hang­ing out with your cus­tomers and get­ting to know them... It's never a sin­gle trip or

re­port.” as easy as buy­ing a

mar­ket, there are other use­ful chan­nels for gaug­ing con­sumer pref­er­ences, mar­ket trends, learn­ing what your com­peti­tors are up to, and glean­ing in­sights into un­met de­mand.

“Ev­ery com­pany can use so­cial media to tap into their cus­tomers,” says Armstrong. “Jucy, for ex­am­ple, has done this ex­tremely ef­fec­tively.

“You have to think as broadly as pos­si­ble. In the food in­dus­try, my ref­er­ence points are as much nu­tri­tion­ists and chefs, as they were once con­sumers and shop­pers.

PRO­TO­TYP­ING

A key el­e­ment of the learn­ing-first process is fast, cost-ef­fec­tive pro­to­typ­ing so you can take your con­cept to your cus­tomer for their feed­back and then re­fine it. Van der Geest says pro­to­typ­ing needn’t be ex­pen­sive at all; in fact, you can do with Post It notes, duct tape and stick fig­ures.

“Es­pe­cially in FMCG mar­ket, I see pro­to­types that look al­most like the real fin­ished prod­uct. They have amaz­ing de­tail and fan­tas­tic qual­ity but that’s miss­ing the point. Peo­ple see you’ve put a whole lot of time into it and they’ll say ‘Oh it’s pretty’ or ‘I don’t like blue so much’. That sort of feed­back isn’t valu­able. If some­thing is very ba­sic, they see it took you five sec­onds to put it to­gether, and they’re way more re­spon­sive and happy to com­ment and give valu­able feed­back.”

NUR­TUR­ING IN­NO­VA­TION

Van der Geest says com­pany lead­ers need to be re­al­is­tic in their ex­pec­ta­tions, have a good over­view of what’s go­ing on, and cre­ate a work­ing en­vi­ron­ment and pro­cesses that fa­cil­i­tate in­no­va­tion.

“Some CEOs just want faster, bet­ter, cheaper. They ex­pect their teams to de­velop these new prod­ucts at quicker speeds, bet­ter qual­ity and for lower cost, and to do it con­sis­tently with an early in­di­ca­tion of their re­turn on in­vest­ment.”

Sorry guys, but the most likely out­come to that ap­proach is burnt- out staff.

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