The next big thing
The complete Idealog guide to new product development, including how to get it right, and what can go wrong
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.
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.”
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.
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.”
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.