Developing and launching innovative new products is inherently risky. No true new idea is fully formed from the start. You simply will not know what you don’t know, until you engage real people with real problems.
There are more questions and unknowns that need to be addressed as the idea moves through the knowledge funnel from an initial idea through market success. Chances are, the initial idea will evolve, take a new shape, or perhaps morph (i.e. pivot) into something quite different, and hopefully better, than was originally envisioned form the onset
Too often, companies approach new product development (NPD) in a linear and rigid fashion. Where they gather all the product requirements up front, and then systematically follow their processes, usually a phase-gate process, and churn out a product that has been technically verified through the various gate and QA checks.
But a funny thing happens when the finished product is handed over to marketing and sales – sales aren’t happening as predicted. The market just doesn’t seem to care, or understand your nifty new product.
Following a tried-and-true phase-gate process that has worked successfully in the past, doesn’t guarantee it will work this time. You might even have a formal ISO 9000 quality program to verify you are developing your product in the prescribed right way. But this is a totally new game.
The old game plan failed to recognize the new rules of the game. As a result, the market is unimpressed, it simple doesn’t value your solution. You got a dud on your hands, and it’s beginning to look ugly around your firm.
89% of the products that fail in the market are due to non-technical reasons
According to Dr. Cooper (credited for creating the stage-gate process which has evolved into a non-linear development process), 89% of the products that fail in the market are due to non-technical reasons.
For example, the product simple was not needed in market. Perhaps due to a lack of product differentiation (the incremental “me-too” boring product). Simply copying what a competitor has done, adding a few new features, and making it less expensive is unlikely to displace the competitor’s product. There simply is not enough perceived value to make a customer want to switch.
Or perhaps you launched the dreaded “solution looking for a problem.” You started with a really interesting technology idea, dreamed up a product that sounded great on paper. But you didn’t fully understand, nor take the time to understand, who the customers are. And what important job (or pain) your product helps them get done better than they can with current solutions.
Doing the “process” right isn’t the problem
A traditional phase-gate process is based on a “single learning loop” process (see figure 1). It assumes you know the important requirements and specifications upfront. In the case where requirements are well defined and known, the traditional development process works great. In that situation it can be the right development game plan to use to move down the knowledge funnel, a.k.a. innovation playing field.
Figure 1: Traditional Phase-Gate Product Development Process
But in the early stages of formulating a true innovation, uncertainty and risk abounds. We can never have perfect information, especially as we embark on a novel idea. Gathering requirements up front helps mitigate risk. But seldom will be the case that we really understand what customers really want (requirements) until we engage them in meaningful conversations and demonstrations.
Using rigid phase-gates to execute truly new products, are pretty rare these days. Development teams have learned that “things evolve” as we move down the knowledge funnel. Assumptions are either validated, refined our rejected. New insights emerge as we learn more about the important jobs people want done, their desired outcomes and constraints that prevent them from achieving 100% satisfaction.
And worthy competitors are doing their best to beat you for the customer’s business. I believe it was Mike Tyson who was credited for saying “Everybody has a plan until they get punched in the mouth.” If you are competing for an opportunity worth winning, competitors will take a swing at you – guaranteed.
Indeed, there is a lot of uncertainty and risk associated with developing and launching innovative new products. The way we manage risk is to use learning loops and iterative design approaches. And be faster at innovating and creating value than the competitors.
A primer on Learning Loops
So what exactly are learning loops? Why are they important? How do you use them? There have been books written on learning loops, so I will only touch on it here.
Figure 2: Triple Loop Learning
Single loop learning: Learning how to do “things” right. It’s about following the rules and processes, and incrementally improving upon. Single-loop learning is the repeated attempt at the same problem, with no variation of method and without ever questioning the goal.
In the case of product development, if we can start with a valid set of known requirements, the traditional product development process can work. But until we explore, experiment and gain a deep understanding of the customer’s needs, predetermined (assumed) requirements is a risky bet.
Double loop learning: Learning to do the right (kind of ) things first. Learn by engaging in reflection. It’s about questioning the goals and objectives, and the rules we use to achieve these goals. This is the level of process analysis where people become observers of themselves, asking, “What is going on here? What are the patterns? In other words adapting to the changing environment when new realities are understood.
Iterative design, agile project management, and modern “stage-gate” all incorporate loop 2 learning. These methods recognize ideas are based on assumptions that need to be validated through testing early, often and efficiently.
Triple-loop learning: Learning about learning. Reflecting how we learn in the first place. Reflecting on how we think about the “rules,” not whether the rules should be changed. Triple-loop learning opens inquiry into underlying “why’s.”…that permits insight into the nature of paradigm itself.
The results of this learning includes enhancing ways to comprehend and change our purpose, developing better understanding of how to respond to our environment, and deepening our comprehension of why we chose to do things we do.
Knowing where you are the innovation playing field
The innovation game plan (development strategy) you chose will depend on your specific situation and circumstance. For example, where are you in the knowledge funnel, your innovation time horizon, and amount of uncertainty you face? The resources (human, technical, assets, and financial) you have to invest. And your innovation and NPD culture and climate. (i.e. does your company accept change and built to be agile?)
Thus an innovation game plan should always start with an awareness of the knowledge gap you face, and recognizing the playing field is constantly evolving. It’s better to base your game plan on a set of plays that match your current situation versus locking into one development dogma over the other. And adapt quickly (be agile) as required, to innovate faster than the competitors.
In short, learn by doing, and adapt your practices to address the realities of the innovation game you are engaged in.