In my last blog I defined the 3 top level activities of product planning:
1) Defining the Right Products to Develop (product portfolio, technology portfolio management to support future development, and the opportunity funnel – see below)
2) Developing products the right way (NPD processes and best practices)
3) Managing the customer experience throughout the life of the customer (customer acquisition, retention and care).
The product planning process follows a predictable flow. Most experts, including myself, advocate an “opportunity funnel strategy” where you first begin with many ideas and constantly add more raw ideas into the funnel. The second process step is to perform high level screens to narrow down the most promising concepts which leads into detailed screens (both technical and market feasibility studies) to select the product opportunities with the highest chance of commercial success. Opportunities passing the detail screen kick off the beginning of the formal product development process (i.e. stage gates and detailed development).
As you move a concept through the funnel, the good ideas will emerge, or at least this is the goal of a good product planning process. As concepts move through the funnel into down stream product development stages and eventually to product launch, investment expenses increase dramatically. But if we create and do the process correctly, we should be consistently launching winning products and enjoying the fruits of our labor.
To successfully implement a funnel strategy, companies need a mechanism and criteria to systematically narrow down raw concepts into viable business opportunities. This includes defining the market arenas where it will compete (who are the customers, what are their problems and how will we compete to win their loyalty) and a list of criteria that supports the market strategy and used to rank the relative strength of the concepts from each other as well as defining go/no-go criteria at each critical stage gate along the development process.
An integrated new product development process called the “Seven D’s” of product planning is used as the framework for developing an effective and efficient NPD planning process. The Seven D’s are:
Direction: Defining who the customers are, what set of problems and needs the customer has, and how the company will successfully compete to win the customers business and long-term loyalty. Direction is established by senior management through a strategic planning process. The direction is typically set for 2 to 5 year horizons, but periodical adjustments are made to respond to market dynamics (i.e. the only thing that is constant is change).
Detection: This is the stage where raw ideas are created. Ideas can come from a variety of sources ranging form Voice of Customer techniques, trend analysis, new enabling and disruptive technologies, innovation and good old intuition. This is often referred to the “fuzzy front end” of product planning because ideas start out with more questions than answers. At this stage a company can’t know for certain if the idea is a winner or not.
Define: As the ideas begin to take shape, a formal definition of the customer requirements and business opportunity evolves. Depending on the “newness” of the concept, companies should expect further clarity of the definition as the product takes shape. But starting without a formal definition and project objectives is a formula for failure.
Product development is an iterative process and there are many strategies and techniques to handle the unknowns including rapid prototyping and agile product development techniques. It’s best to recognize that it’s hard, if not impossible, to know all the answers in what the market will truly value in a product offering, but start with what you know and seek clarity though an iterative development process.
Decide: The moment of truth, a go or no-go decision to fund a project or kill it off. The nature of product development and its inherent “unknowns” forces leaders to make decisions without complete and often perfect knowledge.
Decision is listed here as a stage gate, which it certainly is. But this is just one of many important decision points that span all phases of the product development cycle. Decision making and its first cousin judgment, is a necessary skill set that both organizations and its leaders must excel at.
Develop: This is the formal development stage where the rubber meets the road. A formal product development project is kicked off with resources allocated (human and capital), key project milestones and objectives identified, and a formal project development process established (i.e. stage gate).
Deliver: By the time we get to this stage, the marketing and sales team will have established the distribution channels (i.e. dealers, retail stores, direct sales, e-commerce and/or a combination of all of these), the development team will have tested the product to make sure the market values the solutions (i.e. alpha and beta testing, quality performance, etc.) and the operations team is ready to turn on the production spigot in anticipation of a successful product launch and follow on ramp up.
Product launch is the starting point of the delivery stage and continues throughout the life of the customer relationship. Note that I define deliver over the life of the customer relationship versus product life. As we learned in a previous blog, the sole purpose of a business is to create customers (Peter Drucker), and to create customers, a company must consistently deliver value through its product and service offerings and customer relationships.
Do it Better: There is always room for improvement both in the dimension of creating and adding value for the customer, and being more efficient at delivering value. As we discussed earlier, new product development is an iterative process and continuous improvement is critical to achieving and retaining market leadership and customer loyalty. Reflecting on the results and process through formal project retrospect’s provide a mechanism to understand what went right, what went wrong, and what we must do to be consistently great in the eyes of our customers.
While the Seven D’s are presented in a linear fashion, remember, product planning is an iterative process. As we learn from our successes and mistakes, we improve each step along the way. “Do it Better” should be done throughout all the key stages and phases of the development cycle and not reserved to after the product launch, though formal project retrospect’s should always be done if you choose to be a market leader.