“Profits can only be earned by providing something the market accesses value and is willing to pay for such.” Drucker
In my blog posted on May 8, 2009, we walked through the process of converting raw ideas into uniform concept statements so we can compare ideas based on their relative merit to each other and avoid the problem of good ideas that get overlooked because they are presented poorly and weak or marginal ideas that are selected because they are presented well.
Of course to create uniform concept statements implies we have applied some screening and filtering, but at a very high level. We are still in a very creative state at this phase and are looking to think “differently” and find the next winning and profitable idea. After all, our objective in NPD is to create “new” products with the goal of launching game changing innovations while at the same time recognizing we can not neglect supporting our existing product lines that are still in their growth stages and providing us our economic resources to fund our business expansion.
Product concept selection is a balancing act between risk and reward. It’s prudent to think like an investor and come up with a balanced “portfolio” of product development projects that represent the best risk/reward we can achieve given our resources and the market environment.
We will discuss portfolio management in a future blog, but for now we are concerned with a relatively quick and simple method to narrow our uniform concepts down to a manageable set of concepts that we will refine and validate in the feasibility & definition stage before committing large development dollars. We do this by implementing an initial screening tool.
So what should the initial screen look like?
It’s common practice to use a score card method to narrow down the field. We are still working primarily from assumptions and judgment to make our screening decision but we now start applying some pre-defined criteria which may include:
* Strategic alignment and importance
* Product and competitive advantage
* Market attractiveness
* Leverage core competency
* Technical feasibility
* Financial reward
For the initial screen, we are relying on the collective judgment of our portfolio management team, usually consisting of a cross functional team of senior managers, product managers and technical experts; to debate and apply a consistent screening criteria. The concepts that are given the green light will enter into the feasibility and definition phase.
The initial screening criteria will continue to be used and expanded in subsequent stages including our final portfolio management selection system. It is in the feasibility & definition stage where we will develop the business case, gather VOC and market data to validate if the concept deserves to proceed into the formal development phase. The purpose of the next stage of NPD is to answer these fundamental questions:
* Is the opportunity worth investing in?
* Can we execute and turn this into a successful business opportunity?
* Does it fit our strategic direction?
Feasibility and Definition phase does require the first significant investment in R&D; dollars, so we definitely need to narrow the amount of concepts we will process to fit our resources. However, I suggest your process leaves enough room to allow additional creative thinking and “tinkering” to allow experimentation and exploration that leads to real innovation and learning.
Locking in on too few concepts too early in the feasibility and definition stage without exploration and experimentation won’t yield breakthrough products and more likely will yield product extensions – which over the long haul, won’t keep you ahead of the competition. As we discussed earlier, product extensions are important and your company should have some in your development portfolio, but not at the exclusion of real new products.
Systematic iterations and market feedback (i.e. use prototypes to get VOC inputs) during the feasibility and definition stage will help your company gain a better insight as to what the market values and what it will take to win the customers business. The amount of iteration cycles and process formality your company applies during the feasibility and definition phase will vary depending on the complexity and newness of the concept under refinement and the available resources you have to get the job done right.
Slowing down and trying out new ideas at this stage can provide some huge dividends – but do make sure you have a system to keep the concepts moving through the transformation process and don’t be afraid to kill of concepts that just aren’t panning out.
Cheers!
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