Go Slow To Go Fast

Skating TurtleNew products’ development speeds … and profits … benefit from solid front-end work

Unearthing latent needs of existing and potential customers is a pivotal front-end activity. In the PDMA’s 2012 study of NPD best-practices at 463 companies, the Best companies2 spend more effort than the Rest companies in discovering customers’ unarticulated needs. This effort pays off. Best companies put only 4.5 ideas into commercial development to arrive at one success. Rest companies needed 11.4 ideas to pull off one success.

Going slow in the front end shortens commercial development times

In 2005 I helped lead daylong workshops for Fortune 500 companies who were sponsors of the PDMA’s 2004 study. Workshop leaders compared the sponsors’ practices with the Best and the Rest companies in their industry. I took part in three workshops at companies who were in the Rest class and who used a formal stages-and-gates NPD process.

  • At two of the companies, one person made front-end decisions to go ahead on commercial development of adjacent growth and next generation product ideas.

These  people had seasoned knowledge of their companies’ served markets and technologies but no solid data on un-served adjacent markets or on existing technologies unfamiliar to their companies. As a result, they put an overload of ideas into commercial development where valuable ideas often languished.

  • At the third company, a committee made front-end decisions using meager front-end data. As a result, ideas progressed slowly through commercial development and did not meet the success they deserved.

Unearthing solid front-end data on adjacent growth and next generation customers’ unarticulated needs

Since 1985 I’ve used phone interviews to find solid data on latent needs and valid market opportunities for clients with Horizon 1 and Horizon 2 product ideas for B2B markets.4

1. (2013) Markham, S. K., Lee, H.” Product Development and Management Association’s 2012 Comparative Performance Assessment Study” Journal of Product Innovation Management 30 pp.407-429 (This longitudinal study, begun in 1993, covers 1,241 companies in 23 industries, in North America, Europe, and Asia.)

2. Best companies are (1) the most successful or in the top third in their industry of NPD success, (2) above the mean for their new product program success, (3) above the mean for sales and profit success from NPD.

3. The 2004 study had 333 questions on the company’s NPD best practices. 399 companies were surveyed. Of these, 303 were in the Rest category.

4. Horizon 1 opportunities make up ~70% of a company’s new product portfolio. Included in Horizon 1 opportunities are improvements, extensions, variants, and cost reductions for served markets using existing technologies currently used by the company. Horizon 2 opportunities make up ~20% of the portfolio. Included in Horizon 2 opportunities are (a) next generation products employing existing technologies not currently used by the company, and (b) adjacent growth into existing markets the company does not serve. The Horizons model was first proposed by Baghai, M., Coley, S., and White, D., The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise Basic Books (2000)