The Board of Directors want to increase productivity of successful new products. Their decision sets ups a tussle between the CEO and the new product development (NPD) leader. I’ve seen this tussle during many client projects.
The tussle is not about NPD strategy
The CEO and the NPD leader accept the Board’s strategy of leveraging the firm’s top-notch technology assets. But they differ on the number and priority of the NPD projects placed in the development queue.
The CEO considers NPD to be an engineering system with a queue of projects running at full capacity.
The NPD leader considers NPD to be a development system. In the leader’s system, keeping the queue of projects below 80% capacity, cuts Time-To-Market (TTM) of successful products by 30+%.
The CEO viewpoint … I know what customers want. For higher productivity, the NPD leader needs to use my ideas and priorities. The NPD leader viewpoint … For higher productivity, I need to learn what customers really need and will buy.”
In line with the Board’s Strategy, the NPD leader will:
- Accept the CEO’s power to rank projects in the NPD queue.
- Accept, that the Board rewards a CEO who meets short-term revenue targets.
- Use the “power of reciprocity” (Cialdini, 2021) to secure consensus with the CEO on TTM.
Using the power of reciprocity to gain the CEO’s compliance
The NPD leader starts dialogues with CEO. Their focus is on business problems caused by jumping the queue.
For example: Sales’ insistence on quick responses to major customers’ requests.
The leader says:
- “For these requests, we developed a product with features the customers wanted.
But eventually, the customer did not buy the product. Even worse, the request bumped out of the queue major projects to decrease TTM.”
The CEO says: “It sounds like there is a pattern here. What is going on?”
The leader’s response: “Sale’s contacts are buying agents. Buying agents are not the real decision-makers for products meeting our Board’s strategy.
The true decision-maker is a technical expert, hidden from public view. When we contact that expert, we can beat our competitors.”
The CEO says: “OK, go ahead. But, keep me informed every step of the way.”
NPD leader hires a consultant who finds the true decision-makers.
- The CEO stops jumping the queue.
- The highest priority NPD projects meet their deadlines for success.
- The Board praises the CEO for the positive cash flow within a year after launch of the products.
The CEO continues to view NPD as a black box.
But now the CEO trusts the NPD leader’s expertise.