5 Key Factors for Successful New Product Development

A responsive new product development (NPD) process has always been a key part of a high tech business strategy. However, in recent years, with disruption threatening from every quarter and opportunities presented by rapidly evolving markets, it has become really critical to business growth and survival.

Disruption and opportunity are both driving innovation

This is a reality facing nearly every sector, right now. In fact, a recent McKinsey study has concluded that CEOs across all industries are currently prioritising innovation and growth over a focus on cost-saving in their operations - such is the urgent need to gain market advantage through business acceleration.

NPD is vital to retain profitability

In the 1970s new products accounted for 20% of corporate profits, now estimates show this figure is over 50%. At the same time, the new product failure rate is still regularly reported at around 40%. So, if innovation represents a huge opportunity, it also represents a significant risk to business. The danger of wasting time and resource on unprofitable or unsaleable new products and features is acute.

But research also shows there are some common, critical factors in the most successful product development processes that businesses can concentrate on to optimise their drive to innovate.

5 critical success factors in NPD

1. Product development is a team game

Startups often have the advantage of being small - staffed by multi-skilled individuals in a constant state of collaboration working on one killer product that they hope will change the world. But once a business grows and teams become more specialised and physically dispersed they can lose this interconnectedness. Appointing interdisciplinary teams to focus on new developments has been a proven route to success for many companies.

Whatever the size and scale of your company, though, supporting a range of formal and informal ways to include input from a range of functions and customers is vital in producing a product that can fulfill a market need. It is also vital in discovering how to fulfill that need in a way (and at a price) the market will embrace.

Using the right digital tools can bring dispersed teams together more effectively. These might include screen sharing software, video conferencing, instant messaging, as well as robust document management systems (DMS).

The right DMS can also let 3rd Party contributors work directly on your documentation in highly flexible digital work spaces, effectively letting them operate as an employee without ever having access to the rest of your system and, thus, compromising your security or your IP.

McKinsey has shown that teams connected and working in digitally sophisticated ways are much more likely to innovate at the required speed than those who are less connected.

2. Process is key

Clearly, a focus on process shouldn’t destroy a company’s agility, but the creative Ad Hoccery of an early days startup needs to find structure if it’s going to become a formula for repeatable success. But it’s a difficult balance to achieve.

Project Management approaches like Prince2 can bring much-needed order and discipline to the sometimes chaotic accession from ideation to development and launch.

The use of cross-departmental committees to assess progress and viability of projects at key stages, with the power to continue, kill or adapt projects based on new data and requirements, can keep a company’s focus on likely ROI and working deliverables.

Finding the right digital tools that can support these efforts is essential if companies are going to harness their creativity in dynamic but efficient ways.

For example, the right DMS can help you define, visualise and manage the steps of a NPD process all within the light weight digital framework of a company intranet.

These tools can let you set up a standard set of templates defining the requirements for each stage of a gated process, while allowing you to automate the collection, collation and approval of documents within each phase of work.

In this way these lightweight and configurable tools can help you optimise and speed up development, while ensuring a quality and consistency within your NPD. They can help you fail fast and complete projects more quickly, efficiently - and repeatedly,

3. Speed is of the essence

As product lifecycles are becoming shorter and shorter businesses need to move faster than ever before to take advantage of new opportunities. Agile practices can help businesses produce new and marketable products more rapidly, often making the difference between profitable and non-profitable activity.

The stark reality of the impact of NPD delays on the bottom line is shown by McKinsey, who found that in some cases introducing a product on budget, but 6 months late, cuts cumulative profit by between 17% and 35% over 5 years. By contrast, producing a product on time, but with up to a 50% increase in budget, cuts profitability by only 4%.

While the research literature is clear - the right combination of digital tools can actively help remove blocks to efficiency and shorten time to value in a NPD process, but there is always the risk of tech getting in the way of the very efficiency it’s deployed to secure:

“Good choices establish a favorable course, and the business soars; however, poor choices will siphon away much-needed organizational energy and resources and undermine competitiveness.”  Deloitte

4. Knowledge management

Knowledge is power. This is something that is very often overlooked in growing companies, but many studies have thrown up the danger of teams becoming unmoored from a collective understanding of procedure and organisational goals in their work.

The ability to store and share knowledge about projects, and about a business as a whole can impact on your ability to deliver on all of the factors listed above.

A digital document management system can act as a repository of information vital for the success of NPD initiatives. It can give teams a firm grasp of project progress, deliverables and dependencies. It can facilitate easy access to the documentation they need to complete tasks. It can allow different teams to work on and suggest changes to those documents. It can give overall governance of a project to a nominated individual, who can use its publishing and curation tools to keep projects well managed and on track. Good knowledge sharing capabilities reduces mistakes, increases the speed of delivery of goals and builds, closer more aligned teams.

5. Management Support

Creating a culture that values innovation and encourages it at every level has been found in countless studies to be one of the key indicators of success in this area. The focus, resource and respect that your organisation channels towards NPD will reflect the priority it is given in the minds of those who can influence its direction the most.

Apple, for example, famously made promoting its culture of iconoclasm one of its key objectives when Steve Job’s returned to the business in 1997, propelling the organisation into a new and unprecedented era of innovation.

Conclusion

An effective NPD function is supported by the right tools and the right business culture; it depends on team work underpinned by deep-seated, organisational knowledge and strong strategic direction from above. But it is also characterised by systems and processes that are agile, adaptable and repeatable.

Businesses should carefully consider how they can develop the precise mix of culture, people and digital infrastructure to meet these demands in the most efficient and competitive way possible.