Simple questions to understand your New Product Development health.

ByIAadmin
What springs into most people’s minds when they hear the word “innovation”? That’s right – New Product Development (NPD). With new products typically accounting for up to 35% of sales, you can’t afford to ignore product innovation.

NPD is here to stay

Let’s face it, whatever kind of innovation you do, you’re probably developing new products. Product innovation is still the main innovation activity globally and getting it right could mean the success or failure of your business. Sure, it may not sound as trendy as business model innovation but companies surveyed in 2013 by ADL reported they deploy on average 60% of their innovation resources on product innovation. Also in 2013, PWC reported that 29% of companies placed it as number 1 priority for the next 12 months whereas only 10% of companies placed business model innovation as the top priority. And it’s not just a short-term priority. Another PWC study found that 48% of companies have product innovation in their top 3 innovation priorities for the next 3 years too.

NPD delivers

Why is NPD so predominant? Well, it delivers value. According to ADL, companies obtain around 16% – 35% of their sales from products/services with 3 years or fewer of sales. It should not surprise you that 35% is the average of the top innovators and 16% is the average of the rest, so being good at NPD creates almost double the value as being only “OK”. By the way, you don’t have to target risky, “radical” or “breakthrough” new products. You can create good value through a steady stream or more incremental product improvements.

Keep it simple

The good news is that you can improve your NPD delivery without spending a lot of time, money and effort. Simply getting the basics right will do a lot to boost the value you create. Do you have the basics in place? Ask yourself these questions:
Do you have a new products strategy and do your leaders walk the talk? 
Make sure everyone in the company knows why developing sales with new products is important.  Ensure that the company leaders are seen to drive the NPD strategy.
Do you really know what your customers or consumers want?
You need to know what your customers/consumers want (and don’t want).  Make sure you talk with them and listen closely.
Do you build-in the customer and consumer needs early?
Superior products sell better.  Once you know what your customers/consumers want, make sure you build it into the product you develop.
Do you keep focussed on the customer or consumer along the development process?
Keeping customers involved in the development keeps them interested. It also helps you detect any potential issues and opportunities before it’s too late to react.
Are you able to develop new products quickly enough?
Generally, your new product will be wanted “yesterday”. Being able to deliver good products quicker than competitors can win business. You need to execute quickly with minimal mistakes.
Do you have the right people available at the right time?
It’s difficult to move things forward if you don’t have enough people with the right skills.
Do you measure NPD performance and take action when needed?
If NPD performance is important to your company, then you should be tracking it using the metric(s) best adapted to your needs. Measuring is not enough. You need to take action to avoid or correct issues too!
Are your product launches strong enough?
Even great products will not deliver their full potential if the commercial launch package is weak. You need to define what you need and develop that too as part of the NPD process.
Does Product Innovation motivate you and your colleagues?
Successful NPD needs passion, creativity and energy as well as organisation, resources and skills. And it needs this from just about everyone in the company. If your people are not energised by NPD, it will fall flat.

Product + Service = Solution

Being a top NPD performer does not stop you from innovating in other ways too.  In fact, Service Innovation often goes hand in hand with Product Innovation.  In BtoB, your expert advice on how customers should use your products for best performance can deliver significant added value, turning a “product” into a “solution”.  The same logic can apply in BtoC business too.

Wrapping it up

Developing new products may be the first type of innovation that many people think of, but this is for good reason. It works. You can get the most out of your NPD activity by getting the basics right. And being great at NPD does not stop you innovating in other ways too.

Find out more

If you want to understand the strengths and opportunities of your NPD practices, I can run an innovation health check for you. This audit will cover all the essential elements and will give you clear recommendations of where and how to take action to strengthen. Please feel free to contact me for any further question or comment.

Sources & more reading

PWC, Breakthrough innovation and growth, September 2013, https://www.pwc.co.uk/assets/pdf/achieving-business-growth.pdf

PWC, Global CEO Pulse Survey on Innovation, 2013, https://www.pwc.com/gx/en/innovationsurvey/files/innovation_full_report.pdf

ADL, Getting a better return on your innovation investment, 2013, https://www.adlittle.com/en/insights/prism/getting-better-return-your-innovation-investment

OECD definition of product and service innovation, https://www.oecd-ilibrary.org/sites/9789264304604-en/1/2/2/1/index.html?itemId=/content/publication/9789264304604-en&_csp_=f0a6f52d4530c0667c4c56b36905227f&itemIGO=oecd&itemContentType=book#chapter-d1e3709

Do consumers like food product innovation? An analysis of willingness to pay for innovative food attributes.  British Food Journal, Volume 121 Issue 6.  https://www.emerald.com/insight/content/doi/10.1108/BFJ-06-2018-0389/full/html

Robert Cooper, The Invisible Success Factors in Product Innovation, September 2003Journal of Product Innovation Management 16(2):115 – 133. https://www.researchgate.net/publication/228053587_The_Invisible_Success_Factors_in_Product_Innovation