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4 Critical Skills Every Innovation Leader Must Master

Watch the 20-second summary and then read on!

Innovation managers are outliers in a world of functional managers.  An engineering manager hires and grooms talent to design safe and reliable manufacturing processes.  A business manager balances administrative tasks to maintain operational efficiency, and a sales manager ensures customer visits are scheduled as continued touchpoints.  Each of these roles includes measurable performance indicators:  safety incidences, organizational productivity, and sales revenues. 

In contrast, innovation and product development managers have no certain goals and their output is fuzzy.  Innovation leaders integrate skills of the functional managers:  talent management, safety, reliability, manufacturing productivity, customer interactions, and sales revenues.  Yet, innovation leaders face higher levels of technical and market uncertainties. 

So, which skills are absolutely critical to success in innovation?

What is Innovation?

First, let’s take a step back and define innovation.  If I were to ask 25 people what innovation means, I would get 35 different definitions!  For our purposes, let’s assume innovation means the creation of a new product, service, or program that brings value to the producer and to the consumer.  Thus, we include sales revenues as value to the company and utility, functionality, and convenience as values to a customer. 

The Four Critical Skills

Knowing that innovation is fraught with risk, innovation leaders must master four critical skills to succeed.  These are:

  • Business knowledge,
  • Talent acquisition,
  • Process capability, and
  • Strategic decision-making. 

Business Knowledge

Successful innovation leaders process information from a variety of internal and external sources.  They must understand the business from a technical perspective and understand customers from a market perspective.  Traditional business goals, like financial analysis and productivity studies, are a factor in mastering the business.  Innovation managers must use this information to prepare a profitable business case for any new product or service. 

Business knowledge extends to trends, fads, and emerging technologies.  Innovation relies as much on learning and change as it does in building efficiency into a current model.  Successful innovation leaders study adjacent markets and industries and apply world-class best practices to compete over the long-run. 

Talent Acquisition

Because new product development (NPD) is inherently risky, innovation project team members use different tools to work together.  A successful innovation manager builds a team that balances creativity, operational expertise, and customer interactions.  Persuasion, negotiation, and conflict management are capabilities of an innovation manager who recognizes diversity of functional experience to commercialize a profitable new product. 

Process Capability

It goes without saying that any manager must be organized and efficient with his or her time.  Innovation managers use NPD processes and product portfolio management (PPM) to drive product development.  Choosing and adapting an appropriate process is a hallmark of a successful innovation manager. 

NPD processes range from conventional phased-and-gated waterfall systems to agile methodologies with hybrid systems like WAGILE becoming more popular today.  (Read more about WAGILE here.)  Understanding the organizational culture, executive risk tolerance, and the business model allows an innovation manager to select an effective NPD process.  Of course, the execution of a product development project within the NPD process is linked to effective collaboration of team members – a direct link to talent acquisition as a key skill for the innovation leader to master. 

Strategic Decision-Making

Finally, innovation leaders act strategically as well as tactically.  We have discussed the tactical and operational skills of acting on business knowledge and deploying an appropriate NPD process already.  But, knowing “how” is very different than knowing “why”.

Successful innovation managers use decisions as opportunities to increase product knowledge and to improve customer service.  Strategic decisions include which markets are attractive, what technologies are appropriate, and what products ought to be developed.  This focus on specific growth objectives and competitive analysis differentiates a successful innovation leader from other functional managers.  Check out our new virtual Master Class on Leadership, starting 18 August here.  This course is specifically geared to the challenges of innovation, product, and project managers.

Four Critical Skills that Innovation Leaders Must Master

Innovation leaders must be adaptable, flexible, knowledgeable, and expectant.  All managers must know their trade and be ready to measure performance outcomes.  Yet, successful innovation leaders balance risk, investment, markets, and talent in a unique stew to produce customer satisfaction.  Mastering the skills in business knowledge, talent acquisition, process capability, and strategic decision-making differentiates the successful innovation leader. 

Learn More

I highly recommend New Product Development Professional certification for any innovation manager.  You will learn how strategy, portfolio management, and NPD processes guide decisions for innovation with best practices tools and techniques in process design, market research, and team-building.  Register now for the next session of the NPDP workshop here.

 
     

Hydrate Your Creativity

Water.  We all need water to stay alive.  When we become dehydrated, our minds get fuzzy and our bodies collapse.  Water is a fundamental component of life and we must continually take it to survive. 

Creativity is like the water of innovation.  A company cannot survive if it does not explore new ideas and without creativity, products become stale and collapsed.  Creativity is fundamental to new product development (NPD) and we must continually supply it for a firm to stay in business. 

But just as we take water in different forms to stay hydrated, we can use creativity in different ways to maintain and sustain innovation.  First, we must understand the goals.  Then, we must invest in the right tools.  Next, we must make creativity and its companion – failure – acceptable within the culture.  Finally, we can take the small steps to encourage creativity across organizational boundaries. 

Goals for Creativity

Most firms clearly articulate the need for innovation to stay competitive and to meet a variety of strategic objectives.  Business goals and objectives are typically identified in the strategic mission statement and visualized on the product roadmap.  Yet, creativity is not a clearly identified goal in itself.  However, without creativity, innovation and product development cannot thrive. 

Management can inspire creativity by linking business goals with innovation objectives.  This is easier than it sounds.  Often our R&D and NPD teams gather for “brainstorming.”  Brainstorming is one of several techniques that is useful for generating new ideas and concepts, but brainstorming can be largely ineffective if not applied in the right situation(s). 

It is more important to choose the right problem to solve than the right technique.  A lot of firms will automatically turn to brainstorming when other creativity tools can be used to find potential solutions to customer problems.  The objective of the company is to sustain business growth which may require marketing for sales solutions in addition to product development.  Brainstorming tends to focus on generating ideas around a single concept and many of these ideas never have any follow-up. 

Instead, task your product development and engineering staff with a set of business goals.  Striving to meet a specific goal can generate more creative solutions that are realistic and actionable. 

For example, consider a product that has lately experienced lagging sales.  Instead of jumping to a brainstorming session to generate ideas for added features, use the experience and expertise of your product management teams to better understand the sales data from the perspective of business goals. 

  • Are there new competitors in the market?
  • What is your market share?
  • Our customers once-through or repeat buyers?
  • What fashion or geographical trends are impacting the sales?

Invest in Creativity Tools

Brainstorming is a great technique under certain circumstances, but it is not a cure-all for creativity.  Companies must invest in a wide range of efforts to induce creativity.  This includes a financial commitment, year-after-year, to basic R&D.  Skills development in research cannot be advanced with annual budget fluctuations due to the interruptions in project progress.  Creativity grows from a long-term investment in R&D and in building skills for NPD within staff and personnel dedicated to bringing new ideas to fruition. 

Brainwriting is a structured group method to generate new ideas but is more focused on specific problems and goals than are general brainstorming sessions.  This technique eliminates the wild and often chaotic atmosphere of a brainstorming event to bring forth more actionable ideas.  Each individual will quietly inscribe three to five ideas on a sheet of paper.  Because the problem statement has been circulated in advance, the ideas are immediately forthcoming.  The paper is passed to the next person who builds on these ideas.  Or they may record a new idea.  After a few rounds, the paper returns to the originator who reviews and selects the best idea.  The team then notes the “best” concepts from this compilation of ideas.  These “best” ideas are recorded as in a traditional brainstorming session.

Another technique that works well to generate creative product concepts is built on the customer’s problem, or “job-to-be-done”.  The NPD team should actually use the product as it was designed in the same situations that a customer might use it.  Product use (and role-playing if that’s not possible) helps to identify real pain points from the customer’s viewpoint – areas that are ripe for innovative solutions. 

Accept Failure

We’ve all heard Thomas Edison’s famous quote of not having found the right invention but instead having found 10,000 ways not to do it.  Failure is a part of the creative process and companies must learn to accept some failures on the pathway to success.  This is precisely why athletes practice and practice.  When they encounter the real-life conflict in a game, they know what worked and what did not. 

While failure is a part of the creative process, there are limits to acceptable failures.  Companies should not tolerate new product development without corresponding customer research.  Product designs should not be created in a vacuum without consumer input.  Marketing campaigns should be tested with a subset of the target audience.  The NPD process is devised to engender fast and smart failures, leading to knowledge that increases the success rates of new products. 

Creativity Across Organizational Boundaries

Creativity for new products and services is not limited to named R&D staff or those personnel assigned to the product development organization.   Seek creativity across organizational boundaries to increase idea generation, manufacturability, and sales and marketing of products that meet customer needs and wants.   Workers on the factory floor should be empowered to add value by saving costs or increasing productivity.   Sales teams often have the most contact with customers and know their needs best.   Every NPD effort must be staffed by a cross-functional team that can look across organizational boundaries to build better, smarter, faster products and services to solve customer problems.

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The traditional “suggestion box” might be accompanied by incentives and rewards, linking exceptional ideas to the corporate business goals.   Every suggestion, however, must be acknowledged with a heartfelt “thank you” and how the suggestion will (or will not) be implemented.   Suggestions that aren’t timely or do not have enough cost impact must be acknowledged, rewarded, and encouraged.   Small steps can eventually cover great distances, especially when taken together.

Supporting Creativity

We have to support our bodies and minds by staying hydrated as water supports all the life-giving mechanisms.   Similarly, creativity supports all the business-sustaining systems for growth and productivity.   We set goals for daily water consumption – my fitness app recommends 64 ounces of water per day.   I have invested in tools to help me achieve that objective – refillable water bottles for my bicycle, for instance, and an insulated thermos for the car.   Sometimes I fail to meet my hydration goal – sometimes by a few ounces and other times by a lot.   But I can accept that failure and try again tomorrow.   Finally, I have enlisted help across my institutions – each evening, my husband brings me a fresh bottle of water while I watch television or read.   Staying hydrated helps me achieve so many other goals.

Likewise, senior executives today recognize more than ever that that innovation is key to long-term success.   Inspiring creativity is not easy, yet most employees feel empowered and more engaged in their work when they seek creative solutions to address real-world problems.   Just as I’ve taken simple steps to increase hydration in my daily life, firms can take some simple steps to enhance creativity in their organizations.

  1. Link innovation to specific business goals.
  2. Invest in effective innovation tools.
  3. Accept failures on the pathway to creativity.
  4. Take small steps to generate big results.

Creativity is part of being a successful new product development professional (NPDP).   Learn more about NPDP certifications here. 

Read about more creativity tools in my recent article in Chemical Engineering Progress (published by the American Institute of Chemical Engineers) here.

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Planning for New Product Development

A famous quote by Eisenhower tells us that we should plan well but know that our plans will be disrupted.  Planning includes creating a set of activities, tasks, and milestones to achieve specific goals and objectives.  You can think of planning as a roadmap to a destination with rest stops (checkpoints) built into the route.

New product development (NPD) is important for every organization, regardless of size or industry.  Technology and markets are changing constantly.  Globalization introduces changes in raw material supplies, labor, and distribution.  Digitization has brought forth changes in how we manage relationships with customers and a dependence on sophisticated data models.  Without designing and launching new products, services, and applications, organizations will fall behind their competitors.

As Eisenhower’s quote describes, our ability to anticipate and manage risks is the purpose of planning.   NPD is risky.  Financial investments are lost if the technology or markets failed to materialize.  Revenue shrinks and expenses soar if customers express dissatisfaction with an existing or new product.  The organization’s reputation suffers irreparable harm if a commercial product fails to meet expected quality and reliability standards. 

So, instead of anticipating doom and gloom, let’s look at how planning can improve the execution and outcomes of NPD. 

NPD Processes Manage Risk

Implementing and following a step-by-step NPD process reduces risk.  For example, a standard waterfall process (see the figure below), simultaneously minimizes investment risk and technology risk.  In a traditional staged-and-gated NPD process, work is done in stages and decisions are made at gates. 

Each subsequent phase of work requires additional investment as R&D work scales to commercial production through the process steps.  Fortunately, technology risk is minimized because the knowledge, data, and information gained in each stage frames a go/no-go decision at the next gate.  If the business case and markets continue to look attractive, the new product development effort moves to the next stage of work. 

Planning Estimates

One element of planning that helps us to reduce risk is estimating.  The most successful organizations use both cost estimates and resource estimates to plan an NPD project.  Furthermore, the best organizations also use actual project data and metrics to create future project plans. 

What do we mean by using current data for future planning?  Most organizations create new products in just a handful of categories:

In many organizations, the bulk of NPD work is tweaking features of existing products to deliver a “new product” to existing markets or to introduce existing products to a new market.  These “derivative” products are common enough that it is easy to establish a database to improve estimates of future, similar projects.  That is, we can take averages of elapsed time and actual costs from a set of completed projects to plan a better estimate for a similar project in the future. 

An Example

Let’s say you are the Product Development Manager at a food and beverage company.  The company is constantly on the lookout for new flavors and considers any novel combination of juices as a new product.  Upon investigating the last three new flavors of juices launched in the past three years, you uncover the following data. 

  • Stage 1 (Brainstorming):  3 days, 10 people
  • Stage 2 (Concept Testing):  2 weeks, 4 people
  • Stage 3 (Business Case Development):  6 weeks, 3 people
  • Stage 4 (Prototype Testing):  12 weeks, 10 people
  • Stage 5 (Scale-Up):  15 weeks, 18 people

As the Product Development Manager, you can use this “average” data to estimate, to plan the next similar new product development project.  The result includes an estimated project schedule in Gantt chart format (see figure below), resource estimates, and cost estimates (see the table below). 

Derivative Product Development Estimates
Stage# FTE
(Full-Time Equivalent days)		Cost
($100k/year per FTE)
1:  Brainstorming30$11,538
2:  Concept Testing40$15,385
3:  Business Case Development90$34,615
4:  Prototype Testing600$230,769
5:  Scale-Up1350$519,231
Total Estimated Cost2110$811,538

For this project, the innovation team has estimated a profit of $1 per bottle of juice sold with 5-year sales of 100M bottles.  Thus, we can get a rough estimate of profitability (approximately $99.2M).  A rough business case estimate can help the organization determine whether to continue this project or allocate scarce resources to another one.

NPD Project Planning

Planning is the act of creating tasks, activities, and milestones to drive completion of goals and objectives.  Planning does not prevent all risks from occurring but minimizes uncertainties in technology and market development.  Even though new product development (NPD) is risky by its very nature, planning via a structured process allows us to create more accurate cost and resource estimates, thereby reducing investment risk. 

To learn more about NPD Processes, join the two-part workshop sponsored by PDMA and Global NP Solutions.   Register here – the first session is 17 June 2021.   Contact me at info at Simple-PDH.com to learn more about utilizing effective planning as a Product Development Manager.   

Learn more about building a successful NPD team at any of these upcoming events. 

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What are the Functions of New Product Development?

Most organizations recognize that innovation is crucial for both the short-term and long-term success.  We are acquainted with stories of familiar brands, like Kodak® and Sears falling into decline.  And while business and change management played a role in the recent decline of the JCPenney’s brand, a lack of customer-oriented innovation is also to blame. 

Innovation and new product development (NPD) serve as important business functions for strategic growth.   R&D requires a long- term investment, as do market and technology development.  Thus, we can say that NPD serves three primary purposes for the business:

  • Value Creation,
  • Value Extension, and
  • Value Preservation.

Note that “value” here means the ability to deliver profit to the organization while simultaneously establishing market demand for products and services. 

Value Creation

Most of us think of innovation in terms of value creation.  By designing new-to-the-world products with new technologies, we can create market value.  Such products meet the specific needs of a target customer who spends their money to acquire a convenience, a luxury, or a new way to solve a problem. 

Consider some examples from your office that you probably use every day.  These products create value for you through convenience.  For instance, a combination webcam and microphone provide the ability to move about during a virtual meeting.  You are not tethered by a USB cable to a headset and with a wide-angle camera, you can move a few feet to the left or to the right.  This convenience allows you to stand or stretch during a virtual meeting, just as we used to do in real life.

Another convenient product that you might find in your office that adds value to your everyday routine is the software on your computer.  We have the luxury of single click calendar scheduling in apps.  This saves us the time and headaches of back-and-forth scheduling with others.  It’s especially a time-saver to schedule meetings with large groups of stakeholders!

Value Extension

So, new products give us new value, especially through convenience and solving problems to eliminate wasted time, money, and energy.  NPD also offers to extend the value of existing products and services.  We often call these innovations “derivatives” since they are derived from a primary product.  Many organizations spend the bulk of their R&D effort in value extension. 

Value extension uses new technology to make the product better, faster, or cheaper.  Making the product better allows the company to maintain strategic pricing and sustain revenue over the long–term.  Making the product faster or cheaper (from the manufacturer’s viewpoint) goes directly to cost-savings and to the bottom line. 

Google appears to have mastered value extension.  A combination of products and product families has grown from a simple search engine.  Accessing advertising, shared documents, and e-mail through a single log-on ID and password offers convenience but also offers more (a version of better, faster, cheaper).  Features extend from desktop and laptop computers to mobile devices giving customers access to their accounts at all times, all places (value extension). 

Value Preservation

Finally, NPD helps to preserve product value over the long run.  A typical product life cycle includes introduction of a new product, growth in market share, maturity with increased competition, and decline as the market reaches saturation and profits decrease.  (Read about the product life cycle – PLC – here.)  Innovation can revamp and revitalize a product or brand so that declining profits are reversed.

For example, many of us remember an advertising campaign from a few years ago for a very dull, everyday product:  milk.  The California Milk Processor Board successfully reversed declining sales and preserved product value by increasing product awareness. 

Preserving value might be as simple as a new ad campaign to re-ignite interest in a product or service.  On the other hand, technology improvements or new market applications may be needed to spark renewed customer interest in the product or brand.  It is the job of a product manager to watch for market disruptions and trends, including timing for revamping a product or brand.

Take-Aways

As a business owner, product innovation professional, or technologist, you have some simple take-aways to construct your own analysis of NPD functions.  Follow these steps.

  1. Classify your new product portfolio according to the NPD function (value creation, value extension, or value preservation). 
  2. Assess the value (revenue or cost-savings) of each product and category of products. 
  3. Prioritize the projects and resources assigned to NPD efforts.
  4. Identify gaps between necessary resources need and assigned for the highest value-add projects. 
  5. Reprioritize your new product portfolio according to available resources and strategic growth objectives. 

Let me know if you want some guidance in assessing your NPD functions!  A deeper dive into the knowledge base, such as NPD Processes (sponsored by PDMA and Global NP Solutions), can introduce you to some additional important concepts for successful innovation.  Register here – the first session is 17 June 2021.  Contact me at info at Simple-PDH.com to learn more about the functions for value in NPD.

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Separating Wheat from Weeds

There is a parable in the Bible (Matthew 13: 24-30) speaking of a farmer who bought good seed and planted it.  But, when small shoots first came through the ground, there were weeds mixed among the wheat.  Knowing that if he pulled the weeds, he would also uproot the wheat, he let the weeds grow with the good plants until harvest.  At the final harvest, the weeds were separated from the wheat and burned. 

Aside from the eternal lesson, this parable teaches us something about creativity and innovation.  Not every idea is a good one.  But if we try to kill all the bad ideas, we might also uproot some good ones at the same time.  Instead, if we let ideas grow, we can harvest creativity and separate innovation ideas for further processing while we discard the poor ones. 

Creativity

We often judge creative ideas after the harvest – when a new product is delivering profit and customers express satisfaction with service and functionality.  Likewise, we often “kill” ideas early in new product development (NPD) process when they do not appear to bear fruit – profitability or competitive advantage.  From a business perspective, I totally agree with separating the “weeds” from the “wheat” early in the product development effort.  From a leadership perspective, we do have to be careful to not tamp down the team’s creativity. 

Leaders must nurture creativity, just as a farmer nurtures young shoots.  Apparently, the leaves of a weed called “darnel” are indistinguishable from wheat – even by experts – until the plants mature.  Similarly, we do not know if an idea is good or bad until we test it with customers. 

One strategy to improve creativity, and to encourage customer feedback on all ideas, is to let the biggest naysayer try to prove an idea is bad.  Within constraints of time, budget, and scope, a team member who doubts the success of an idea can try to demonstrate it is a bad idea.  Either they are correct, or they become the biggest champion for the concept.  Either way, the team wins, and customers are best served with creative, innovative ideas. 

Tools

In innovation, we have several tools at our disposal to separate the wheat from the weeds.  First, a rigorous NPD process compares the goals of an individual idea with the strategic objectives of the organization.  A company’s vision might be to grow a specific product line or brand.  Or the firm may have goals to cut costs.  New product development projects must align with these goals to advance. 

Another tool that product development professionals use to promote good ideas is Product Portfolio Management (PPM).  Within the framework of PPM, organizational leaders rank and prioritize all projects and ideas.  Decision criteria vary from firm to firm but generally include strategic alignment, profit potential, and customer satisfaction.  PPM balances risk of short-term and long-term innovation investments as well. 

Quality

Finally, innovation is mixed with quality just as the farmer’s field was mixed of weeds and wheat.  Successful product development only occurs when we deliver quality products and services to our customers.  Quality includes elements of reliability, functionality, and maintainability. 

Quality in new product development encompasses the product design and the project management process.  In the former case, we test ideas and concepts with customers and ensure that QC standards guide manufacturing.  In the latter case, we work to constantly improve the system in which a project moves through various development phases and gates.

Separating Wheat and Weeds

Today’s technology is very different than in Biblical times.  Robots patrol fields taking photos of young shoots to classify them as weeds or wheat.  Ultra-accurate machines then spray precisely on the weed leaves to kill them or exactly on the wheat leaves to fertilize them .  However, the risk is the same – if you mistake wheat for a weed you can kill your entire crop. 

As product innovation leaders, we must be careful not to kill good ideas along with the bad ones.  Maintaining creativity is important to continue designing and developing new products and services to satisfy customer needs.  We need to let ideas mature to test concepts with potential customers.  On the other hand, limited investment reduces the risk of failed products. 

Tools like an NPD process (we recommend WAGILE product development) and PPM help to sort the “weeds” “wheat”.  Organizational strategy and growth goals help to differentiate good ideas from poor ones.  PPM, in particular, ensures the best ideas are ranked the highest. 

Finally, quality is what the farmer sought – wheat provides quality food while weeds are mostly inedible.  Likewise, positive innovation quality metrics include customer satisfaction, market share, and market penetration.  Having QA and QC in place throughout the product design and development process.

Learn More

If you want to learn how to separate the wheat from the weeds, please join me for an in-depth Innovation Best Practices Workshop starting 2 June March 2021.  Special discounts for multiple attendees and the unemployed.  Contact me at [email protected] for more information.

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Project Controls in Innovation

Controlling is often a misunderstood management function.  In everyday use, we use the term “controlling” to mean manipulating or limiting other’s behavior.  Yet in engineering management, project management, and new product development (NPD), controlling is an important process that helps the team leader assess the performance of a project and of his or her team. 

Definition of Controlling

Let’s define controlling as follows, consistent with the American Society of Engineering Management (ASEM). 

“A management function of measuring performance and comparing the results with established standards to ensure that the work conforms to requirements and brings a desired outcome.” 

Defined in this way, controlling is a critical function that assures work meets expectations.  If at any time, the project outcomes are not meeting expectations, we make adjustments to bring the product or project work into alignment with the plan. 

Steps in Controlling

There are typically four steps that product and project managers follow in controlling. 

  1. Set a baseline,
  2. Measure performance,
  3. Compare the baseline against performance measures, and
  4. Take corrective action as necessary. 

Set a Baseline

In project management and NPD, setting baselines for performance should be easy.  In reality, however, setting baselines requires substantial planning effort on behalf of the project leader.  The baseline must reflect the best outcome of project planning.  Principles of project management dictate that during the initiation phase, the project leader and team members identify requirements from all project stakeholders.  Gathering and documenting project requirements ensures that stakeholder expectations can be met. 

In innovation projects, customer needs are documented in the PIC (product innovation charter).  During all stages of the structured NPD process, the innovation project team will test customer needs to ensure alignment with the product design.  One way in which to map customer needs to engineering design specs is to use the QFD tool (quality function deployment).  Read more about process design here. 

Measure Performance

In Step 2 of controlling, we measure the performance of engineering and project teams.  Here, both individual and team member performance are assessed as well as the project requirements.  For example, if a new product development project had a customer requirement to increase battery life by 50%, the engineering team would measure all new battery designs against the performance standard.  A new battery with just 20% increase in lifetime would be inadequate, while a battery with a life that is 48% longer is considered a successful technology.  The project is approved when it meets the technical hurdles and would move along in the NPD process. 

image from creative commons with free to share and use

Compare Baseline Against Performance

In Step 3 of controlling, the project leader and project team members assess the project performance by comparing current design elements against the baseline set forth in the project plan.  It is important to ensure that the baseline and product performance requirements are measurable so that this comparison is meaningful.  Objectives are stated in measurable terms and metrics are gathered without difficulty or subject to opinion or interpretation. 

Again, for instance, battery life extension of 50% is measurable.  The initial battery in the current product demonstrates an average of 3-hour life before requiring a recharge.  Sample batteries in lab tests demonstrate 4-hour, 4.2-hours and 4.4-hours.  These data points are easy to compare to the initial product performance level.  The product development and innovation teams strive for measurable goals and objectives to improve customer satisfaction. 

Take Corrective Action

At the heart of the controlling process is the idea that correcting errors early leads to higher quality products and that the development effort will be less expensive overall.  Thus, the final step in the controlling function is to take action based on analysis of the data from Step 3.  In the case where performance matches expectations and baseline plans, no action is required. 

Frequently, controlling will reveal that a project is over-budget and/or behind schedule.  In these situations, the project manager and sponsor must work with the customer to modify the plan.  Some tools are available to help accomplish the work within the required time frame, but these schedule adaptations normally require additional costs (e.g. crashing and compression).  Further, missing the timeline for a new product launch can impact the overall profitability of an innovative new product. 

Controlling Function

In engineering management, project management and new product development, controlling is an important management function.  The four steps in controlling are: (1) set a baseline, (2) measure performance, (3) compare the baseline against performance, and (4) take corrective action as appropriate.  To learn more about the controlling function and other ways to improve new product project execution, you must earn your New Product Development Professional (NPDP) certification.  Check out our training and speaking schedule for innovation and project management here. 

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Can Nerds Serve the Customer?

I’m a self-admitting nerd.  My educational background is in engineering and I enjoy learning how things fit together.  I love to watch movies, but I never know the names of actors or actresses.  I fail miserably at the literature questions in Trivial Pursuit™. 

Yet, I love math, logic, and reasoning.  In recent years my fondness to “figure out how things work” has become a study of people, leaders, and teams.  Successful innovation teams have a different culture than others. 

A friend and colleague mentioned that her son was studying mechanical engineering.  She encouraged him to take a Design Thinking class so he could learn about human-centered design.  I agree wholeheartedly with her!  Engineers have an isolated educational experience driven by high-level calculus an intense theory of physics.  Of course, accountants, sociologists, and architects also have educational experiences driven by depth of knowledge, rather than breadth.

So, can nerds learn to serve the customer?

The Customer

First, we have to take a step back.  Any free economy functions to produce goods and services that generate profit for the seller.  Buyers pay a price for goods and services that give them utility and functionality at their own perceived value.  The buyer (or customer) seeks a benefit in purchasing a product that is greater than the price they pay.  Moreover, the price that the buyer pays must include a margin of profit for the producer.  If not, the producer will cease to offer those goods or services. 

A seller learns what to sell by studying customers and markets.  Customers are the key element in designing and developing new products.  My friend was very astute to encourage her son to broaden his studies beyond engineering.  New Product Development Professionals (NPDP) blend the unique skills of technology understanding, market perception, and product knowledge to successfully innovate profitable goods and services. 

Engineers, like other innovation leaders, have an intense curiosity about how things work.  Yes, we are nerds because we enjoy tinkering and troubleshooting.  So, trying to solve a customer’s problem by designing a new widget is exactly a perfect fit!

Design Thinking

Again, my friend gave her son a huge gift toward his employability by encouraging him to supplement engineering classes with Design Thinking.  Design Thinking is both a process and a set of tools.  From the process perspective, Design Thinking teaches us to collaborate with fellow nerds, customers, and any function that will help solve the problem.  From the tools point of view, Design Thinking gives us templates and techniques to elicit even the most obscure unarticulated customer needs. 

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At the core of Design Thinking is empathy – an understanding of the feelings, thoughts, and attitudes of another person.  In the case of product development, the product development engineers build empathy for the customers by interviewing, shadowing, and observing their interactions with the product.  When we understand the struggle that a customer has to open a package or assemble the parts, we improve the features and functions of that product. 

For example, IKEA includes a small (cheap) hex wrench with its ready-to-assemble furniture (such as a bookshelf).  The packaging is small (a benefit to customers and transportation) but only nerds have a full tool chest available to assemble a bookshelf.  So, for most folks, the cheap hex wrench is a huge time-saver.  Parts are clearly labeled and the visual instruction sheet from IKEA gives simple directions to assemble the parts using the tools (hex wrench) provided.  Both the seller and buyer benefit – higher profit margins and enhanced perception of the product’s value. 

Image from Creative Commons

Engineers and Design Thinking

Yes, nerds can serve the customer!  Engineers are great at trouble-shooting and finding creative solutions to problems.  Augmenting our technical training with customer empathy creates a superhero innovation leader. 

If you don’t know the basic tools and process of design thinking, that’s okay.  Register here for an interactive, online workshop, led by a full-fledged nerd. 

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Innovation in the Product Life Cycle

I recently ran across notes I had taken while reading a book that summarized management skills.  I no longer remember the title or author’s name, but the book was an overview of all the subjects covered in an MBA program 20 years ago.  Of course, MBA programs have changed a lot in this time frame, yet a lot of the basic tools we use for decisions have not changed.   

For instance, managers need to understand finance and accounting.  Managers need to know how to create a strategic plan.  And managers need to understand operations, distribution, and supply chain.  Managers also need to understand the product development process, including aspects of technology and marketing.   

The Product Life Cycle

The product life cycle (PLC) is not a new concept, yet it supports the work of a product manager today still.  Just like every living thing has a life cycle – birth, growth, maturity, and death – so do products.  The PLC covers the introduction of a new product to a market, growth of the product in both market share and market penetration, maturity to a commodity-like product, and decline.   

image from creative commons

Introduction

In the introductory stage of the PLC a product is first released for sale.   Sometimes new products are new-to-the-world and sometimes they are only new-to-the-company.  The decision to develop a new product, though, starts long before it is introduced to the market

Product managers are constantly on the lookout for new product ideas.   They gather concept ideas from existing customers.  Innovation managers also continually scan the horizon for new product opportunities.  A new product might consist of a new technology applied to an existing market or a new market altogether.   

I found a new product the other day – most likely an application of existing technology to a new market.  My cats love gravy.  They will drink the gravy out of the bowl and leave the particles of food behind.  They really love a treat, called “Gravy-licious”.   It is a crunchy treat with a “gravy” coating.  At the store the other day , I found a 3-pound bag of regular food made entirely of gravy-coated particles.   I knew it would be a hit – the bowl was empty in no time!  

While gravy-covered treats and gravy-covered food are not radically different from my point of view (or apparently the cats’ view either), these are different products.   Consider the scale of manufacturing for a treat versus that of a large volume food product.  Also consider packaging, distribution, and promotion.   Each element must be adequately addressed to introduce a new product to consumers.   

Growth

During the growth stage, a new product is adopted by a majority of consumers in a market.  Remember that adoption by a passionate few can then drive mainline purchases by your target market.  In fact, product innovation leaders will gain insights to the quality, pricing, and feature sets of new products from the introduction and early growth stages.   

Growth is characterized by extended promotion of the product.   For a new-to-the-world product, profits begin to accumulate.   Manufacturing is streamlined as are supply chain and distribution.   

Maturity

As the product continues to grow in market penetration, competitors enter the market.  The term market penetration means that existing customers are buying more of the product and as many customers that want the product can buy it.  Market saturation occurs when every customer who wants a product can – and does – purchase it.   

This maturation of a market means that the product is becoming commoditized.  There is often little differentiation among competitors and profit margins decline due to pricing pressures.  A lot of companies take the strategy of lowest cost during the maturity stage which, unfortunately, sinks the whole market.   

Decline

Fighting for the lowest cost leads to overall decline of the product – or death in the product life cycle.   Manufacturers do not want to make a product that has no profit margin as there is greater utility for equipment to make another product.  In some cases, it is more cost effective to sell a factory rather than continue to produce goods that generate financial losses.   

Yet, a lot of product managers fail to recognize the signs of decline.   Heroic efforts will not save a dying product.  Instead, innovation leaders must take a long, hard look at customers markets, technologies, brands, competitors, and products to generate a strategic plan.   Do you sunset the product or reinvest to launch a next a next generation new product?  Not an easy decision.   

Innovating in the PLC

One word that repeats itself when describing the product life cycle is competition.   Even with a new-to-the-world product, we do not operate in a vacuum.  Competition is working on new technologies and new promotions in our target markets.  We must be ready – at every stage of the PLC – to address competitive threats.   

Do you know your competition?  Do you have a formal strategy to address new product competition?  Are your profit margins strong against all product competition?

If you answered “NO” to just one of these questions, it’s time for a tune-up in your PLC!  Join the self-paced Competitive Analysis course here.  You will earn 2 PDH and save 20% with discount code “Intro” through 15 April 2021.

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Innovation Project Scheduling

Time.  It is the only resource for which there is no true price and the only resource that cannot be recovered.  Once we spend a minute, an hour, or a day, it is gone.  We cannot re-use the time or re-purpose it. 

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Yet, time is a resource that is often wasted.  Personally, I can waste time by watching television or chasing rabbit trails on the Internet.  On a recent evening, for instance, I watched a re-run of “I Dream of Jeannie” and then spent several minutes looking at the Wikipedia histories of Larry Hagman and Barbara Eden.  While I might guess a trivia question correctly in the future, I probably did not use my time to my highest productive ability. 

Innovation Project activities

Likewise, we do not always use our project time effectively when we develop new products.  Innovation can present a lot of “rabbit trails” from both the technology and market perspectives.  When a lab test looks interesting, organizations often devote all their resources (including time) to duplicating and validating the result.  Similarly, when a focus group gives positive feedback on a feature, our innovation focus narrows, and we dedicate more time to understanding that particular customer need.  In retrospect, these might be the right (or wrong) decisions.  Only time will tell.

Dedicated innovation project resources are the hallmark of a successful new product development (NPD) strategy.  However, a singular focus can lead us to miss alternate approaches or business models.  Not only do we have to be aware of our natural biases as an organization, we also must be aware of competitor actions in the field. 

One way to counter a narrow innovation focus is to conduct parallel product development activities.  Especially in the early phases of NPD project work, innovation teams can – and should – investigate multiple ideas, concepts, and feature sets.  Some key activities in early phase new product development are as follows. 

  • Ideation
  • Concept Trials
  • Customer Shadowing
  • Needs Assessment
  • Strategy Alignment
  • Competitive analysis
  • Prototype Testing
  • Pilot Testing
  • Quality validation
  • Market Tests
  • Performance Verification

Roadmapping

At the highest level, scheduling of innovation activities occurs through roadmapping.  A roadmap is a visual representation of key product development activities and milestones that guide the product innovation team to an expected outcome.  For example, if we know we need to launch a new product at a specific trade show in December, then we can draw a roadmap of activities that will allow us to meet that deadline. 

Example of a Simple Product Roadmap

Backward Pass Scheduling

In formal project management “language,” the term backward pass scheduling is used to describe building a roadmap (or schedule) from the required end date to our current date.  So, if we must have a new product ready in December, we will have to do prototype testing in September.  To have a realistic prototype in September, we will need to have a feature list by July period to have a list of critical features in July, we need to conduct focus groups on different concepts by May.  And that means we need to hold ideation and design thinking workshops in March.  We plot our key innovation activities on the roadmap which gives us a rough schedule for the project. 

Detailed Scheduling

Once we have generated a roadmap of activities for the new product project, we will undertake detailed scheduling.  Software tools are invaluable for both roadmapping and detailed scheduling.  All project development tasks are input along with the required resources (by name and position) and activity duration.  Capacity management is key to success at this stage.  Some tasks include dependencies with other tasks and resources cannot be used twice in the same period.  A typical output of scheduling software is a Gantt chart, which we overlay on the roadmap. 

Innovation Project Scheduling

In this post, we’ve only touched on a few of the important elements in creating an innovation project schedule.  The figure below summarizes these steps.  (Note that monitoring and controlling a project is a separate topic.)

While getting the details right is important, the most crucial element for successful innovation leaders is getting the process right.  This includes understanding customer needs and required innovation activities.  Join me on 22 and 23 April 2021 for the WAGILE Product Development workshop.  In this interactive online class, you will tackle your biggest innovation scheduling challenges, streamline customer feedback processes, and improve speed-to-market.  If you find you are launching ho-hum products too late in a crowded marketplace, you must learn WAGILE now!  Register here.

Learn how to make your innovation process flexible!

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Four Stages of Competition

According to Dictionary.com, the origin of the word “competition” is Latin, around 1600 AD.  One definition is “a contest for some prize, honor, or advantage”.  Another definition is “the act of competing; rivalry for supremacy”.  In business, we often think of our competition as other organizations that compete with similar products in a marketplace. 

It seems that the formal definitions of competition are stronger, harsher than what we experience in our day-to-day business lives.  There is only one prize in sports, for example.  Many teams compete each year, but only one is the “national champion”.  Many individuals compete in the Olympics, but only one can win the gold medal.  In business, only a single product or brand can be number one in a given category.  And winning means the highest profit. 

Competition and the Product Life Cycle

In sports, the “best” teams usually are sorted out early in the season.  Unfortunately, players suffer injuries that can decrease the skill level and balance of a team.  When Klay Thompson suffered back-to-back injuries, the chances dwindled for the Golden State Warriors to win an NBA championship this year.  That injury on top of losing Kevin Durant to another team, reduced the skill and balance of the team from a position of “winner” to “needing to recruit”.  While Golden State has been a perennial competitor in the NBA, their losses created space for stronger competition in the league by Utah and the LA Clippers, for instance.  (Read more about Who is Your Competition here.)

In business, early market entrants might be the strongest competitors.  Yet, over time, different companies produce and market products that offer competitive advantages.  Just like NBA teams have an initial ranking that morphs and adjusts throughout the season, new products also have different competitors throughout the product life cycle (PLC). 

The Product Life Cycle (PLC)

Most products go through a similar life cycle, though the speed of the life cycle varies.  New-to-the-world products are launched into the introductory phase of the PLC.  Often there is little direct competition at this stage.  The new product is designed to meet a unique market need and the target customer might represent a small market. 

Product Life Cycle (PLC)

As more customers adopt the product and via intensive product promotion, the market share grows.  This is, of course, called the growth stage of the PLC.  Companies focus on building brand awareness and increasing distribution during this phase.  However, as more firms view the success of the product in meeting customer needs, competition also grows. 

As a market becomes saturated with the availability of a high number of like products, a product enters the maturity phase.  In this stage of the PLC, companies face price pressures and begin to focus on cost-cutting.  Products with differentiation can maintain profit margins but, in general, the product faces commoditization. 

Finally, an organization must make the tough decision to abandon the product or reinvest.  This decision occurs in the decline phase of the PLC.  Competition actually dries up because profit margins are so low.  Unfortunately, paying customers also dry up. 

Your Product, Your Competition

Knowing where the product is at on the PLC is a starting point to analyzing its competitiveness.  You have to understand if the market presents an opportunity for growth in market share or in market penetration.  It is also crucial for firms to make the (sometimes unpleasant) decision to abandon a product when it is in decline. 

Analyzing the number and type of competitors (direct or indirect) can help organizational leaders make the best, most profitable decisions.  These decisions also must include alignment of new product innovation programs, business acquisition strategies, and overall growth goals and objectives.  Economic and regulatory factors, external to the firm, impact markets and innovation as well. 

Next Steps

Do you know your strategy to address competitive threats?  If not, learn to Analyze the Competition in a self-paced, online course.  Register here and earn 2PDUs. 

image of computer with key for competitive analysis

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