NPD process

Planning for New Product Development

Posted on 05.27.21

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: Brainstorming	30	$11,538
2: Concept Testing	40	$15,385
3: Business Case Development	90	$34,615
4: Prototype Testing	600	$230,769
5: Scale-Up	1350	$519,231
Total Estimated Cost	2110	$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.

Innovation Best Practice and NPDP Workshopstarting 2 June 2021 (online)
PDMA Process Workshop starting 17 June 2021 (online)
WAGILE Product Development Workshop 15 & 16 July 2021 (online)

A Division of Global NP Solutions, LLC

Study. Learn. Earn. Simple.

The Wagile Stages

Posted on 09.17.20

This week’s blog continues our series on the Wagile product development process. Wagile is a hybrid of traditional waterfall (“w-”) and Agile (-“agile”) systems. The Wagile philosophy is to move fast, practice discipline, understand risk, engage customers, and provide autonomy.

Traditional Stages and Gates

In a conventional new product development (NPD) process, stages are defined intervals where work gets done. Gates are used as decision points – does the project advance to the next stage of work? The advantage of a staged-and-gated framework for innovation projects is the discipline of a structured system. Risk is managed because the investment in R&D or technology development is low when uncertainty is high (e.g. early stages).

A common complaint of traditional NPD processes is that the system becomes overly bureaucratic. Many managers recognize the inherent risk of innovation projects. So, in the view of a risk-averse person or entity, knowing all the answers and planning for all contingencies upfront should eliminate risk. Yet, this behavior drives costs of investigation and evaluation up without learning from failure. Failure is perceived negatively.

Scrum Artifacts and Meetings

Scrum, the most common implementation of Agile, uses increments of work called “sprints”. Rather than defining specific task completions as in the traditional staged-and-gated framework, sprints are defined by time. A typical Sprint last two to four weeks.

The team works with the organization’s business analysts to determine what work tasks they can accomplish during each Sprint. The idea is to have a deep focus on the highest priority features first.

Risk is managed in Scrum by developing a minimally viable product (MVP). The advantages that cost should be low by designing highest priority features early and avoiding “gold-plating” of products and services. A challenge in Scrum is to define “done”, and my many features end up with gold-plating anyway.

Another difference between Wagile and Scrum is when the team cannot complete the agreed-upon tasks within the sprint. Activities then rollover to the next sprint, creating a backlog. Sprint backlogs impact the overall project schedule and can cause delays in market launch.

Wagile Stages

As we discussed in an earlier post, the Wagile gates are decision points in a project to move forward. The plan for the next stage of work is approved at the gate review. Stages of work in Wagile have two boundaries: task completion and risk. Schedule or project budget serves as a proxy for risk. A stage is complete when either (1) the tasks are finished or (2) the schedule/budget is consumed. Every stage has a set of required activities (standard) and a set of specific questions related to the individual project. The Wagile stages are:

Opportunity Identification,
Business Case,
Technology Development,
Scale-Up, and
Production.

Wagile Stage Activities

A key differentiator for Wagile versus other innovation processes is customer focus. Stage-Gate™ was designed by Bob Cooper to include customer feedback but does not explicitly call it out. Scrum uses the role of the Product Owner to represent the voice of customer. Unfortunately, the Product Owner often presses internal demands for features and technology rather than the external needs of a target market. In Wagile, each stage requires customer interaction via the Customer Representative role, tools, and tests.

For example, in Stage 1 (Opportunity Identification), activities include Create, Trial, and Validate. Both Trial and Validation require customer feedback. These activities cannot be completed (or measured) without external data. At Stage 1, however, these data are qualitative for the most part.

Similarly, subsequent Wagile stages include required customer feedback activities of concept testing, technical functionality testing, prototype testing, and market testing. Wagile stages are complete only when customer feedback is recorded. In the situation where schedule or budget (project risk elements) are depleted before customer feedback is gathered, the project is re-evaluated through the Product Portfolio Management system. Often, challenges in gathering customer feedback are symptoms of an unattractive project.

Using Wagile

Wagile stages, like conventional NPD process stages, are where work gets done. Unlike a traditional system, recycle of activities and iteration of the new product or service idea is encouraged. On the other hand, Wagile varies from Scrum (which also encourages utilizes iterative design) by installing hard barriers associated with customer feedback and risk.

Ask yourself if your NPD process is balancing discipline with flexibility. Are you getting the expected results within the desired time frame? If not, it’s probably time to revamp your process. Research shows that revitalizing your product innovation process with industry best practices leads to continued success. And if you don’t have consistent customer feedback, flexibility, and discipline built into your NPD process, it’s time to become Wagile! Join me on 11 November for a Wagile tutorial and right-size your product innovation workflows. Register here.

Learn More

Learn more about Wagile Product Development in my Webcast with PDMA on 10 September (register here). Contact me at [email protected] for a complimentary 30-minute innovation coaching session.

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About Me

I am inspired by writing, teaching, and speaking at great professional events. I tackle life with an infusion of rigor, zeal, and faith. It brings me joy to help you build innovation leaders. Teresa Jurgens-Kowal is an experienced innovation professional with a passion for lifelong learning with a PhD in Chemical Engineering and an MBA in Computer and Information Decision Making. My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator. Contact me at [email protected] or area code 281 + phone 787-3979 for more information on coaching for entrepreneurs and innovators.

A Division of Global NP Solutions, LLC

Study. Learn. Earn. Simple.

Product Development Fundamentals

Posted on 06.06.19

New product development (NPD) is a set of processes and systems that convert ideas into saleable products and services. Successful NPD means that those processes are simple, repeatable, and lead to profit. Nearly every organization – big or small – creates new products and services in order to stay competitive. But, to win the competition, the business must be successful at continuous NPD. As Peter Drucker said, “The best way to predict the future is to create it.”

Simple

NPD processes and systems must be simple to lead to repetitive success in innovation. As an engineer, I appreciate simplicity. The most elegant systems that humans have ever created are truly the least complicated. And as an engineer, I know that when a system breaks down, it is much quicker and easier to troubleshoot a simple system then a complex one.

Simple NPD processes include traditional staged-and-gated systems as well as emerging agile processes, like Scrum. A typical staged-and-gated system for innovation requires the NPD team to lay out goals and action plans for the next stage of work. A set of gatekeepers, will approve the course of work along with an appropriate budget and by assigning adequate resources. In this way, each stage of work is evaluated for risk and the gate reviews ensure progress on the project as the new product moves from idea to concept to prototype and, finally, to commercialization.

Scrum processes are also simple systems to develop new products. In this case, flexibility in design is valued and product specifications are varied to ensure customer satisfaction. Risk is managed via frequent customer feedback, and prototypes are created in parallel while the NPD team scopes the remainder of the project.

Repeatable

Regardless of whether an organization chooses to follow traditional staged-and-gated NPD systems or more flexible Scrum project management frameworks, innovation processes must be repeatable. Processes should repeatedly eliminate poor concepts early and rapidly advance the most promising ideas. Project advancement decisions are made on a consistent and predictable basis. As a result of repeatable innovation, investment in design and marketing is steady while new products grow in contribution to the overall product portfolio.

Profitability

I recently heard someone say that if you’re not making sales, you are just playing with a hobby. New product development must lead to business profits or the business will suffer. Of course, there is an expected time period in which the investment in design and development will exceed sales, but at some point, every successful product or service turns a profit.

As a kid, I really loved doing plastic canvas needlepoint. I made all kinds of cool items from coasters to tissue box covers and tic-tac-toe games. During the course of a summer, I completely saturated my mom, sisters, and grandmothers with my clever crafts. So, I put the rest up for sale at the shop of a family friend. After Christmas, half of my “wonderful” products came back to me. I made a teensy, tiny profit and learned the difference between a hobby and a business.

Fundamentals of Product Development

New product development requires three facets to be successful: simple processes, repeatable systems, and profitable endeavors. Without these three fundamentals an idea might be converted into a reality but not a commercial, saleable product.

To learn more about product development fundamentals, join our easy online course at www.simple-pdh.com. Learning about Product Development Fundamentals is the first step in your journey to becoming an innovation leader. Contact me for more information!

A Division of Global NP Solutions, LLC

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Innovation Ecosystem

Posted on 01.17.19

Innovation is hard work. While we often imagine a really clever guy in his garage creating the next big thing, reality teaches us that discipline is a far more important trait to successful innovation than is imagination. Discipline supports creativity and frames the context of an innovation ecosystem.

Key Components of Innovation

Innovation certainly requires discipline and creativity – as well as flexibility – for new product development (NPD) team members and leaders. An innovation ecosystem requires pertinent processes, tools, and metrics to lead to repeatable success. Some of these elements are:

A well-considered innovation strategy,
Product portfolio management and knowledge management,
An NPD process, and
Ongoing team and leadership training.

Let’s take a look at each element in turn.

Innovation Strategy

Every company, large or small, has a strategy. Usually, the strategy is documented and reviewed annually. A corporate strategy describes why the business exists and how it expects to accomplish its mission. An innovation strategy is a subset of the organizational mission and specifically describes the details of the new product development programs.

For instance, I worked with a company that wanted to be viewed as “Number One” in an organic food category. Their vision included customers choosing their brand over all other competitors because the food was healthy. The innovation strategy, therefore, built on the vision of delivering healthy products to the marketplace, yet also had to strike a balance between customer tastes, product features, and the labels of “healthy” and “organic”.

Thus, the innovation strategy breaks down the corporate strategy into specific goals and objectives for a new product development program. Healthy foods must be tasty and have textures and flavors that consumers enjoy. The innovation strategy includes, then, a focus on customer needs and definitions (what does “healthy” really mean?) and on technology development (can we manufacture a low-fat, high fiber product?).

Product Portfolio Management (PPM)

Product portfolio management (PPM) is the system to identify in which projects to invest. Knowledge management (KM) captures technical, product, and market data for future use. Both PPM and KM are critical to long-term success of an innovation ecosystem. Yet, historically, both PPM and KM fail in implementation.

PDMA studies show that only about half of companies have a well-functioning PPM process. This is a disappointing statistic since PPM is how we make decisions regarding which NPD projects to advance and which to halt. PPM provides an evaluation and comparison of all innovation projects based on competitive advantage, market attractiveness, technical feasibility, and profit potential. An effective innovation ecosystem uses PPM to guide data-driven project decisions.

Likewise, an effective knowledge management system captures the tacit knowledge of customers, subject matter experts, and key stakeholders and translates these disparate bits of information into explicit knowledge. It is inherently difficult to ask a customer what features they want in a new product, but KM allows us to save and share customer challenges, desires, and feelings about product usage. KM goes hand-in-hand with PPM by supporting clear definitions of customer needs.

NPD Process

Established NPD processes are also critical to an organization’s long-term success with repeatable innovation. An NPD process needs to be formal and structured with key steps, roles, and responsibilities determined in advance for all innovation projects. However, the specific NPD process deployed by a company should fit its culture, scale of operations, and degree of innovativeness sought. The standard NPD processes that my clients use include traditional staged-and-gated processes, Scrum, and hybrid processes.

A traditional staged-and-gated NPD process follows a linear pathway through a project. Designed by Robert G. Cooper in the late 20^th century, the NPD team will set project requirements early in the process and will build the product according to this pre-determined feature set. Cooper recommends – as do I – to continually test the product assumptions with a wide range of users throughout each stage of the NPD process.

A Scrum process follows the Agile philosophy by adapting the work in a short sprint (e.g. two to four weeks) to the highest priority feature or feature set. Customer involvement is intimate in a Scrum NPD process as the customer both sets sprint priorities and approves the incremental product output from each sprint.

Finally, hybrid NPD processes are becoming the norm in innovation as neither a traditional staged-and-gated process nor an agile/Scrum approach is ideal. Hybrid NPD processes support the innovation ecosystem through continuous communication with the customer while utilizing a formal requirements design and development methodology. Keep in mind that no NPD process is perfect, and an NPD process should be updated regularly to reflect organizational, market, and technology needs.

Team and Leadership Training

A successful ecosystem relies on a clear strategy and established practices and procedures (PPM, KM, and NPD processes). To make the cogs turn, however, people must be motivated and inspired to do creative work while at the same time understanding organizational boundaries and limits. Team and leadership training is the last, but perhaps most critical piece, of the innovation ecosystem puzzle.

NPD teams and innovation leaders benefit from New Product Development Professional (NPDP) and Best Practice Training. In these public or customized workshops, team members safely learn how to clearly identify the innovation strategy, implement PPM and KM, and streamline the NPD process. Moreover, teams learn the tools in market research to understand, test, and validate customer needs with concept tests, prototypes, and post-launch reviews.

Likewise, teams need to develop cross-functional and conflict management skills. These are learned and practiced through Situational Team Leadershipand Virtual Team Training. Virtual teams offer a huge advantage for innovators to tap into local market information while designing a product for global reach.

Finally, leaders need to approach innovation with flexibility, adaptability, and patience. Leaders should be trained in situational leadership, virtual team management, and change management in addition to understanding the overall NPDP best practices. Innovation leaders also need ongoing support since other the NPD function is often isolated from other business functions and requires special skills and business frameworks.

I recommend an ongoing sharing and exchange for innovation leaders with a trusted group of like-minded product management professionals. Having your own personal advisory board facilitated by an innovation expert can help you advance and accelerate your innovation ecosystem. Check out the Innovation Master Mind as a way to rapidly improve your innovation programs through industry collaboration and problem-solving. (Register here for a FREE pilot session of the Innovation Master Mind on 23 January 2019.)

A Successful Innovation Ecosystem

I am constantly reminded of the delicate balance in nature’s ecosystem. Rain, sunshine, and fertilizer allow plants to grow and thrive. An innovation ecosystem requires feeding and nourishment to also grow and thrive. Key elements of an innovation ecosystem are the innovation strategy, product portfolio and knowledge management, an established NPD process, and team and leadership skills development.

Innovation is fun and exciting! When we apply and formalize these elements in an innovation ecosystem, we realize both personal and professional success while delighting our customers.

Learn More

Feel free to contact me more information on customized NPDP training. I can be reached at [email protected] or 281-280-8717. I love helping individuals, teams, and organizations achieve their highest innovation goals!

A Division of Global NP Solutions, LLC

Study. Learn. Earn. Simple.