NEW PRODUCT/SERVICE DEVELOPMENT: Why New Product Initiatives Fail

If you attended my speech at a past IFAI EXPO business track on "Growing Your Business Through New Product Development" at the Orlando Convention Center, or not for that matter, consider this..

Only about 54%* of New Product Development (NPD) Initiatives and 65%* of New Product Launches actually succeed…

Conversely, why do so many fail? There are several reasons why an NPD initiative can fail, but in my experience, it all comes down to these 3 central reasons;

1. Voice of customer was not taken into consideration.
2. There was no process in place.
3. The business culture was not supportive.

Before beginning your NPD initiative, make sure that you;

(A) Get your staff or employees on the same page with regard to what you are trying to achieve with your new strategy

(B) Select the best New Product or Service Development process to use

(C) Embrace the voice of the customer in your innovation process

*Source: Booze-Allen & Hamilton

Brought to you by Dennis Paris of Tangerine Strategies, LLC.


Please share your experiences with dennisparis@tangerinestrategies.com

Before Investing In New Product Development

Make sure that your operation's capabilities meet or exceed the requirements of your new product development project BEFORE you make a major investment! Assess every requirement before investing in equipment, manpower or even 3rd party manufacturing resources including, but not limited to engineering, production, procurement, sales/marketing and customer services.

Recently, I listened to a horror story by an entrepreneur who took a new product concept to a manufacturing company that boasted a high level of engineering expertise. They reviewed the complexed product specifications and gave it a thumbs-up but missed one attribute of expertise that led to failure...precision.

After $400,000 was invested in new machinery and tooling, it was discovered that the level of precision necessary to convert the drawings into a properly functioning product, exceeded their engineering skill and equipment capabilities. Numerous production attempts consistently fell short of market worthiness and the investment was lost.

Determine if your new product development concept strategically fits your business or that of a 3rd party's manufacturing operation. Identify ALL of the requirements of your new product's attributes and then examine products with similar attributes that have successfully gone through the same engineering, design and manufacturing process. Leave no stone unturned.

Posted by Dennis Paris, Tangerine Strategies, dennisparis@tangerinestrategies.com

NEW PRODUCT DEVELOPMENT: Clearing Up The FUZZY Front End... The PIC Exercise

New Product Development “PIC” Exercise

Successful companies translate their corporate strategy into a strategic policy for common vision before initiating the NPD process.

(PIC) Product Innovation Chart:

A 1-2 page document that gets everyone in the organization on the same page (finance, sales, engineering, production, reception). The PIC includes, at a high level;

1. Back ground of product line
2. Customers
3. Market places
4. Core competencies
5. How to make and sustain product advantage
6. Product goals and objectives
7. Tactical approach to market place


The PIC accelerates critical discussions between Engineering and Marketing. It's not difficult to do and takes about 1-2 hours to complete. It is simplistic yet powerful!

Brought to you by Dennis Paris of Tangerine Strategies, LLC
Please share your experiences with dennisparis@tangerinestrategies.com

Business Strategy and Planning: What's at risk?

Businesses that operate solely on near term customer perspectives versus a forward looking, market based strategy, carry considerable risk to future growth, particularly due to the shifting economy, and changes in your market's value perceptions. Unlike in the past, current market instability requires more than relying on your sales rep "bagging" the next project, in effect, to save the day...or the next couple of months.

What amazes me is how often business owners and CEOs admit to not having a long or even a short term business plan. And of the business plans that do exist, many do not consider future growth scenarios and projections. They mostly emphasize the obvious, including near term sales projections and not much more.

A forward looking business plan and strategy is crucial to laying the foundation for perspectives and actions that lead to sustainability and future growth. Furthermore, a forward looking plan often results in near term incremental growth, mainly because of new actions taken to support your future plan. For example, product or service market repositioning and expansion, or something as innocuous as recharging your management and staff with a "believable vision" based on solid planning. Future growth planning also positively impacts near term profitability through a review of activity based costing, and the crafting of a new product or service commercialization plan, will typically generate "new" customer interest during market assessments that coincide with an appropriate process for the planning of your new products. Moreover, the surprise to many companies is that, this new customer interest develops around "existing products", as well as with your new impending products and services. In many ways, forward looking planning becomes a super food to the health of your business!

The bottom line is that now more than ever, business strategy, planning and of course execution are critical elements to your business' sustainability and future growth. End of story...Dropping the Microphone!

Dennis Paris

Innovation/New Product Development Case Study

One of Tangerine Strategies' case studies that has gotten quite a bit of attention is about a Military Contract Manufacturer that engaged our Innovation/New Product Development Services. What is striking about this case study is that, like so many small to mid-sized companies, attempts to develop and commercialize new products result in an extraordinarily high failure rate or, do not achieve expected returns on investment.

Ehmke Manufacturing Inc. did attempt twice to commercialize new products without a structured process and on the 3rd attempt, they engaged our expertise to install a custom process, coach the senior team, help U.S. Special Ops military personnel with transitioning to a product manager role, and then assist with all aspects of planning and commercialization. Since the writing of this case study, Ehmke has hired additional personnel to support this growing business unit.

Read more at:  Ehmke Manufacturing, Inc. Case Study

Visit Ehmke's new business unit on line to understand more about the product line addressed in the case study at:
http://www.highgroundgear.com/

Is Budgeting Destructive? - Real Life Example

Flashback:  You can sense the tension in the board room as 3 of my Product Marketing LOB (line of business) management peers enter the darkened board room, only lit by the presentation screen, filled with Executive VPs and the CEO. All 4 LOB managers must accomplish 3 things, 1) present YTD budget results, successes, failures, causes, lessons learned, impact on business and financials and 2) present the best way for the remainder of the year's budget to be applied so as to optimize business objectives and, 3) propose the next year's budget requirements for their respective LOB's with enough external market trend data, internal sales projections and financial sensibility to just hope, that they appear to know what they are talking about. One by one, we each present, 60 - 90 minutes in length during which time we receive, absorb, deflect or down right choke on questions dished by the corporate governing body. Questioning is aggressive in a "take no prisoners" style. The body heat in the room noticeably rises with each presentation. We all know what's on the line. Some of us will be winners and receive what we asked for. Others will be loosers and not receive even what was approved in the current year and someone could be (and one was) terminated for presenting flawed data. That's a 25% mortality rate, which is pretty high.


The fact is, that we (each of 4 LOB managers) logged in on average 50+% of our time for 2 - 3 months of preparation for this annual blood bath, and about 10% - 15% of each week (or approximately 240 hours) during the remainder of the year was dedicated to budget analysis and reporting. In fact, all of our year-long actions and programs were enabled solely by the budgeting and approval process. Performance against budget remained central to our individual reviews. Bonuses were measured against revenue and budget management. The thick of politics constantly revolved around the budget. It was a never ending cycle...

An Executive MBA graduate school professor asked a room full of experienced EMBAs, is budgeting bad for business?  The overwhelming answer...The typical budgeting process has been, and still is one of the most destructive processes within a corporation. Good opportunities are missed, destructive politics and the character of good people become questionable. It's bad but, it's a necessary evil.

Question: Is it a necessary evil? How can we make it less destructive?

Are Budgets Bad for Business?

Here's an oldie but a goodie... an opposite view of "Budgeting is good for business";

1. They control the wrong things and miss the right ones.

2. They erect walls.

3. They assume that everything is translatable to dollars, but just because a budget was not over spent, doesn't mean that it was well spent.

4. They create distorted behavior, managers do incredibly stupid things to make budget.

5. They do not measure value creation.

(source: “Why Budgets Are Bad for Business,” Fortune, June 4, 1990)

Manufacturing and the importance of innovation...

An article in the Autumn 2011 edition of Strategy and Business pointed out not only how important innovation is to the manufacturer itself, but to the U.S. economy. It stated that; In 2008, 67 percent of all private sector RnD was by manufacturing companies, according to the National Science Foundation. Innovation propels improvements in worker output, capital flow, usage of materials and energy among other components of productivity. Increased productivity leads to faster economic growth and higher standards of living. And from 2006 to 2008, 22 percent of U.S. manufacturing companies reported a new or significantly improved product, service or process, compared with only 8 percent of non-manufacturing companies. Trends of this nature are still relevant today.

From my vantage point as a market strategist and a new product development (NPD) process advisor, for a manufacturer that generates all of its revenue through custom contracts, very little investment is required to explore opportunities that leverage its future with either an improved production process or new commercialized product. A flexible NPD process offers a manufacturer the benefits of a "creeping commitment" and strong guidance to accumulate enough data to support the decision to take the leap!

Please share your thoughts with Dennis at dennisparis@tangerinestrategies.com

IFAI EXPO: Biz Track... New Product Development as Business HEDGE!

As I presented, at a past IFAI EXPO (Orlando Convention Center) business track on "Growing Your Business Through New Product Development"; While the authorities to be have announced that the recession had officially ended mid 2009, many businesses still struggle. Also consider that demographic data suggests that baby boomers have reached an age where total spending is on the verge of declining. This concept is shared by many renowned analysts, however an article by Thomas Corley on ezine articles titled "Amercas Shrinking Economy and The Demographic Shift Causing It" does a nice job of explaining it.

If your business depends on an economic recovery level prior to this recession, we may become seriously disappointed as the demographics continue to play out. The point is, this is a critical moment in time where businesses MUST plan for their future, and New Product Innovation and Development is one avenue to HEDGE the direction of the markets!