Transcript Insert Presentation Title Presenter Name Date www.stage

READY, FIRE… AIM:
BALANCING SPEED AND
ACCURACY IN NEW
PRODUCT DEVELOPMENT
Meg Sheehan
Principal, Global Solutions
June 23, 2009
www.stage-gate.com
© 2000-2009 Stage-Gate International
Stage-Gate® is a registered trademark. Logo for Product Development Institute Inc. used under license by Stage-Gate International.
Logo for Stage-Gate used under license where appropriate.
The Innovation Diamond™ and Winning at Product Innovation™ are trademarks of Stage-Gate International.
Key Discussion Points

How to improve “speed to market”

But, speed isn’t everything

How do you bring focus to your
product development efforts
© 2000-2009 Stage-Gate International
Stage-Gate International

Founded by Dr. Bob Cooper and Dr. Scott
Edgett, creators of Stage-Gate®

25+ years of highly-recognized research
and implementation experience

Focused exclusively on product innovation

World’s top provider of research-based
solutions to improve innovation performance

Maximum-value portfolio of consulting
expertise and “accelerator” products
© 2000-2009 Stage-Gate International
New Product Development Research
Based on the NewProd Studies
and APQC Benchmarking Studies
of almost 2000 new product
launches in 500+ firms*
*Studies conducted by Robert G. Cooper, Scott J. Edgett
Ten Critical Success Drivers that separate the winners from the losers
The Innovation Diamond
© 2000-2009 Stage-Gate International
The Innovation Diamond
And the
Four Points of
Performance
Climate, culture,
teams &
leadership
Product Innovation
& Technology
Strategy for the
Business
Business’s new
product
performance
Resources:
Commitment
& Portfolio
Management
Idea-to-Launch
System:
Stage-Gate®
Stage-Gate® is a trademark of
Product Development Institute Inc.
© 2000-2009 Stage-Gate International
The Innovation Diamond
And the
Four Points of
Performance
Climate, culture,
teams &
leadership
Product Innovation
& Technology
Strategy for the
Business
Business’s new
product
performance
Resources:
Commitment
& Portfolio
Management
Idea-to-Launch
System:
Stage-Gate®
Stage-Gate® is a trademark of
Product Development Institute Inc.
© 2000-2009 Stage-Gate International
The Four Drivers of Performance:
#1: Climate, culture and leadership

The right climate and environment for
innovation:
♦
Senior managers in top performing businesses
create a positive climate and culture for
innovation and entrepreneurship
♦ They foster effective cross-functional NPD
teams
♦ And are properly engaged in the NPD
decision-making process
© 2000-2009 Stage-Gate International
The Four Drivers of Performance:
#2 The Stage-Gate® Process

Stage-Gate is the world’s most widely cited, peer reviewed and
implemented New Product Development process
♦
♦
♦
♦
PDMA Best Practices Report, 1997: “68% of organizations participating in this study
use a Stage-Gate system”
AMR Research, 2005: “71% of organizations surveyed confirmed use of the StageGate process; 85% for organizations with 5,000+ employees”
Booz-Allen Hamilton study/report: “100% of the Global 1000 Innovators use a
disciplined Stage-Gate process”
Stage-Gate has gone through 20+ years of evolution & refinement

A disciplined decision-making framework to drive product success

Defined, cross-functional contribution from teams and executives
from Idea through to Launch, at the right pace and level of detail

A risk management model outlining the right information at the right
time for objective evaluation and alignment

An investment management model with tough Go/Kill decisions
© 2000-2009 Stage-Gate International
Ten Critical Success Factors for
Winning
A unique & superior product
2. Strong market orientation throughout
3. More up-front research
4. Sharp & early product definition before
development
5. The right organizational structure - Teamwork
6. An innovative & supportive environment
7. Leadership support
8. Creating a funnel not a tunnel
9. Managing product development as a process
10. Sufficient resources for product development
1.
9
© 2000-2009 Stage-Gate International
Critical Success Driver #3
More pre-development work – the homework or ‘upfront’ activities – must be done before ‘Development’
gets underway




The steps that precede Development – screening, market studies,
tech feasibility, build business case – are critical to success
New product failures are most often the result of weaknesses in
the ‘up-front’ activities – errors of omission or commission
But little time and effort are spent here: 7% of money and 16% of
effort (Japanese and highly successful US firms spend
considerably more here)
Homework answers key questions before Development begins:
♦
♦
♦
Is the project economically attractive?
Who is the target customer? What positioning?
What should the product be – features, attributes, performance – to
make it a winner?
♦ Can it be developed? At the right cost? How?
© 2000-2009 Stage-Gate International
Does More Homework Mean
Longer Times to Market?
NO!
1.
2.
3.
More time and money spent up-front greatly improves
the odds of success – there is clear evidence for this!
More homework results in better and sharper product
and project definition – this speeds up the Development
phase (less recycling and wasted time)
Homework done up-front anticipates product problems
and design changes – these product design changes are
made early in the game (rather than as the product is
going to market)
The message is:
“Do It Right the First Time” – DIRTFooT
© 2000-2009 Stage-Gate International
Critical Success Driver #4
Sharp and early product and project definition (before
Development) separates winners from losers


Consistently cited as a key to success in success/ failure studies
This definition includes:
1.
2.
3.
4.
5.

Project scope
Target market definition
Product concept & benefits to be delivered: value proposition
Positioning strategy (including price point)
Features, attributes, requirement & specs
Why so critical?
♦
♦
♦
Forces homework to be done up-front (Success Driver #3)
Communication tool & commitment between functions
Provides clear targets for Development – the ‘goal posts’
are defined
© 2000-2009 Stage-Gate International
Impact of Sharp, Stable Product Definition
15.4%
Benefits to be delivered
clearly defined
37.1%
65.5%
19.2%
Well defined target market
40.0%
58.6%
23.1%
Defined positioning
strategy vs. competitors
36.5%
65.5%
15.4%
Defined product concept what product will be & do
30.5%
51.7%
15.4%
Stable product definition
Worst Performers
30.0%
Average Business
48.3%
Best Performers
46.2%
48.6%
Defined requirements,
features, specs
65.5%
15.4%
Contract between project
team & management
30.8%
44.8%
0%
10%
20%
30%
40%
50%
60%
70%
Percent of Businesses That Have a Good Product Definition Before Development Stage Begins
© 2000-2009 Stage-Gate International
80%
The Innovation Diamond
And the
Four Points of
Performance
Climate, culture,
teams &
leadership
Product Innovation
& Technology
Strategy for the
Business
Business’s new
product
performance
Resources:
Commitment
& Portfolio
Management
Idea-to-Launch
System:
Stage-Gate®
Stage-Gate® is a trademark of
Product Development Institute Inc.
© 2000-2009 Stage-Gate International
The Four Drivers of Performance:
#3: Strategy

Top performers put a product innovation and
technology strategy in place
♦



Different than business strategy
Driven by the leadership team and the strategic
vision of the business
This product innovation strategy guides the
business’s NPD direction
And helps to steer resource allocation & project
selection
Defines the role that new products and
technologies will play in achieving the
business’ overall goals, and what “arenas” or
battlefields will be entered as a result.
© 2000-2009 Stage-Gate International
Why Bother With NPD Strategy?
“I find the great thing in this world is not so much where we
stand, as in which direction we are moving: To reach the
port of heaven, we must sail sometimes with the wind and
sometimes against it but we must sail, and not drift, and not
lie at anchor.”
Oliver Wendell Holmes, The Autocrat of the Breakfast Table, 1858.
“Plans are nothing. Planning is everything.”
Dwight D. Eisenhower, US General and Supreme Allied
Commander at D-Day
“In the absence of a clear strategy, what you are working on is
your strategy.”
Me
© 2000-2009 Stage-Gate International
The Importance of a New Product Strategy
for Your Business
Businesses that are most likely
to succeed at new products are
those1...
♦ that implement a companyspecific new product ideato-launch process
♦ driven by business
objectives & strategies
♦ with a well-defined new
product strategy at its core
Our benchmarking studies
reveal that2...
♦ having an articulated new
product strategy for the
business is one of the four
most important drivers of
NP performance
The need for an articulated product innovation strategy is clear
But how well-defined is the innovation strategy for your business?
1 Source: Booz-Allen & Hamilton
2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study
© 2000-2009 Stage-Gate International
A Product Innovation Strategy to Guide the NPD Effort
34.6%
38.1%
Clearly defined NPD
goals
51.7%
30.8%
46.3%
Role in Business goals
58.6%
23.1%
Long term commitment
38.1%
58.6%
53.8%
64.8%
69.0%
Strategic arenas defined
15.4%
Strategic buckets
26.9%
41.4%
Worst Performers
Average Business
19.2%
27.6%
Product roadmap in place
Best Performers
37.9%
10%
20%
30%
40%
50%
60%
70%
Percentage of Businesses
Best performers articulate a product innovation strategy
© 2000-2009 Stage-Gate International
80%
What Is a Product Innovation
Strategy?
1.
2.
3.
The goals for your business’s total product development efforts
The role of product development: how new products tie into
your business's overall goals
Arenas of strategic focus – the battlefields
Attack plans – how you plan to win here
♦
♦
4.
Strategic stance or approach
Entry strategy (for new arenas)
Resource Commitment & Strategic Portfolio Decisions
♦
♦
♦
Deployment
Strategic buckets
Strategic product roadmap
More than high level goals and a list of development projects!
© 2000-2009 Stage-Gate International
The Four Drivers of Performance:
#4 Portfolio Management

Resource investment and focusing on the
right projects – portfolio management:
♦
♦
Top performers commit sufficient resources to
effectively undertake their new product projects
And they boast an effective portfolio
management system that helps the leadership
team effectively allocate these resources
-

To the right areas
To the right projects
Portfolio Management: How you
operationalize your strategy
© 2000-2009 Stage-Gate International
Some food for thought …
“You gotta know when to hold ‘em.
Know when to fold ‘em.
Know when to walk away.
Know when to run.”
Kenny Rogers, The Gambler
“Take calculated risks. That is quite different from
being rash.”
George S. Patton, U.S. General
© 2000-2009 Stage-Gate International
Portfolio Management Is Fundamental
To Successful Product Development

How should you invest your R&D
or Development funds & people?

What is your investment portfolio?

Portfolio Management:

Technology Impact to Business
HIGH
LOW
♦
Is about resource allocation
♦
Which Development projects should the business resource from
among many opportunities (Go/Kill)?
♦
The relative prioritization of these (e.g., accelerated development;
Go vs. Hold for now)
LOW
Likelihood of Commercialization
Within Next 5 Years
PM is how you put into practice your Business Strategy
Strategy becomes real when you start spending money!
© 2000-2009 Stage-Gate International
HIGH
Why Portfolio Management Is Vital

Eight key reasons why portfolio management is fundamental to
innovation success:
1.
2.
3.
4.
5.
6.
7.
8.
Financial – to maximize return
To maintain competitive position
To properly allocate scarce resources
To forge link between project selection & business strategy
For focus
For balance
To communicate priorities
To provide objectivity in project selection
Top performers emphasize the link between
project selection & business strategy
© 2000-2009 Stage-Gate International
Portfolio Management:
A Major Problem Area

Portfolio Management is typically poorly handled:
♦
Rated as weakest area in new product management in recent
benchmarking study*
♦ Management confessed to...
- No serious Go/Kill decision points
- No criteria for making the Go/Kill decision
♦
The result: a tunnel, not a funnel
- Also indicated poor project prioritization
♦

Too many projects for limited resources available
Major business challenge
♦
Many different approaches
♦ No easy answers
♦ A problem many companies are addressing
Vital for success – but no quick fixes
© 2000-2009 Stage-Gate International
* Source: Cooper/Kleinschmidt
Breakdown of Projects By Project
Worst
Performers
Average
Business
Best
Performers
Promotional Developments & Package
Changes
12%
10%
6%
Incremental Product Improvements &
Changes
40%
33%
28%
Major Product Revisions
19%
22%
25%
New To The Business Products
20%
24%
24%
7%
10%
16%
~45%
~55%
~65%
New To The World Products
10 Point Steps
Best Performers focus more on innovative & game-changing projects
© 2000-2009 Stage-Gate International
Some More Provocative Facts





Portfolio has excellent balance in
project types
Not only are portfolios
unbalanced
Portfolios contain too many low Portfolio contains high value-to-thevalue-to-the-company projects
business projects
And far too many projects for
the limited resources available
Good job of ranking/prioritizing projects
A small minority of businesses
have a systematic & formal
portfolio management process Good balance between number of
projects & resources
in place
But hi-productivity businesses
Formal & systematic portfolio
suffer much less from these
management process in place
deficiencies
0.0%
19.4%
31.0%
0.0%
21.2%
37.9%
12.0%
25.0%
41.4%
4.0%
24.0%
37.9%
3.8%
21.2%
31.0%
0%
10%
20%
30%
Percentage of Businesses
Worst Performing Businesses
© 2000-2009 Stage-Gate International
Average Business
Best Performing Businesses
40%
50%
Five Goals in Portfolio Management
1.
To allocate resources so as to maximize the value of the portfolio
♦
Against some company goal
- Long term profitability; or return-on-investment
2.
To achieve a desired balance of projects
♦
Between long term and short, fast ones
♦ Between high risk and low risk
♦ Across different project types & market sectors
3.
To link the new product effort to the Business Strategy
Ensuring that projects are ‘on strategy’
♦ That spending reflects the strategic priorities of the Business
♦ That the business’s strategy will be realized thru the list of active
projects
♦
© 2000-2009 Stage-Gate International
Five Goals in Portfolio
Management (continued)
4.
To obtain the right number of
projects
♦
♦
5.
Sufficiency: ensuring that
projects will enable business to
reach its NPD goals
♦
© 2000-2009 Stage-Gate International
Balancing resource demands
with resource availability
Not overloading the pipeline
with too many projects
Question: If we do these
projects, will we achieve our
Sales (or Profit) goals for NPD
for the next few years?
Balancing Speed
and Accuracy in NPD
Focus on the
Four Points of
Performance
Climate, culture,
teams &
leadership
Product Innovation
& Technology
Strategy for the
Business
Business’s new
product
performance
Idea-to-Launch
System:
Stage-Gate®
© 2000-2009 Stage-Gate International
Resources:
Commitment
& Portfolio
Management
Stage-Gate® is a trademark of
Product Development Institute Inc.
Thank You
Meg Sheehan
Principal, Global Solutions
[email protected]
+1-905-304-8797
www.stage-gate.com
© 2000-2009 Stage-Gate International