Transcript Slide 1

Winning at New Products
The Critical Success Factors That
Distinguish Best Performers
Michael J. Wiebe, P.Eng.
June 16th, 2005
Stage-Gate Inc.
Phone: 905-304-8797
www.stage-gate.com
 2000 – 2005
Fax: 905-304-8799
SG INNOVATION Program ™
Business Strategy
Product Innovation & Technology Strategy
PORTFOLIO MANAGEMENT
Portfolio Management Process
Discovery Portfolio
TD
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TD
S1
TD
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TD
S2
Technology
Intelligence
TD
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TD
S3
TD
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Technology Development
Process
Product
Life Cycle
Management
5-Stage Innovation Process
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Market
Intelligence
PLR Portfolio
NP Project Portfolio
S1
2
S2
3
XP
S2
XP
3
S3
4
XP
S3/4
S4
5
S5
XP
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XP
S5
3-Stage XPress Process
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Successful
Product
Launches
$$$
Post Launch
Review
Product Development: The Business
Challenge
 Best Practice Companies are achieving:
• 38% of sales revenues & 42.4% of their profits
come from new products
• Companies expect to increase rate of product
introductions by 21% over the next 5 years
• 79.5% of all products launched are commercially
successful
 Companies that are doing well today invariably have an
enviable stable of new products
 Innovativeness drives companies’ investment value
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Performance Results:
Percentage of Revenue & Profit from New Products
9.0% Bottom 20% of Businesses
The Average
27.5% Business
% of revenue coming from
New Products
38.0%
Top 20% of
Businesses
9.1%
% of profit coming from New
Products
28.4%
42.4%
0%
5%
10%
15%
20%
25%
30%
35%
Percentage of the Business’s Sales Revenues & Profits
Coming from New Products Launched in Last 3 Years
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40%
45%
50%
Some Bad News Too!
New Product Management is in Trouble
 44% of firms’ PD projects fail to meet profit
objectives1
 Only one in seven concepts is a winner
 Performance ratings1:
• 32% of businesses rate their NPD speed and efficiency
“very poor”
• Only 27% rate their NPD profitability relative-tospending as “high”
• 28% of businesses don’t even measure their NPD
performance results!
1. Source: APQC Benchmarking study, 2003
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Ten Critical Success Factors
that Decide New Product Success
Based on the APQC Benchmarking Studies and
NewProd™ Studies*
over 2500 New Product Launches in 500+ Firms
*Studies conducted by
Dr. Robert G. Cooper and Dr. Scott J. Edgett
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Critical Success Factors
1. A unique, superior product or service:
a differentiated product that delivers unique benefits and superior
value to the customer
• Understand your new product, your customers and your
competition in relation to the opportunity
2. A strong market and international orientation:
a market driven and customer focused process
• During idea generation, product design, development,
testing, and launch
3. Completion of the homework or ‘up-front’
activities: must be done before ‘Development’ gets underway
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Critical Success Factors
4. Sharp and early product definition is required prior
to Development:
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Target market definition
Product concept & benefits to be delivered
Positioning strategy (including price point)
Features, attributes, requirement & specs
5. The right organizational structure, design and
climate are keys to new product success:
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A true cross-functional team approach
A defined and accountable team leader
Team empowerment - no micro management
Encourage innovation and creativity
Do not punish failure – learn from the experience
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Critical Success Factors
6. A supportive climate & culture for innovation:
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Resources available for creative work
Risk averseness
NP ideas rewarded
Time off or scouting time
7. The actions and commitment of senior
management impacts NPD performance:
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Showing strong commitment to NPD in a variety of ways:
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Make NPD a part of annual performance objectives
Engage in the design of the company’s new product process
Empower project teams, and support committed them, but do not micro manage
Make available necessary resources & keep the commitment!
Be an active Gatekeeper who makes tough Go/Kill decisions
Keep score: Measure new product results each year
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Critical Success Factors
8. Creation of a “funnel” …. Not a “tunnel”
• Make tough ‘Go/Kill’ decisions
• Focus limited resources on the right projects
• Develop more rigor in selection – move to Portfolio
Management
• Use scorecards that discriminates winners from losers
9. Focus on consistency, completeness and quality of
execution for all deliverables:
• Ensure that deliverables meet quality expectations
• Lead by example – ask good questions and expect good
information
• Quality of execution is the key to success – its controllable!!
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Critical Success Factors
10. People! The resources must be in place:
• Best performers have more Sales, Marketing,
Manufacturing/Operations resources available
• Ensure that committed resources are available to perform
the required activities
• Urgent things – operations – often take precedence over
future-oriented projects
• Leaders must lead by example and stay committed to
resource allocations
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One More Critical Success Factor
Companies that implement a Best-in-Class
Stage-Gate® Process from idea-to-launch…
Get impressive results:
 Fewer errors & less recycling
 Shorter times to market (by about 30%)
 Better cross-functional communication & cooperation
 Earlier detection of failures & higher success rates
 More projects on time & on budget
 Better launch & higher customer satisfaction
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Leading Firms Have Adopted Stage-Gate® Methods:
Nearly 73.7% of N.A. Industry Uses Some form of Stage-Gate® –
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Some Examples from Best Practice firms
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Exxon Mobil Chemicals:
• “This process, a company-wide stage-gate framework, has become institutionalized and
is ingrained in the language and culture of the company”
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Kraft Foods:
• “Kraft’s formal NPD process emphasizes front-end, pre-development activities. These
up-front activities typically involve extensive use of both external and internal consumer
data”
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Bausch & Lomb:
• “B&L’s new product development process, called the product development
management process (PDMP) is simple, easy to follow, and built on internal and
external successes and best practices. The NPD team has built a process with
stages/phases and gates that is practical, but not restrictive”

Exfo Engineering (winner of PDMA Outstanding Corporate Innovator Award 2000):
• “EXFO believes its product development, or stage gate process, to be its second best
practice. EXFO implemented a stage gate process when the organization became ISO
certified in 1994”
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Air Products (Chemicals):
• Best Practice: “An integrated work process for technology innovation involves
integration along two axes: business and technology and development pipeline”
Quoted from: APQC
Benchmarking study, 2003
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References – Books:
1. Best Practices in Product Innovation:What Distinguishes Top Performers, March
2003. Reports the results of the latest and definitive benchmarking study, done
thru APQC, Houston.
2. Winning at New Products: Accelerating the Process from Idea to Launch, 3rd
edition, 2001, by RG Cooper (Perseus Books, Reading, Mass), paperback, 425
pages. The classic best seller – 3rd edition. Provides an overview of the critical
success factors in product development, and outlines the Stage-Gate® process
3. Portfolio Management for New Products, 2nd edition, 2002 (new!) by Cooper,
Edgett & Kleinschmidt, (Perseus Books, Reading, Mass) hardcover. Provides a
look at the best portfolio methods, results achieved, and their use in industry.
4. Product Leadership: Pathways to Profitable Innovation, 2nd edition (Perseus
Books, Reading, Mass) by RG Cooper … hardcover 2005. Aimed at the senior
executive. Provides an overview of Stage-Gate®, portfolio management, and
developing a product innovation and technology strategy.
5. Product Development for the Service Sector, by Cooper & Edgett (Perseus
Books, Reading, Mass) 1999. Success factors and Stage-Gate® for service
industries
Order on line for next day shipments: www.prod-dev.com
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Articles:
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2.
3.
4.
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12.
R.G. Cooper, “Benchmarking new product performance: results of the best practices study”, European
Management Journal, 16, 1, 1998, pp 1-7.
R.G. Cooper, “The invisible success factors in product innovation,” Journal of Product Innovation
Management, 16,2, April 1999, pp 115-133
R.G. Cooper, “New product leadership; building in the success factors,” New product Development &
innovation Management, 1,2, 199, pp 125-140.
R.G. Cooper, “New Product Development”, chapter in: International Encyclopedia of Business &
management: Encyclopedia of Marketing, First Edition, edited by Michael J.Baker, International Thomson
Business Press, London, UK, 1999, pp 342-355.
R.G. Cooper, contribution to “Succeeding in Technological Innovation” series: “Product Innovation and
Technology Strategy”, Research-Technology Management, 43, 1, Jan-Feb. 2000, pp 28-44.
R.G. Cooper, “Doing it right -winning with new products, “Ivey Business Journal, July-August 2000, 4, pp
54-60.
R.G. Cooper, Edgett, S.J., & Kleinschmidt E.J., “Best practices for managing R&D portfolios”, ResearchTechnology Management, 41, 4, July-Aug.. 1998, pp 20-33.
R.G. Cooper, S.J. Edgett & E.J. Kleinschmidt, “New product portfolio management: practices and
performance”, Journal of Product Innovation Management, 16,4, July 1999, pp 333-351(winner of T.P. Hustad
Best Paper award, 2000).
R.G. Cooper, S.J. Edgett & E.J. Kleinschmidt, “New problems, new solutions: making portfolio management
more effective”, Research-Technology Management, 2000, 43,2, pp 18-33.
R.G. Cooper, S.J. Edgett & E.J. Kleinschmidt, “Optimizing the Stage-Gate® Process: What Best Practice
Companies Are Doing – Part I”, Research-Technology Management 45, 5, Sept-Oct 2002, 21-27.
R.G. Cooper, S.J. Edgett & E.J. Kleinschmidt, “Optimizing the Stage-Gate® Process: What Best Practice
Companies Are Doing – Part II”, Research-Technology Management 45, 6, Nov-Dec 2002.
R.G. Cooper and S.J. Edgett, “Overcoming the crunch in resources for new product development,”
Research-Technology Management, 46, 3, May-June 2003, 48-58.
Also, see selected articles on line (no charge) at www.prod-dev.com
Order APQC definitive benchmarking report on line (same address): Best Practices in Product Development: What
Distinguishes Top Performers, Apr 2003.
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