Does it seem like nothing new or bold has come out of your new product development pipeline lately? All that seems to emerge are “safe bets” and slam dunks. You know, incremental improvements you have high confidence the development team can design, the operational team can make, and the sales team can sell.
On the surface that seems like a sound approach to managing your NPD pipeline. After all what’s there not to like about developing products that we can make and sell? Absolutely nothing! This is the ultimate goal of a repeatable idea to launch framework (your NPD system).
The problem isn’t the goal but rather the reality of the competitive landscape.
The competitive landscape changes over time. What customers want today is not necessarily what they want tomorrow. This is especially true for high-tech and consumer products.
New innovations are constantly entering the market creating new capabilities that lead to new realities, which often means a whole new way for customers to get their jobs done more effectively. Just think about what happened to typewriter manufacturers when desktop publishing and laser printers hit the market.
People still had the same basic jobs to get done: communicate with people through the written word – but desktop publishing and laser printers provided a superior set of features and benefits that put the typewriter industry out of business.
If we stick to doing only what we think we can do, we may very well find ourselves obsolete and irrelevant in the not too distant future.
It’s a story that is told over and over again inside and outside of high-tech markets. No one is immune. (see my blog post on what business are you in.)
Why does this happen? In an attempt to eliminate product launch failures, many companies make the mistake of taking all risk out their new product development portfolios. Incremental improvements and line extensions are far easier to predict and execute than new-to-market products. But as we know from experience, a portfolio dominated by incremental improvements will eventually lead to stagnation and market decline.
Another reason incremental products dominate our new product development portfolio is that our NPD systems become too bureaucratic. An “end in itself” versus a “means to an end.” Our NPD approaches become etched in stone. We begin to have the same NPD conversations with the same people year after year, and falsely believe we are capturing the voice-of-customer. Or worse, we think we know the market so well; therefore, we think we know what people need, so we don’t even try to talk to real customers.
What can we do about it?
The first thing a company must do is recapture its entrepreneurial spirit.
The entrepreneur spirit is to think differently to see and create new possibilities and take action on these possibilities to create new realities.
It’s about questioning fundamental assumptions about how things work (e.g. what are the real jobs people are trying to get done). Then innovate and come up with better ways to solve people’s real jobs to be done, based on insights learned as we test our assumptions and present our value propositions to real people (early market customers and partners).
Secondly, we need to allocate time and resources for entrepreneurial activities to succeed.
This can be a real challenge for companies, especially smaller companies who are already trying to do too much with too few resources (see my article: got too many ideas …). But if innovation is a strategic priority, we must resource it and not short change it. No time for lip service – walk the talk and make innovation a strategic priority.
We also have to recognize that early stage innovation projects require a different product development approach than what is used for incremental and line extension projects.
Innovation projects require more experimentation and learning. And if it’s a new-to-market concept, this includes learning what customers really want, even when they can’t tell us. And learning how to communicate and deliver the customer value and get to profitability first, then scale. It’s more than building a widget – it’s more about creating customers and a repeatable and predictable sales process.
Incremental and line extensions have their place in product development portfolios.
Especially markets that are experiencing good growth. Not to exploit a market opportunity with platform strategies and line extensions is an execution failure. But if incremental projects are the only type of projects in your portfolio – it’s out of balance and will eventually result in me-too product doldrums and declining sales. Take heed of Theodore Levitt’s observation in Marketing Myopia: “Every major industry was once a growth industry.” There is no escaping this business reality.
Rekindle the entrepreneurial spirit and create a balanced risk/reward portfolio that will provide predictable growth and market leadership. Nothing great ever happens without taking on calculate risk.
Find your entrepreneurial spirit and out innovate your competitors – your customers will reward you handsomely!
Kevin