“I can’t understand why people are frightened of new ideas. I’m frightened of old ones.” – John Cage
We all want to be innovative – and we all know we need to be innovative to thrive.
But new product development can be risky and complex. Don’t worry, I have five best practices that will give you the confidence to proceed. Follow these tips, and you’ll spend less time banging your head against the wall, and more time being creative and visionary.
1. The Board and CEO commit to investing in New Product Development
I have heard all the excuses. “We don’t have time.” “Resources are better spent focusing only on our main product.” “We have tried new things, but nothing works.” While you need to keep some focus on your core business, that’s not an excuse to turn a blind eye to innovation. Boards and CEOs must stop focusing solely on short-term earnings and visualize the long-term to ultimately be more successful. Let’s face it: you won’t have a long-term if you choke off investment in NPD. The firm Change Logic understands this conundrum and developed frameworks for organizational change needed to both manage the core and innovate. In short, you need to become “ambidextrous.” Have two separate teams: one managing the core business and one the new business. It’s the CEO’s job to ensure coordination across the two groups.
2. NPD goals link back to an overarching strategy
The temptation may be to have a great, creative idea and just run with it. That’s better than doing nothing, I suppose, but aligning NPD efforts with strategy increases success. According to a study by Dr. Christopher Bart of the DeGroote School of Business in Ontario, Canada, there is a positive correlation between using a “product innovation charter” (a strategic mission statement for NPD) and success of new products. Keep efforts moving towards a big picture strategy – the specifics will morph based on marketplace feedback.
3. The team tracks progress toward a set of measurable goals
Set some targets from the beginning and measure movement toward them. With advances in technology, it’s possible to keep track of just about everything. Companies should set short and long-term goals for new products across key metrics, for example: revenue, profit, traffic, email sign-ups, new business conversion, renewal rate. Some leaders resist setting targets, because “they are often inaccurate.” I do agree that targets are often inaccurate, but the purpose is not to tell the future for the sake of telling the future. The purpose is to diagnose where things are working and where they aren’t. You need some stakes in the ground to measure progress.
Let’s say our goal is $1 million in revenue through 100,000 monthly visitors, 10,000 new email sign ups per month, and 1,000 new customers per month. If we don’t meet the $1 million revenue goal, we can look at which one of the three components was off to identify where to spend effort in the future.
4. The firm uses critical go/no-go decision points to reduce risk
The fancy term for a process with checkpoints is a “stage-gate process.” When we link to a strategy and have measurement mechanisms in place, we can make sure we place the right bets, at the right time, on the right initiatives. While it is essential that leadership fully commits capital to NPD projects, it is not essential that the company spends the money all at once. Investment should be made gradually as experiments yield favorable results.
5. Leadership injects marketplace feedback across the process
I cringe when people tell me they do not use consumer research because “Steve Jobs didn’t listen to the customer.” That’s simply not true. His vision may have come from within, but it was grounded in being empathetic with the reader/viewer and building products that they would want. The good news is you don’t need to be the creative genius that Steve Jobs was to understand what consumers want. There are proven quantitative and qualitative tools that can be used to solicit feedback during many stages throughout the product development process. It could be as simple as using the free version of Google Forms to survey your customers.
Following this advice with de-risk and “de-annoy” new product development efforts. Don’t be frightened of new ideas – embrace them!
