Technology Assessment International

If this is the first time your organization considers developing a new product, it is likely that design is getting the lion’s share of attention. But sooner or later, the entire organization will need to be involved. Here are a few tips to look at the process from a company wide perspective and increase your chances of success.

Select your Idea Carefully

Before you start, formally inventory your new product ideas and keep adding to the list. It will allow you to pick the best available idea. If you skip this step, the most recent idea or the easiest one to test is likely to be picked. It is no necessarily the best one.

Be Clear on your Goals

Ask yourself what you expect from new product development. Going down the value chain? Gaining a proprietary position for a product category? Expanding into a new market? Simplifying multiple custom versions of the same product? The answers will help you prioritize the ideas you documented.

Leverage your Strengths

What are your company’s strengths? You will be more successful if you use them. If you are really good a making white gizmos for market A, don’t start by developing red widgets for market B. Is your technical expertise in electronic devices? Don’t make your first product development a mechanical device.

Define your Market up Front

What is your market? Talk to your potential customers before you start developing. Don’t limit yourself to your best existing customer. But if their response is lukewarm, you should probably stop right there and work on something else. Lack of market research upfront is the most common cause of failed new product development.

Also, don’t assume that because you develop a product for one customer, you will be able to sell it “as is” in the general market. Most likely, this customer is the only significant market for this product. At best, you will have to remove “customer specific” idiosyncrasies from the design. This constitutes a second product development and should be treated as such.

Calculate your Expected ROI

How much money will you make? Do at least a “back of the envelop” calculation. How much will it cost to develop? Include labor costs, not just out of pocket costs. Then multiply by at least 2. If it is your first time and you have not been tracking how long it takes to develop a design, multiply by 4.

Now for the revenue estimate: how much would this be worth to a customer and how many customers are likely to buy? Should you really estimate a 30% market share if your current share is 0.00001%? What is your typical profit margin? If you get it, does the investment make sense? Note: resist the temptation to increase the margin or market share estimate to make a good story. They probably will not materialize.

Learn and Repeat

Document, document, document! This will allow you to learn how much it cost and how long it takes to research/develop/market/ pilot your future new products. Implement a New Product Development process to embed these good practices into your organization.

Give it your Best… but not your Best Engineer

Resist the temptation to give your best applications engineer dual responsibility for applications support and product development. Daily demands will always make him gravitate back towards applications support. Development will be delayed, costs will escalate and frustration will ensue all around. A minimalist structure that seems to work better is to have a less experienced engineer work exclusively on the new product under the leadership of the most accomplished applications engineer.

Final Advice

It is not easy reinventing the process of new product development on your own. If no one on your staff has this experience, consider hiring us to guide you through it with the implementation of a New Product Development process. The money you will save from doing it right the first time will more than pay for this service.