Technology Assessment International

Implementing a NPD process with stages can turn New Product Development into an efficient profit generator by reducing risk and increasing and speeding up revenue. New Product Development involves selecting, designing and producing/procuring the product, marketing it, selling it and servicing it and perhaps more... By organizing all these activities, our NPD process eliminates chaos and speeds up revenue generation.

Mitigating the Risk

Using stages in a NPD process is also about mitigating the risk associated with developing new products. Risk can be reduced by investing resources to acquire knowledge about the product, its core technology and its potential market. Our NPD process breaks up this investment into stages separated by gates. At each gate, the organization decides whether to continue investing based on the information acquired during the last stage. Unrewarding projects are interrupted as early as possible, reducing waste and increasing average revenue per dollar spent.

Stages and Checkpoints

The NPD process with stages is an adaptable concept which can look different from one organization to the next. Its core features are:
•    Stages with checkpoints
•    Participation of all functions at all stages
•    Business justification of projects at an early stage, before most of their development cost is incurred
•    Clear and published criteria for investment

Stage 1: Idea Screening

This stage includes:
•    Generating and documenting new product ideas
•    Prioritizing ideas for screening according to general criteria
•    Screening ideas to proceed to the next stage

A system for capturing ideas is required, but it can be as simple as an Excel spreadsheet or as complicated as a Software package designed for just this purpose. Prioritizing ideas requires developing criteria consistent with the company’s growth strategy.

Often, ideas can be discarded with just a few hours of work: a lab test, a patent or online product search, or a quick estimate of potential market and revenue. Ideas that fit the criteria and cannot be eliminated by this process can proceed to Stage 2.

Stage 2: Proof of Concept

The idea might involve using a technology that is new to the company but could be applied in many products (a new class of chemicals, egg white to replace whole eggs in prepared foods…). Before designing the intended product, the company would need to verify that the concept is useable. This would be done in the proof of concept stage.

The proof of concept should also be a proof of Market concept or Manufacturing concept. A company that manufactures expensive custom equipment would want to consider what it would take to market inexpensive standard versions of what they normally produce. In this case, the risk is in Sales and Marketing and should be the subject of the proof of concept.

Finally, this is where the financial proof of concept or Business Justification is conducted. The ROI of this product development is estimated. This activity gives its conventional name to this stage: “Business Justification” but we prefer to call it “Proof of Concept” to describe its complete scope.

If the idea is for a product like the company’s other products and for the same market, this stage can be limited to the Business Justification.

Stage 3: Product Development

In this stage, specifications are defined and a design and prototype are developed. Preparatory activities in the other functions also occur.

Stage 4: Beta Testing

In this stage, concept meets reality. The prototype is tested by the first customer. The feedback is incorporated in the final design. Preparations for product launch take place in all functions.

Stage 5: Commercialization

This phase can and should last much past the product launch. Launching a product involves announcing to the market that the product is available. Only companies with powerful brands (Apple?) might get away with stopping at that to insure the success of their product.

For the rest of us, continued nurturing past product launch is required to get the market to adopt the new product. Failing to do so is one of the top 5 causes of disappointing revenue from new products, in our experience.

Conclusion

Implementation of aNPD process with stages has helped businesses focus their New Product investment on the most potentially rewarding projects. It has shortened the time between idea and revenue by orchestrating the complex set of activities required for the commercial success of new products. Finally, it has raised the average return by canceling projects as soon as their failure can be predicted.