Getting your concept quickly into market to gain real insights is more effective than becoming stuck in expensive, time consuming, traditional new product development cycles: it’s all about pace, advises Entrepreneurs Panel member, Adrian Thompson.
I’m always surprised by the number of businesses who assume their new products will be a success, no matter what their or the industry’s track record is.
But you have a choice when it comes to new product development (NPD). Spending vast amounts of time and money perfecting an all-singing, all-dancing beast that may end up sitting idly on the shelf. Or, to get a viable new product concept to market, in the minimum time, with the minimum investment.
By blindly following a typical NPD process, you are making a significant financial bet on creating a golden arrow to hit the bullseye first time.
However, if it misses – which, lets face it, statistically most do – the cost of failure is multiplied, and you now have an even bigger challenge to deal with. Losing sight of what the customer wants, and becoming internally focused on project delivery, all too often leads to failure.
It’s only when you are actually in front of a customer trying to sell your new product do you know if you have success. From my experience, this is the first real stage of the NPD cycle.
Getting trapped in the NPD cycle
Let’s break down a traditional NPD cycle.
In your NPD meeting, the team has a “eureka” moment and creates the seed of a new product idea. Then someone is tasked with coming up with the outline concept for the next meeting. As the brief develops, more individuals get involved. You start to see the project creep as the product becomes complicated by additional features that drive the price up. It starts to grow legs – and starts to run away from you.
You go through a lengthy market research process, the cumbersome five-gate NPD procedure, forecasting models for capital approvals – the works. Every effort is made to finesse the final design to get the product beautifully correct.
Then you’ve still got to get it to market. So you put more into marketing, inventory and sales even before the idea is proven, no matter how brilliant your research.
Don’t get me wrong. A process is necessary, but the trick is not to let it take over the innovative, entrepreneurial drive.
If the process isn’t managed at pace with an absolute focus on the customer benefit, you risk a perfect storm of time, process delays and cost.
So many new product launches aren’t successful because they go off script and take too long, with a resulting high cost of failure. Remember the mantra – there’s no guarantee of success until you actually get an order!
Taking NPD down the MVP route
Here’s the alternative:
- Get the new product concept nailed down and agreed in 48 hours from the initial lightbulb moment. Maintain the clarity of the idea, momentum and energy.
- Make sure the outline brief only focuses on the core customer USP’s.
- Resist adding those extra ‘nice to have’ features.
- Follow the process – but at a set pace.
This is known most commonly in the start-up world as your Minimum Viable Product (MVP). It reduces the cost of failure through a minimum investment in stock and marketing collateral. This gives you room to improve the product quickly once it’s in market, based on real customer feedback gained in the heat of battle.
Going back to the archery analogy: don’t aim for perfection. Work on the principle that your first concept is the arrow that at least hits the target. Then you can keep evolving quickly until you hit the bullseye. If you miss, kill it, learn and move forward. Most importantly, no one gets hurt.
You just need to get in there so you can start playing the game. It’s only then you’ll find out if you’ve got a winner, or where the flaws are.
Innovation can mean different things to different people
An important lesson about NPD I’ve learnt is understanding what your customers mean by innovation, and where their comfort boundaries lie.
In my industry, the customer is distributors, who supply specialist engineers. Distributors are always looking to drive sales through innovation, and increase their potential market size or drive up purchase value. They align with innovative suppliers who can grow their bottom line through new products or market opportunities.
However, it’s a double-edged sword with a high risk if it goes wrong. If a new product fails, they must deal with dissatisfied customers and stock stuck on the shelf.
So whilst distributors need innovative suppliers, they actually dislike blue sky innovation as it’s prone to higher risk. They are naturally conservative and want manufacturers to manage risk for them.
What they really want is a linear progression of products. Our role, then, is to add value by continuous innovation, driving the category value through adding installer benefits.
You can move a product up in price scale through gradual evolving innovation, so the wholesaler sees a better version of what they had before. It gives them the comfort of something new, that is intrinsically familiar. For example, our market leading pump, the Mini Orange, launched in the early 1980s, and is now on its 17th iteration.
Taking customers on a journey
Businesses often fail in their NPD programmes by seeking step change innovation, without realising that’s not what the customer wants. They go ahead by replacing an established product with the next generation before having gained market acceptance.
Market disruption through revolutionary innovation does work – there are many examples in the technology arena. But you need to fully understand the customer’s needs.
We don’t all have the brand power of Apple or Microsoft. A safer approach of “familial evolution” enables businesses to get things spectacularly right by taking customers on a journey.
As an example, at Aspen Pumps, we were a long way behind the market leader in one product category. We had not given this area much focus due to the crowded nature of the market space. We reviewed the product’s total life cycle, identifying where the air conditioning engineer was frustrated with the current offerings. The “a-ha” moment was around reducing installation time, and making it easier for the engineer to service in a limited working space.
Within eight weeks, we had production standard prototypes of the new pump ready for a major exhibition. We presented it, pushing for orders and future commitments, using just one leaflet as marketing material. We took feedback on board and made major improvements for our next iteration.
From this, we generated a 20% improvement in market share within the first 12 months. We secured invaluable customer feedback before we had even invested in manufacturing, stock or serious marketing.
The role of market research in NPD
Market research is incredibly important in private equity for due diligence on companies to understand the market structure and where a business is positioned. I get all that.
But when it comes to identifying product gaps, I’ve spent a lot of time and money on market research, without unearthing any clear opportunities. I find it points you in the direction of your competitors’ products, and you fall into the dangerous trap of creating a ‘me-too’ strategy.
Innovative, fast-growth companies don’t rely on focus groups and expensive, time-consuming market research. They intrinsically know their market, their customers and their needs. They get on with meeting those needs through delivering new products and services. Through these, they develop and define the future direction of the market.
Get NPD right for fast growth
Growing fast means getting to market swiftly with a product, rather than spending years in research and development. This gives a business more “time at the crease” to learn and improve on a real product, rather than one that spends too long on the drawing board.
Any process that shortens the time and cost it takes to get a new product in front of customers is a massive commercial benefit. It can transform the business innovation process and success rate.
By learning from experience, you can keep your customer needs at the centre of your business, building an entrepreneurial, pioneering culture set up for fast-paced growth.
