{"id":3846,"date":"2018-03-18T13:19:26","date_gmt":"2018-03-18T03:19:26","guid":{"rendered":"https:\/\/prodex.com.au\/?p=3846"},"modified":"2020-09-20T19:37:48","modified_gmt":"2020-09-20T09:37:48","slug":"innovation-and-new-product-development-npd-qa-with-bob-cooper","status":"publish","type":"post","link":"https:\/\/prodex.com.au\/th\/innovation-and-new-product-development-npd-qa-with-bob-cooper\/","title":{"rendered":"Innovation and New Product Development (NPD) Q&A with Bob Cooper"},"content":{"rendered":"

During a recent webinar titled The Five Most Important Drivers of Success in Product Innovation<\/a> \u2013 That Most People Get Wrong! with Dr. Robert Cooper, President of the Product Development Institute Inc., he fielded a number of audience questions. Bob is also the creator of the Stage-Gate\u00ae system, the widely used innovation and new product development process and methodology used by leading organizations around the world to drive new products to market. Based on his broad and deep knowledge, here are his answers to a number of the audience questions:<\/em><\/p>\n

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AUDIENCE: <\/strong>For the metric that one out of nine concepts are commercially successful, are these just concepts or are they fully vetted \/ funded projects? We track project success, but do not currently track concept success, and are wondering if we should be looking at both.<\/em><\/span><\/p>\n

BOB:<\/strong> These are early stage concepts, more than ideas, but not fully defined products as one might find in a business case. That is, they are not yet projects in the development stage. See the attrition curve chart below from the book Winning at New Products<\/a> (4th ed., p. 19); it\u2019s a different source, so this chart shows a 7:1 ratio, rather than the 9:1 I stated in the webinar. If we started with raw ideas, it\u2019s 60:1.<\/span><\/p>\n

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Thus, the concepts cited in the webinar are somewhere around stage one of the idea-to-launch (I2L) gating model as shown in the webinar (slide 19) in the diagram below.<\/span><\/p>\n

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Having said that, it\u2019s very difficult to operationally define a concept or an idea. Most firms would start the clock at the equivalent of gate three, approve business case, and determine project performance from this point onwards. That is, from the point where the project is well defined, which means an approved business case. From a practical standpoint, I concur. However, there\u2019s no harm in tracking the success (or attrition) of ideas and concepts, especially if you\u2019re interested in measuring the performance of your ideation efforts, or best sources of ideas.<\/span><\/p>\n

AUDIENCE:<\/strong> Do the studies conducted show strong correlation between organic growth and the metrics of NPD performance between top, average and bottom performing companies?<\/span><\/em><\/p>\n

BOB:<\/strong> Sadly, we lack data on this. The problem is that many factors correlate with business performance, when measured by metrics such as growth, profitability, and return-on-shareholder-equity. Many of these performance drivers have nothing to do with product development. For example, organic growth is likely a function of the growth rate of the markets you are in, your strategy (how robust it is, and how effectively it is implemented), the quality of your management team, your core competencies, the competitive environment, and so on.<\/span><\/p>\n

While NPD performance is likely one driver of organic growth, there are many other confounding factors, hence it is often difficult to get a strong connection between new product success factors or performance and metrics that capture the overall or total business performance. There are various research studies such as Getting a Better Return on Your Innovation Investment (PDF)<\/a> by Arthur D. Little that show businesses doing well have strong NPD programs.<\/span><\/p>\n

AUDIENCE:<\/strong> Our Stage-Gate process really starts at approval of a business case. I recognize that we need to introduce one, if not two, gates prior to approving the business case. Any suggestions on how to change mindsets to introduce new gates without making people feel like we are starting from scratch?<\/span><\/em><\/p>\n

BOB:<\/strong> Many studies reveal that the activities that occur before formal development begins, the front-end homework, market studies, technical assessment, building the business case are the really pivotal activities. They create the foundation for the project and the seeds of success or failure are often found in these pre-development phases (see for an example, New Products \u2013 What Separates the Winners from the Losers and What Drives Success<\/a>). Thus, the game is won or lost in the first five plays. This is perhaps why Toyota\u2019s 5 NPD Principles include front-end load your project, as a plea to do more work earlier in the project to do the needed early stage homework.<\/span><\/p>\n

Given the importance of the front-end, it makes sense to capture these vital activities and include them in your idea-to-launch (I2L) system, and not merely assume that they\u2019ll happen. They often don\u2019t, which explains why so many new product failures can be traced directly to the front-end of the project.<\/span><\/p>\n

AUDIENCE:<\/strong> Many companies often believe that the new product strategy is implicit in their company or brand strategies. How do you convince them that they are different and that they need to invest significant time in developing a new product strategy?<\/span><\/em><\/p>\n

BOB:<\/strong> Bore them with the facts! There are countless studies that reveal that having a product innovation strategy for the business is strongly connected to the new product performance of the business. In short, a solid, well-defined strategy pays off. I cited two such studies in my webinar (see near the beginning). See for an example, Developing a Product Innovation and Technology Strategy for Your Business<\/a>, especially figure one which shows that top performing businesses have the elements of an innovation strategy in place, whereas poor performers do not!<\/span><\/p>\n

There are also the common-sense arguments: Without a strategy you drift, like a ship, without a rudder. You\u2019ll likely end up in a lot of projects in unattractive markets and areas, or worse yet, just too many different and unrelated areas. Strategy helps to define the search fields for effective idea generation to focus your ideation efforts. Your innovation strategy is one of the key criteria for selecting the best projects in portfolio management. And so on.<\/span><\/p>\n

AUDIENCE:<\/strong> Some innovation team leaders and consultants resist communicating areas that are out of bounds because they feel it limits creativity. How should we deal with this?<\/span><\/em><\/p>\n

BOB:<\/strong> It depends on how limiting the defined areas are. Obviously, if strategic areas are defined so as to be very limiting, then creativity is indeed thwarted. So be careful in how tightly you define strategic areas, making sure that they are broad enough to allow creativity and some bolder, more imaginative development ideas and projects to occur.<\/span><\/p>\n

Additionally, some firms allow a discrete percentage of projects to be wildcards or outside the traditional areas as defined in the business\u2019s strategy. These so-called test drill projects are indeed out of bounds, but often uncover new opportunities in a new field. This is not the same as a scattergun approach, because the number of such projects is quite limited.<\/span><\/p>\n

Finally, some pundits argue that too broad a definition of in bounds areas actually hurts creativity and innovation. What happens is that a lot of off-strategy projects are proposed and may even progress. Thus, the firm ends up in a lot of unwanted and perhaps unattractive areas, and also in too many different areas, essentially a scattergun approach. So innovation actually suffers in this scenario.<\/span><\/p>\n

AUDIENCE:<\/strong> If so many companies worldwide with over 73% of US and over 90% of German and Scandinavian companies having implemented a Stage-Gate system, why aren\u2019t they all equality successful? How do the top performers distinguish?<\/span><\/em><\/p>\n

BOB:<\/strong> There are two main reasons.<\/span><\/p>\n

First off, many of the systems these firms have implemented, often with the best of intentions, are either now obsolete or were highly flawed. I cannot tell you how many firms I have visited that claim to have a Stage-Gate system \u201cjust like in the book\u201d and when I inspect it more closely, I often discover that it\u2019s nothing like what was described in my book. They simply got it wrong. It\u2019s a poorly conceived, poorly designed system, and so results aren\u2019t so good.<\/span><\/p>\n

Further, some firms are living in the past, and are using much older versions of Stage-Gate, models typical of the 1990s, but a lot has changed since the 1990s. For an update on what\u2019s new in Stage-Gate, see my website and topic section Next Generation Stage-Gate and What\u2019s Next After Stage-Gate<\/a>? and in particular, the two articles, What\u2019s Next After Stage-Gate? and also What Leading Companies Are Doing to Re-Invent Their NPD Processes.<\/span><\/p>\n

Secondly, while many firms have a well-designed Idea-to-Launch (I2L) system, they have failed to implement it well or consistently. For example, gate meetings are missed, decisions aren\u2019t made, and gatekeepers behave inappropriately. As we saw in one of the polling questions during the webinar, almost 90% of attendees confess to poor project selection practices, too many projects, too few big projects, not enough resources to do the projects etc. This usually is not the result a bad system, rather a lack of discipline at gates and portfolio reviews!<\/span><\/p>\n

In other firms, project teams sometimes just don\u2019t get it. Expectations are unclear, the work doesn\u2019t get done, business cases are weak, and so on. Sometimes this is due to a lack of training or skills; often it is because there are simply too many projects in the pipeline.<\/span><\/p>\n

Most of these problems are implementation issues, often simply a lack of discipline and a failure to adhere to the spirit of an otherwise well-designed I2L gating system.<\/span><\/p>\n

AUDIENCE:<\/strong> What do you say to the risk that going too flexible in the structure of a Stage-Gate system is just a \u201csop\u201d to those individuals in a company that simply don\u2019t want to have their decisions challenged?<\/span><\/em><\/p>\n

BOB:<\/strong> There are limits to flexibility. Otherwise, soon you have no system at all and it\u2019s back to the chaos of the 1970s, when project teams and R&D folks could do pretty well what they wanted. Back then, budgets were much less constrained, relatively speaking (resources seemed plentiful), and besides, NPD results were not so good.<\/span><\/p>\n

These are relatively good policies for some limits:<\/span><\/p>\n