Innovation and Successful New Product Development

Entrepreneurship is full of stories of inventive individuals who toiled for long time and then came out with a very successful product. For example look at Dr. Amar Bose and his music speakers or Tim Leatherman and his multipurpose tools. (see: Developing a Product Brief

Http://arunkottolli.blogspot.com/2011/12/developing-product-brief.html)

These of good examples of Inventor led new product development. But for every success story, there are 100's of failures. The low success rate makes one study the success story and identify the key traits needed to succeed.

When we study their success stories, there is lot of common threads in all the success stories and there is a distinct process for success - which I have documented and presenting it here.

There is a major difference in the approach of entrepreneurs and inventors when compared to large companies. Large companies always start with the market needs - i.e., there must be a sizable market demand for the potential product, before the company starts to develop the product, while inventors often start without knowing the market potential and are usually driven by their own need for the product. Inventors often assume that their need for the product is same as the market need, and start on developing the product.

It is the Process and not the Product

Success of new product development lies with a strong process. A better process leads to a better product, and better product leads to greater market success. The process steps needed for successful product development are:

1. Strategy

2. Product portfolio

3. Research

4. Insight

5. Innovation Development

6. Market Development

7. Selling

These steps are not sequential and can be combined and done in parallel.

Strategy

Why to innovate?

Inventors will always start with at this point. This calls for understanding the problem in depth and start figuring out the solutions.

Answering this question will lead to a strategy for new product development - which gets refined over time. The term strategy involves a broad answers to:

• What type of product to develop?
• What price points?
• When the product will be ready?
• What we know and do not know today?
• What resources - both internal & external are needed?
• How much will the development cost?
• Where is the funding for the development?
• How & where to develop?

In the early stage of development not all answers will be complete and well defined, but inventors start with trying to address these questions and that leads to the development of the overall invention strategy.

Portfolio

After developing the strategy, the next step in the process is to identify the innovation portfolio. Typically any innovation will not succeed in isolation, it will need a set of other innovations like a portfolio of innovations that are needed for make it a business success.

For example, Amar Bose would not be successful with just one design of speakers. Though the first design of 901 speakers was an invention by itself, the real success was because Bose designed a series of speaker designs that met the original intentions - but in slightly different ways. Similarly Tim Leatherman had to develop a series of hand tools to succeed.

Having a single innovation product will meet only one specific need, but will fail to meet a much broader need. So to make the innovation a success one needs to develop a broader portfolio of innovations.

A portfolio of innovations are necessary in most cases of innovation except in case of incremental innovation or design changes.

In addition to developing a range of products, one may also need additional innovations in other areas associated with the product. Such as packaging or distribution or supply chain, sales, etc..,

A classic case of such a portfolio of Innovation is iPhone. Apple had to develop a series of innovations to make iPhone relevant and successful. Apple had to develop a business innovation of having the carriers provide subsidy for the end customer, and then develop special call/data plans for the iPhones. Apple also had to innovate on the iOS software & iTunes services to enable other developers create Apps that can be sold through iTunes.

Research

Research is the most essential task during the innovation process. Before starting the development, one needs to know what are the exact gaps in our knowledge, what we know and what we know that we don't know.

There will be a gap between what we know today and we will know once these new products and services have been discovered, developed, and applied. We compare our current knowledge with the knowledge we will need, and this shows us where the gaps are; filling them with brilliant new knowledge that leads to insights is the purpose of research.

Research must include both explicit and implicit knowledge, Scientific/Technical knowledge and business knowledge: Finance, Costs, operations, marketing etc.

Insight

Insight is the moment when all the things come together. The "eureka" moment.

With all the research, the hard work, experience has converged into insight - the complete and total solution. The insight is not a process but a landmark event when everything comes together. The insight moment can occur at any moment - while taking a shower or while driving etc., but this is not a random event. Its only though the rigor of research, diligent and persistent efforts - one gets the insight. It is an outcome of a dedicated process of research.

The entire team converges on this insight & then the innovation process moves on to next step of development.

A good example of this insight moment was idea of Tata Nano. Tata group had invested substantial resources/time on business opportunities for "Bottom-of-pyramid" markets, had roped in Dr.. C.K. Prahalad as a consultant and had created an elite team to do the basic research for such opportunities, and then the insight moment happened and the idea of Nano was born.

Product development

At this stage, there is a clear idea on the solution and then the product will have to developed. Now this is a stage where prototypes of completed innovations. This involves design and engineering of prototypes (this could be a product, a service or a business design)

This stage will require an integrated, multi-displinary process that involves multiple teams of researchers, who understand the ideas the best, project managers and people who have deep knowledge of the relevant business domains (finance, manufacturing, marketing, sales etc..)

This stage involves extensive engineering, design, testing, alpa/beta program with select customers to get their feedback, and redesign/modify, test as needed.

Project management is a very important skill in this stage. Product development and the next stage Market development involves coordinating various members and teams. Project management becomes a critical skill to do this coordination effectively.

Market Development

As the product development gets underway, the market development has also be done. This stage is more customer focused activity. In this stage, one needs to work out the marketing plan: pricing, distribution, supply chain development, etc.. This stage is vital for the commercial success.

For example, when Tata launched Nano car, Tata motors had to build a entire supply chain for parts, build a dealership network, create marketing campaigns, build public enthusiasm etc.. And all this was happening while the engineering team was still working on the car designs.

Selling

Selling is the final icing on the cake. By now the product is fully developed, marketing has started, customers are interested, and then comes the sales and after sales activity. The innovative product has to be sold to the customer to get the financial returns for all the hard work.

Closing Thoughts

Successful new product development is the commercialization of an Innovation. Success of the product depends on the process as much as the inventive idea. For every one successful new product, there are tens of failed products and thousands of ideas.

Innovation and new product development requires a rigor and process. As Louis Pasteur's famously said "Luck favors a prepared Mind", there is a lot of hard work needed to get lucky in Innovation and new product development.

Also See:

Greatest Running Shoe Never Sold Leaves Inventor Without Deal

Outdoing the Swiss Army knife

For the love of booze