Minimizing Risks in New Product Development

All too often, we hear about risks and failures with new product development. Developing new products is a complex, expensive process and has unpredictable outcomes. In other words, new product development is fraught with risk.

Every week, thousands of new mobile apps are being developed. But a handful of them make any money. If you are developing a new product - even with a disciplined business plan, a well managed project management and all other business processes in place, new products can still have unpredictable results. Even successful/innovative companies have seen product failures.

It is almost impossible to eliminate the risks associated with new products, there are few things one must do to minimize the risks. It begins with aligning the business goals with a proven technology possibilities to produce successful & innovative products.

1. Develop a pragmatic business goals.  

Apple sold 26 million pieces of iPhone 6.  So, if you are a competitor to iPhone, and define your business plan is to sell 20 Million phones a quarter, then the plan is set up for failure. Instead develop a pragmatic plan which takes into account of various factors: Marketing & Sales channels, supply chain, etc.

The plan must be something achievable, realistic, and consider the inputs from other parts of organization.

Start by clearly defining and articulating the business plan and validate it through objective analysis before embarking on significant new product development activities. The business objectives should be unemotional, objective and quantifiable. This helps us in a big way in decision making during the project and not waste time.

2. Don't Rely Exclusively on the Voice of the Customer.

Contrary to existing conventional wisdom, relying exclusively on the voice of the customer will often steer you on wrong direction. Customer often adds his wish list into the requirements - just to see if it can be done. Customers may not always know what they really want, and they rarely know what is technically possible.

Instead of listening solely to what customers are saying, also look at what customers are willing to pay for. Identify what is the bare minimum features that customers will pay for and then use your instincts, intuition & market knowledge to identify all the required features.

This makes it possible to reliably develop the new products in cost-effective way and that can be sold to customers.

3. Bring proven technologies from other companies. 

Most new products needs new technologies. Current players may not have developed the product idea you have - because the current technology/platform may not be capable. So the first step is to evaluate new technologies and adapt proven technologies - mainly from other companies. Typically, startups often test new technologies and it makes sense to copy it fast  if the technology is already proven.

Large technology companies acquire startups for their proven technology. For example, Cisco acquired Meraki & EMC acquired iWave etc.

Applying proven technology from other company reduces the risks while enabling rapid product development.

4. New Product Development requires disciplined project management.

New product development requires innovation. And innovation typically has a reputation for uncertainty and unpredictability. By approaching innovation with a pragmatic and disciplined project management process, it takes away the risks. If the innovative project does not deliver expected results or fails to meet the milestones, then having a disciplined approach helps to identify risks ahead of time and take corrective measures - even if it implies canceling the project.

A disciplined project management implies:

• Knowing the key milestones and final objectives
• Project plan calls for measuring the pace of innovation
• Align innovation with new product development plans
• Keep the project on course when distractions occur.

The discipline to spend time up front helps reduce the risks associated with the creative and technological sides of innovation. This will ensure that what goes into the project is truly meaningful and will yield the desired business results at the end, when the new product arrives on the store shelves.

Project management is an upfront investment to avoid "garbage in, garbage out". Defining all the inputs and expected outputs in the project will avoid wasting resources and minimizes risks.

5. Create an agile development team 

New product development requires an ability to change if the market needs change. Ability to read the market needs quickly and adapt to the changes is critical for success. Agility starts at business leadership level and must spread across the organization, including marketing and technical teams.

One must constantly be monitor what's going on in the world, what are the trends in technology and marketing? And ask "How does this impact our product?" "How should we adapt to succeed in this?"

New product development requires agility from everyone involved.