New Product Introduction [NPI] [Definitive Guide] | TCGen

The new product introduction process is the specific series of 6 steps or stages a company uses to achieve its realization of new offerings to satisfy a market ... Skiptocontent GuidetotheNewProductIntroductionProcess WhatistheNPIProcess? WhatisTheNewProductIntroductionProcessinsteps? AgileforNPI–Yes! WhoisinvolvedinNewProductIntroduction? MinimumViableProcess:AModernApproach AModern,LeanProductIntroduction[NPI]Process AboutJohnCarter ContactUs WhatistheNPIProcess? NewProductintroductionusuallyfollowsaprocessdividedintostepswhereacompanycreatesanideaandcarriesitthroughtocommercialization.ThereasonitiscalledNewProductIntroductionprocess,ratherthananewproductprocess,becauseitisframedfromfromthemanufacturing’sorganization(orthecontractmanufacturer)viewpoint.Thiscontraststomorenormalmanufacturingprocesseswheretheycontinuetobuildaproductafteritwasfirst“introduced”tothemanufacturingprocess. WhatisTheNewProductIntroductionProcessinSteps? Newproductintroductionprocess[NPI]insteps Thenewproductintroductionprocessisthespecificseriesof 6stepsorstagesacompanyusestoachieveitsrealizationofnewofferingstosatisfyamarketneed.Inthebestcompanies,aproductdevelopmentstrategylinkscorporatestrategywithproductdevelopment. Whilenearlyeverycompanydevelopsnewproductsorservices,newproductintroductionprocess differsubstantiallyfromonecompanytoanotherdependingontheindustry,theproducttype,whethertheproductsareanincrementalimprovementorabreakthroughinnovation,andthedegreetowhichyoufocusonproductportfoliomanagement. Thisisprobablythemostimpactfulformofprocessmanagementthatacompanycanundertake. Althoughcrossfunctionalprocessesdifferdependingonthesefactors,anacceptedapproachformorethanthree(ormore!)decadesputsanewproductideathroughaseriesofsteps.The6stepseachculminatesinanup-or-downdecisionmadebytheSeniorManagementteaminaformalreview(oftencalleda“gate”)attheendofeachphase. Whatarethe6StepsintheNewProductDevelopmentProcess[NPD]? Atypicalproductdevelopmentprocessofthiskindhassixstepswithfivegates. Step1:IdeationStep2:ProductDefinitionStep3:PrototypingStep4:DetailedDesignStep5:Pre-Production(Validation/Testing)Step6:Manufacturing Step1:Ideation Thisfirststeporstageofthenewproductintroductionprocess (NPI),oftencalled“Ideation,”iswherenewproductconceptsoriginate.Often,businessesformsasmallteamtoexploretheideagenerationandinitialdefinitionoftheproductconcept,businessanalysis,performmarketresearch,andtoexploreitstechnicalandmarketrisk.Theideastageisoftenthemostimportantstepforbrainstormingnewproductsbecauseitiswheremostproductideascomefrom–andthiscaststhedieforthedevelopment. Gettingtheproductconceptwrongatthisearlystagewastestimeandincreasesopportunitycost. Notenotallnewproductideascomefromtheinside–TheCorporateDevelopmentorganizationandexecutivesshouldbeconstantlyscanningfornewproductideas. Marketingeffortsshouldalsoincludeproductlifecyclemanagement,activecompetitiveanalysisandmarketscanningtoo. Engineeringshouldbebrainstorming,too. Note,thattheIdeationstepisoftenthemostchallengingandaproductdevelopmentchecklistcanbeusedtopinpointrisksinthisstageandthroughouttherestofdevelopment. Step2:ProductDefinition(Discovery) Sometimescalled“scoping,”orconceptdevelopment,thisstepinvolvesrefiningthedefinitionoftheproductconceptandthegatheringofproductrequirements.InastartupthisstepisoftencalledDiscoverywherethecustomerneedsaredeeplyexpored. Theteamcreatesthefirstdetailedassessmentofthetechnical,marketandbusinessaspectsofthenewproductconceptanddeterminescorefunctionality. Developersandmanagers,andespeciallytheprojectmanager,exploresanddefinethekeypointsofdifferentiationforthenewproductandgetcustomerfeedback.Thissecondstep,ifdoneimproperly,canincreasetimetomarketorcausetheproducttomisunderstandtheneedsofthemarket. Becausethisstepisoftenbeforereallyrampinguptheteam,theinitialmarketingstrategyisdefined. Althoughitisearly,oftenmetricssuchasARR(AnnualRecurringRevenue)orAcquisitionCostsareestimated. Step3:Prototyping ThisstepintheNPIjustifiesthecompany’sinvestmentinthedevelopmentofaproductbyrequiringtheteamtocreateadetailedbusinessplan.Thisplanusuallyinvolvesintensivemarketresearchinparallelwithprovingtheproductfeasibility.Theteamthoroughlyexploresthecompetitivelandscapeforthenewproductandwheretheproposedproductfitswithinit,whilealsocreatingafinancialmodelforthenewofferingthatmakesassumptionsaboutmarketshare.Pricingisdeterminedinthisstep. Fortangiblenewproducts,suchashardwareormixedsystems,theteamalsoconsidersthemanufacturability,DesignforManufacturing(DFM)oftheproposednewproduct.Bytheendofthisphase,SeniorManagementshouldhaveaclearideaofwhatthey’reinvestinginandhowitwillperforminthemarketplace.Thisthirdstepintheproductdevelopmentprocessiscriticalbecauseitreducesthemarketriskforthenewproductinallbusinesses. Itispossiblethatveryearlyproductionrunswillbepilotedthatwouldbemanagedbymanufacturingandthequalitycontroldepartment. Alsopreliminarysupplychainmanagementwouldbereviewedtoensurethatthecurrentsupplybasecanbeused(supplierqualificationtakesalongtime). Step4:DetailedDesign Inthisphase,thefocusisontheproductdesignprocessbutalsorefinementoftheprototypeoftheproduct(andinthiscaseitislargelyfullfeaturedandworkingasarealproductwould.Inmostcasestheyalpha-testtheprototype,workingwithcustomersinaniterativefashion:gettingtheirfeedbackandincorporatingitintotheprototype. Thebillofmaterialsisgeneratedinthisdesignstage. Atthispointthedesignteamcanbecomequitelargegiventhevolumeofworkrequired. Atthisstage,manufacturingserviceswillbescaledupaswelltoensurethatthedesignishighquality(soyieldswillbehigh)andprocurementwillalsobeheavilyinvolvedtoosincethisstepmightbegintheorderingofparts. Inparallel,marketing,salesandmanufacturingbegintocreatethelaunchandmanufacturingplatformstosupporttheemergingproductandmaybebeginimplementingearlystagemarketingtests.ThisfourthstepinthenewproductdevelopmentprocessissometimescalledDevelopment,andsometimesincorporatesthenextstep,“Validation/Testing.” Thisisoftenledbyprogrammanagementandincludesprototyping,too. Step5:Pre-Production(Validation/Testing) Validationandtestingmeansensuringtheprototypeworksasplanned.Italsomeansvalidatingtheproductintheeyesofthecustomersandmarkets,whiletestingtheviabilityofthefinancialmodelfortheproduct. Everythinginthebusinesscase,andeverythinglearnedfromcustomersduringtheDevelopmentphasecomesunderscrutinyandistestedin“realworld”conditionsasmuchaspossible.Themarketingstrategyisalsoconfirmedatthispoint. Ifanythinginthebusinesscaseorprototypeneedsrevising,thisistheteam’slastchancetodoso. Thisisthelaststepbeforethefinalproductisreadyforthemarket. Step6:Manufacturing Duringthisstepoftheproductdevelopmentprocess(includingthemanufacturingprocess),theteamrealizeseverythingrequiredtobringthefinalproducttomarket,includingmarketingandsalesplans(orsalestrainingifnecessary).Theteambeginstooperationalizethemanufactureandcustomersupportfortheproduct. ThatiswhythisstepiscalledManufacturing. Bythemanufacturingorganizationemployingcontinuousimprovement,therewillbesomeongoingassurancethattheywillbebuildingdinghighqualityproducts. GateReviews Eachofthesesixphasesendsinagatereviewwheretheteampresentstomanagementspecific,pre-defineddeliverables,anddemonstratestheoutcomesrequiredtomoveontothenextphaseoftheproductdevelopmentprocess.Eachofthesereviewsendsinago/no-godecision.Inotherwords,Managementhasfiveopportunitiestokilltheprojectbeforecommittingtoitslaunch. However,theworldismovingawayfromthiswaterfallproductdevelopmentapproach.ItistooprocessheavyandencouragesunnecessarymeddlingfromSeniorManagement.Compareyourgatereviewsandotheraspectsoftheprocesswithourproductdevelopmentchecklist. AgileforNPI–Yes! WaterfallProductDevelopmentProcess Currently,therearetwoprimaryapproachestotheproductdevelopmentprocess.Thefirstisawaterfallapproach,agenerictermforatraditionalnewproductdevelopmentprocessinwhichtherearediscretestepsandmilestones.Itiscalledwaterfallproductdevelopmentbecause,inthisapproach,teamscontinueontothenextstagesonlyaftermilestonesaremet,i.e.theflowisonedirectionalonly. Weoftenseethesestagesinmanagementconsultingengagements. AgileProductDevelopmentProcess Agileproductdevelopmentprocesses,ontheotherhand,areincreasinglymorecommonbecausetheycancreatenewproductsthatdelightcustomersusingfewerresources.TheAgileapproachreliesonsprints,cyclesthatcombinedevelopmentwithcustomertesting.MostallorganizationsthatsaytheyareAgilearereallyusingAgilebetweenmajormilestonestodeveloptheirproducts.Thisisahybridapproachthatoffersthebestofbothworldsandanapproachusedinouragileconsulting. WhoisinvolvedinNewProductIntroduction? Productdevelopmentisacross-functionalactivityinprocessmanagementperformedbyproductdevelopers(fromalldifferentfunctionsinbusinesses).Itiscommonforacross-functionalteamtoassembletorealizenewproductsintheideagenerationstagestodeveloptheinitialproductconcept.Inmanyindustries,thesefunctionsmightincludedesignengineeringorcoding,testing,productmanagement,sales,finance,andothers,ledbyateamleaderorscrummaster.Across-functionalteamstaystogetherthroughoutthenewproductdevelopmentprocess. Inaddition,aSeniorManagementteamoverseesandapprovestheprojectasitdevelops.Theyhavearesponsibilityfortheinvestmentstheymakeinnewproductdevelopment.Thebestproductdevelopmentprocesseshaverolesandresponsibilitiesthatareclearlydefined–forthedevelopmentteamandfortheSeniorManagementteam–soastolimitmeddlingbymanagement. MinimumViableProcess:AModernApproach Thetraditionalsix-stepprocessdescribedaboveistheestablishednewproductdevelopmentprocessyou’vereadaboutinthetextbooksandseeninthetrainingvideos.Someoftheseprocessesmighthavefivesteps,orevensevenoreightsteps,butthebasicideaisthesame.Thisisstate-of-the-artproductdevelopment—for1985.Buttoday’sfast-movingmarkets,rapidlychangingtechnology,andagileteamsneedaleanapproach. Werecommenddrawingelementsfrombothwaterfallandagiletocreateamoderndevelopmentproductprocess–thatwayyougetthebestadvantagesofbothsystems. Wealsorecommendthatyouhavearapidandsimpleescalationprocess. ThisnewapproachistohaveaMinimumViableProcess:enoughprocessbutnevertoomuch.Itbeginswithasimplerealizationthatanyproductdevelopmentprocessboilsdowntotwoneeds.AMinimumViableProcessmust… Enableexecutiveoversightattheinflectionpointswheretheyneedtomakeinvestmentdecisionsand,Guidetheteamtowardriskreduction Lengthy,onerousreviews,wheretheteammustjustifyitscontinuedexistenceeveryfewweeksormonths,createstoomuchbureaucracyandleavestheteamwithtoolittleflexibility.ItmakesSeniorManagementthecustomerthroughouttheprocess.Further,whileadherentsofthetraditionalphasesandgatesapproachacknowledgethatproductdevelopmentisaniterativeactivity,theycontinuetotrytomakeitfitintoasequential,linearscheme. “Enableexecutiveoversightattheinflectionpointswheretheyneedtomakeinvestmentdecisionsandguidetheteamtowardriskreduction” TheMinimumViableProcessapproachinvolvesasubtlebutimportantchangeinthinking.Whilethephasesandgatesapproachcontainsaseriesofsequentialsteps,theMinimumViableProcessrecognizesthateachportionoftheprocesshasmanyactivitiesdoneconcurrentlyanditeratively.Ratherthanfulfillingarigidsetofdeliverables,theteamengageswithSeniorManagementinthreecheck-insthatshowthattheconceptissound,thatthereisafitbetweenthemarketandtheproduct,andthateverythingispreparedfortheproductlaunch.Thesecheck-insdemonstratethatcontinuedinvestmentiswarranted. NewProductDevelopmentProcess:MinimumViableProcess Ratherthanhavingpre-setdeliverablesandoutcomesthattheteammustmeetinordertopassareview,theteamcontinuestoaffirmthroughouttheprocessthatitismeetingasetofbroadparametersthatdefinetheproject.Oftenthesekeydeliverablesaredeterminedinaproductdevelopmentconsultingengagement. Ifit’smeetingtheseparameters,Managementshouldleavetheteamalone;ifit’snotmeetingthem,thentheteamneedsaleanescalationprocesstoinformtheSeniorManagementandgetbackontrack. Here’showitworks.Atthebeginningofaproject,possiblyafterhavingaproductideabutbeforethecompanyinvestsbigdollars,thedevelopmentteamandSeniorManagementteamcometoanagreementaroundkeyparametersfortheprojectsuchas: ProductCostFeaturesScheduleQualityReliability Eachoftheseparametersmusthaveaquantitativethresholdthattheteammustnotexceed,asinthediagrambelow.Wecallthesequantitativeparametersboundaryconditions.Thisapproachimpliesthattheteamhasalreadydonesufficienthomeworktosettheseparametersaccuratelyandtomakethemquantitative. BoundaryConditionsDiagram Oncetheteamandmanagementagreetotheseboundaryconditions,theteamisleftalonetoreducetherisksassociatedwithmeetingeachcondition.Ifitlooksasthoughtheteamisontracktoachieveitsaims,thenManagementdoesnotmeddle. Inaddition,InaMinimumViableProcesstherearenorigidreviewswithapre-fabricatedsetofdeliverables.Thesereviewsarereplacedbythethreecheck-insthroughouttheprocesswherethedevelopmentteammeetsManagement’sneedtoensurethatitsinvestmentisprotected.Theydemonstratetheviabilityofthiscontinuedinvestmentbyshowingthatthedevelopmentteamisreducingriskineveryconceivablecategory:marketrisk,technicalrisk,competitiverisk,etc. Ifatanytime–andnotmerelyatpredetermined“gates”– theteamperceivesthatitwillnotachieveoneormoreofitsboundaryconditions(calleda“boundarybreak”),thenthedevelopmentteaminformstheSeniorManagementteamandtherefollowsanescalationprocesscalledanOut-of-BoundsReview. Insuchareview,theteamcommunicatesabouttheboundaryconditionbreaktheyanticipate.Theteamalsoproposesasolutiontotheboundarybreak.IftheManagementteamagreeswiththissolution,thentheyapproveitandtheteammovesforwardonthisbasis.IftheManagementteamdoesnotagreewiththeproposedsolution,thentherefollowsaface-to-facemeetingwhereallstakeholdersnegotiateanewboundarycondition.Theteamthenproceedsbasedonthisnewspecification.Suchreviewsshouldtakeplaceindaysorinaweek,andnotinweeksormonths. Out-of-boundsdiagram EstablishingBoundaryConditionscoupledwiththeOut-of-Boundsreviewsreducesbureaucracyandpaperwork.Itisaleanapproachtonewproductdevelopmentwhereissuesareresolvedquickly.MostimportantlyitpreservestheManagementteam’sconfidenceintheirinvestment,whileguidingthedevelopmentteamtocontinuallyreducerisk,byworkingtoaclearsetofobjectiveparameters. AModern,LeanProductIntroduction[NPI]Process Old-fashioned,sequentialphasesandgatesprocessestendtotakeaone-size-fits-allapproachtonewproductdevelopment.Theyputprojectsthroughasetofrigidmilestones,whetherornotthesemilestonesapplytotheprojectathand.InaMinimumViableProcess,theprojecthasonlythemilestonesitneeds. ExampleofIncrementalProducts Forexample,ifyouaredevelopinganincrementalimprovementonanexistingproduct,theremaybenoneedtodemonstratetheConceptFit.Ifyourexistingproductissuccessful,thenyou’vealreadyprovedtheconceptaswellastheProduct/MarketFit.Suchaprojectmightneedonlyonecheck-inbetweentheteamandmanagement. There’snoneedtohavethreecheck-inswheretheydon’taddvalue–andifthere’snoreasontohavethree,there’scertainlynoreasontohavefive!Infact,havingthreecheck-insmightsubtractvaluebyaddingwasteandbureaucracy.Haveonlythemilestonesthatmakesenseforyourproject. Definetheexitcriteriaforeachcheck-inintermsofthesetofoverallboundaryconditionsthatthedevelopmentteamandSeniorManagementhavedefinedfortheproject.Thisapproach,combinedwithaMinimumViableProcesswithonlythreecheck-ins,enablesManagementbyexception.ThismeansthatManagementintervenesonlywhenitlooksasthoughtheteamisgoingtoviolateoneormoreboundaryconditions. Thismanagement-by-exceptionapproachistheleanwaytodevelopnewproducts.Combinedwiththethree-step,MinimumViableProcessdescribedabove,itensuresthatcompanieshavethepredictabilityandprocessqualitythatmanagementneedstomakegoodinvestmentdecisions,whilealsoensuringthatteamsspendmostoftheirtimereducingriskandaddingvaluetoproductsinwaysthatcustomersactuallycareabout. AndthisiswhattheMinimumViableProcessisallabout.CallittheGoldilocksApproach:gettingtheprocessjustright.Notsolittleprocessthatchaosensues,butnotsomuchprocessthattheteamisdistractedfromitsmostimportantpriority:creatingproductsthatdelightcustomersandmeetbusinessobjectives. ProductDevelopmentExpert JohnCarterisawidelyrespectedexpertonproductdevelopment.HeisaninventorofBose’sNoiseCancellingHeadphonesanddesignerofApple’sNewProductProcess.AsFounderofTCGenInc.,hehasconsultedforAbbott,Amazon,Apple,Cisco,HP,IBM,Mozilla,Roche,and3M. ContactUs…We’dlovetohearfromyou. LearnMore Consulting DownloadTools General 950SiskiyouDrive,MenloPark,CA94025(650)733-5310