Is Your New Product PipelineMore Like a Tunnel Than a Funnel?
By Ed Lahue
Are most of your new product or service ideas being launched into the market? While that might sound like a good thing, it probably isn't.
Many companies approach new product development as if it were a football game where the object is to run to the goal line with every new idea or project. Many ideas may have some kernel of merit, but actually, very few really are worthy of being launched into the market.
A great new product pipeline should look like a funnel with lots of seed ideas at the top but very few getting launched after various phases of development. The challenge is picking the winners from the losers early in the process. As you go farther down the funnel, your investment in time and resources increases exponentially. This prioritization is critical even if all ideas are equal, because all companies have limited resources. Many companies dislike making the hard choices required to limit the ideas that move down the funnel. However, neglecting to make these choices spreads the resources too thin, which waters down every project—even the viable ones.
Many other experts believe a balanced new product pipeline starts with seven to 10 ideas at the top for every one launched at the bottom. However, given that it takes several "seed ideas" to generate an idea worth evaluating, this ratio can quickly become 100 to one. With this lack of good ideas to choose from, many senior executives pick pet ideas and the entire organization chases the development with the intention of launching these ideas into the market. However, the objective of the early phase of the new product development process should be more about doing your homework on the viability of the concept. This homework should include an assessment of the market and customer as well as the technical issues.
On many occasions, this homework is not done and an organization falls in love with its ideas too quickly. This is especially true if the idea has become the senior executive's pet project. Hence, a limited number of quality ideas being forced through the funnel causes this "tunnel effect," as does taking shortcuts in an attempt to launch quickly. This scenario creates a high failure rate for new products being launched into the market.
Where are we going? How will we know it when we see it?
There are many aspects to a successful new product pipeline, but there are two key elements that are particularly critical. The first is to be clear on where you want to go as an organization with innovation. A clearly defined new product strategy defines the role of NPD in reaching the company's overall business goals. In addition, it defines the strategic arenas or platforms that should be pursued. These arenas include various market segments, technologies, and products.
The second key element is to define success. A well-defined success criterion details what a good idea is. How will you know when you see it? What is the minimum required in projected sales and the acceptable profit margin?
So for a robust new product pipeline, get more ideas at the top of the funnel so you can be selective about what you spend your limited resources on.
Get funnel vision, not tunnel vision!!!
Ed Lahue, President and Sr. Consultant of The ELM Group (www.elmgrp.com). Ed Lahue is an accomplished business professional with over 20 years experience in identifying new growth opportunities for his clients. He has successfully marketed several brand name consumer products as well as developed winning business strategies for major businesses and industry.
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