How do you ensure that you take a broad and structured approach to product and service innovation – that is customer focused and simple to do?
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Wednesday, November 20th, 2019
How do you ensure that you take a broad and structured approach to product and service innovation – that is customer focused and simple to do?
Thursday, June 14th, 2018
Which project is ‘best’?
A key challenge in any innovation programme – be it creating a pipeline of new product proposals, selecting service/process re-engineering projects or deciding how best to allocate budget across multiple project proposals – is how to determine which projects are ‘best’ and therefore which to select. Managers are often faced with several possible projects and have to choose which to back, long before there is enough information to build a conventional business plan.
Once a project proposal is sufficiently developed to include details of planned implementation, financial evaluation methods such as Net Present Value (NPV) can be applied. But for projects at earlier concept stages, “over-reliance on strictly financial criteria may lead to wrong decisions, simply because financial data are often wrong” – the words of Bob Cooper, who developed the stage-gate model for new product development. At this stage it can be tempting to simply fall back on intuition and previous experience but a better approach is to assess projects against a number of criteria which are pointers to likely success.
Read the full paper by Rick Mitchell & Alastair Ross:
Thursday, January 4th, 2018
The second video in our series ‘Why great products are not enough’ covers Nokia and its fall from market dominance in mobile phones in 2005 to market exit less than 10 years later. There are key lessons to be learned from Nokia’s experience. In this video Alastair Ross reviews Nokia’s fall and analyses why and how it happened and the key weaknesses in Nokia’s business model and capabilities.
Wednesday, November 23rd, 2016
Product development is a critical function for product-based businesses. The ability to develop new products with features and functionality that are valued by customers and users, to bring them to market quickly, cost effectively and at acceptable quality and then to support and enhance them during their lifetime has always been a complex undertaking.
Today’s additional requirements to serve a global market, to exploit new technologies to meet ever higher customer expectations, to consider the opportunities for complementary digital services and to compete against new low cost, but increasingly high value, rivals from China and other emerging economies simply add to the challenge.
To achieve business goals for profit and growth from new and existing products, there are major responsibilities placed on the Research & Development (R&D) function and its management team. The R&D function has two fundamental goals:
In delivering new value propositions to the market, R&D management needs to be able to link research and technology possibilities with customer needs. It needs to have deep insight into the wants and needs of the users of its products and technologies. It needs to understand the unmet needs of users who are not yet its customers and where future growth can come from. It needs to be able to innovate to formulate technologies and product concepts that best meet these unmet needs, select the most promising and bring them to market.
Being effective is a key requirement for R&D – to focus on the ‘right’ technologies, to select the ‘right’ product concepts and to get the ‘right’ balance between investment in new products with support and enhancements to existing products. But in addition, R&D efficiency is a key requirement. In developing new products there are critical resources which have to be efficiently used if the business is to realise the promise of its R&D potential:
To consider how well an R&D function is meeting these goals, there are some key outcomes that can be reviewed:
Is R&D creating value propositions that the market wants?
A key measure here is the % of revenue from products launched in the last three years. If the % of revenue contributed by new products is low, then this indicates that the new product portfolio is not meeting user requirements in ways that are superior to the firm’s existing products – or rival products. This metric can be complemented by surveys among existing customers and also non-customers. In-depth understanding of user requirements (including unmet needs) and application knowledge are critical here. In meeting user needs, there is a balance to be struck between developing a new product and enhancing an existing one – or by providing a service-based solution. Increasingly digital services are playing a key role in meeting customer requirements. R&D operations now need to consider how to create ‘platforms’ that bring together hardware, software and service elements to meet user requirements in effective and reconfigurable ways that enable fast time to market.
Does R&D bring new products to market quickly?
Key measures here are: How does the firm’s time to market compare to rivals? Has time to market reduced over the past 5 years? A fast time to market enables a company to met emerging customer needs before rivals – and thus achieve a higher profitability whilst there is less competition. A focus on getting a ‘core product’ to market fast – and then follow with enhancements is an effective approach. Lessons can be learned here from the ‘Lean Startup’ movement regarding the use of the ‘Minimum Viable Product’ (MVP) approach. With the increased in servitization, user needs may be met by a software/digital service solution that is ‘wrapped around’ an existing product platform. Service-based solutions can be brought to market much faster than product-based ones. R&D Management need to decide how this service element is provided – internally or through partners.
Is R&D on-time to market?
Predictability is important – to fit with customer needs but also to align with the plans of internal support functions such as Manufacturing and Sales. Is R&D meeting defined project timescales? Failure to do so results in internal costs to replan and realign internal resources – with likely impacts on other products – and also can result in customer opportunities being missed.
Is R&D delivering quality products?
How well are new products meetings their target performance? What is the level of their reliability, measured by field failures and returns? Trading quality for a fast time to market is a short-term solution. New technologies will have inherent risks which need to be identified and addressed – through rigorous trial and testing – prior to their use in new products.
Are products being developed by R&D within budget?
This is key to R&D delivering across its portfolio of planned and existing products. If new products overrun their development budget, the shortfall is typically met by reducing the planned budgets on other products or projects. R&D management need to consider how to get the best ‘bang for the buck’ from their budget – which requires a strategic view of their product portfolio and key decisions to be made on ‘make v buy’ policy, in-house development v external, new product v enhanced existing product and product v service solution.
An effective way to ensure that your R&D operation is ‘fit for purpose’ is to assess it against best practices and also to determine how well defined practices are deployed in daily work (e.g. is FMEA applied effectively, is application expertise embedded in concept development, are design reviews regularly held?).
An outside view can be powerful in such assessments – bringing an independent eye and experience from other businesses and sectors. Codexx has performed a number of assessments of R&D operations in Western and Eastern Europe, China and the USA, making use of our licensed PROBE benchmarking solution for R&D and our F4i (‘Foundations for innovation’) assessment for innovation practices.
We also worked with the Universities of Exeter and Aalborg between 2010-13 to study the ‘journey’ of new products from concept to market, covering 43 UK and Danish technology-based businesses, using a best practice model of the innovation journey. We have subsequently used this model to help companies assess their product development practices and performance.
The core of this article is an excerpt from the forthcoming book ‘Sowing the seeds of business transformation’ by Alastair Ross, to be published in 2017.
Tuesday, May 17th, 2016
Businesses providing complex or ‘knowledge intensive’ services – such as law firms, accountants, management consultants, R&D organisations and specialist advisors – are facing increasing business pressures. They need to design new services that meet ever increasing client demands in:
And the increasing level of competition (including new local and global rivals) mean that doing this profitably is often a challenge. The ‘old ways’ of developing services – informal and often ad hoc – that worked in the past will not be good enough in the future. Service businesses need to take a leaf out of the manufacturers’ cookbook for developing new products and create a new more structured and cohesive approach for developing complex services.
To help clients in developing new services in today’s challenging business environment, Codexx has launched a new solution: ‘Structured Service Development‘ which is based on our work in complex services over the past 15 years where we have developed or re-engineered more than 25 services in multiple sectors including: legal, financial, consulting, environmental and industrial. For more information on this service read the solution flyer: Designing complex services – new Codexx offering – May 2016.
If you would like to discuss how Codexx could support you in the development of new services, the re-engineering of existing services or in improving the management of service delivery, contact us.
Friday, October 17th, 2014
Product development is a critical function for product-based businesses. The ability to develop new products with features and functionality that are valued by users, to bring them to market quickly, cost effectively and at acceptable quality and then to support and enhance them during their lifetime has always been a complex undertaking.
Today’s additional requirements to serve a global market, to exploit new technologies – including the opportunities provided by the internet – to meet ever higher customer expectations and to compete against new low cost, but increasingly high value, rivals from China and other emerging economies simply adds to the challenge.
How do companies ensure that their product development practices are good enough?
Over the past decade Codexx has worked with a number of clients on assessing and improving product development practices, most recently we performed a global R&D benchmarking assessment covering Europe, US and China. In 2010-12 Codexx carried out two major research studies on what we call ‘the innovation journey’ for technology-based product businesses, from new ideas to value (e.g. [products) in the marketplace. This covered 43 technology businesses in the UK and Denmark.*
Figure 1: An end-to-end product innovation process
From our experience, we have put together a ‘top ten’ list of practices that we consider have a key impact on the success of product development. In no particular order:
Figure 2: A system for innovation within an organisation
Thanks to Rick Mitchell, Visiting Professor of Innovation Management at the University of Cambridge for his contribution to this article.
*‘The Innovation Journey for technology-rich product businesses – Phase 2 – Final study report’, October 2013, Codexx Associates Ltd, The University of Exeter Business School, The University of Aalborg Business School. More information.
For further information on our innovation and product development solutions, contact us at www.codexx.com.
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