Www.stage-gate.com © 2000-2009 Stage-Gate International Stage-Gate ® is a registered trademark. Logo for Product Development Institute Inc. used under.

www.stage-gate.com

© 2000-2009 Stage-Gate International

Stage-Gate® is a registered trademark. Logo for Product Development Institute Inc. used under license by Stage-Gate International. Logo for Stage-Gate used under license where appropriate.

The Innovation Diamond™ and Winning at Product Innovation™ are trademarks of Stage-Gate International.

READY, FIRE… AIM: BALANCING SPEED AND

ACCURACY IN NEW PRODUCT DEVELOPMENT

Meg Sheehan Principal, Global SolutionsJune 23, 2009


Key Discussion Points

How to improve “speed to market”

But, speed isn’t everything

How do you bring focus to your product development efforts


Stage-Gate International Founded by Dr. Bob Cooper and Dr. Scott

Edgett, creators of Stage-Gate®

25+ years of highly-recognized research and implementation experience

Focused exclusively on product innovation

World’s top provider of research-based solutions to improve innovation performance

Maximum-value portfolio of consulting expertise and “accelerator” products


New Product Development Research

Based on the NewProd Studies and APQC Benchmarking Studies of almost 2000 new product launches in 500+ firms*

*Studies conducted by Robert G. Cooper, Scott J. Edgett

Ten Critical Success Drivers that separate the winners from the losersThe Innovation Diamond


The Innovation Diamond

Product Innovation & Technology Strategy for the Business

Idea-to-Launch System: Stage-Gate®

Climate, culture, teams & leadership

Resources: Commitment & Portfolio Management

And the Four Points of Performance

Stage-Gate® is a trademark of Product Development Institute Inc.

Business’s new Business’s new product product

performanceperformance











READY

AIM


The Four Drivers of Performance: #1: Climate, culture and leadership

The right climate and environment for innovation: ♦ Senior managers in top performing businesses

create a positive climate and culture for innovation and entrepreneurship

♦ They foster effective cross-functional NPD teams

♦ And are properly engaged in the NPD decision-making process


The Four Drivers of Performance: #2 The Stage-Gate® Process

Stage-Gate is the world’s most widely cited, peer reviewed and implemented New Product Development process

♦ PDMA Best Practices Report, 1997: “68% of organizations participating in this study use a Stage-Gate system”

♦ AMR Research, 2005: “71% of organizations surveyed confirmed use of the Stage-Gate process; 85% for organizations with 5,000+ employees”

♦ Booz-Allen Hamilton study/report: “100% of the Global 1000 Innovators use a disciplined Stage-Gate process”

♦ Stage-Gate has gone through 20+ years of evolution & refinement

A disciplined decision-making framework to drive product success

Defined, cross-functional contribution from teams and executives from Idea through to Launch, at the right pace and level of detail

A risk management model outlining the right information at the right time for objective evaluation and alignment

An investment management model with tough Go/Kill decisions


9

Ten Critical Success Factors for Winning1. A unique & superior product2. Strong market orientation throughout3. More up-front research4. Sharp & early product definition before

development5. The right organizational structure - Teamwork6. An innovative & supportive environment7. Leadership support8. Creating a funnel not a tunnel9. Managing product development as a process10. Sufficient resources for product development


Critical Success Driver #3

More pre-development work – the homework or ‘up-More pre-development work – the homework or ‘up-front’ activities – must be done before ‘Development’ front’ activities – must be done before ‘Development’ gets underwaygets underway

The steps that precede Development – screening, market studies, tech feasibility, build business case – are critical to success

New product failures are most often the result of weaknesses in the ‘up-front’ activities – errors of omission or commission

But little time and effort are spent here: 7% of money and 16% of effort (Japanese and highly successful US firms spend considerably more here)

Homework answers key questions before Development begins:♦ Is the project economically attractive?♦ Who is the target customer? What positioning?♦ What should the product be – features, attributes, performance – to

make it a winner?♦ Can it be developed? At the right cost? How?


Does More Homework Mean Longer Times to Market?

1. More time and money spent up-front greatly improves the odds of success – there is clear evidence for this!

2. More homework results in better and sharper product and project definition – this speeds up the Development phase (less recycling and wasted time)

3. Homework done up-front anticipates product problems and design changes – these product design changes are made early in the game (rather than as the product is going to market)

NO!

The message is:“Do It Right the First Time” – DIRTFooT


Critical Success Driver #4Sharp and early product and project definition (before Sharp and early product and project definition (before Development)Development) separates separates winners from losers winners from losers

Consistently cited as a key to success in success/ failure studies This definition includes:

1. Project scope2. Target market definition3. Product concept & benefits to be delivered: value proposition4. Positioning strategy (including price point)5. Features, attributes, requirement & specs

Why so critical?♦ Forces homework to be done up-front (Success Driver #3)♦ Communication tool & commitment between functions♦ Provides clear targets for Development – the ‘goal posts’

are defined


Impact of Sharp, Stable Product Definition

44.8%

65.5%

48.3%

51.7%

65.5%

58.6%

65.5%

30.8%

48.6%

30.0%

30.5%

36.5%

40.0%

37.1%

15.4%

46.2%

15.4%

15.4%

23.1%

19.2%

15.4%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Contract between projectteam & management

Defined requirements,features, specs

Stable product definition

Defined product concept -what product will be & do

Defined positioningstrategy vs. competitors

Well defined target market

Benefits to be deliveredclearly defined

Percent of Businesses That Have a Good Product Definition Before Development Stage Begins

Worst Performers

Average Business

Best Performers











READY

AIM


The Four Drivers of Performance: #3: Strategy Top performers put a product innovation and technology

strategy in place♦ Different than business strategy

Driven by the leadership team and the strategic vision of the business

This product innovation strategy guides the business’s NPD direction

And helps to steer resource allocation & project selectionDefines the role that new products and technologies

will play in achieving the business’ overall goals, and what “arenas” or battlefields will be entered as a result.


Why Bother With NPD Strategy?

“I find the great thing in this world is not so much where we stand, as in which direction we are moving: To reach the port of heaven, we must sail sometimes with the wind and sometimes against it but we must sail, and not drift, and not lie at anchor.”

Oliver Wendell Holmes, The Autocrat of the Breakfast Table, 1858.

“Plans are nothing. Planning is everything.”Dwight D. Eisenhower, US General and Supreme Allied Commander

at D-Day

“In the absence of a clear strategy, what you are working on is your strategy.”

Me


The Importance of a New Product Strategy for Your BusinessBusinesses that are most likely to succeed at new products are those1...

♦ that implement a company-specific new product idea-to-launch process

♦ driven by business objectives & strategies

♦ with a well-defined new product strategy at its core

Our benchmarking studies reveal that2...

♦ having an articulated new product strategy for the business is one of the four most important drivers of NP performance

1 Source: Booz-Allen & Hamilton2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study

1 Source: Booz-Allen & Hamilton2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study

The need for an articulated product innovation strategy is clearBut how well-defined is the innovation strategy for your business?


A Product Innovation Strategy to Guide the NPD Effort

Percentage of Businesses

10% 20% 30% 40% 50% 60% 70% 80%

37.9%27.6%

19.2%Product roadmap in place

41.4%26.9%

15.4%Strategic buckets

69.0%64.8%

53.8%Strategic arenas defined

58.6%38.1%

23.1%Long term commitment

58.6%46.3%

30.8%Role in Business goals

51.7%38.1%

34.6%Clearly defined NPDgoals

Worst Performers

Average Business

Best Performers

Best performers articulate a product innovation strategy


What Is a Product Innovation Strategy?

1. The goals for your business’s total product development efforts

The role of product development: how new products tie into your business's overall goals

2. Arenas of strategic focus – the battlefields

3. Attack plans – how you plan to win here♦ Strategic stance or approach♦ Entry strategy (for new arenas)

4. Resource Commitment & Strategic Portfolio Decisions♦ Deployment♦ Strategic buckets♦ Strategic product roadmap

More than high level goals and a list of development projects!


The Four Drivers of Performance: #4 Portfolio Management Resource investment and focusing on the

right projects – portfolio management: ♦ Top performers commit sufficient resources to

effectively undertake their new product projects♦ And they boast an effective portfolio

management system that helps the leadership team effectively allocate these resources

- To the right areas - To the right projects

Portfolio Management: How you operationalize your strategy


Some food for thought …“You gotta know when to hold ‘em.

Know when to fold ‘em.

Know when to walk away.

Know when to run.”

Kenny Rogers, The Gambler

“Take calculated risks. That is quite different from being rash.”

George S. Patton, U.S. General


Portfolio Management Is Fundamental To Successful Product Development

How should you invest your R&D or Development funds & people?

What is your investment portfolio? Portfolio Management:

♦ Is about resource allocation

♦ Which Development projects should the business resource from among many opportunities (Go/Kill)?

♦ The relative prioritization of these (e.g., accelerated development; Go vs. Hold for now)

PM is how you put into practice your Business Strategy

Strategy becomes real when you start spending money!T

echn

olog

y Im

pact

to B

usin

ess

HIGH

LOW

Likelihood of CommercializationWithin Next 5 Years

LOW HIGH


Why Portfolio Management Is Vital

Eight key reasons why portfolio management is fundamental to innovation success:1. Financial – to maximize return

2. To maintain competitive position

3. To properly allocate scarce resources

4. To forge link between project selection & business strategy

5. For focus

6. For balance

7. To communicate priorities

8. To provide objectivity in project selection

Top performers emphasize the link between project selection & business strategy


Portfolio Management: A Major Problem Area Portfolio Management is typically poorly handled:

♦ Rated as weakest area in new product management in recent benchmarking study*

♦ Management confessed to...- No serious Go/Kill decision points- No criteria for making the Go/Kill decision

♦ The result: a tunnel, not a funnel- Also indicated poor project prioritization

♦ Too many projects for limited resources available Major business challenge

♦ Many different approaches♦ No easy answers♦ A problem many companies are addressing * Source: Cooper/Kleinschmidt

Vital for success – but no quick fixes


Breakdown of Projects By Project

16%

25%

24%

10%

24%

22%

33%

10%

Average Business

7%New To The World Products

19%Major Product Revisions

20%New To The Business Products

28%Incremental Product Improvements & Changes

6%12%Promotional Developments & Package Changes

Best Performers

Worst Performers

~65%~55%~45%

10 Point Steps

Best Performers focus more on innovative & game-changing projects

40%


Some More Provocative Facts

Not only are portfolios unbalanced

Portfolios contain too many low value-to-the-company projects

And far too many projects for the limited resources available

A small minority of businesses have a systematic & formal portfolio management process in place

But hi-productivity businesses suffer much less from these deficiencies 31.0%

37.9%

41.4%

37.9%

31.0%

21.2%

24.0%

25.0%

21.2%

19.4%

3.8%

4.0%

12.0%

0.0%

0.0%

0% 10% 20% 30% 40% 50%

Formal & systematic portfoliomanagement process in place

Good balance between number ofprojects & resources

Good job of ranking/prioritizing projects

Portfolio contains high value-to-the-business projects

Portfolio has excellent balance inproject types

Worst Performing Businesses

Average Business

Best Performing Businesses

Percentage of Businesses


Five Goals in Portfolio Management

1. To allocate resources so as to maximize the value of the portfolio ♦ Against some company goal

- Long term profitability; or return-on-investment

2. To achieve a desired balance of projects♦ Between long term and short, fast ones♦ Between high risk and low risk♦ Across different project types & market sectors

3. To link the new product effort to the Business Strategy♦ Ensuring that projects are ‘on strategy’♦ That spending reflects the strategic priorities of the Business♦ That the business’s strategy will be realized thru the list of active

projects


Five Goals in Portfolio Management (continued)

4. To obtain the right number of projects♦ Balancing resource demands

with resource availability♦ Not overloading the pipeline

with too many projects

5. Sufficiency: ensuring that projects will enable business to reach its NPD goals♦ Question: If we do these

projects, will we achieve our Sales (or Profit) goals for NPD for the next few years?


Balancing Speed and Accuracy in NPD





Focus on the Four Points of Performance




READY

AIM


Thank You

Meg Sheehan Principal, Global Solutions

[email protected]+1-905-304-8797

www.stage-gate.com

Www.stage-gate.com © 2000-2009 Stage-Gate International Stage-Gate ® is a registered trademark. Logo for Product Development Institute Inc. used under.

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