Product Launch

Is this the reason your new product launch will be late?

In a report titled "Best Practices for New Product Development and Introduction" from 19 June 2007 Ralph Rio, Research Director Enterprise Software at ARC Advisory Group states:

"On average, 45% of the products are released on schedule which means over half of new products miss their schedule."

Listen to Is this the reason your new product launch will be late? [8 minutes, 4.5 MBytes, Apple QuickTime / iTunes is required]

To improve these results, Rio recommends focusing on company goals and metrics that reflect top line revenue impact. Rio's summary provides insights on solving the problem of missed introduction schedules. His report uses the phrase NPDI leader - new product development and introduction leader. He reported:

"The NPDI leader also needs good skill in persuasion to gain agreement from managers to do something that is not optimal for their department, but is in the best interests of the corporation."

The NPDI leader's goal is to ensure that the appropriate people are engaged in development and launch activities and that their activities are coordinated to maximize efficiency to achieve the desired business results for the company.

Why it is important to fill this leadership role?

When new products are not available for purchase by customers on the promised launch date, top line revenue suffers. When missing information or services cause potential customers to abandon the sales process, top line revenue suffers. When customers that purchased your products are reluctant to recommend it, top line revenue suffers. Fixing these problems should be a new product development and introduction imperative. Some product launch problems are a result of errors of omission and that will be discussed later.

Assigning blame for poor performance

When there are inefficiencies and delays in the new product development process, who is blamed?  Frequently, one functional group blames another functional group. For example, a contributor with a strong allegiance to engineering may blame management for delays. This has been a recurring them in the Dilbert comic strip from its inception on 16 April 1989 to the present.

Here is some hyperbole about the cause of delays:

• Marketing and sales don't share the same goals
• Sales may criticize the 'factory' for not understanding the customer's needs.
• The product manager frequently complains about not having enough resources.
• Team members complain that their favorite solution was not selected.
• The project management specialist may rebuke contributors that miss critical milestones that were meticulously documented in the project schedule but were unattainable in practice .

Who fulfills the new product development and introduction leadership role?

"NPDI leader" is not a common job title. Who might fulfill this leadership role?

In some companies, the Product Manager is expected to provide new product development and introduction leadership. As described by David Daniels of Launch Clinic in "The Role of the Product Marketing Manager" the Product Manager and Product Marketing Manager have specific strategic and tactical roles but typically their influence is limited within the company.

In other companies, business development managers have broad responsibilities for several product lines. Usually the role of the business development manager is multi-disciplinary and impacts engineering, marketing, and sales activities. Therefore, business development managers are positioned to provide NPDI leadership.

The product champion or sponsor has broad influence and may be positioned to provide NPDI leadership.

Leadership and risk reduction

My July 2005 Visions article titled "Making Robust Launch Decisions - Part 1," suggested another way to analyze launch delays. The potentials for launch delay can be attributed to three types of risk. These three risks are based on an article titled "Why Good Projects Fail Anyway" by Nadim F. Matta and Ronald N. Ashkenas in the September 2003 issue of Harvard Business Review. The three types of risk are:

• Execution risk—The risk that designated activities won’t be carried out properly
• White space risk—Some activities will not be identified in advance
• Integration risk—Disparate activities won’t come together at the end

An NPDI leader must have a system-level perspective to minimize these three types of risk. Errors of omission increase these risks. To ensure top line revenue success, an NPDI leader must have a broad understanding of development and launch fundamentals and interdisciplinary expertise.

The Impact of Reductionists

In the absence of an NPDI leader, the viewpoints of reductionists prevail. Often, reductionists are masters of one discipline but a reductionist has a biased view that overemphasizes specific activities.  Reductionists at your company may have job titles such as lead engineer, manufacturing supervisor, purchasing manager, or market analyst. For example, a reductionist might declare that the "all the engineering drawings for a product have been approved" or that "the brochure is finished." The problem is the failure to appreciate the other contributions necessary for a successful launch.

Reductionists are specialists. Their contributions are required for successful new product development and launch. For maximum success, an NPDI leader guides the activities of these specialists.

Examples of successful new product development and introduction leadership

Here are a few examples of successful companies that have NPDI leadership.

• At Toyota, this new product development and introduction leader is called a shusa [see Results and Rewards of Sustained Innovation in Development and Launch].
  
• At Apple, an NPDI leader is Steve Jobs. He provides system-level thinking that dramatically coordinates development activities and impacts launch schedules.
• The 37signals team of experienced, enthusiastic, multidisciplinary designers and developers has adopted a unique commercialization philosophy.

Who is best equipped to provide effective and efficient new product and development and introduction leadership at your company?

Lessons Learned for Market Launch - 2007 B2B Survey

In a 17 October 2007 press release, Schneider Associates, a marketing communications firm, and the Center for Business Innovation at Babson College announced a report on the best practices for conducting Business-to-Business (B2B) launches. The research identified 10 lessons that improve the chances of launch success. As listed in the press release, the 10 lessons were summarized as:

• Have a documented launch process.
• Establish a separate launch budget.
• Establish your launch budget as early in the product development phase as possible.
• Try to keep your launch budget stable throughout the implementation phase.
• Determine your launch performance measures before the launch begins.
• Measure the right success metrics.
• Include the right external professionals on your team.
• Fight for bigger budgets.
• Do a great job educating your sales force and other internal audiences about your new product or service.
• Spend money on word-of-mouth campaigns rather than on advertising.

For comparison, the 10 strategies for launch success presented in Joan Schneider's 2004 book were:

• Treat Launch as a Separate Phase
• Have a Plan
• Don’t Carve Your Plan in Stone
• Learn to Live with the Inevitable Delays
• Spend Money on Products That Are “New”
• Assemble an Expert Launch Crew
• Brand/Product Managers Make the Best Team Leaders
• Bigger Budgets Fuel Success
• Consumer-focused Spending Prevents Crash Landings
• Don’t Overlook PR

Both lists include the recommendation regarding the selection of the appropriate people for the design and implementation of the product launch.

How do you ensure that the appropriate people are engaged in development and launch activities and that their activities are coordinated to maximize efficiency to achieve the desired business results for your company? I will explore that in my next post.

Results and Rewards of Sustained Innovation in Development and Launch: Toyota’s Success

This post explores the results and the rewards of Toyota’s sustained innovation in development and launch.

Listen to " Results and Rewards of Sustained Innovation in Development and Launch: Toyota's Success " [10 minutes, 10 MBytes, Apple QuickTime / iTunes is required]

Two articles published about Toyota in the Summer 2007 issue of Strategy and Business magazine inspired this podcast. Strategy and Business magazine is a Booz Allen Hamilton Incorporated publication.

In an article titled Innovation Agility, authors Kevin Dehoff and John Loehr summarized. “Toyota can launch more new vehicles than its competitors in the same timeframe, trying new designs in the market sooner. Faster market feedback means less reliance on long-range ‘guesses’ about customer preferences three years hence. This significantly reduces Toyota’s market risk.”

Toyota is expected to become the global leader in vehicle sales in 2007 taking over the position that General Motors has occupied since 1931. Let’s explore how has Toyota systematically strengthened its position.

Dehoff and Loehr propose a set of six capabilities that enable Toyota launch projects to succeed. These are:

1. Structure and organization
2. Development process
3. Extended enterprise
4. Institutional learning
5. People development
6. Culture

The following examples from each these six capabilities highlight the essential factors that work together for Toyota’s success.

Capability Number 1 - Structure and organization
A key element of the Toyota product development engine is achieving a harmonious, efficient team effort. Program leaders called shusa’s are key to the success of this management process. The shusa provides the system-level perspective to direct contributors to an effective, unified effort that leads to a successful launch.

As explained by James P. Womack, the author of the book “The Machine that Changed the World,” a shusa is a super-craftsman. The shusa’s role is interdisciplinary. In addition to engineering decisions, the shusa is responsible for the program’s business success. The shusa must have the technical skills, business insights, and managerial experience to ensure that everything works together to create value for customers. At Toyota, becoming a shusa is a 20-year process.

In companies that don’t have the equivalent of a shusa, launch results are often less successful because of differences in priorities and preconceptions in groups such as engineering, marketing, and sales. Concepts such as launch architecture can provide the unifying design that maximizes synergy.

Capability Number 2 - Development Process
Toyota’s development process enables them to design, develop, and launch great products faster with fewer resources than most of their competitors.

The Toyota Production System emphasizes quality and efficiency to reduce waste through lean manufacturing concepts. John Krafcik coined the phrase lean production to emphasize that lean methods uses less resources than many traditional mass production methods to produce outstanding products in less time. The Toyota Production System has been described as a manufacturing phenomenon that seeks to “maximize the work effort of a company’s number one resource, the People.”

According to Dehoff and Loehr, the Toyota development model incorporates an intensive form of coordination. Their development process relies on concurrent engineering. Parallel path development activities are encouraged. The Toyota development model uses “a great deal of communication among engineers on product launch, an activity that is often seen as a waste of time in other companies.” This system delivers value and reduces project risk.

The bad news for Toyota’s competitors is that Toyota’s development process is very good now and because of the reinvestments they have made, the momentum for continuous improvements within Toyota will likely surpass the efforts of many of their competitors for the foreseeable future.

Capability Number 3 - Extended Enterprise
The goal of program success is shared throughout the extended team. In the Win-Win Sourcing article, Bill Jackson and Michael Pfitzmann conclude that “The most effective procurement model fosters knowledge sharing, not mistrust.” Toyota prefers suppliers that favor quality to cost reduction. Toyota’s prefers to treat its suppliers as partners.

Contrast this with price-based sourcing which may foster a combative posture between manufacturers and suppliers.

In the “Get it right the first time” section, Jackson and Pfitzmann state “But no matter how it’s justified, the net effect of the price-based system is to raise costs.” The authors cite three insightful reasons for the unintended result of lost opportunity. They conclude that price-based systems can:

1. Sanction sloppy engineering
2. Foster gamesmanship that includes initial over-design of components to facilitate cost reduction efforts later
3. Penalize developers by requiring them to fix old problems instead of creating new products

Toyota’s implementation of extended enterprise maximizes cooperation within a diverse development team.

Capability Number 4 - Institutional Learning
Toyota success depends on its systematic effort to capture, institutionalize, and share knowledge. This enables teams of multi-skilled workers to develop and produce a large variety of products.

Capability Number 5 - People Development
Toyota invests in developing its best people. Their system nurtures technical and functional excellence. In contrast, typical mass production favors unskilled or semiskilled workers that produce standard designs for as long as possible.

Capability Number 6 - Culture
Toyota’s culture encourages changes for the better within the company. In combination with people development, institutional learning, extended enterprise, Toyota’s culture is fundamental to their approach to competitive advantage.

Toyota’s core values include continuous improvement and collaboration. A core principle of the Toyota system is Kaizen - the Japanese term meaning, “change for the better.” Contrast this with the “if it is not broken” or “good enough” approach in use by too many development teams.

Dehoff and Loehr reported, “It has taken Toyota 60 years to perfect their product development process.” Congratulations to Toyota. Through sustained innovation in new product development and launch they have become number one.

What is your strategy for attaining the top spot in your sector? If you already are a recognized market leader, what will perpetuate your prominent position? What steps will you take to ensure a better, faster, and more efficient path to launch success?

Product Launch Press Conferences for Financial Analysts: What is Most Important Question?

If you are planning a product launch press conference at a premier industry event, what will be important to a financial analyst? What would motivate a financial analyst to attend a product launch press conference?

Listen to Product Launch Press Conferences for Financial Analysts [8 minutes, 8.5 MBytes, Apple QuickTime / iTunes is required]

In this post, I will address what I believe is the most important determination for a financial analyst.

Here is a hint. Analysts that personally attend product launch press conferences are more interested in the future than the past. Financial analysts are interested in the future because they are making recommendations about purchasing, selling, or holding company stocks.

A product launch provides an extremely valuable insight about the future of a company. A successful launch provides an innovation assessment of functional areas such as management, development, marketing, sales, and distribution. A successful launch validates strategy and tactics. A product launch press conference is a critical part of a product development and launch process because it can reveal the current operational excellence of the entire organization. Specifically, a company that systematically introduces differentiated and innovative products is more likely to be an attractive investment.

Earlier this year, I attended a major conference and exposition as a media representative. Historically, these events are a preferred venue to introduce new products. My original goal was to find at least one great story about a new product. I scheduled the time to attend two, on-site press conferences.

The first company, a mature, industry leader, spent most of the first 15 minutes of their high profile press conference reviewing financial results. Although there were hints about new products, the presentation focused on history and not news. Eventually, information about the new products was revealed as part of an overall status report for the company. When the press conference was opened for questions, it became clear that there were two kinds of specialists in the audience of more than 100 people: industry journalists and financial analysts.

The second company, also a mature, industry leader, spent some time during their press conference addressing the implications of a recent merger but did highlight many new products that they were introducing.

During the press conference luncheon, I sat at a table populated by financial analysts. For half an hour, I just listened. One of the analysts was familiar with the financial reports from both companies and it was clear that he had studied this market sector. I learned that he had allocated only a few hours of his time for this industry event.

When I had the opportunity for a private conversation, I had only one question. I asked, “Why did you invest the time and effort to attend this event in person?”

The seasoned veteran replied, “There are specific meetings for analysts but I come to this meeting to get another perspective. Is anyone really going to buy this stuff?”

At a product launch press conference, the financial metrics provide the historical summary of a company’s performance with the old products while the press kits provide specifications about new products. Remember that financial analysts have historical data about performance and great industry data back at their office. They have access to a lot of official information. The additional perspective that they hope to gain by attending an onsite, new product press conference at a major trade show is about future performance.

If you want to build confidence about future product sales, here are three suggestions to consider when planning a press conference that financial analysts will attend.

The first suggestion is about the inclusion of enthusiastic customers or other experts.

• Present reference customer that can showcase improved ways to solve old problems using your new products. Enthusiastic users are essential ingredients to a great story and an indicator of the future sales of a new product.

• Provide opportunities for the financial analysts to interact with these evangelists.

The second suggestion is about demonstrations.

• Beside static images of the new products, consider showcasing the products in context using both live and prerecorded demonstrations.
• Showcase enthusiastic representatives using your product. Great demonstrations are powerful. Instead of a customer saying that your product was “powerful” imagine the reaction if they did something powerful using your product.
• Find passionate people to demonstrate your product. If your CEO or the product manager can’t masterfully demonstrate your product, find someone who can.
• Find a way to let analysts experience the product. Can you provide a sample? Is there some way to develop a connection with your product? Is there a way for analysts to use your product even if it is a virtual experience?

You may by thinking “But things can go wrong at a demo” When the demo design and preparation are poor, awful things frequently happen. However, when the demo design is innovative and properly prepared, the results can be amazing.

If you are thinking about the investment for a powerful, proficient demo ask yourself another question. When is a great demo more important than at the press conference where you are launching your new product?

The third and final suggestion deals with the future.

• Present reference customer that can showcase improved ways to solve emergent problems using your new products.
• Demonstrate that your product roadmap is aligned with future trends and that your team is agile enough to adapt.

What is important
Customers and competitors are likely to engage in discussions about features, advantages, and benefits. Industry journalists are likely to report on what happened at your press conference. Financial analysts want to know about the future. “Is anyone really going to buy your stuff?”