NPD Tales

Ideas Thoughts and Comments on Product Development

Cost of Delay?

Delays in product development schedules are almost inevitable.  Unless you avoid technical risk and sandbag your project plans there will invariably be some issue that will result in a potential slippage in your product launch date.

Corrective action might be possible.  You could lose some features, throw some more engineering resources or money at the problem – and the sooner you know about the problem the more chance you have of putting it right.  However it’s important to understand what impact the delay will have on the success of the product so the most appropriate solution can be executed.

If we look at a typical sales curve for a new product, there are a few key parameters that you need to think about.

launch delay factors

1 – How will the delay affect the growth of the sales?  Will the ramp up be slower (or in some instances – like where an earlier entrant has proven the market – quicker)?

2 – What will be the impact on the maximum sales?  Will late entry adversely affect market share (or do you command almost unshakeable customer loyalty)?

3 – When will sales start to decline?  Is this a fixed point in time (where new technology or next generation products take over) or does your product have the same life whenever you launch it?

4 – How quickly will your sales tail off? (This is less important and more difficult to relate to a delay in product launch)

It’s difficult enough to have a strong forecast of your baseline curve, let alone predict the impact of a late product launch.  More accuracy in these figures helps you make better decisions – but even if you can’t put exact figures on your graph, it’s worth asking the questions to understand the shape.

Increasing NPD Productivity – Portfolio (4 of 5)

Portfolio Management when applied to new product development is simply a multivariate analysis of the factors that determine the importance of a new product development opportunity and a method of assigning a priority to each opportunity.

At it’s basic level it should involve some quantitative analysis of the forecast revenue, profit and return on R&D investment.  The biggest challenge here is to get accurate sales forecasts, it’s usually easier to predict R&D costs.  I have seen analysis that has used simple statistical analysis of the product financials to take into margins of error for the forecasts and estimates.

More complex analysis of qualitative factors (like technical risk, existing market fit and strategic value) can be achieved by assigning quantitative values to them.  At this point the analysis becomes much more interesting – advanced visualisation can be used to determine the viability and priority of each project against the whole portfolio and where it fits in the overall innovation strategy.

portfolio management bubble

Of course it’s important not to get carried away – an incremental approach of starting simple and increasing the complexity of analysis over an extended period of time can deliver early benefits before finding the optimum level.

Interruptions

Look at it from any angle – a design engineer who is constantly interrupted is not likely to be working efficiently.  From lean product development perspective interruptions are one of the most common sources of waste.  In more general terms interruptions do more to increase both time to market and flaws in product design.

Enlightened management of new product development should seek to create an environment where interruptions are minimised, but even in these cases, team members often naturally create their own interruptions.  As technology helps us become more connected this problem seems to be increasing.

As Jack Ganssle said “..if you respond to the email reader’s ‘bing’ you’re little more than one of NASA’s monkeys pressing a button to get a banana.”

Welcome to NPD Tales

Welcome to a regular blog that explores the world of new product development.  I’ll be covering the widest range of topics associated with NPD and Innovation that I can think of.  My aim is to provoke thought and provide inspiration for anyone involved in turning ideas into successful products.  Feel free to comment on the posts or suggest topics that you’d like exploring.