assignment

1. New Product Development challenges fall into three major categories:
• New Product Selection
• Time and resources issues
• New Product Development in isolation from the rest of the company or the market
Fortunately, all three challenges have the same solution.
New Product Selection
Does this scenario sound familiar? The design team is already working to a specification when suddenly,
the most successful Account Manager comes in and swears that he can get a million dollar order if the
new product features can just be changed a bit. Better yet, the customer is the company’s biggest
customer and your employer cannot afford to upset him. You recast the scope of the new product and
start over with the design.
One week later, the VP of Sales summons you and the President to a meeting. Another opportunity has
come up, potentially representing a 20% increase in company revenue this year. This is for the new
product under development and the Sales team has been trying unsuccessfully to get into this large
account. This is their opening. The new product will need to meet the prospect’s specification which
differs from both the original and the revised specification.
On his way out, the VP of Sales delivers his parting shot: the proposal is due in two weeks while your
realistic target date for completion of the design in progress is in three months.
All these situations are symptoms of the same issue: not defining upfront the target market for the new
product. The situation described above usually occurs in the absence of a Marketing function (Market
Managers or Product Managers) to shield the Product Development group from the immediacy of the
Sales demands and to provide realistic pricing and market size definition and expectations. Another
manifestation of this issue is the addition of features to the product so it can satisfy every possible
customer without consideration of the associated prohibitive cost.
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2. Time and Resource Issues
Designing to a moving target is a fine way to strain limited resources and delay the revenue generating
completion of the project. The delay makes it more likely that the market will change and prevent your
company from harvesting all the revenue it had anticipated. The changes can take the form of external
events such as the current economic crisis or of competitive activity such as the early release of
products that are substitutes for yours.
R&D resources risk being sucked into the daily demands of technical support when the same group
handles both. This will also cause delays and decrease the profitability of New Products. If the two
functions cannot be separated, assigning a dedicated individual to each new product project can have
the same benefits. Mentoring by a more versatile and experienced Manager can allow the assignment of
a junior professional who, unlike his Manager, will not be distracted by competing demands. To see
more Practical Tips for Managing New Product Development, click here.
Stretching finite resources too thin can drag project timelines and increase risk. It is often the number
one challenge of NPD leaders.
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New Product Development in Isolation
Is Technical Product Development an island in your company, working in isolation until the design is
finished? Isolation can manifest itself in at least two ways: in one, the New Product Development group
conceives of the product, writes the specification, designs the product and even estimates its selling
price and anticipated revenue. If this looks normal to you, ask yourself: how successful would the
company be if Operations specified the products and the Sales department designed them?
Another symptom of isolation is when ideas get explored by the technical group but never progress
beyond exploration: no connection with the rest of the business is the cause.

3. Such isolation can lead to overestimating the selling price and quantities sold: 44% of new products fail
to deliver the projected sales, according to one study. This isolation delays revenue generation as the
Sales department does not get a chance to prepare the market in advance of product launch.
This isolation can also cause delays in Operations. The plant manager could be reluctant to break
production runs in order to produce pilot quantities of the new product, delaying market adoption and
revenue.
All these delays and wrong estimates contribute to wasted resources.
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The Solution
Many of the challenges in New Product Development do not occur in the product development itself,
but are organizational challenges that result in interpersonal friction and reduced return on investment.
One solution can address all these issues: the implementation of a New Product Development process.
As described here, a New Product Development process with stages allows organizations to prioritize
their new product development efforts according to clear criteria such as market evaluations and return
on investment. It also aligns the entire organization behind each project, preventing conflicts in priority
between different departments. The use of gates between phases ensures, for example, that design
happens only after a specification has been agreed upon.
To address these challenges of New Product Development, a process must have the following features:
• Assess the projects financial value before the development starts
• Prioritize projects according to clear criteria
• Let Marketing professionals define the target market and specify the product upfront
• Involve all the functions of the companies at the product selection stage

4. • Align project targets and resources
Our New Product Development process meets all five criteria above and will address all the challenges
of new product development mentioned in this article.