By Ahmet Abaci and Beth Somplatsky-Martori
The road to nowhere is littered with loose ends: Half-finished projects, great ideas that died on the vine, and wasted resources that chipped away at profitability and the bottom line.
In a world where startup energy and entrepreneurship are prized, there certainly is no lack of passion about that “one great thing” that is going to transform the company and change the world.
In our last blog, we talked about the culture and insights that are needed to power such innovation, and new product development, at small- and mid-sized businesses. But avoiding a mention on the list of also-rans and failures-to-launch requires a disciplined approach to innovation, or, more accurately, a way to harness that power into something that’s usable.
That’s why we advocate a process called phase-gate “lite” – a way to layer a process atop a base of innovation in a bid to produce new products that have a legitimate chance of success in the marketplace.
Why do we recommend a light version for smaller and more nimble companies? Though we can agree that process is important, it’s critical to avoid too much bureaucracy in a lean organization that has limited resources with too much paper and rules, or the process won’t be accepted and utilized.
The importance of using a universal set of guardrails to funnel innovation cannot be understated. Too often, companies have what we call “squirrel moments” – those instances where the eureka moments of charismatic CEOs launch a process prematurely – sending it down a path that, rather than being productive, can severely undermine the enterprise value of the company.
Phase gate “lite” simply forces innovators to follow an orderly plan – one where identifying objectives, conducting research and customer interviews, sounding out the market, and determining the projected NPD project return on investment (ROI) provides the balance needed.
Though “phase gate” may seem counterproductive to fostering innovation, it’s quite the opposite. It helps to ensure that only fully vetted ideas advance in the new product development process.
Why is process important? One of the phenomena we have observed within our client base is the embrace of an informal process by which sales – reacting to a customer request or news of a similar product launch by the competition – forces development projects directly into engineering. They do this with little regard to how large the market is, the potential profit to be realized from the product, or whether it will displace other projects the product engineering and development teams are working on.
It is surprising how many times this can happen without the CEO or executive management team being aware that the request was made, and the new product is being worked on.
What we find to be lacking in these instances is an understanding of the importance of cross-functional coordination to NPD. Though it would seem to be intuitive that it takes the collective efforts of product managers, engineers, marketers, and sales reps to bring a product to life, in many cases, implementing a phase gate process represents the first time a company is compelled to use a cross functional process to manage anything in their business.
One way to achieve buy-in across the organization is to redefine the new product development process as not just a launch, but a recipe for market success. In our experience, the process is far more collaborative when the focus is on “achieving market success” through broad customer adoption. As an example, a major CPG company uses “first day shipments” of new products to customers as a success metric, not the fact that product was made and put into inventory. Focusing on customer shipment, which connotes adoption, and first day, which requires early collaboration between all functions, drives the desired behaviors.
One way we find to be useful in guiding this new collaboration process is to introduce a RACI matrix – R for responsibility, A for accountable, C for consulted, and I for informed. This matrix helps to delineate who is responsible for the work, who is accountable for making sure the tasks are performed on time and to budget, which members of the team should be consulted for their unique perspectives along the way, and who outside the team needs to be informed about the progress of a new product as it moves through the process (customer service about the launch timing, for example).
After the completion of this step, you’ve built the foundation upon which to funnel your new product energy. In our next blog, we’ll discuss the first building block of the phase gate lite process – ideation, understanding its role in the process, and learning how to leverage market research to validate the potential new product concepts and gain input and alignment from your team.
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