Turning an idea into a product or service is oftentimes more difficult than coming up with the initial thought. In addition to having the right product idea in the first place, there are three essential ingredients for successful new product development:
- Relevant skills. For example, if you’re developing a new food product, creating it is only the starting point. Other issues include sourcing ingredients, the mass production process, quality control, packaging, costing and pricing, and customer trials.
- Sufficient resources: If you can only afford a half-hearted attempt, don’t even begin. If you commit too many resources, the rest of your business may suffer.
- Commitment: The success of the project will depend on your personal commitment. Although teamwork is important, in a smaller business it’s often the owner or manager who must drive the project.
Reducing the risks
Try to identify the major issues early on so you can decide if the overall risk is worth the potential reward. Ask yourself the following questions:
- Will you get a satisfactory return on your investment? Establish the likely volume of sales, and the marketing and sales cost of achieving each sale.
- Is your target market growing or shrinking?
- Are there any foreseeable changes in your market that could affect the success of your product, such as new safety legislation?
- Are there any competing products already in the market? Can you offer something different and unique?
Work out how to reduce each risk to an acceptable level. For example, can your new design be patented or protected in some other way?
Ask potential customers, suppliers, and members of the development team for feedback on the idea or a prototype. Raw feedback at this stage can save time and money.
Signs of non-starters
While a good product idea doesn’t promise success, a bad product idea is guaranteed to fail.
Here are some fatal flaws:
- You can’t sell at the price or volume necessary to make a profit.
- Your product can easily be copied. Competitors could launch similar services at lower prices, with fewer start-up costs.
- You lack market power. For example, a new piece of software may be the best in the market, but it could be doomed to fail if you lack an effective distribution chain.
Know what you’re doing
Start by defining a basic specification for your new product or service.
- Make sure you have a compelling reason for customers to switch over to your product.
- Next, plan the design of your product. Use in-house or external designers and get them to sign confidentiality agreements if necessary.
- If you need any approvals or certification (such as for electrical products), book the product tests. Ask if the approvals body can also test your prototype to identify any problems early on.
Efficient manufacturing
If you intend to manufacture your product, cultivate these plans and develop the design of your new product simultaneously.
- Design new products so that the number of components is minimized.
- Try to reduce the complexity of assembly to save time and reduce labor costs.
- Use standard parts that are inexpensive and easy to source. See if you can work with parts you already use in other products.
Finally, ask yourself if it would be cheaper or better to outsource the manufacturing process.
Selling price issues
Decide on the likely selling price for your product and the anticipated sales volume to find out if the product will be viable. Based on this information, work out what your maximum unit cost of production should be. Many new products aim to provide the same quality as an existing product, but at a lower price and with better profit margins. Other products rely on superior design or technology to win market share and can be priced at a premium.
Project management
Create a team with all the skills needed to make the project a success and choose a team leader. Every new product needs a product champion to point the team in the right direction.
- Give the team leader the authority to run the project (within an agreed budget and timetable) with the responsibility of reporting progress to you at agreed milestones.
- Make sure all the team members agree on the main objectives, which should be based on the basic project specifications.
- Be prepared for negativity and keep the team motivated. Anyone with a negative attitude will influence the rest of the team.
- Celebrate achieved milestones as an effective way of maintaining morale.
Make it clear that there may be failures along the way. Remind the team that if making the new product was easy, someone would have done it already.
Managing tasks and objectives
Set SMART (Specific, Measurable, Agreed, Realistic and Time-bound) objectives to control progress. This enables the team leader to identify problem areas that can be focused on.
Create a flowchart showing the order in which tasks must be completed. A visual of the whole process can make things more apparent to everyone.
Nothing is perfect, so as the project proceeds you’ll typically need to adjust the specifications and planning assumptions.
Cost control
Keep asking yourself if the project will meet its commercial objectives. To do so, it’ll have to standby the pricing levels you’ve assessed as commercially viable. Without planning and monitoring, costs can spiral out of control.
Next steps
- Calculate costs, do market research and assess the resources you require.
- Select the right team and appoint a leader.
- Involve the team in the new product development to gain their buy-in.
- Allocate work on each development section and set progress milestones.