Good Ideas Aren't Enough

Good Ideas Aren't Enough

Manufacturers must improve processes all along the innovation life cycle to ensure product development success.

Global positioning system maker Garmin Ltd. announced in early November that it would exit the production of smartphone handsets. "We thoroughly analyzed the rapidly changing dynamics of the smartphone market and concluded that we cannot reach the scale necessary to effectively compete in the industry," said CEO Min Kao in the company's third-quarter earnings release. "While this was clearly not the desired outcome, we must be prudent with our ongoing investment in the category and have therefore redeployed research and development resources internally, winding down our investment in mobile handset device development."

George Coulston: "It's easy to have good ideas; there's no shortage of them out there. It's much more difficult to define an opportunity, build a business case around that opportunity, really vet out customer requirements and then work your way through all the commercialization issues."

Garmin's decision to shut down development of a product not meeting expectations is a scenario likely experienced at one time or another by most manufacturers that are engaged in innovation. Successfully introducing new products into the marketplace is a notoriously challenging endeavor for most manufacturers even as they promote the importance of innovation to their companies' growth. And simply having a good idea is not enough. "It is easy to have ideas; there's no shortage of them out there," says George Coulston, vice president, global research, development and engineering for tooling producer Kennametal. "It's much more difficult to define an opportunity, build a business case around that opportunity, really vet out customer requirements and then work your way through all the commercialization issues."

Indeed, opportunities to misplay innovation extend well beyond the ideation phase, but so, too, do opportunities for improvement. The challenge, then, is to translate those opportunities to misplay innovation into opportunities to improve the business side of innovation. The following examples and observations may help manufacturers whose own new-product introduction efforts have faltered.

Don't Short-Shrift Market Research

How often has a seemingly good idea been introduced, only to languish for lack of a customer, too many competitors or being late to the party? One reason such failures occur is lack of insight into customer economics and competitors' capabilities, says Mark McClusky, president of consulting firm Newry Corp. It's insight that should be gathered before a manufacturer starts spending millions of dollars to ramp up production.

Kennametal's Beyond Blast insert platform made its debut at IMTS 2010 in Chicago in September. Product development is one of the six key processes by which the manufacturer operates its business.

"People put products into the marketplace thinking they really know what's going on but they really don't. And the reason they don't is because they either didn't invest enough to try and find out or because they were unable to find out," he says.

McClusky, whose clientele is 80% industrial, says the error he sees most frequently is companies underestimating their competition. The company will enter the marketplace with what it believes is a sure winner, "only to find out the competition already has something similar, could get to something similar if they worked at it a little bit, or the competition has the ability to reduce price, for example, and respond to a product introduction without a lot of trouble." By the same token, he has observed manufacturers invest tens of millions of dollars on products without truly understanding whether a market existed for it or not.

Certainly, understanding customer needs presents challenges as well. Even with processes designed to do exactly that, such as Voice of the Customer, manufacturers should take care that the customer's voice is not substituted with the voice of marketing, the voice of the sales force or the voice of some technical guru. It can and does happen, says Coulston, whose company was named 2010 Outstanding Corporate Innovator of the Year by the Product Development and Management Association. He explains: "The problem with that is you're not really capturing the voice of the customer. It's important in these VOC processes to take cross-functional teams that are going to be involved with product development and have that team directly spend time in the field with the customer, preferably in the environment where their targeted product is going to be used."

The danger inherent in lack of insight is greatest when a company is entering new territory, Newry's McClusky notes. "That's part of the challenge of today -- in order to grow, people can't just gingerly edge out, stealing share away from their most well-known competitors. They've got to do new things. They've got to innovate," he says. Yet "the newness of that territory means that you don't understand the dynamics as well as you do in your well-trodden path. So people make mistakes."

Involve the Business Team Early

Materials producer Ferro operates in some pretty dynamic markets, like solar, where technologies are evolving rapidly. If Ferro doesn't innovate as quickly in those areas as its customers do, the manufacturer will be left behind, says Jeff Edel, global business director of Ferro Electronic Materials. Recognizing the challenge, the company has spent the last few years putting processes in place that help it better manage its innovation.

Like many manufacturers, Ferro employs a staging gate process to drive innovation. With a staging process, product development efforts move through "stages," and must meet certain criteria to successfully pass through a "gate" and move forward in the development process. For existing product extensions, Ferro takes a staged process "light" approach, which allows for rapid product development and launch. Ferro Electronic Materials also has a core technology group that is less directly tied to current business or customer technology road maps, but instead has more freedom to look ahead at industry trends.

Jeff Edel: "It's critical having that linkage between the technical and the commercial person from the first stage."

Nevertheless, Ferro has added a twist to its staged process to assure that its innovation efforts remain aligned with business needs, in both its core technology group and for product extensions. The twist is referred to as a "two-in-a-box" concept. Quite simply, the concept means that a technical representative and a commercial representative are linked to every project, moving it forward in a form of co-development.

"It's critical having that linkage between the technical and the commercial person from the first stage," Edel says. "It's really critical to making sure things don't get developed technically without having a strong market linkage or that we don't go down market paths without having strong technical capabilities to execute."

First Launch and Beyond

Accenture's Wouter Koetzier, managing director of the consulting firm's innovation practice, warns that managing the innovation process after the initial launch is virgin territory for many manufacturers and may not get the attention it deserves. It should be planned with military precision. "If you don't have a plan you can execute against, there is not much chance you can get it right."

New aluminum pastes for the solar industry introduced by Ferro Electronic Materials improve solar energy efficiency and throughput rates, enabling solar energy to become a more cost-competitive energy- generation alternative.

He cites rapid market penetration, quickly correcting a new product's cost base and competitive innovation as essential to success in this phase of innovation. Competitive innovation, he explains, means quickly innovating upon launch and it's particularly important in consumer products. "It's all about once you hit the market you should already be working on the next level of innovation. You should already be working on the next iteration."

Kennametal's Coulston says his company has put in place procedures to ensure that a project does not lose momentum following a product's launch. Three months after launch, the manufacturer conducts what he calls "launch check." During launch check an audit is performed to make sure all the deliverables associated with product launch occurred. The deliverables can include delivery of training materials to the sales force, completed marketing communications, application engineers around the globe that are ready to assist customers, and others.

"We want to make sure all those things that we said we were going to do at stage five [of the company' staging process] in order to get to actual launch took place," he says. Once projects clear launch check, "that's when the clock starts on the sales plan."

Similarly, the company has added post-launch reviews that occur one year after product launch and two years after launch. While the one-year launch review, implemented to evaluate how sales are progressing against plan, have been part of the procedure for many years, Kennametal added the second-year launch review about a year ago. Its reasoning? "Often times projects, for one reason or another, may not be on plan in the first year," Coulston says. "Lots of things can happen, but we want to make sure the project teams stick with the project and work to make sure the project gets back on plan." Additionally, they want to collect the learnings from the effort and feed them back to benefit other projects in the pipeline.

Ultimately, new product development is not simply a research and development or engineering process, points out Coulston. "New product development is a business process and every function in the organization is accountable for their role in innovation and in product development," he says.

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