New product development guide

The more prepared for you are for when that time comes, the better.

What is new product development?

Put simply, new product development, sometimes called NPD, is the process businesses go through to bring a new or updated product or feature to market. The most successful product launches are the ones that incorporate the needs of customers from the start. 

In this article, we will cover the basics of new product development—why it’s important and how to achieve it. And we’ll detail the different, although not competing, methods that people have researched to determine what separates the market leaders from the average companies.

We often talk about the 9-step NPD process—this breaks down the complex process into manageable sections that you and your teams can work through.

Here’s our rundown of that process to whet your appetite for NPD:

Why new product development is important

New Product Development (NPD) productivity in the top performing company is five times what it is the the average company. The top performer gets five times as much new product output for the same investment according to the Innovation Excellence Study 2005 conducted by Arthur D. Little.

Robert G. Cooper, in his essay The Formula for Success

The top companies make new product development seem effortless. They constantly spin out new products.

Think, for example, of Apple: between the Apple Watch, the iPad, iPhone, Macs… Apple have managed to produce several new products a year for a while. On top of this, they continually add new services to ingrain themselves in the lives of consumers worldwide: things like Apple TV, and iCloud are making the company sticky and an essential part of our daily lives.

We need to acknowledge the cause and effect cycle of Cooper’s statement: are top companies in their position of power because they were able to adapt and undertake new product development quickly and effectively? Or, did becoming top companies enable them to undertake new product development, due to more capital, resources, and revenue for research and development?

The answer is: probably a bit of both.

Apple is the market leader because they undertook new product development in an effective manner, and then Apple had more market share, more data, more capital to continue new product development effectively. And so the cycle continues.

New product development is important because:

1. It helps you to increase market share.
2. It engages customers, and builds brand loyalty.
3. It allows a company to stay in touch with the market, and consumers.

How you should approach new product development

New product development is important, but of equal importance is the way in which you do it.

Cooper acknowledges the divide between a ‘top’ company and an average company’s new product development, and in his study he breaks down the processes of the ‘top companies’, and seeks the common denominators—what they all do that makes them able to undertake new product development effectively.

The seven key principles of new product development

1) Customer focused

Solving customer problems is key. If you can offer a real ‘value proposition’ to the customer, you are on your way to effective new product development.

This highlights the need for a certain “wow” factor. Offering boring modifications, small updates, and new products with no competitive advantage is a problem.

A great methodology for getting to the bottom of what consumers really want is via Jobs to Be Done research.

2) Front-end loading

This, in essence, is about good due-diligence. Thorough market, technical and business assessments are critical at the front-end, or the early stage. That research early on will make your decision making much easier, much more effective and in line with the reality of your circumstances.

It’s the ‘measure twice, cut once’ principle, which can be incredibly important (and cost effective) if you’re looking at a multi-million pound product development cycle.

This is where a consumer intelligence platform like Attest can pay for itself 1000x over by honing your idea first, helping you eliminate bad or unwanted new product ideas so you can focus in on the winners early on.

3) Spiral or agile development

Smart teams “create the first version of a product (perhaps a virtual one) and test it with the customer, seeking feedback. Then they use that feedback to produce the next, more complete version—maybe a working model or a protocept.”

This comes down to:

“build, test, obtain feedback, and revise”

The alternative is the outdated, linear approach (sometimes known as ‘Waterfall’) that starts at the top with an executive having a brainwave (see the dangers of Survivorship Bias) and then focusing on getting it perfect before it’s released to consumers.

Too often, a product is thought up, and then the processes are put in place, and then you get around to making it. By the time it comes to market, it either does not suit the consumer, or a competitor’s product has come out, or the market has simply moved on.

4) Be comprehensive

Cross functional teams are key. They need to be involved from start to finish, and provide an outlet for the agile development mentioned above. For example, you shouldn’t invent the product in the lab, and only pass it onto marketing a few weeks before launch.

Having a sound marketing and communications plan from the outset is essential. All teams should work hand-in-hand.

Added to this is the necessity of team accountability. This is essential for good communication, but also for people to know where their roles reside.

5) Define your key metrics

You can’t manage what you don’t measure.

Peter Drucker

Measuring how your new products perform is key to understanding and evaluating your processes.

This must start at a team level, and be built up to the company at large. But only by measuring teams can we enforce that much needed accountability we mentioned above.

What does a new product launch have to do in years 1, 2 and 3 in order to be crowned a ‘success’? What numbers would be so bad that it would necessitate you pull the plug on it? It’s best to agree these up front than after your product has already gone to market.

6) Focused and effective portfolio management

Here is the biggie, and a word of warning to all those seeking to maximise their new product development.

Most companies simply have far too many ‘development projects’ on the go at the same time. Resources are spread, and their portfolio is out of balance – not only are there too many projects, but they are the wrong mix.

Cooper’s suggestion to alleviate this problem is to develop a funnel mechanism. Start with lots of ideas, and put them through the paces. Set up gates and tests to see which ones are going to add most to the company.

7) A lean, scalable and adaptable process

The overarching theme of these points is agility. Anything that involves too much bureaucracy, time wasting, and the dreaded ‘make work’ activities, needs to be changed.

Cooper’s rule: if your new product development process is over three years old, it probably needs to be changed.

The stage-gate process

This is the foundation of Cooper’s new product development process that has gathered plenty of traction over the years.

Stage 0	Discovery: discover new opportunities and ideas
Stage 1	Scoping: An assessment of the possible benefits of the project.
Stage 2	Build Business Case: This is part of the critical ‘due diligence’ we highlighted earlier. This is about evaluating the business feasibility, leading to: product and project definition; project justification; and project plan.
Stage 3	Development: Design and development, and operations understood, the market launch is developed. Testing is outlined.
Stage 4	Testing and Validation: This is the key difference between the ‘top’ companies and the average ones. This stage validates the product, the market, the development, and it keeps the company in touch with market developments.
Stage 5	Launch: Commercialisation of the product.

Stage 0

Discovery: explore new opportunities and ideas.

Stage 1

Scoping: assessment of the possible benefits of the project.

Stage 2

Build business case: a crucial part of the due diligence we mentioned earlier—this is about evaluating the business feasibility, leading to product and project definition, project justification and project plan.

Stage 3

Development: design and development is carried out, operations are defined, the market launch is established, and testing is outlined.

Stage 4

Testing and validation: this is the key difference between the ‘top’ companies and the average ones. This stage validates the product, the market, the development, and it keeps the company in touch with market developments.

Stage 5

Launch: commercialisation of the product.

And here are some more pointers and approaches for you to think about to make sure your new product development hits the mark.

Self-organising project teams

A group possesses a self-organizing capability when it exhibits three conditions: autonomy, self-transcendence, and cross-fertilization.

Hirotaka Takeuchi and Ikujiro Nonaka, The New New Product Development Game

In other words, when a team is given free-reign, with ‘zero-information’ (i.e. prior knowledge is discounted), they can work freely, effectively, and offer appropriate solutions.

Within the right framework, “the project team begins to operate like a startup company – it takes initiatives and risks, and develops an independent agenda.”

Overlapping development phases

Teams work on different time scales.

For instance, image that R&D takes a lot of time, and Product teams take less. They must work together to synchronize their timelines to meets deadlines. The benefit is that “each member soon begins to share knowledge about the marketplace and the technical community”.

This is a development of what we talked about earlier—cross-functional teams are essential to effective new product development.

“Multi-learning”

This is simply about staying in touch with a host of different outside sources of information to keep the project up to date.

Subtle control

Subtle control is the culmination of “self-control,” “control through peer pressure,” and “control by love.”

In essence, it is about having a management system in place that keeps an eye on proceedings, to “prevent instability, ambiguity, and tension from turning into chaos,” while also having management that “avoids the kind of rigid control that impairs creativity and spontaneity.”

Organisational transfer of learning

This is more than simply keeping everyone in touch. It’s about the “transfer of learning to subsequent new product development projects”. That is something that is often missed.

We talk so much about keeping everyone in touch during a project, and give no consideration as to what to do between projects; this is about inter-project sharing of knowledge, as opposed to intra-project.

Conclusion

All these steps are important, and well worth considering. However, every single step seems to come back to two key points.

Firstly, being lean (remove waste and inefficiency from the process), scalable (push for as much autonomy as possible), and adaptable (test and learn as you go along) is key.

Secondly, building the new product development around consumers is vital.

Yes, getting your new product development process right is important, but if you’re not engaging with, or listening to your target consumers, there’s no point in even worrying about the processes, because the product won’t be satisfying their needs. That’s a recipe for failure before you’ve even begun.

Learn more about the NPD process and how to get set up with our 8 simple steps to new product development.