When a company has an innovative idea or product, it’s success depends on a countless number of variables. Some variables can be controlled, and unfortunately some cannot. Taking a structured approach to product development and paying attention to five key points can be paramount to the success of a new product in the market. Developing and ultimately launching a product can often make or break a business, especially a smaller business looking to make a large impact. Product development varies based on the market of a business and the company management style, but most businesses hit five key points in the development process.
Assemble the right team
Developing a successful product is a function of the team that takes the idea and turns it into a reality. The team should ideally cover the hierarchy of the company, so that the right ideas can be heard, yet the team can still provide the needed impact to the top executives. Individual contributor level employees, especially those who deal with customers and products regularly, are ideal personnel to gather initial information. Senior management is great to have not only as a champion, but an active team member who sees the product from the very beginning and can help convince other leaders of it’s potential. An active champion is key to the success of the team, otherwise the idea may not maintain momentum for high level approval.
Evaluate the Market
This is where your business development and marketing team needs to be active and take charge. If there is not a demand in the market, the product simply will not be successful. The team should seek feedback from some of the closest existing customers along with current partners. Close customers tend to have a more honest and established relationship and will be more forthcoming with their perspective of the new product. Partners can typically offer an ideal perspective because they are involved in the same markets, but tend to see things differently because they are not personally vetted to the new product. If necessary, make sure that non-disclosure agreements are in place so that any conversations had do not result in a competitive situation.
Perform a full cost Analysis
Understanding what the market is willing to pay for a new product will be pivotal to it selling. The team needs to fully understand what products are already out there, why they are inadequate, and place a realistic value on the gap that will be between the new product and the current offering. The project development team needs to put together a detailed cost estimate with all risks and contingencies to paint the most accurate cost picture for company leadership. The cost must, at minimum, match the cost that the market is going to pay for the product. If it’s not, the team needs to reevaluate all the different subcomponents and work to bring the product within the cost requirement without sacrificing the key benefits that will differentiate from current market offerings. Once the leadership team has decided that the detailed estimate meets the market requirements, it’s time to start working on the prototypes.
Manufacturing Initial Prototypes
The leadership team must understand that manufacturing prototypes and small runs will be more expensive than mass production. This is an expense that will eventually become nullified during production.
The development team must now work very closely with the production team to develop prototypes of the product. The development team should have supplier contacts and quotes that the production team can now utilize to build the initial run of prototypes.
Once the first run is build and ready for distribution, the next step is for the business development team to share them with a small quantity of good customers and key partners. These companies will quickly become champions of the product assuming the cost and benefits are still in line with initial assumptions. Have these key clients demo the units and provide candid feedback. The marketing team should use that feedback to draft product literature and developing marketing ideas, such as email campaigns, conferences, and magazine publications. Key marketing messages should be centered around on the most positive attributes that differentiate the prototypes from the existing products on the market.
Not everything goes well the first time, in fact most of the time the first run doesn’t go as planned. If the first run does not go as planned, go back to the drawing board based on the feedback received. Make adjustments to the prototype or develop a second version, if necessary. Release the second run prototypes for additional market testing and feedback. See whether the second product is better received, and evaluate why feedback was different. A small launch helps determine what needs to be changed with minimal financial impact, all before an officially launching full-scale production.
Scaling to Full Production
Going from prototype runs to full scale production is not simple. A product may be easier to make when only manufacturing 10 products in a week, but what happens when demand skyrockets and a 10 units need to be finished every day to keep up with demand? How will this impact the existing facility, the personnel, and the supply base? It’s important that suppliers are made aware of potential market conditions and full-scale production rates prior to this stage because some may simply get scared off. The larger quantity of product that is produced, the more leverage one has on the buying end when assembling subcomponents and procuring raw materials. Sourcing agreements, bulk buying, and volume based price incentives all are worth exploring during full-scale production. All of this is eventually realized in final production, when the company begins to make money from the new product.
Obviously the key points highlighted in this article are not the only objectives that need to be considered when taking an idea and migrating to achieving full-scale production. There are hundreds of components and thoughts that need to be considered, and depending on a company’s core competency, hiring an outside company with complimentary key skillsets can help ensure success.