Dr. Kahn's interest in NPD best practices
Several years ago actually officially in 2004 we received a grant to begin working with some nonprofit organizations to help them improve their pride development process, and so we began. This is some research I did with Gloria Barczak and Roberta Moss who at the time were with the American Cancer Society and we did a lot of research looking at what the literature says about best practices and we found that there wasn't a lot of consensus. What we were finding is a lot of research said that, yeah there appears to be some best practices but you need to be flexible and some best practices in some industries may not necessarily apply to other industries. So that got us thinking about what really is a best practice and that got us also to begin to look at all the other research been going on such as the American Protiviti Quality Center research that Dr. Cooper, Bob Cooper had done, also looking at the product development management association research PDMA, best practices research which is now referred to as the comparative performance assessment study (CPAS) but all this is pointing out certain characteristics. The question is what really is a best characteristic and what is a not so best characteristic.
So that actually got us to begin to do this track of research that we started actually publishing in 2006 leading up to an international study in 2012 and also publishing an audit in 2012.
Explanation of New Product Development Best Practices
What you have to think about is what allows you to achieve something that you need to achieve. In terms of practice, it's something that you find that is customary that enables you to perform a function, if you then begin to what's the best practice what gets you to have high performance superior performance, and within the context of NPD. What allows you to get superior NPD performance.
I would also say that there also is the opposite of that which is a worst practice, which would be something that just totally paralyzes your NPD process or makes your NPD process ineffectual. So looking at process how do we begin to maybe juxtapose what's worse process or worse going to be worse practice to best practice. So best practice tends to be what leads to your ability to be a high-functioning organization.
Dimensions of NPD best practices
There are different ways that you can look at NPD. We actually began to look at finding dimensions for new product development practice because some research tended to just say that NPD best practice is x versus looking at particular areas. We did some research and did what's called a Delphi methodology we sent it out to leading experts both in academia and industry and asked for their recommendation and we do an iterative process to get to a consensus.
Seven Areas for NPD Best Practice
And based on our research we find that there are seven areas for NPD best practice, they include: commercialization, climate or I should say project climate which would be your team company culture, there's an element of research process which is your new product development process, strategy and then metrics and performance measurement, and hopefully if I did that correctly there should be seven separate dimensions for NPD.
The level of importance of each NPD dimension
In our research what we ask people to think about is our all dimensions created equal , and our research finds that people tend to put different levels of importance on new product development dimensions. The one dimension that appears to pop out is strategy, people say that it's an imperative, in fact it's the most important dimension as rated by our NPD professionals. After strategy you have then this area around research, commercialization and process. Interesting after that, the one dimension that tends to have the lowest rating which is interesting because it's a hot topic right now is metrics and performance measurement. So what I want to stress though is it may not necessarily mean importance as there tends to be not as much understanding and how do we effectively put in place a metrics and performance measurement dimension in NPD, but it's very clear that strategy is something that is an imperative in new product development and for the sake of Planisware, process is a very important element as well.
Emphasis on strategy
They're all important but I think what we have to do is we reach in finding out which dimensions may or may not be more important, but what's clear for us is shows there there needs to be a bit of an emphasis on strategy. Which actually leads to some of the research in effect looking at Bob Cooper's research this actually corresponds to Bob's Cooper's research that strategy and thinking about what you want to do with product development is an important way to jumpstart your process, and then having a process through which you can then manage the whole new product development process.
Learnings from NPD failures in Companies
If we look at a new product development process, we look at it as a continuum from worst practice to maybe a bit better too good to best practice. Some companies actually may not necessarily be able to get to a best practice but they may be able to do a slight variation that's okay. That's where we see the big differences is that some companies are able to achieve a best practice and some companies may not necessarily be able to fully implement it because it's just the nature of their industry. But overall what we are finding is there's a consensus on what is best and what is worse and based on the session that I just did here at this Planisware conference is the middle areas where you see a lot of variation between companies, and that's where the opportunity is how do you transition from worst to best practice and what is your path. The one thing we also will do with our model is that if you begin to think about product development performance across dimensions and that you can have worst practice and best practice on each of these dimensions, as a company you can begin to realize that I may not necessarily be proficient across everything and I may be highly functioning on other dimensions. So where do you want to begin to focus on improving your company as it relates to the new product development and there may be opportunities for you to look at a particular area that you may not necessarily be thinking about and realizing that an area where you may be putting all your attention and you may be high functioning and you might not may want to begin to think about other areas.
The Importance of Documenting NPD Process
What we found in our research is the ability to differentiate worst to best practice is very clear, the challenge is when you try to get general consensus across the middle ground, it's not so clear. And that's where a future research we're going to begin to look at what is the gradations across industries. What I would say is we've done research looking at nonprofits and profit companies and where we see the demarcation in terms of best to worst or worst to best is that nonprofit entities tend to be a little more informal, and don't have a well structured a process as the for-profit companies, and that's a big demarcation between nonprofit and for-profit. I would also say that in terms of companies performing really well and not so well it's important to have a documented NPD process versus not having any process at all or having a process where nobody really knows what that process is. For example I recently was visiting a company and the CEO was unaware that there was a new CEO coming in and he was unaware of what the new product development process was and thought that we need to develop one and it came out in the meeting that there actually is one it just nobody knows what it is. So that I would say is not a best practice. Everybody's laughing but the fact of the matter is that this actually does happen in industry and it's about being cognizant of how do we improve as a company. No disrespect, I think coming in the CEO was interested in trying to develop an innovation strategy but did not necessarily talk to the employees before starting to think about what needed to happen and had there been some more discussions, I think they would have been a realization that a process exists but the fact of the matter I'd also say that a lot of people in the organization were not clear on what the process was. So the NPD department had its own process but it wasn't fully promoted across the organization, so the best practice is having a process that people understand and are aware of versus only a select few.
Key Practices for NPD dimensions
For example on the part of commercialization, a worst practice would be that there is no tie back to the operations group, so R&D and marketing are just making decisions without connecting back to operations and there's not really a well-coordinated launch, that would certainly be worse practice. Best practice you have a cross-functional team that is engaged and they are actually coordinating the launch and they're actually able to make the launch decisions. In terms of a process dimension having a formal, yet there is some flexibility in that product development process but certainly there is a discipline behind using that process, that would be what I call a best practice versus worst practice and process would be no NPD process, no documentation pet projects just can be rampant, anyone who has an idea can just let that go. I would say in the case of research, it's very clear companies that don't do research and just go see the pants and gut feel are not going to be high functioning versus a company that is conducting research and then evaluating their research and putting it into the process.
In terms of the let's say strategy, actually having a strategy that connects to the mission and there is some very clear thinking around what the company should be doing vs laissez-faire, and so those are examples with best and worse. What I would say interestingly on our research the one area where there was no consensus on best practices metrics and there is certainly consensus that having a metrics and performance measurement initiative is critical but nobody can agree on what that is. And I think that's an opportunity for further research and for companies and having recently talked with companies and gone to conferences, that is a big area of how do we actually define and get some consensus around what is the best practice. I think that what drives the issue around metrics is the fact that try to take an NPD goal and then operationalize it there's different ways to approach it and depending on how you pick your metric can influence certain behaviors in the organization. We were in a meeting today and actually that was brought up, a woman said having NPD goals and translating those goals into metrics that's the best practice. I said yeah that's true but how you translated it will influence what the behavior is in the organization. Great example, if you are time people's compensation they're going to do what they're being compensated on.
How to efficiently use metrics in portfolio analysis
I agree with the approach where you identify some metrics, the one thing I would say is maybe the weighting of the metrics could change. But the fact that I'm a fan of the what's called the KISS method (Keep It Simple Stupid) and I think by having 12 metrics you can devise a very easy score card and using that scorecard you can then follow it and people, if you get too many metrics people can't comprehend and by having too many metrics you may be forcing certain behaviors and people are trying to do too much and as a result you have very much a haphazard NPD process versus a focused process. And this brings an interesting point with our best practice. Some companies had a defined NPD process but there wasn't a lot of stages and a lot of definitions.
The Importance of Discipline
I mean it was defined and the fact that people knew what to do but there's also an interesting aspect for process called discipline and having the discipline to adhere to the process company-wide versus oh we have a process that we're best practice but nobody listens to it. So it's and then interesting having a software package like Planisware is a best practice and also what Planisware can help a company do is quickly become best practice in the area of process, as well as in the area of metrics because you're able to document things, track things and help a company establish a rigor and a discipline around new product development.
Auditing New Product Development Best Practices
We've created a very simple document instrument if you will, that will help people just to think about what can you improve and the audit is set up to be very simple, we have a list of characteristics in terms of Yes/No. And if it's a yes you give it a plus one, if it's a no plus two and if you're neutral zero. The idea is we use the term a Gestalt view of a new product development, do you feel like you're doing okay or not okay and we have it set up on the different dimensions of new project on the performance to find out really where are you doing well and where you did not doing so well. What we find is a lot of companies may continue to focus on one particular area and they'll become extremely proficient and very good at that one dimension and they don't realize that there are actually other areas that they may be having issues with and so the purpose of an audit help to attune a company to where do you want to focus your attention and certainly you may want to continue to focus on certain areas but there may be a particular area that is not getting the attention that it deserves. I think what the audit can help is to identify how a software package like Planisware can maybe help to bring you up to a best practice. So doing an audit in conjunction with thinking about a software package like Planisware is a wise move and help to identify how you may want to actually support the implementation of such software
The Art and Science of New Product Developement
I tend to be on the side that like business, there is an art element and a science business, and also having delved in the areas of analytics and forecasting related to new product velopment there is certainly an art science. I think that a system like Planisware helps to get you to the analytical side to scientifically evaluate a process which is essential to ensure is are we functioning as best as we can. There actually are elements of art because we live in a dynamic world and markets are constantly in flux so there's an ability to actually pivot if we need to.
Three Essentials: Efficent, Effective, Adaptive
The one thing that I would say around performance measurement which leads to this discussion is that the research and what companies are talking about now there are really three things that we need to be thinking about as an organization. How do we become efficient, which is this element of cost savings in operational performance. How do we become effective, which is our ability to attain goals for us to attain our objectives we want to do as an organization. And lastly how do we become adaptive, and this element of adaptive is about our ability to pivot and change with an ever-changing marketplace ever changing business environment and at those companies that are able to become efficient, effective and adaptive are going to be the ones that are going to continue to succeed and the ones that will emerge as the leaders in the future. Some companies that we thought they weren't going to make it like IBM. IBM's pivoting they're finding a way to develop new opportunities. Innovation and new product development it's about creating opportunities for your organization's and efficiency, effectiveness and adaptiveness are those metrics that we can use to help our organization to continue to find opportunity.