Great effort, wrong direction!!

Over recent years many companies have put a great deal of effort into getting their product development process right. For many, an emphasis on stage-gate, and the implementation of processes around it, has become synonymous with getting their product development right. But does doing your product development right, having all the right processes and practices in place, guarantee product development success.

How often do we stop to consider whether all that good product development effort is focussed in the most appropriate direction? Are we doing the right things as well as doing things right? Surveys have indicated that 40 percent of the effort that goes into product development goes into products that will never be successful. Also, companies that are best in class at product portfolio management are four times more likely to achieve margin premiums of 75% or higher for new products. Why? In many cases, because wrong decisions have been made during the development process. But, often, the decision to embark on the development of a product was ill-informed.

The product concept didn’t fit with other products in the company’s portfolio; a lack of technical resources to adequately develop the product; a lack of financial resources to properly launch the product etc. In short, there was a lack of strategic direction at the front end of product development. A lack of real portfolio planning and analysis that informed the decision-making on what products are best for the company to develop. For an introductory article on portfolio management see “New product portfolio management: practices and performance by Cooper Edgett and Kleinshmidt, J. Product Innovation Management 1999”. More detail is provided in the book “portfolio Management by the same authors.