12 Dec Signs your NPD process is stuck in the 1980s
Your NPD process is stuck in the 80s when…
- Your organization still calls it ‘stage-gate’.
- Your teams think NPD is about project management.
- Your portfolio of projects consists of an Excel spreadsheet.
- Projects get into the process and never get killed.
- Concepts are generated from random brainstorming or are management pet projects.
- Your product line roadmap is a powerpoint that someone from marketing created.
A marketing friend of mine called me last week to complain about the behavior of his executive team during a recent gate meeting. The gate meeting turned into a senior leadership debate on business and product line strategy.
The senior leadership team declared the stage-gate process broken and wanted to shut everything down to fix it.
My friend was frustrated and indicated they didn’t have an innovation problem or even a lack of ideas. He indicated they knew how to run a project effectively through the development process. Clearly, NPD was not working though. What was the problem?
The answer, I explained to my friend, was that they did not have a stage-gate process problem. Instead, they had a product line strategy and roadmapping problem. There was no alignment on product line strategy and no working product line roadmap that guided new products into the pipeline, allowed decisions to be made on product projects, or a process for projects that didn’t meet strategic and risk criteria to be killed. Without that alignment, gatekeepers and portfolio managers have no framework in which to make decisions. What a mess!
When everyone knows it’s not working, and no one knows how to get it back on track, “Where do you start?”
Let’s go back and look at some of the components of the new product development (NPD) process. Phase-gated and stage-gated new product development processes are only subprocesses of a full architecture of NPD and innovation. If any of these subprocesses are suboptimal then your results will not be as strong as they could be, you are not gaining the benefits, and the competition may be winning the game.
The full architecture of NPD and innovation links the following processes together:
- Business strategy
- Product line strategy
- Product line roadmapping
- Concept generation
- Stage gate project management
- Lifecycle management
- Portfolio management
Let’s start with my friend’s executive declared ‘stage-gate’ problem. Gated processes have been around for decades now. They started in the 1950s with NASA and have gained momentum in industry since the 1960s. Over the past 30 years these processes have become a mainstream staple of new product development project management.
The stage-gate type process lays out an effective way to manage a single project at a time.
The gated process is considered by many practitioners to be mature in its lifecycle. Because of its mature lifecycle, many companies have come to understand that stage-gate alone is inadequate to achieve strategic new product development and innovation goals. If your company is stuck at the stage-gate capability level you have some catching up to do.
While the stage-gate type process helps streamline work flow, information flow, and decision flow of single projects, it is portfolio management that allows organizations to manage sets of many projects effectively, especially given the usual constraints of time and money. When trade-offs need to be made and resources need to allocated, it is portfolio management that optimizes the allocation of human resources, expense dollars, and capital expense, to achieve the product line and business strategy. If your portfolio management still consists of rolling up a list of projects into a view and report-out of all projects, and stops there, your company may need to take portfolio management, portfolio analysis, scenario building, and portfolio recommendations for management decision, to the next level.
Using portfolio management work flow and information flow to make strategic portfolio decisions is critical to maximizing your creation of value and conversion of products to cash flow.
Could your company be behind in utilizing these best practices? If so, you may be missing the point of portfolio management, and not capturing the maximum value of an optimized portfolio.
In order to make portfolio recommendations, portfolio managers, analysts, and review teams need to have a framework from which to reference the gaps in the product line and business strategy. This is what product line roadmapping provides.
However, if the product line roadmap is simply a powerpoint created by someone from marketing, without cross organizational input and alignment, then the framework is a house of cards that has not been embedded into the organization and is not understood by the senior leadership team.
In addition, without the framework of the product line strategy and product line roadmaps, concept generation is random and not targeted to the gaps in your strategic plan and you increase the risk of missing your goals.
Roadmapping links the front end, stage-gate, and the portfolio to product line strategy to carry out the execution of business strategy for the purpose of converting products to cash flow.
My marketing friend asked if they really had to shut everything down to fix the process. The answer is NO. Companies build skills in these areas in parallel and one level of capability at a time. If a company conducted the implementation of each of these subprocesses sequentially it would take decades to gain the benefits. This frustrated marketer was relieved. I gave him an outline of areas on which to focus to help move his organization to the next level.
How to start:
- Everyone needs to be involved. Form a cross functional and cross organizational team to assess capabilities.
- Conduct work in parallel. Build capabilities in each sub process in of the full architecture of NPD one level at a time.
- Keep it simple. Don’t burden the organization with unnecessary steps.
Are you ready to take your NPD process out of the 80s and use the current best practices to create maximum value for your company? What are you waiting for? Let’s get going!
Jeff GrohPosted at 15:47h, 16 February
Great article and subject. I would make three comments. First, while I agree with your list of five symptoms that indicate your NPD process is stuck in the 80’s are applicable to many companies, small to mid-sized companies may in fact start with portfolio management systems that utilize Excel spreadsheets. If an organization has never had any type of portfolio management process in the past, then starting simple and building process complexity as the process matures is rational in most cases. I think getting a process established, including key stakeholder support and engagement, is much more important than the specific tools. Maybe what you are really saying is if you view the portfolio management process as simply a list of projects in excel that are “published” by Marketing or Product Management, then you are stuck in the 80’s. I would agree with that.
Second, I wonder in your list of the full NPD architecture, if maybe Portfolio Management belongs as #5 followed by Stage Gate, then Life Cycle Management? To me, the portfolio management process prioritizes new and existing projects that support the overall roadmap and product/business strategy, align resources, and defines what new products will come to market in the short and medium term. It is a never-ending process typically managed by Marketing/Product Management with input from all key stakeholders. Out of that process will flow specific projects that enter the phase gate process along with any existing projects. Phase gate is all about executing a group of projects and creates a overall structure for managing the projects. I really like this list, as it does define the major pieces of the architecture and aligns with my view that NPD has to be viewed as a key business process, not just a function of R&D. I believe many senior managers of any sized organization who are responsible for the P&L of their company have that misguided belief. Lack of senior management understanding and engagement in the NPD process is, in my view, the single biggest contributor to failure.
Finally, I think a big mistake many companies make with the phase development processes, is that they confuse them with project management. The phase development processes provide the framework for managing a group of projects, but do not speak to how each individual project has to be managed. Specific project management tools have to be aligned with the project risk. For instance, if you are trying to use a Gantt chart to manage a project that has a great deal of complexity and unk unks, you are likely fooling yourself and wasting time. You are much better off using techniques such as iterate and learn cycles and/or parallel trials to reduce uncertainty first. The use of scrum for software development is another project management tool for software development and is based on iterate and learn cycles because of the uncertainty in defining what customers will value. At some point, every project ends up with tasks that are more driven by normal variation where tools like critical chain and Gantt charts work great. In my experience when I hear companies complain that their phase gate process is “broken”, this is one area to look at, in addition to the overall strategy. When timelines are missed on projects, the process gets blamed, when in fact the organization is not carefully considering project risk and what that means. Even in the portfolio process this is a problem because many projects are discussed without a full project definition and lack of understanding of project risk.
INSIGHTOVATION.COMPosted at 16:46h, 16 February
Great input Jeff. I agree with your comments and need for risk assessment.
I also see your point about the placement of portfolio management in the list of subprocesses of the full architecture of NPD and innovation. The reason I listed it after lifecycle is that best-in-class companies use a portfolio and roadmap that includes ‘products in the market’ (PIMs). Where these PIMs are in their lifecycle may impact the initiation of projects like extensions, refreshes, or replacement with new products. Therefore PIM’s lifecycles impact the roadmap and types of projects that feed the funnel for the portfolio. PIM’s lifecycles may show future gaps in the roadmap and identify targets for innovation for concept and technology development. The portfolio and roadmap should include products in concept (PICs), products in development (PIDs) and products in the market (PIMs).
Thanks for your input.
horatio fiskPosted at 15:43h, 14 December
Only part of stage gate is marketing related. The most important part of it is development and engineering related and is hugely important…Ask Nike, Apple, Oakley, OXO, Microsoft….I would not make blanket statements like that it takes your comments from being useful into being nothing more than a promotion.
INSIGHTOVATION.COMPosted at 20:53h, 14 December
Perhaps we disagree. All product development is marketing related. Also, I suggest are no MOST important parts. The new product development process is wholly cross-organizational and you can fail in any of the weak links of the chain. If you are a marketing led company then the total lifecyle of products, from conception, through commercialization and finally through lifecycle management is the domain of marketing. Marketing owns the product line P&L. Marketing is not simply marketing and communications, promotions and advertising. All of strategy, concept generation, stage-gate, portfolio management and lifecycle management is marketing related. That is exactly what marketers do. But this cannot be answered in a paragraph. It takes a graduate degree to see the big picture.
Perhaps we have different definitions of the marketing function! Thank you for your comments.
Mike TennityPosted at 00:23h, 21 December
A good article on symptoms to a ‘stuck innovation process’ but very poor premise. Call it what is is – a badly managed gate meeting and/or gatekeepers not understanding their role and responsibilities. They need to deal with that! And let’s not suggest a good, well-established process name – stage-gate – is a automatically symptom of something greater.
INSIGHTOVATION.COMPosted at 10:29h, 21 December
Dear Mike, I agree to your general comments. My premise is that stage-gate is doing one project right. If that is the extent of the company’s development processes then the company is well behind, is missing the bigger picture, and is at a competitive disadvantage. How do they know they are resourcing the right projects? A company needs product line strategies, a robust front end that targets the right market segments, a strong portfolio management process to chose the right projects, a well embedded development process (i.e., stage-gate) and product lifecycle management.
So if a company is still calling the overall process stage-gate. They truly are stuck in the 80’s.