The Innovation Planning Paradox

planningConventional wisdom is that a robust planning process is crucial for long term financial success. Countless books, articles and consultants emphasize the importance of long-term planning in managing innovation. Surveys suggest that companies with effective planning processes are more satisfied with their ability to innovate. For some companies, the new product development (NPD) planning horizon may be measured in months, but in other industries such as pharmaceuticals and chemicals, it may be measured in years. A recent biography of Bill Cook (1), an entrepreneur who started Cook Inc., a private Indiana-based +$1B medical device manufacturing company, made me wonder: Is a formal, robust long-term planning process a necessary condition for innovation success?  Continue reading

U.S. Debt, China and Innovation

What does the U.S. debt, the Chinese economy and innovation have in common? More than you think.

Among all the other political stories in the U.S. that consume the media’s attention and many Americans, not much was heard recently about two disturbing trends that will impact the long-term economic well-being of every American household. Continue reading

Practical Tools for Project Portfolio Management-Part II

Portfolio2For any size business that undertakes multiple simultaneous projects, the ability to manage the project portfolio is a constant struggle (1).  In particular, the portfolio over time tends to move to a higher state of disorder akin to the concept of entropy (2). Think about what happens at most companies, large and small: over time, more projects get started before existing projects are complete. Engineers are expected to work on not just one or two projects, which is ideal, but now must multi-task across multiple projects. On top of that, important customers demand new software features or enhancements to existing products, further diluting the focus on current projects. Statements like “every project seems to be late, never early”, “we always underestimate project cycle time” and “we constantly pull team members from a project to fix high priority customer requests” are common, especially in small to mid-sized firms. There are simply too many projects for too few resources, and the system grinds to halt. Continue reading

Practical Tools for Project Portfolio Management

Portfolio2For any size business that undertakes multiple simultaneous projects, the ability to manage the project portfolio is a constant struggle (1).  In particular, the portfolio over time tends to move to a higher state of disorder akin to the concept of entropy (2). Think about what happens at most companies, large and small: over time, more projects get started before existing projects are complete. Engineers are expected to work on not just one or two projects, which is ideal, but now must multi-task across multiple projects. On top of that, important customers demand new software features or enhancements to existing products, further diluting the focus on current projects. Statements like “every project seems to be late, never early”, “we always underestimate project cycle time” and “we constantly pull team members from a project to fix high priority customer requests” are common, especially in small to mid-sized firms. There are simply too many projects for too few resources, and the system grinds to halt.  Continue reading

Why Killing Failing Projects Is So Difficult

Failure1In organizations where multiple projects are being managed simultaneously, inevitably there is a sense among management as well as project teams that some projects should be postponed or killed outright and the resources re-allocated to higher value activities. Organizations regularly continue to invest in projects even though they know they are failing. Maybe there are technical hurdles, or the competitive situation has changed. In theory, the phased-development processes aid in making those decisions at the go/no-go gates for each phase. The reality in most organizations is much different. While senior management knows that some projects need to be shelved, why is there such resistance? This article addresses some of these issues.  Continue reading

Fostering a Culture of New Product Innovation: A Bottom’s Up Perspective-Part II

GrassrootsInnovation is the process that links technology to a market need and results in a product or service of value. But what are the key elements that need to be in place for a company to be innovative? That’s not a simple answer. Every industry, technology, and company is different so what works for one, may not work for another. Every senior manager responsible for their firm’s financial performance and concerned about long-term growth, whether a CEO, president, or owner, wants their organization to be innovative, but what does that really mean? Continue reading

Assessing Disorder in a New Product Development (NPD) Process

order-chaosThose responsible for managing innovation and the new product development (NPD) process face some universal problems. Statements like “every project seems to be late, never early”, “we always underestimate the project cycle time” and “we constantly pull team members from a project to fix high priority customer requests”, are common. These frustrations are manifestations of process and organizational problems that left unaddressed, continue to hinder a company’s ability to develop new products in a timely manner. The problems do not go away and in fact, over time, the negative impact expands. This article addresses some key reasons, in my experience, for an NPD process to move into a higher state of disorder and how to address the root causes. Continue reading

Why Small Companies Need a New Product Development (NPD) Process

I recently read an article that challenged small companies, especially start-ups, to consider an HR (human resource) function. The article provided several reasons why this is typically not considered by small companies and went on to make an argument for a focus on building HR capabilities. The article made me wonder: Do small companies and start-ups have a similar bias against formal NPD processes? I suspect so. Here, I address why small companies should embrace an NPD process rather than resist it. Continue reading

The Role of Product Definition in Innovation Success-Part I

A key determinate of innovation success is a robust process for choosing and defining new products. This is part of the “fuzzy front end” and sets the stage for successful innovation. I have written extensively about the concept of the portfolio process (1), but in this two-part article I will focus on the role of a solid product definition in innovation success. Continue reading

New Product Success Rate: Why So Low?

In a recent survey (1), only about 61% of all products launched by existing companies turn out to be successful in the market. When you investigate further, however, you will find that the “best” companies have much higher success rates of around 82% vs. 59% for the “rest”. In this case, the “best” were defined as the most successful or in the top third in their industry for new product development (NPD) success, being above the mean for their new product program success, and being above the mean for sales and profit success from NPD. Why such a significant difference? What differentiates the “best” from the “rest?” Continue reading