With any new product development (NPD) project, there comes the time when management must decide how and when to announce the new product to the market. This is an especially important decision for highly-engineered complex products. At one end of the spectrum, you might decide to wait until you are essentially 100% sure that all the technical issues have been resolved and shipments can begin immediately upon introduction. This of course is the least risky decision. At the other end of the spectrum, you might pre-announce the new product well before the technical issues are resolved and even commit to the ship date. This latter decision typically carries significant risk, particularly in terms of meeting the ship dates if there is still much technical uncertainty to be resolved. As with many NPD decisions, context is important, including for instance the type of industry and customer expectations. The decision may be different based on whether the product is an extension of an existing product that is already shipping, a new-to-the-world radical innovation, or is a product and technology new to the firm, but not new to the market.
In the real world of product development, you are typically going to fall somewhere between the two extremes. I believe, however, that companies tend to push the envelope further and further over time, especially if they have high levels of brand loyalty. A recent article in JPIM presents some interesting research pertaining to this subject. The article points out that about 60% of computer hardware, software and telecommunications companies announce new products before they are ready for shipment, and that about 70% of these experience some delay in the ship date. I suspect this is true for many types of industries, especially for highly-engineered complex products. How do these shipment delays impact trust and ultimately brand commitment in the long term?
The author points out that trust comes first, followed by brand commitment and loyalty. The concept of trust is generally well understood by most of us. When we first deal with any person or organization, we look at how they are communicating and rapidly form an opinion about trusting them. We might rely on what others think, which can be extremely important in the context of highly engineered complex industrial products with lower shipment volumes. Small to mid-sized companies may have a more difficult time convincing a potential customer to trust them. For instance, the potential customer may worry about long-term support and product quality, or ability to service the product. Building trust takes time. Step-by-step, the company and its employees make commitments and customers watch what happens. Do they live up to their commitments? If so, trust continues to expand. If not, well then, trust will suffer and if it is early in the relationship, a potential customer may simply abandon the relationship before it gets started. Those damaged relationships are very difficult to repair.
Once there is trust, then brand commitment can follow. The author describes two types of commitment. One is based on a customer’s perception about the switching costs to move to another brand and is defined as calculative commitment. The other type, affective commitment, is more of a psychological attachment to the product or company. I talked about this concept in a recent blog article on my definition of a “design view”. Commitment works over the longer term, according to the author, which makes perfect sense. Think about relationships you have with any company where you have purchased multiple products over a long period of time. If you are very loyal to that brand, you may be perfectly willing to overlook the occasional service problem or late delivery date.
Any company producing a product should highly value committed, loyal customers. That is especially true of companies that manufacture highly-engineered complex products where switching costs can be high and the ability to sell customers the latest versions of existing technology can be very profitable. Customers that have high levels of brand loyalty will of course be partial to any new product or service offered by the company. Most customers will still evaluate their options, but maintaining a high degree of brand loyalty and commitment provides a tremendous competitive advantage.
The author of the JPIM article reaches four main conclusions. First, product launch delays will have a negative impact on brand trust and of course you want to avoid that if at all possible. Having said that, the statistics the author cites about how many companies pre-announce and how many of them experience delays in meeting those pre-announced dates illustrates how companies frequently ignore the risk. The author theorizes that managers rely too much on the forgiveness of highly committed customers, but the second conclusion from the study is that a high level of brand commitment is not capable of preventing damaging the level of trust when pre-announced launches are delayed.
A third conclusion is that a delay in the announced launch date is particularly damaging to trust if competitors have also pre-announced, but are able to ship when promised. Brand trust in the competitor may even benefit. Finally, brand trust can decline more when ship dates are missed if the customer relationship is new. The implication is that if the shipment of a new product has to be delayed, you may want to consider shipping to new customers first.
The other related issue that I want to address is the impact launch pre-announcements have on the project team and ultimately product quality. This issue is not addressed in the above referenced JPIM article but is nonetheless important. I will illustrate the point with a hypothetical product launch. Let’s say that a decision has been made to announce a new product to the market in three months, with a ship date of six months from today. The project team comes to management and because of technical issues believes that the actual ship date is really nine months away and recommends pushing back the launch pre-announcement by three months. How management handles these types of decisions can be crucial.
Management might decide, for instance, that they will ignore the team’s recommendations and push forward with the announcement. They may believe that by doing this, the technical issues will magically be resolved and the team will just “have to work harder” to achieve the original commitment. That decision can be fraught with many unintended negative consequences. First, the project team may look at the decision, realize that there is very little chance for success and dis-engage from the project just at a time when it is extremely crucial for high levels of engagement. Second, the team will likely start making decisions that will allow them to meet the date, but might sacrifice quality. The consequences of these team decisions might not be clear for weeks or months after shipment begins. This will be especially true if in addition, management refuses to consider changing the project scope that might allow the team to achieve the original date with a high level of quality. While the product may be able to ship as originally planned the impact on the team and the potential quality and other product issues may unnecessarily cause irreparable damage to the company’s brand and employee engagement.
Like any other management decision, you have to find the right balance. As I have pointed out in this blog article, some level of stress on the project team is absolutely necessary. We all need an appropriate amount of stress to perform at our absolute best. The key is to strike the right balance, and only an informed and engaged management team who understand the nature of NPD can do that.
Do you have experiences in product launches where the pre-announced dates were missed? How did that impact the company’s brand? What about times when you decided to move forward with a pre-announced date when the project team recommended a delay? How did that turn out?
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