Dynamic markets demand dynamic new products
Dynamic markets demand dynamic new products
A constant flow of new products and services is vital, particularly in dynamic markets such as manufacturing and engineering. The ever-changing wants and needs of your customers are driven by many things but it’s on the validity of your products and services that you will be judged.
This is my final blog in a series on how companies can take advantage of the reported boom in the manufacturing industry. Here, I explore how best to tackle the multi-tasking exercise of product development.
One of my key roles as a business adviser and active interim manager, is helping my clients develop a series of successful products and services in order to maintain a steady income over time. It’s not a task exclusive to any one department; it involves the whole company. It takes nerve and organisation in equal measure. And it’s pretty much an on-going activity for those manufacturers who don’t intend to stand still.
Research, examine, identify
I take my clients through a disciplined toll gate process, each stage of which has to be completed before moving on to the next. The result is a product set that meets expectations in terms of cost, margin, performance and delivery. You minimise the risk while time to market can be reduced by as much as 50%.
Before we get much further, however, we need to take a step back and be specific about your business goals. What’s needed is a clearly written policy statement, identifying your business plans and setting out the steps required to achieve the all important numbers. Successful product development relies on a business strategy detailing where your customers lie and how you intend to make your company market-ready for them.
This means developing new products for you existing core markets – or at least adjacent/related areas – rather than branching out (and struggling) into totally new environments where you’ve no, or little, knowledge and experience.
What do your customers need?
Understanding the market you’re going after means doing the leg work to identify unmet needs – this is your criteria for performance. I call this stage\ Voice of the Customer (VOC) which, together with a detailed competitor analysis, will start to uncover where your niche lies.
Not wishing to sound arrogant, this is less about what your customer wants and more about meeting their hidden needs. If Henry Ford had asked people what would make their lives easier they’d have said faster horses. He identified what they needed before they knew it themselves – a car. Similarly, watching people walk the streets with so-called ‘ghetto-blasters’ on their shoulders led to the Sony Walkman.
VOC is observing and working out how you can improve your customer’s own performance rather than producing products in a vacuum. Here’s an example: watching how a lab technician used some equipment to perform a task, gave me an idea for making some enhancements to a product produced by my client, a manufacturer of lab materials. It was a simple idea but it led to significant savings, in both time and costly mistakes, throughout a process that required great accuracy.
The technician was sorting water samples collected from different locations in a 3rd world country. He was using a fairly arduous method – involving labels and a limited range of coloured marker pens – to indicate very precise levels of chemicals and minerals (including ph) found in the water samples. Clearly a misreading of the levels would result in the wrong treatment being applied to water supplies so the ability to indicate test results precisely and make them instantly recognisable was needed.
First, we came up with a range of containers, colour coded according to the ph chart, into which the lab technicians put the relevant water sample. Then, as a ‘belt and braces’ measure, we created some software that enabled the technicians to print the individual test details in the corresponding ph colour onto a white label which they then stuck on the container.
No more hand scribbled notes using a colour pen that didn’t match the ph content. Great speed and precision at this key reporting stage resulted in the right action being taken further down the line. Just this modest product development exercise strengthened my client’s relationship with his customer and, as a solution, it justified a modest % price increase. And that improved my client’s margin.
What are your competitors up to?
Carrying out a detailed competitor assessment is crucial. Using a range of tools and processes you monitor their activities as a side-by-side comparison, breaking down each element and component into finite detail. It could be that 2 different companies are producing seemingly identical products. Upon further investigation, you find the spec on a critical element, such as the electric motor, is inferior thereby affecting reliability. What does this lead you to consider: producing the higher spec for a lower price? Or, adding extra spec, to the whole product for the same price?
So now you combine your VOC research and competitor analysis and create a Price vs Performance matrix:
Cost vs Performance matrix
The Price vs Performance matrix will help you come up with the right product at the right price. By examining the extremes of high and low performance vs high and low costs, you begin to understand where you can outsmart your competitors with a product that has better level of performance at a price point that either matches (or may even justify increasing) your price.
The matrix gives you some science behind the data in terms of where you should position your product in the market and against which competitor.
Product Road Map
You’ve reached the stage whereby you know what you want to manufacture: maybe you need 10 features but this messes up the cost issue so phase them in:
1. 3 months to create a gadget with 5 features
2. 6 months with 2 more features
3. New additional technology over a defined period of time
It’s based on what you can afford and the technology available.
Creating a product road map, will provide a clear focus within your business, making it clear to everyone, exactly in which direction you are heading and why. (It also has the added advantage of keeping your competition guessing!)
Key thing is to keep scanning the market and keep listening to your customer, and keep looking for opportunity where you may be able to save your customer, time, cost, improve efficiency/productive etc. Then keep your new product development (NPD) team dynamic and alive to changes so you’re always reviewing your product road map ensuring you stay one step ahead.
Production and launch: a time for massive multi-tasking
Once you’re in production, your teams need to be working hard in the background, validating every step you take and closing the loop.
Keep updating VOC and competition data – the competition may have stolen a march on you. Scan the internet, get intel from your sales team on a weekly basis. Make sure what you’re planning is still relevant.
Post launch, the examination must continue. Have a process in place to review your numbers at 3, 6,12 months – whatever timeline is necessary. Compare sales and market expectation against your original strategy. Set targets for the number of demos, quotes, etc. Essentially, you need confirmation that you are moving in the right direction.
Ask how the product is doing – need to tweak, add or upgrade earlier than expected? Maybe remove some features and reduce cost?
Product development is an ongoing exercise. Always be on the lookout for where you can out perform your competitors in a way that your customer values.
And your attention should go beyond product level to all aspects of your business:, eg logistics, lead time, terms & conditions, marketing, sales process, distribution network, customer services, online access, etc.
Get in touch if you’d like to know more about how I work with clients on their product development. I have a tried and tested approach that I tailor to specific manufacturing environments and circumstances