When it comes to developing next generation products only a small percentage of companies seem to get it right. A study followed 28 projects – derivatives of existing successful products on which the future business success depended. Of these next generation products only four successfully met expectations (14%). Five had some success (18%) and the rest were deemed failures (68%). Interestingly in every case where delays and difficulties occurred the problems started early, right in the product definition phase.
One company that has managed the development of next generation products well has been Intel. Throughout its history Intel has been excellent at managing product life cycles from development to launch to maturity. When Intel introduced the Pentium microchip processor back in the mid 90’s the new processor had clock speeds of 60 and 66 MHz. High end users snapped up early computer models with these chips in them. Later, Intel released faster versions of the processor and with each release there was a price cut in the older chips. Eventually the market was filled with Pentium chips. Newer versions filled the needs of the high end market that demanded optimum processing speed while older versions filled the needs of other less performance and price sensitive segments.
However, Intel also does something else well. They continually develop new products to plug any holes in the market place. In the 90’s Intel plugged a hole in the market with multimedia chips allowing the Pentium chips to run video, graphics and animated games. Similarly, Intel has recently introduced Centrino chips that have wireless connection capability for portable computers so they can connect in airports, hotel lobbies and other areas where wireless networks can be accessed.
Software that runs on older Intel Chips also runs on the next generation Pentium, Pentium II, III etc. chips. This makes the migration to the new generation chips seamless thus encouraging people to move up. Intel quickly fills all the market niches with their chips and thus prevents competition from gaining a significant foothold in their market.
How does Intel successfully develop new products when so many others fail? Here are some of the differences researchers found that separate successful product developments from unsuccessful ones:
1. Develop a Road Map: Successful companies have a strategic planning process that clarifies their vision and then map their product development process to fit their strategy.
2. Define the new product early and get management commitment: Companies that are late to market or whose new product performs poorly are often late in defining the product requirements.
3. Start small: Successful New Product teams start small (5-6 people). Small teams can quickly define the product and define the market strategy. (Teams with 20 – 30 people are often late in defining their product).
4. Just say No: Successful teams prioritize products and product features. Categorize product features into “must have” “should have” and “nice to have”. This keeps the process focused on the customer and prevents “feature creep”.
5. Take a break: During the later stages of product development successful teams have an offsite meeting to identify markets that will be impacted by their new technology. They then map out derivative products to fill any gaps.
These simple principles make a huge difference in R&D project success – apply them and get it right!
1. For the full story please see Behnam Tabrizi and Rick Walleigh HBR Nov-Dec 1997 reprint 97610″ Defining Next Generation Products: An Inside Look”