Phase zero is Paul Stephenson’s name for the most important part in developing any new product or service – the moment when a new concept is given a plan and a budget. Paul has worked at Naim Audio, the company that has led high-end high fidelity technology and creates the only noise you should be able to hear in a Bentley, for 30 years. He estimates that in the decade he has led the company as managing director the company has developed and launched 80 new products. He definitely knows how to get new product development (NPD) right.
Naim achieved a record turnover in its last financial year while manufacturing all its products on its own premises at Salisbury. “We now have the manufacturing tools and know-how which have enabled us to make world class hi-fis in thousands of units, not tens, while still maintaining the hand built premium quality,” he says. “Naim’s business model is based on R&D.”
Every product a mini start-up
So what is the right time for a company to commit itself to developing new products or services? All companies start with some unique product or offering. “Getting that initial product to the manufacturing stage and setting up your sales channels take all your time,” says Paul. “Ideally it will generate enough sales to fund the next product – and in a technology-based business the next products absolutely need to be built into the business plan. Make sure you really understand the value of the market place, the sales and distribution channels, then go to the bank with your marketing case and tell them why yours is different!”
NPD begins to sound a lot like starting a new business, and should be approached in much the same way, agrees Peter Thier, VP of global product development at the Cambridge technology management consultancy Sagentia. “The business case has to be sound: at the front end NPD is about identifying the need in the marketplace and the business rationale behind that.”
Even if you are able to finance the entire process yourself, it is vital to make the business case as if you were going to pitch the new product to a bank or VC for support. But don’t let them skew the pace of development. There is always pressure from the VC board or your corporate board to bring new things to market. If the idea is too sexy they expect it to be on the market in a few months whereas there may be a whole lot of boring risk and cost reduction work left to do. Be careful what you reveal and when, Thier counsels.
Gathering the tools
Early stage companies tend to be technology-focused. “I think one of the mistakes these companies make is to assume that the same skill set works as well for technology development as for the launch of the process.” Conversely a more established business may have already shifted to growth mode and not necessarily have the breadth of skills to bring a new technology – particularly moving out of its core competency – into a smart development process. Identify the gaps and be creative about filling them.
This may mean hiring. Companies in the pharmaceutical or cosmetics space are frequently established on their chemistry: that is where their IP lies. When they start to look at delivery they often need to develop devices. Engineering and manufacturing those devices could be terra incognita to them.
If you need access to key technology that may exist within a university somewhere in the world or a piece of IP held within another commercial organisation it may mean hiring the research team or acquiring an organisation that has device experience to develop the system. If the process is taking you out of your comfort zone the really smart thing to do may be to team up with a product development specialist like Sagentia.
Product development principles are the same whatever the size of your company. This is the company that developed the mobile payment system M-Pesa for Vodafone and some breakthrough medical devices for growing companies including LED surgical lighting for Brandon Medical and robotic cameras for keyhole surgery in collaboration with Prosurgics. “We help clients discover where those gaps in the business exist and how they can fill them,” says Thier.
Whatever the right solution for you, DIY is a high risk strategy, he warns. “Budgets typically are overrun exceedingly and the timeline to launch can extend considerably. Sometimes it is simply a matter of finding the technology or the device and private labelling it, but you have to conduct that search to find out where it lies and how to acquire it.”
There are other ways. Morbid fear of one’s competitors can be very restrictive and if you can overcome it, a LinkedIn group could be the route to the best minds in the target field. “I used to be very sceptical,” says Paul Stephenson. “I assumed that the people out there would poach my staff but that never happened.” The reason LinkedIn can be an effective market research or product development tool is that it’s anarchic and its users are the ones who decide how it works.