The development and commercialization of new products and technology is a key component of any viable strategic business plan. By its nature, the development process is risky, time consuming, expensive and labor intensive and, in a lean business environment, effective resource allocation is crucial. Although many companies focus the majority of their new product efforts on the actual lab work, technical success in the lab is just one aspect of the commercialization process and that effort alone does not ensure commercial success. To increase the chances of commercial success, the development needs to be integrated into the business plan to ensure internal sales and customer acceptance. A stage-gate process that starts with an internal market team and early customer commitment can significantly increase the chance of success for a new product.
Management of the development process in conjunction with the business plan can often be cumbersome to balance. Opportunities are often missed or not leveraged to their full advantage because the pieces of the puzzle do not always fit together in a clear manner. Additionally, many companies develop business processes that are so complex in size and scope that managers find themselves managing the process and not the outcome.
This article discusses a few simple process tools that accelerate and integrate the product development process into the entire business process. These tools help consolidate target-market growth opportunities and customer-support needs.
For many reading this article, much of what is written will seem obvious, but after 25 years in the business I've come to realize a few things.
- The Sales Opportunity Matrix
- The Technical Service Request (TSR) process
- The Product Development plan
The whole process starts with the market segment plans. Each plan is developed by a market team composed of marketing, sales, technical and manufacturing. The teams develop the high-level segment goals that identify segment growth opportunities, new product initiatives and specific customer-support programs. These plans have three key components: growth with existing products, growth through new product development and growth through specific customer initiatives. For example, in the Architectural segment there may be a plan to grow current share by "X" % a year with existing products. In addition to the normal sales growth, there is a component of new product commercialization and there also may be customer-specific opportunities such as converting a customer from a competitive product or helping a customer launch a new product. All three of these activities need to be managed and accounted for in the annual and longer-term business plan.
The Marketing Roadmap is a straightforward and elegant process for managing all the individual activities. In spreadsheet form, it rolls up and tracks the various development and growth plans. As shown in Figure 2, one spreadsheet tab is used to track each initiative. Functioning as a project manager, the roadmap uses a stage-gate process to track the status of each program. Technical, sales and market managers are able to quickly see the status of any program in a single view. Another tab (not shown) is used to consolidate and summarize the programs. In this way, the business and financial managers are able to see a consolidated list of programs, the revenue goals and current statuses of the initiatives. Priorities are then set based on solid financial information, likelihood of success and fit to the market segment plan. Key to the success of the process is clear communication, accountability and buy-in from the organization. In this simple format, everyone is able to easily see all the programs and initiatives, the expectation for those initiatives, the timing, and how all the initiatives fit together to form the annual budget.
The early identification of strategic customers for the new product or growth initiatives is crucial to the success of the plan. In the past, new products were often first developed and then taken to customers in the hopes of generating sales. In the Market Roadmap process the target customers are integrated early into the program. Potential customers are approached during the design stage to determine interest and value, and to clearly define the target properties of the product. Other times customers are solicited for market and product needs. With this approach, the entire team of marketing, sales and technical is focused on the customer. This pre-selling of the product can significantly increase sales professionals buy in and understanding of the product.
As previously stated, new product development and commercialization is only one of three processes that make up the business plan. The second is the sales plan. Every company develops an annual sales plan based on existing business. Most of these plans incorporate growth targets; however, they are often lean on supporting detail.
In the Marketing Roadmap this is not the case. Say, for example, there is an initiative to grow alkyd business by "X"% a year. To support this growth, sales would develop what's called an "Opportunity Matrix." The Opportunity Matrix is a web-based tactical plan that Sales uses to track specific customer opportunities. In addition to tracking the growth with existing customers, the Opportunity Matrix includes the new product programs (identified by project number) and customers from the Marketing Roadmap. In a typical management-review meeting the sales, marketing and technical managers would review the roadmap to determine the development status of the program and review the opportunity matrix to determine if the company is hitting its commercialization targets.
The third and final piece is customer-specific programs. For years, Reichhold has used a Technical Service Request Database (TSR) to work on short-term customer opportunities. These programs may include competitive benchmarking, formulation development and slight product modification. Each numbered TSR is included in the Sales Opportunity Matrix. The TSR database itself is used for requesting lab work and record keeping. Each TSR has a defined volume and market opportunity. These opportunities support the Marketing Roadmap growth targets.
Once set up, these processes, the strategic Marketing Roadmap, and the tactical TSR database and Opportunity Matrix combine to give a very comprehensive annual sales budget with specific activities, expectations and outcomes in an easy-to-maintain and manage format. It further forces integration of all activities into the market segment growth initiatives and keeps everyone focused on the same set of goals. In other words, these management tools are the connecting pieces that can help bring everything (and everyone) together under one common vision.
For more information on new product commercialization, contact Reichhold Inc., 2400 Ellis Road, Durham, NC 27703; e-mail firstname.lastname@example.org.