winning at new products
Post on 27-Nov-2014
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www.stage-gate.com
Exhibit 1: The Four Points of Performance in the Innovation Diamond –the four main factors that drive NPD performance results
Based on a major APQC study into NPD best practices2
Product Innovation & Technology
Strategy for the Business
Idea-to-Launch System:
Stage-Gate®
Climate, culture, teams & leadership
Resources: Commitment & Portfolio
Management
Stage-Gate® is a trademark of Product Development Institute Inc.
Business’s new product performance
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Exhibit 2: Best performing businesses develop a Product Innovation & Technology Strategy, which includes these elements
Percentage of Businesses with Each Strategy Element
37.9%
41.4%
58.6%
69.0%
58.6%
51.7%
27.6%
26.9%
38.1%
64.8%
46.3%
38.1%
19.2%
15.4%
23.1%
53.8%
30.8%
34.6%
10% 20% 30% 40% 50% 60% 70% 80%
Product roadmap in place
Use strategic buckets
Long term commitment
Strategic arenas defined –areas of strategic focus
Role of NPD in Business goals
Clearly defined NPD goals Worst Performers
Average Business
Best Performers
Reads: only 27.6% of businesses on average develop a Product Roadmap. Best performers are about twice as likely to use roadmaps as poor performers – 37.9% versus 19.2%.
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Define:• Role of NPD in Business
Strategy & Goals• Your Goals for NPD
e. Tactical Portfolio Decisions
d : Resource Commitment & Strategic Portfolio Decisions: Deployment, Strategic Buckets &
the Strategic Product Roadmap
Pl a tform E xte ns io n
Ex ten si on s i nto Pe trol eu m B le n de rs
Pet r ol eu m Ble nd er s : L ow P ow er R ang e
Pet r ol eum B len de r s : H ig h Pow er
A e rato r Pl atfo rm
N e w P ro du ct P lat form: A era tor s
P& P Ae r ato r s: Lin e #1 ( f i xed m o unt )
P & P Aer a t ors : L in e # 2 ( f lo at i ng)
P& P Aer a t or s: H i - Pow er
C he mi ca l M ixe r s: H i - Po wer
O ri gi n al Ag i tator P l atfo rm - Ex ten si on
Ext en sio n s i nto C he m ica l M i xers
Che m i cal M i xer s: B as ic L ine
Che m i cal M i xer s: Sp eci al Im p el le rsPl an e xten si o ns
& ne w p la tform s
P la tfo rm Exte n si o n
Ex ten si on s i nto A e rato rs for C he mi ca l W aste
Ch em i cal Aer a to rs: L in e # 1
C he mi ca l A er at or s: Li ne # 2
Product Roadmap
Pl a t f o rm
P ro j e c t s( ch ang e th e basis of
co mpe tition )
N e w P ro d u c t P ro j e c t s
O th er : Exten sions, M odifica tions,
Impr ovem ent s, Fixes , C ost Red uctions
Strategic Buckets
Exhibit 3: The ABC’s of defining your business’s Product Innovation Strategy
Project selection (Go/Kill), prioritization, & resource allocation
c. Attack Strategy & Entry Strategy
Industry Analysis
Company Analysis
Arenas of Strategic
Focusb. Select Strategic Arenas –Areas of Strategic Focus
a. Define Goals for Your NPD Effort
Attack Plans• Innovator• Fast Follower• Low-Cost• Differentiator• Niche• Defender
Jo i nt V e nt u r e s ( la r g e fi r m w it h
s m a ll f irm )
In te r n a l pr o d u c t d ev e lo p m e nt o r A cq u is itio n s o r
L ice n s in g
I n te r na l b a se d e ve l op m e nt s
(o r Ac qu i sit io n s )Ba s e
Ve n t u re ca p it a l
o r V e n tu r e n u r tu r in g o r
E d u c at io n a l;a a cq u is it io n s
I n te r n a l v e n tu r e s
o r Ac q u isi tio n s o r L ice n s in g
In t er n a l m a r ke t
d e v e lo p m e n t o r Ac qu i sit io n s (o r Jo i nt V e n tu r es )
Ne w , f a m i lia r
Ve n t u re ca p it a l o r V e n tu r e
N ur t ur in g or Ed u ca tio n a l a cq u is it io n s
V e n tu r e c a p ita l o r Ve n t u re
N u rt u r in g o r E d uc a ti o na l a c qu isit io n s
Jo int ve n tu r e sNe w , un fa m il i ar
N e w , u n f a m ili a rNe w , f a m il ia rB a s e
T e c h n o lo g i e s e m b o d i e d i n t h e p ro d u c t s
Optim um Entry Strategies
Resource Comm itm en t to NPD
• The Strategic Role of Your Busines s
• S trate gy, G oa ls a nd Task Approach
• Com petitiv e Par ity• S pending Level Bas ed on
De mand from Active P rojects
Exhibit 4: The Product-Market Matrix delineates possible Strategic Arenas on which to focus your NPD or R&D efforts
The axes of the diagram are “Products” and “Markets.” Each cell represents a potential strategic arena.
Arenas are assessed for their potential and the company's business position. Stars designate top-priority arenas – where new product efforts will be focused.
Products
Voice Data Internet Wireless Long Distance
Small - Home Office
Medium Business
Large BusinessMultinationals
Residential
Exhibit 4: The Product-Market Matrix delineates possible Strategic Arenas on which to focus your NPD or R&D efforts
The axes of the diagram are “Products” and “Markets.” Each cell represents a potential strategic arena.
Arenas are assessed for their potential and the company's business position. Stars designate top-priority arenas – where new product efforts will be focused.
Products
Voice Data Internet Wireless Long Distance
Small - Home Office
Medium Business
Large BusinessMultinationals
Residential
Resource Commitment to NPD
•
•
••
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Exhibit 5: The Strategic Map – arenas are plotted on two dimensions
Petroleum Aerators
Aerators for P&P
Chemical Mixers
AeratorsChemical
Waste
Home Base
Petroleum Blenders
Hydro-MetAgitators
AeratorsFlotation
Cells
High Density Stock
PumpsSlurryPumps
ChemicalSpecialty
Pumps
10 8 6 4 2 0Business Strength
0123456789
10Good Bets
Conservative Bets
High Risk Bets
No Bets
Each circle represents a possible strategic arena – a possible area of focus for NPD
Are
na A
ttra
ctiv
enes
s
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Exhibit 6: Strategic Portfolio Management practices in best performing businesses
Percent of Businesses Where Each Portfolio Management Practice is in Place
37.9%
37.9%
41.4%
31.0%
65.5%
65.5%
21.5%
22.8%
26.6%
19.4%
30.7%
57.2%
4.0%
0.0%
12.0%
0.0%
8.0%
46.2%
3.8%
31.0%21.2%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Balance – sufficient resources for number of projects
Portfolio contains high value projects
Sold job of ranking & prioritizing projects
Portfolio has excellent balance in project types
Resource breakdown reflects Business’s strategy
Projects are aligned with Business’s strategy
Formal & systematic portfolio management system in place
Worst Performers
Average Business
Best Performers
www.stage-gate.com
Exhibit 7: The two levels of decision-making in portfolio managementBusiness Strategy & Product Innovation
Strategy
2. Tactical Portfolio
Decisions: Project Selection (Go/Kill),
Prioritization, & Resource
Allocation
1. Strategic Portfolio Decisions:
Strategic Buckets & Strategic Product
Roadmap
Resource Commitment to NPD
P la tform E xt ens io n
E xten si on s i nto P etrol e um B l en de rs
Pet r o leu m Bl end er s : L ow P ow e r R an ge
Pet r ol eu m B le nde r s : H ig h Pow e r
Ae rat or Pl a tfo rm
Ne w Pro du ct P la tform : A er ator s
P& P Ae r at or s: Li ne #1 (f i xed mo un t )
P& P Ae ra t or s: L in e # 2 ( f l oat i ng )
P& P Ae r at or s: Hi - Po wer
Che m ica l M i xer s: Hi - Po w er
O ri g i nal A gi tato r P l at form - Ex ten si on
Ex ten si on s i nto C h em ic al M i xers
Ch em i cal M i xe r s: B asi c L in e
Ch em i cal Mi xe rs : Sp eci al Im pel le r sPl an e xte nsi o ns
& ne w p la tform s
P la tform Exte n si on
Ex ten si o ns i nto A e ra to rs for C h emi c al W as te
Ch em i cal Aer a to r s: L in e #1
Che m i ca l A er at or s: Li ne # 2
Product Roadmap
Pla tform Projects
( chan ge the ba sis o f com p etition )
New Product Projects
Other : Exte nsio ns, Mod ifica tion s,
Imp r ovem en ts, Fixe s, Co st Re duc tion s
Strategic Buckets
Resource Com mitmen t to NPD
• The Strategic Role of Y our Busine ss
• Stra tegy, G oals and Task Approac h
• Competitive Pa rity• Spending Level B ased on
Dem and from Ac tive Projec ts
Portfolio Review:Ø HolisticØ All projects in auction
ü Right priorities?ü Right mix?ü Alignment?ü Sufficiency?ü Resource adequacy?
Ø By senior management
Stage-Gate® Process:Ø Individual projectsØ In-depth evaluationØ Quality data availableØ By senior managementØ Go/Kill decisionsØ Resources allocated
Resource Commitment to NPD
•
•
••
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Exhibit 8: The Strategic Buckets method split resources into different envelopes or buckets to ensure resource splits mirror strategic priorities
697Widget-4
706Slow-Brew
755Regatta
774Pop-Up
803Kool-Flow
852Monty
881Jeanie
Gate Score
Rank
Project
6.77Lite-Pkg
18.06Xmas Pkg
24.15Flavor-1
25.541498-K
31.23Quick-Fit
37.32Pop-Redo
42.311542
Sales/MD
RankProject
New Products=$2 M
Sales Requests
= $3 M
Cost Reductions
= $2 M
Improvements & Modifications
= $3 M
507M&S-41
526Tesco-Lite
555Small-Pack
614Regen-3
653Asda Refill
682Mini-Pkg
791Walco-43
Mktg Score
RankProject
6971230-D
7061267
75598-DD
7741402
803149-F
85297-D
881150-C
Savings/MD
RankProject
4 portfolios, fire-walledRank projects until out of resources in each bucket
$2 M$2 M
$3 M
$3 M
Exhibit 8: The Strategic Buckets method split resources into different envelopes or buckets to ensure resource splits mirror strategic priorities
697Widget-4
706Slow-Brew
755Regatta
774Pop-Up
803Kool-Flow
852Monty
881Jeanie
Gate Score
Rank
Project
6.77Lite-Pkg
18.06Xmas Pkg
24.15Flavor-1
25.541498-K
31.23Quick-Fit
37.32Pop-Redo
42.311542
Sales/MD
RankProject
New Products=$2 M
Sales Requests
= $3 M
Cost Reductions
= $2 M
Improvements & Modifications
= $3 M
507M&S-41
526Tesco-Lite
555Small-Pack
614Regen-3
653Asda Refill
682Mini-Pkg
791Walco-43
Mktg Score
RankProject
6971230-D
7061267
75598-DD
7741402
803149-F
85297-D
881150-C
Savings/MD
RankProject
4 portfolios, fire-walledRank projects until out of resources in each bucket
$2 M$2 M
$3 M
$3 M
www.stage-gate.com
Exhibit 9: The Strategic Product Roadmap lays out the major development initiatives
P latform Extension
Extensions into Petroleu m Blenders
Petro leum Blenders : Low Power Range
Petro leum Blenders : High Power
Aerator P latform
New Platform : Aerators (for P&P Industry)
P&P Aerators: Line #1 (fixed m ount)
P&P Aerators: Line #2 (floati ng)
P&P Aerators: Hi-Power
Chemical Mixers: Hi-Power
Origina l Agitator Platform - Extension
Extensions in to Chemical Mixers
Chemical Mixers: Basic Line
Chem ical Mixers: Special ImpellersPlan extensions
& new platform s
Platform Extension
Platform Extension: Aerators for Chemica l Waste
Chemical Aerators: Line #1
Chemical Aerators: Line #2
0 12 24 36 48 60Months
Major development projects are mapped out for the foreseeable future. Placemarks for these projects are established & resources tentatively set aside or ear-marked.
Timeline
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✓
✓
✓
✓
✓
✓
Exhibit 10: The Productivity Index – an index used to rank development projects
• Take what you are trying to maximize– Example: NPV
• Divide by what the constraining resource is– Example: People (expressed as person-days)– Or Development funds ($000)
• And rank your projects by this index until out of resources• Example:
ProductivityIndex
OutputInput
= NPVPerson-Days=
NPV= forecasted NPV of the project
Person-Days = resources required to complete the project
www.stage-gate.com
P = Probability of Commercial Success (given technical success)$D = Development Costs remaining in the project$C = Commercialization (Launch) Costs$PV = Net Present Value of project's future earnings (discounted to today)
cs
P = Probability of Technical Successts
$ECV = Expected Commercial Value of the project
ECV = [(PV * P - C) * P ]- Dcs ts
P
P
cs
ts
Development$D
$C
$PVTechnicalSuccess
Commercial Success
Yes
NoTechnical
Failure
CommercialFailure
Yes
No$ECV
Launch
Exhibit 11: Determination of Expected Commercial Value of a Project
A model of a two-stage investment decision process: First, invest $D in development, which may yield a technical success with probability Pt. Then invest $C in commercialization, which may result in a commercial success with probability Pcs. If successful, the project yields an income stream whose present value is $PV. More sophisticated versions of this model would entail more stages than the two shown here, and an array of possible outcomes from each stage.
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www.stage-gate.com
Exhibit 13: Key elements of an effective idea-to-launch system
Percentage of Businesses that Embrace Each Best Practice
51.7%
44.8%
51.7%
52.5%
58.6%
62.1%
69.0%
42.5%
30.0%
33.3%
34.4%
38.8%
44.8%
33.4%
23.1%
15.4%
23.1%
18.7%
15.4%
38.5%
15.4%
0% 10% 20% 30% 40% 50% 60% 70% 80%
A Process Manager in place
NPD project performance metrics(e.g. NPV, sales, on-time launch)
Tough, rigorous Go/Kill decisionpoints thru-out the process
Excellent quality-of-execution:all activities, idea-to-launch
Develop products superior tocompetitors’ in meeting customer needs
Front end loaded – an emphasis onhomework prior to Development
Customer focused – voice-of-customerwork; identify customers needs/problems
Worst Performers
Average Business
Best Performers
Exhibit 12: An Overview of a typical Stage-Gate® idea-to-launch system
Driving New Products to Market
Stage-Gate®: A 5-stage, 5-gate frameworkfor significant new product projects
Stage-Gate® is a trademark of Product Development Institute Inc.
Discovery
Idea Stage
Business Case
2nd
Screen
Stage 2Gate2Gate
1
Scoping
Idea Screen
Stage 1
Post-LaunchReview
Development
Go to Dev’mt
Gate3 Stage 3
Testing
Go toTest
Stage 4Gate4
Launch
Go toLaunch
Gate5 Stage 5
Exhibit 12: An Overview of a typical Stage-Gate® idea-to-launch system
Driving New Products to Market
Stage-Gate®: A 5-stage, 5-gate frameworkfor significant new product projects
Stage-Gate® is a trademark of Product Development Institute Inc.
Discovery
Idea Stage
Business Case
2nd
Screen
Stage 2Gate2Gate
1
Scoping
Idea Screen
Stage 1
Post-LaunchReview
Development
Go to Dev’mt
Gate3 Stage 3
Testing
Go toTest
Stage 4Gate4
Launch
Go toLaunch
Gate5 Stage 5
www.stage-gate.com
Exhibit 14: An Overview of NexGen Stage-Gate®
Stage-Gate® Regular for major new product
developmentsScoping Business Case Development Testing Launch
2nd Screen Go to Develop Go to Test Go to Launch PLR
Stage 2Gate2Stage 1 Stage 4 Gate
5Gate
3 Stage 3 Gate4 Stage 5
Stage-Gate®
XPress for improvements &
modifications
Scope & Business Case
Development& Testing
Launch
Go to Develop Go to Launch PLR
Stage 1& 2
Gate5
Gate3
Stage3 & 4 Stage 5
Scope & Business Case
Execute: Development,Test & Launch
Decision to Execute PLR
Stage 1& 2
Gate3
Stage3, 4 & 5
Stage-Gate® Lite for Salesforce &
Marketing Requests
Gate1
Idea Screen
Discovery
Idea Stage
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Exhibit 15: Spiral Development: A series of “build-test-feedback-revise”Iterations move the project team quickly to a fact-based product definition
Gate2
Stage 2
BuildBusiness
Case
VoC User Needs &
Wants StudyFull Prop Concept
Test
Gate3 Stage 3: Development
Rapid -Proto &
Test
1st-Proto & Test
Next Proto &
Test
Gate4 Stage 4
Testing &Validation
Field Trial, Beta Test
Exhibit 15: Spiral Development: A series of “build-test-feedback-revise”Iterations move the project team quickly to a fact-based product definition
Gate2
Stage 2
BuildBusiness
Case
VoC User Needs &
Wants StudyFull Prop Concept
Test
Gate3 Stage 3: Development
Rapid -Proto &
Test
1st-Proto & Test
Next Proto &
Test
Gate4 Stage 4
Testing &Validation
Field Trial, Beta Test
www.stage-gate.com
Exhibit 16: The climate & culture for innovation, and the role of senior management, are keys to success in NPD
Worst Performers
Average Business
Best PerformersPercent of Businesses With Each Element of Climate
55.2%
65.5%
27.6%
21.4%
62.1%
50.0%
79.3%
30.1%
40.0%
13.7%
15.6%
37.1%
34.3%
50.5%
7.7%
7.7%
0.0%
3.8%
7.7%
14.3%
26.9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
NPD team rewards or recognitionfor projects
Senior management provides strongsupport & empowerment to teams
Time-off for creative work;Friday projects
Skunk works & unofficialprojects encouraged
Business's climate supportsentrepreneurship & innovation
NP metrics are part of seniormanagement’s annual objectives
Senior management strongly committed to NPD
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Exhibit 17: How best performing businesses organize their teams for NPD
Worst Performers
Average Business
Best Performers
Percent of Businesses With Each Organizational Element
55.2%
65.5%
69.0%
79.6%
72.4%
79.3%
79.3%
32.4%
43.8%
58.1%
63.8%
48.6%
61.6%
72.1%
7.7%
19.2%
34.6%
50.0%
23.1%
38.6%
53.8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Team members accountable forproject’s end results
Team has central & sharedinformation system, IT based
Leader from beginning to end
Identifiable project team leader
Team does project frombeginning to end – no hand-offs
Projects undertaken by clearedidentified team of players
Team is cross-functional: Technical,Marketing, Sales, Operations
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www.stage-gate.com
www.stage-gate.com
16
The “World’s Top Innovation Management Scholars”
Dr. Scott Edgett is internationally recognized as one of the world’s top experts in product innovation and is the pioneer of portfolio management for product innovation. He is a high profile speaker and sought-after consultant. Dr. Edgett has extensive experience working with large multinational clients in a variety of industries, principally focusing on issues affecting innovation leadership and capability. He is credited with helping business executives and innovation professionals successfully implement world-class innovation processes that have generated outstanding results. His speaking engagements and consulting work have taken him around the globe to work with some of the world’s best innovators and companies among the Fortune 1000. Dr. Edgett is Chief Executive Officer and co-founder, with Dr. Cooper, of both Product Development Institute Inc. and Stage-Gate International. He has spent more than 20 years researching and developing innovation best practices and working with organizations in product innovation. He is a prolific author having co-authored six books including the popular ‘Portfolio Management for New Products, 2nd Edition’ and has published more than 60 academic articles. Dr. Edgett is a former Professor of the Michael G. DeGroote School of Business, McMaster University in Ontario and is a Faculty Scholar at ISBM at Penn State University.
Dr. Robert G. Cooper
Dr. Scott J. Edgett
Dr. Robert Cooper is one of the most influential innovation thought leaders in the business world today. He pioneered the original research that led to many ground-breaking discoveries including the Stage-Gate® Idea-to-Launch process. Now implemented by almost 80% of North American companies, it is considered to be one of the most important discoveries in the field of innovation management. He has spent more than 30 years studying the practices and pitfalls of 3,000+ new product projects in hundreds of companies and has assembled the world’s most comprehensive research on the topic. His presentations and practical consulting advice have been widely applauded by corporate and business audiences throughout the world. A prolific author, he has published more than 90 academic articles and seven books, including the best selling ‘Winning at New Products, Third edition’. He is the recipient of numerous prestigious awards including the Crawford Fellow from the Product Development and Management Association (PDMA) and the Maurice Holland Award from the Industrial Research Institute (IRI). Dr. Cooper is a Professor of Marketing and Technology Management at the Michael G. DeGroote School of Business at McMaster University in Ontario, Canada and Distinguished Fellow at the Institute for the Study of Business Markets (ISBM) at Penn State University.
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New ProductPerformance
Product Innovation &Technology Strategy
Idea-to-LaunchSystem: Stage-Gate®
PortfolioManagement
Climate, Culture& Leadership
Diamond™The Innovation
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“Top performing companies focus on the four drivers of The Innovation Diamond.”
Dr. Robert G. Cooper and Dr. Scott J. EdgettFounders of Stage-Gate International
Achieve the four drivers of performance:Innovation efforts that support business goals
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The Stage-Gate International AdvantageHow we can help you win at product innovation
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Researchcomprehensive,
peer reviewed and longest running
benchmark studies
LeadershipThe world’s most
respected experts in NPD – Dr. Robert G. Cooper and
Dr. Scott J. Edgett
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