Product innovation is the engine that drives growth and prosperity for many companies . At the same time is one of the most difficult undertakings of the modern corporation. What is the reason that some companies were successful at developing and launching new products on the market even though product life cycle gets shorter, while others have had more than their fair share of failures and gone bankrupt. Professor R.G.Cooper and his partners conducted a research into around 2,000 projects and 500 companies. This research has addressed two main questions:
- How successful and profitable are the companies new product efforts?
- Are certain product development practices connected to success and profitability?
Best practice research has uncovered a common theme in organizations that excel at product innovation. Four key areas of best practice stand out as common denominators: product innovation and technology strategy; portfolio management – both strategic and tactical; idea-to-launch new product development process, and the right climate and culture for innovation. These four performance drivers comprise the Innovation Diamond.
The best-performing companies (the top 25%) turn 78% of their new products into money-makers. The best companies also execute their projects much faster and more efficiently. They have a much higher proportion of projects completed on time.
Measuring product development performance and practices is one of the most important best practices. But unfortunately it is also one the weakest areas according to Cooper’s research because most companies don’t measure and don’t know how well (or poorly) they are doing. Almost a third of the companies do not measure systematically measure their product success rate or adherence to budgets and time schedules for individual projects and for the company as a whole. Post-launch reviews are not done or poorly done in most businesses. Also new product development project teams are typically not accountable for the business-performance results of their projects.
It was discovered that many senior managements do not keep score in NPD (New Product Development) – overall NPD results are not measured and new product results are typically not part of senior management’s personal objectives or reward systems. Furthermore most companies do not measure how well their product development process is working.
The BSID focuses your organization on making sure that the policies support the strategy, that the processes facilitate the policies, that the systems enable the processes, and the reporting measures the execution of the strategy. Not focusing on the BSID (Business Strategy Innovation Diamond), may result in just BS instead of strategic innovation.
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