I am often called in on consulting assignments to help companies improve their new product development practices, to make their development cycles shorter and more responsive to marketplace needs. I frequently find that they do not have a strategic approach to their new product development activities. As a result, they suffer from reactive, opportunistic and slow product development. Under these circumstances, a company is unlikely to develop products that address their needs or those of their customers.
A strategic approach to product development consists of a number of interrelated elements: Situation Analysis, Strategic Plan, and a Product Development Plan.
A situation analysis is a detailed analysis of the company’’s products and operations, and engineering capabilities, overall cost structures, marketing and distribution, actual vs. perceived quality, trade relationships, pricing and product mix, corporate philosophy, willingness to take risks, financial resources, quick response capabilities, sourcing, product development practices, competitive advantages, human resources, and proprietary technology. The analysis also examines the current market and products, marketplace trends, the competition, the customers and the end-users.
A strategic plan for the business consists of Mission, Objectives and Goals, Strategies and Tactics.
A mission statement is a broad, conceptual statement of the purpose of the company. It may include statements about what its products are, what its business is, who its customers are, what its market niche is, where and how it distributes its products, its relationships with its employees and its financial goals. The mission’’s purpose is to express the company’’s operative philosophy and corporate identity. Hopefully, it will distinguish the company from its competitors. The mission is neither quantifiable nor measurable.
Objectives and goals build on the mission. They provide explicit targets for the company’’s growth.
Strategies are clear, concise statements about exactly how the company will achieve its objectives and goals. In their simplest form, they are a list of steps that need to be taken, a road map that provides corporate and functional direction for the future.
Tactics tend to be relatively short-term activities while strategies take on a longer view. Tactics are the detailed steps that must be taken to achieve each strategy. They delineate what will be done, who will do it, when it will be started and when it will be finished, and, when appropriate, how much it will cost.
After the strategic plan for the business has been developed, it is then appropriate to prepare a new product plan, i.e., a listing of what new products will be developed over the next two years in support of the company’’s strategic plan.
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