While the recession of the past three years has been rough, necessities to cut costs, reduce time to market, and compete globally breathed new life into innovation. In a recent survey of 1,214 business executives by Harvard Business Review Analytic Services, fifty percent of executives indicated New Product Development (NPD) and innovation as a top priority. Why? Because business leaders are keenly aware of the fact that majority of their revenues in the next 3-5 years will come from new products.
In another recent survey of 30 companies by Nielsen, a common ingredient to success with new product development was shared — precisely manage the new product development process, not the ideas themselves. For example, survey results show companies with rigid stage gates average 130% more new product revenue.
So, it’s no surprise that Product Lifecycle Management (PLM) has joined the ranks of ERP, CRM, and SCM as the fourth mission-critical enterprise IT solution. PLM is a critical strategic, tactical, and operational enabler to increase product development efficiencies from idea management to digital engineering, from product data management to digital manufacturing. It enables R&D organizations to create new product ideas and prototypes faster. It helps engineering organizations to manage the complexity of product designs and engineering changes. It gives manufacturing organizations the upstream visibility into requirements and designs for planning and scheduling of production processes and facilities. It offers IT organizations the framework for information management and collaboration. Most importantly, PLM serves as the business process management framework for precisely managing the entire product lifecycle from discovery to development, from commercialization to retirement.
For innovative companies like Mercury Marine and Samsung, PLM is not new. It has been a driver of innovation best practices for some time. They discovered the high correlation between successful NPD by applying PLM solutions to reduce time to market, and achieve top-line growth through product innovation. Mercury Marine case study highlights how they increased product development efficiency. Samsung case study describes how they shrank the development cycle by 30 percent.
Other findings from the HBR Analytics Services survey included:
- New product development is a team sport. More than half of the companies said marketing, operations, sales, and finance work with the R&D department.
- Customer suggestions are the most important source of new product ideas.
- Fifty-five percent said partners are an important source of ideas and innovation support.
While these findings don’t reveal anything new, they explain the trends in social product development and collaboration tools that connect communities for knowledge generation and information sharing. These tools facilitate real-time inputs into the ideation, requirements, prototyping, and design processes. BrightIdea and FeatureSet are examples of such tools that enable conversation, engagement, interaction among customers, partners, and employees. Making NPD a team sport helps make faster and better decisions. It reduces the time, risk, and cost associated with tactical stage-gate processes and strategic project portfolio management processes.
Rising significance of partnerships in innovation is an interesting challenge for technology product companies. On the one hand, most companies (especially small and medium size technology companies) don’t have the sufficient expertise and cross-disciplinary capabilities to keep up with innovation. So, they leverage expertise and abilities of people outside their companies. On the other hand, collaborating with partners in NPD brings about concerns such as finding trusted and competent partners, IP rights ownership, and competitive conflicts.
Key takeaways:
- Making NPD a top priority starts with a commitment to defining and managing the product development process.
- Increasing collaboration within the company and across the extended enterprise helps capture and filter the best ideas
- Adoption of PLM solutions ensures precise management of the product development process, accelerates time to market, and improves NPD efficiency.