How can external expertise help New Product Development managers reduce the risks in the NPD process?
One of the prim
ary problems with any new product development (NPD) process is the element of risk. Many markets, especially those in the pharmaceutical and medical devices sectors, are very highly legislated and, due to overly long approval periods, are inherently risk averse. On paper, payback and projections can make any project look extremely favourable, but behind the scenes, the “what ifs” will constantly weigh on the minds of those in charge of the NPD process. The problem is that even the most risk averse companies recognise that the only way to maintain market share and grow it is to introduce new products and new lines, while helping to maintain and redevelop established ones. This means that risk is a necessary business process and is something that NPD teams have to take on board in order to meet their business objectives.
Many companies treat the whole development process as a singular entity or an island – creating artificial barriers to involvement. This approach, Simon Strothers, director at ITCM argues, can throw up all manner of negative implications which, had the project had an open remit in the first place, never need to appear.
The implications for NPD managers typically include the following problems:
Sub-optimal product design and function: Working in isolation means you will not have been able to take advantage of a broader and more diverse set of ideas. You may also be unaware of the latest materials and technologies that could add real value to your product.
Products will be easier to copy and improve upon by competitors: Without the use of external stimuli, with the new ideas they will bring, companies are often unable to differentiate themselves through new IP both for products and machine processes. Materials and convertors also play a major part in this; but if the product is already defined, then scope to add value in this area is constrained.
Higher than necessary costs: As mentioned above, machine suppliers and materials convertors can add huge value through ‘Design for Manufacture’, ‘design for assembly’ and ‘design for packaging’. Once the product has been defined, however, it is often too late to influence with these techniques.
Timescales to launch will be longer: You are effectively working in series, so significantly longer lead-times ensue. Machinery and materials development can actually start in parallel, with huge savings in time.
Product risk will still exist: The big question may still remain. Can the product be manufactured cost-effectively, by the launch date and at the desired rates of production? Having these kinds of unknowns at this stage in a project is highly undesirable. Significant costs may already have been committed which could be wasted if there is a need to revisit.
Probability of project failure will be higher: Related to the above; if high risks remain as the project progresses, then of course probability of failure will be higher.
High value capital investment influenced by timescale and market pressures: Can be minimised, with up-front involvement and parallel/ concurrent working with machinery and materials partners.
Although these implications seem onerous enough to put any project in jeopardy, they can in fact be managed very simply by simply making sure a few early provisos are put into place. Firstly, NPD managers should never underestimate the strength and capability of an external machine design and development company. In almost all cases they will have significantly more expertise in the production arena and they will almost certainly bring new ideas to the project, those that will be essential for establishing the necessary IP to protect the project from the competition.
The second proviso is to accept risk as part of the project, but to manage it, rather than letting it manage you. Adopt a robust project and risk management process and many of the problems can be addressed early enough in the process to mitigate their effects.
