Rob Smart Presentation

8/6/2019 Rob Smart Presentation

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Assuming Doesnt Feed theBulldog!

InventVermont Meeting

June 9, 2005Montpelier, VT


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InventVermont - June 9, 2005

New Product Categories

0%

5%

10%

15%

20%

25%

30%

High Medium Low

Low

Medium

High

Newness to Company

Newn

esstoMa

rket

New-to-world

10%

New Product Line

20%

Existing LineAddition

26%

Existing ProdImprovements

26%

Repositioning

7%

Cost

Reductions

11%


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New Product Mix

10%

20%

26%

26%

11%

7%

New to World

New Line

Additions

Improvements

Cost Reductions

Repositionings

All Industry

20%

38%

20%

20%

2%1%

Industrial Product Firms(moderate-to-high technology)


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Product Development Challenges

Technology making more possible Life cycles cut by 400%

Customer expectations increasing Global competition strengthening

Building company worth


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Majority of Ideas Fail

7

Product Ideas

4

Developed

1.5

Launched

1

Succeeds

14%Success

Rate


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Key Activity Frequency

68%

56%

35%

49%

23%

66%

89%

89%

63%

25%

85%

77%

92%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Market Launch

Production Start-Up

Pre-Launch Business Analysis

Trial/Pilot Production

Test Market/Trial Sell

Customer Tests of Products

In-House Product Tests

Product Development

Business/Financial Analysis

Detailed Market Study

Prelim Technical Assessment

Prelim Market Assessment

Initial Screening

Percentage of Projects Where Activity is Undertaken

Only 1.9% of projects featured all 13 activities


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Key Activity Dollars

27%20%

1%

6%

1%

3%

7%

29%

1%

1%

3%

1%

1%

0% 5% 10% 15% 20% 25% 30% 35%

Market Launch

Production Start-Up






Product Development





Initial Screening

Percent of Total Cost of Project


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Key Activity Time

6249

5

79

9

36

98

419

14

16

61

26

32

0 50 100 150 200 250 300 350 400 450

Market Launch

Production Start-Up






Product Development





Initial Screening

Average Person-Days of Work per Task


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Top Reasons for Failures

13%

6%

8%

9%

10%

14%

16%

24%

0% 5% 10% 15% 20% 25% 30%

All Other Causes

Technical or Production Problems

Poor Timing of Introduction

Competitive Strength or Reaction

Higher Costs than Anticipated

Lack of Effective Marketing Effort

Product Problems or Defects

Inadequate Market Analysis

Percentage of Companies Citing


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Best Companies Do Better

22% of companies surveyed 3.5 ideas to achieve winner (v. 8.4 ideas)

49% of sales (v. 25%)

49% of profits (versus 22%)

97% return on investment (median 33%)

47% market share (median >35%)


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Managing Risk-Reward

Risk/Uncertainty

Expendit

ures

Risk/Uncertainty Expenditures


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Stage-Gate System

Robert Cooper Winning at New Products

Incremental (staged) commitment process Successfully implemented in many companies

Scales from small to large organizations

Idea Gate 1 Gate 5Gate 4Gate 3Gate 2Stage 1 Stage 5Stage 4Stage 3Stage 2 PIR

InitialScreen

SecondScreen

Decision onBusiness Case

PostdevelopmentReview

PrecommercializationBusiness Analysis

PostimplementationReview

PreliminaryInvestigation

DetailedInvestigation

(Build Business Case)

Development Testing &

Validation

Full Production &Market Launch


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Stage Framework

Manage

Product

(P&L)

Refine

Financials

Refine

Financials

Revenue &

Financial Plans

Strategic

AlignmentBusiness

Production &

Launch

Production-

Ready Product

Prototype

Development

Product

Requirement

Document

Technical

FeasibilityProduct

Fully Execute

Marketing Plan

Initiate

Marketing Plan

Formalized

Marketing Plan

Market

Requirement

Document

Preliminary

Market

Assessment

Market

Stage 5Stage 4Stage 3Stage 2Stage 1


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Keys to Effective Gates

Seasoned gatekeepers Cross-functional representation

Control over required resources Constructively critical discussions

Portfolio and other tools


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High-Level Criteria

Company strategic fit, core competenciesMarket segments, customers, competitors

Product unique advantages, feasibilityBusiness capital requirements, financials


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Company Criteria

Strategically aligns with defined objectives Leverages:

Organizational capabilities, structure

Technical know-how

Operational (supply channel) infrastructure

Limited-to-no new competencies


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Market Criteria

Sizable, growing target market(s) Confirmed market requirements

First-to-market advantage Defendable competitive position

Clear channels to customers


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Porters Industry StructurePotential

Entrants

Barriers

DirectCompetition

ChannelsManufacturing MarketsSuppliers

Differentiators

Substitutes


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Sales ChannelsIntroduction Growth Mature Decline

Limit channels(direct sales only)

until product

acceptance

Scale channelswith customer

acceptance,

increased demand

Increasedcompetition drives

channel incentives

and turnover

Consolidation ofvendors and

channels begins;

execute exit strategy

Evaluate licensing to further expansion and/or exit business


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Product & Technical Criteria

Unique product capabilities Technical feasibility

Clear and compelling value Sustainable leadership position


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Business & Financial Criteria

Revenue & profit contributions Operating expenses & capital requirements

Financial metrics:

Net present value

Internal rate of return

Payback period

Sensitivity analysis


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Built-In Success Factors

Emphasizes homework Multidisciplinary and cross-functional

Parallel processing

No single department ownership

Strong market orientation

Weed out weak early

Pre-development product definition


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The Experience Effect

0

20

40

60

80

100

120

1 2 4 8 16 32 64 128

Number of New Product Introductions

RelativeDe

velopmentC

ost

Every 2X introductions leads to 29% cost reduction


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Thank You!

Rob Smart Presentation

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