Letter from the PDMA President - Increasing your competitiveness in NPD today

by Chris Miller, Innovation Focus

As a concerned, committed new product development professional, ask yourself: "What percentage of products once launched fail?" The answers range from 90 percent to 99 percent, depending on whom you ask. The actual failure rate is closer to 40 percent. But among companies that take their product development and management seriously we see a 60-percent success rate. This has been true for nearly 15 years, perhaps for longer. Why does the myth of a huge failure rate persist?

Then, ask yourself: "Do we have a generally agreed-upon NPD process that we follow at our company most or all of the time?" If 80 percent of your team answer "Yes," evidence shows that your company is likely to be twice as fast at getting products to market as it would have been without that process.

Here is my point: As professionals in the field of NPD, we can reasonably make the claim to management that we can cut almost any company’s time to market in half and deliver a success rate of 60 percent. Recent studies such as the one just conducted by the PDMA Foundation (see pages 26 to 29) show that.

That is not a bad claim. If we can cut your time to market by 50 percent for a $24,000,000 NPD opportunity on the usual 12-month development cycle, we have just delivered a potential $12,000,000 in revenue to your company. If we can reduce the risk from the perception that only one-in-10 new products succeeds, to the more realistic 60 percent success rate, investment in product innovation becomes a pretty good bet.

These data make it possible for people like James Raskin, Vice President of Planning at Black & Decker, to say, "We no longer have an NPD funnel. We have an NPD rifle. Once we put the product in the chamber and pull the trigger the product is on the shelf and it sells."

The message here is that today companies can control risk and speed in the NPD process. Delivering "organic growth" through the practice of proven product life cycle management techniques is almost a sure thing. We can do this as experienced NPD professionals.

Yet, despite this evidence, companies continue to be much more likely-in today’s environment, at least-to invest in cost reduction rather than in product innovation. They prefer to invest in the marketing and sales of yesterday’s products rather than in meeting emerging customer needs. They are more likely to invest in acquisition than in fundamental research. They are more likely to control than to experiment.

It’s up to us as product and innovation managers to counter this trend and exert our influence to explain the benefits of professional NPD. Today, there are just over 100,000,000 companies around the globe, and we estimate that only about 5 percent or 5,000,000 are ready to take advantage of improved innovation processes-even though this discipline has been around more than 25 years.

We are in a position like the "quality" experts of 50 years ago. At that time only a small percentage of the largest companies were committed to "quality"-maybe only 5 percent. However, as expectations grew throughout the customer base, the once-pervasive attitude toward quality changed. Today commitment to quality is visible in virtually all major corporations around the globe.

Innovation will be the same. Customers at all levels of the value chain in goods and in services will eventually perceive innovation as part of a continuous improvement and will demand "new" products on an ongoing basis simply as a component of quality.

How does this apply to you and what should you do about it?

First, become more involved in the industry. You and your company are at a disadvantage if you are not participating in the comparative performance assessment survey being conducted by the PDMA Foundation; contact George Castellion. You will find highlights of the PDMA Foundation’s new Comparative Performance Assessment Study (CPAS) by clicking here. This impressive research will go a long way in telling you and your company how you stand among your peers. And it is ongoing. George is a past President of PDMA and an easy guy to talk to. Get in touch.

Secondly, start an aggressive NPDP certification program in your company or in your region. How long will it be until the leadership in your company realizes that it cannot cost-reduce its way to long-term success? Certification is the one way we know of to assure that you and your team have the skill necessary to drive innovation. Click here for a brief description of the benefits of PDMA’s NPDP certification program.

If you have not done these two simple things, go to pdma.org and look at the PDMA membership directory. Look for your competitors. If they are not listed then you probably have time. If they are, those strange sounds you hear down the hall are probably not squeals of delight at the size of this year’s bonus. Those sounds reflect anguish among your colleagues as one more "re-org" passes through in an effort to do "anything" in a company that can’t seem to do the right thing.

Chris Miller
May 12, 2004
Lancaster, PA

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