Chief Research Officer
New product development (NPD) professionals are tasked with two primary jobs: develop new ideas into products, and commercialize those products. NPD pros exist in nearly every business, but it’s a career where failure is commonplace. Although it varies considerably by industry and by company, the generally accepted metric is that 80% of new products fail in Year 1. I’ve also heard anecdotally that another 80% fail in Year 2. If you do the math, that means that only 4 out of 100 new products achieve commercial success.
The scariest part about those estimates is that all 100 of those products were believed to be winners by NPD pros prior to launch. NPD pros already turned their backs on the “bad” ideas that didn’t warrant advancement into the product development process. So what’s going on here? Why do so many of these “good” products fail? Is there something wrong with the new product development process?
“Garbage in, Garbage Out”
There’s no single magic answer to that question. Maybe your NPD process is flawed, or maybe it works exactly as designed. Or maybe, just maybe, you are feeding the wrong ideas into the NPD engine. Think about it: if you are starting off with bad product ideas, some of those will get kicked out of the NPD process along the way, but the ones that make it through to the end are still going to be bad products – which contributes to market failure.
What if more emphasis – or a more disciplined approach – was placed on the development of those new ideas? Wouldn’t a better method for identifying and vetting new product ideas likely result in an improvement on that 4% new product success rate – and isn’t that what really counts?
Innovation management creates a better vetting process for new product ideas
That’s where innovation management comes into play. It’s more than just new product development: Innovation management means that the company:
· Identifies the business intent behind innovation;
· Understands the opportunities and insights within the industry;
· Identifies the spaces within which to innovate (current markets, adjacent markets, or new markets);
· Builds robust business concepts and growth platforms instead of fragmented ideas; and
· Turns concepts into business cases with winnable and sustainable business models.
Yes, there is some overlap towards the end of the innovation management process with the new product development process. But what’s different is the upfront investment in time and resources to develop a strong understanding of what kinds of products, services, or experiences are a good fit with respect to both the company’s goals and capabilities and the customers’ needs.
Innovation is now a business discipline that can be taught and learned
Business leaders around the world recognize business innovation as a main driver of new growth and success. However, few professionals possess the knowledge, skills, and tools around innovation, because in the past there had been no common standard or method for learning innovation and how to apply it in a business setting. The Global Innovation Management Institute (GIMI) aims to change all of that by creating and driving standards for innovation management through its Global Innovation Certification program.
Innovation Excellence (IX), the Center for Innovation, Excellence, and Leadership (IXL Center), and GIMI have partnered to bring the Global Innovation Certification program to market. The program was developed by a group of senior executives, innovation experts, trainers, academics, and consultants from around the world, with a goal of helping individuals, companies, and regions develop world-class innovation and innovation management capabilities through global standards, testing, protocols, and certification. The four-level program, which officially launched earlier this year, combines theory with project-based action learning, thus requiring participants to apply what they have learned.
When it comes to developing new products, low success rates are normal – but that doesn’t mean they are acceptable. NPD professionals should explore innovation certification (either individually or more broadly within the organization) as a way to build an innovation management capability that will develop better new product ideas and, ultimately, increase new product success rates.