By Rick Rothenberger
Vice President, Engineering
and New Product Development
Eaton’s Crouse Hinds Business
Essential Elements For Growth
Every company is in business to be successful as an enterprise. One of the primary elements to being a successful business is delivering profitable revenue growth on a recurring basis. There are several key elements to being successful at this, but success usually starts with a constant flow of new products that are superior to your competitor’s offering. We all know that products that offer the right level of features, reliability and functionality at the right price point will be wildly successful in the Market, assuming other critical functional areas of the business are credible and performing well.
The second key element in achieving success occurs by serving your customer better than anyone in your chosen market space. We will discuss this more later, but figuring out what your customers value in a business relationship and why they would rate your business better in customer service over your competitor is a task in its own right. The combination of excellent customer service and a constant flow of superior new products will not only help you grow the top line, it will enable you to get your price in a healthy market.
The third and final primary element for business success is having world class operational performance including sourcing, supply chain, manufacturing, quality and logistics. Performing at world class levels allows you to delivery high quality products to your customer, on time, within acceptable lead-times and provides a good margin return to the business.
Constant Flow Of Superior New Products
Now we will explore how a business can achieve a constant flow of superior new products. You might ask yourself why a constant flow of superior new products is important, and the answer is that not only does it give your sales people a reason to go visit their accounts and talk about how great your company’s new products are, it gives you the ability to use product innovation to provide higher value to your customers than your competition can. Things like more energy savings, longer time spans between maintenance cycles, improved operating safety conditions and so on are all things that innovation can bring to your customers. Oh, and don’t forget about innovating to achieve a low cost point with a minimum feature set – all keys to entering the lower end markets in developing countries. Probably the most important thing about product innovation is that it keeps you ahead of your competitors and provides your customer value that the competitor cannot match, giving you the competitive advantage that you desire. Staying ahead of your competitors with your product offering is critical to providing that much needed revenue growth.
What Does A “Superior” New Product Look Like?
So what does a superior new product look like? As you might imagine “superior” can take on many forms, but defining what the term means in a competitive sense is one of the most important aspects of developing a successful new product. Each new product development project must have a scope and specification that clearly differentiates it from the competition. The project scope and specification must adequately define the product’s competitive differentiators on a line item by line item basis, along with cost points and the service offering associated with them. Getting the scope and exact feature set, generally, is trial and error with the early part of the product development process focused on taking rapid prototyped models out to lead customers to get feedback on proposed features sets and design approaches.
Selecting 3-4 lead customers to visit with early prototypes will allow for adequate feedback to modify the project specification into something that will define a successful product in the market. Once the customer has helped you clarify what features are valuable to them, they have also helped you get a good price for the product you eventually will sell to them.
Now that you have the coveted new product specification, you can go about innovating to deliver the value and feature set identified. In many cases innovation will be driven by new functionality, new space requirements or new price point requirements. It is always beneficial to use the most elegant, simplified, cost effective design that you can to achieve the functionality needed for the investment you can afford.
Simply put, you can innovate to achieve an ultra-low cost point which gives you tremendous pricing flexibility, especially when competing on package level business or you can innovate to provide feature sets that competitors can’t – or you can combine your innovations to achieve a superior product at a superior price point, margin and functionality level. It all depends on what product objective and time to market target you have set for development.
To be a true, sustained product leader in the marketplace, a company needs sustained innovation and a constant stream of new products. If the company can achieve this they will be very difficult for any competitor to match, and will enjoy a consistently favorable position with their customers.
Multi-Generation Product Planning
One of the most important new product planning processes is the multi generation product line planning process. The end result of this process is a high-level definition of how the product line will evolve over time, which includes a general description of each new product launch and the timing of the launch across the entire product line. Typically, the multi-generational product line plan is graphical with the horizontal axis representing a time scale, generally 2 years out, and the vertical axis representing various major product families within a given product line. Successful product line driven businesses tend to have a single lead product line manager who is responsible for developing and maintaining the multi-generational product line plan, this allows for clear ownership of the product line plan and provides the basis for new product development project planning and project timing to be defined over the 2 year time horizon.
Data sources used to define the product line plan come from a variety of places, but the most important ones include the competitor’s product offering, and a direct understanding of what products customers are demanding and/or using that are needed in the company’s product basket. Keep in mind that each new product shown on the product line plan will have a detailed product specification, and new product development timeline defined. Technology trends that impact the company’s products are also considered in the multi-generational product line plan, but generally find themselves embedded in the detailed product specification, ultimately providing feature sets that provide a differentiated product when compared to competitive offerings.
At this point, it is valuable to consider the concept of “technology push” innovation and how it is used to create leapfrog products that can put your product offering well ahead of the competition when launched. Technology push innovation is the concept of letting completely new product and platform ideas come about based on a technology looking for an application, rather than an application looking for a technology to enable a specific feature-set. The notion of technology push is used to challenge established architectures, and essentially begins with a clean sheet of paper and a fresh start to thinking about a company’s products. My experience is that the use of technology push innovation challenges the status quo, and demonstrates what could be done with new thinking on age-old products.
When using technology push innovation techniques it is very important to work closely with lead customers to evaluate new thinking, and iterate to the embodiment of the product that delivers real value to your customer base, this way your chance of success in the market is improved. The lead customer or user group is also important in the development process in that they provide you the ability to fail quickly, learn quickly, pivot and come back with revision 2 for another round of lessons learned. Eventually the right combination will be discovered and the product will be ready for introduction.
Protecting Your Innovation
The last topic for discussion involves protecting your product innovations from being copied. Failure to adequately protect your innovation will result in the loss of competitive advantage for your company since competitors would be free to use the innovation in their own products. The most common form of protection used is the patent system which is available in most countries of the world. Patents are a viable method of protecting most innovation, but in some cases other forms of intellectual property protection are the more appropriate. Other protection concepts to consider include the use of trade secrets and trademarks, to name a few.
The value of a steady stream of superior new products to the success of a business is very clear. Without new products a business will eventually reach a point of maximum share, and be forced into a situation of plateauing sales and little growth. Practicing the methods discussed in this article will certainly improve the new product growth and success of your business, and, if executed well will position you nicely against your competition.