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Re-Evaluating New Product Development in Uncertain Times
By Kaye Crippen, principal, Market Development Consultancy

Innovation is key to emerging tech companies. Emerging technology companies rely on new technologies that they hope will result in new products that make them a viable business. However, in some cases, companies fall in love with the new technologies, which inhibits their ability to bring innovative new products to market in a timely manner. They begin to think the new technology is the new product. Therefore, it is important for companies to develop a new product development (NPD) process.

But how do you manage the NPD process when the economy takes a downturn? Does the market really want the most sophisticated product with lots of bells and whistles or are buyers going for no frills products? Are companies delaying purchases or purchasing only the most basic items? Many technology companies like to develop sophisticated, signature products. But today, even companies like Nike are finding that customers are cutting back on buying new sophisticated models and are going for the basics instead.

Although your company has probably already conducted market research, changing times can cause dramatically different consumer behavior. It is critical that you re-evaluate consumer needs. Consumer product companies can interview buyers at retail outlets to determine trends. For B2B products, you can interview corporate purchasing agents to find out how their decision-making has changed. Are they delaying purchases, making only basic, as-needed purchases, or making the procurement process more competitive?

If you do not have the budget to continue all of your developmental efforts, how do you decide what projects to continue and how to modify them? The key is to take immediate action and to re-evaluate which projects should have the highest developmental priorities in light of the changing economic situation. Some companies slash the budget across all projects in order to continue to pursue all at once. In reality, this does not help to bring projects to the market more quickly and may result in all projects being slowed considerably due to the reduced funding. Others choose "pet projects" or the projects most favored by the top scientists or engineers.

A more rational approach would be to re-prioritize NPD projects and focus emphasis on one project or a few projects that have a strong probability of getting to market quickly. Another approach is to pick a short-term project that is likely to bring in cash along with a longer-term project that offers breakthrough technology or relates well to the company’s objectives. During good economic conditions and when funding is easy to obtain, emerging technology companies tend to focus more on innovative products closely aligned to the corporate mission. However, in downturns, the need to generate cash and to stay afloat often means that companies have to produce more mundane products to help fund the more innovative ones.

These decisions are best done by the new product development committee or team leaders. First assess company needs and review the time lines for launch of new products. If you have a process for evaluating new product development efforts, use this process for your re-evaluation efforts.

In many cases, the issue becomes: How do we downsize development without killing it in the process? Some of the questions that should be raised include: Which products are closest to launch? Which products will be best received in the changing marketplace? (This might require some additional interviews with industry leaders and consumers.) What might the launch mean to your company in terms of cash flow, both short and long term? To company visibility? To the ability to receive additional funding? What will the new product launch mean in terms of the amount of publicity you might receive? How might this publicity influence investors?

The next step is selling your development personnel on the decisions reached by the NPD committee. These decisions may require re-forming teams or even downsizing, but they can be sold to the company on the basis of corporate survival and future growth. In the end, the more attention paid to this process, the more successful the company will be at surviving the downturn and being on top when the good economy returns.

(Kaye Crippen, Ph.D., is Principal of Market Development Consultancy. The firm specializes in developing new markets for new products from idea generation through to product launch. Crippen has taught NPD Management in the MBA program at The National University of Singapore and has done consulting throughout Asia Pacific. She can be contacted at kcrippen1@msn.com or 949 496 3893.)

 


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