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 companys
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
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
or 949 496 3893.)