All companies, no matter what size or in what industry, need to generate innovative new products and services if they are to succeed. Increased competition, both domestic and global, the rapid pace of new technology,and changing customer demands have created a marketplace that is more competitive than ever before. One innovative product can alter the future of a single company, lead to entirely new families of products, and may even usher in a whole newindustry.
In Blockbusters, Gary S. Lynn, Ph.D., and Richard R. Reilly, Ph.D., share the results of their exhaustive 10-year study of highly successful new product development teams. This study, as shown in detail in this summary, discusses the five critical practices that all successful new-product teams must follow. Lynn and Reilly explain why senior management involvement, having a clear vision for a new product, sharing information, knowing your customer, and teamwork are keys to creating a winning new product.To illustrate how the best new-product teams work, Lynn and Reilly tell the success stories of Colgate,IBM, Polycom, Iomega, Apple Computer and other organizations.
How Blockbusters Happen
Great companies succeed and endure because they continually produce great products. Companies often fail because they’ve forgotten this simple truth. Tactics like manipulating inventory values, speeding up depreciation schedules or moving corporate headquarters offshore don’t create value. Even establishing world-class customer service won’t do much if a company’s products or services are inadequate. To create real value, companies must develop and launch great, blockbuster products—this is the heart and soul of any successful business. This summary presents the five key practices required for developing blockbuster products. These five practices were identified through a multiphase, systematic,large-scale study of extraordinarily successful, awardwinning products, as well as not-so-successful product launches and outright failures. The study was based on a detailed survey called an “innovation report card.” This innovation report card was used to rate hundreds of new product development (NPD) teams in many different industries.
The project then screened the teams again, this time selecting only those award-winners who scored a “perfect 10” in meeting company goals, meeting or exceeding customer expectations, and meeting or exceeding profit and sales expectations. Thirty-four teams met all of the criteria. For the next two years, it was observed how these blockbuster teams did what they did, analyzing every phase of their development process from concept to launch and following up with personal interviews. They learned what the teams did on a day-to-day basis: how well they communicated, how they met deadlines, how deadlines affected the team, how often they held meetings, how those meetings were structured and how well they stayed focused.
The Buck Starts Here
Blockbuster products do not happen without the intense personal involvement of senior management.Usually that’s the CEO — or the person who will be the next CEO or division head. Lynn and Reilly found that without the active participation of senior management, new product development teams were unlikely to create blockbusters, a finding that challenges the advice given by many management books today.
What Doesn’t Work
Coming up with the “big idea” is only the beginning.When you’re the senior manager, your involvement does not stop there. Effective senior managers didn’t practice “management-by-walking-around,” a style in which a company’s top executives “pop in” unexpectedly here and there to check what’s going on and sprinkle their wisdom like stardust. Rather than being helpful during new product development, this management style caused what might be called “hit and run.” When the senior manager comes in to “offer suggestions” on a problem and then moves on to the next crisis, the result is typically a Band-Aid solution. The suggestions are typically short-term, cosmetic fixes that don’t address underlying issues. Another management style that fails for NPD is the“seldom-seen-and-rarely-heard” approach. This is when a senior executive provides the guiding hand at the beginning, but is conspicuously absent as the team develops the product. The team is constantly hampered by a lack of authority to move the product forward quickly.
Having a clear idea of the product-to-be is a key element in creating a blockbuster. But a great idea is not enough to ensure success. Your chances of turning a good idea into a big success increase dramatically if you establish specific parameters of what the product will be. Called “project pillars,” they must be easy to understand and agreed to by both senior management and the team. They must remain stable until you offer the product for sale. Changing project pillars midstream discourages the team, leads to conflict among team members, will probably hold up production, and will most likely result in the new product failing in the marketplace. So the second practice of blockbuster product development is: Articulate clear project pillars that remain stable. Blockbuster teams were three times more likely to excel in having a clear and stable vision than the failed teams.
Finding Your Project Pillars
How can companies establish project pillars? The authors came up with 12 questions to ask when developing project pillars:
1. What is the product’s “reason for being”?
2. At what level of excellence must the product’s main benefit be delivered?
3. What features must the product contain?
4. What are the design constraints affecting engineering, manufacturing, marketing?
5. In what critical points must this product excel against competition?
6. How must the product differ from the competition?
7. How is the product better than the competition?
8. Is this difference meaningful to the target market?
9. Who is the specific target market for this product?
10. Can you characterize the ideal customer for your product (age, income, lifestyles for a consumer product,size, geography, level of service for an industrial product)?
11. How big is the potential market for your product?
12. Are there schedule constraints for bringing the product to market, such as a trade show or holiday season?
To answer these questions, a company must analyze and test competitors’ products and truly understand who its customer is. This period takes study, observation, analysis, time and patience.
When Customers Lead the Way
Lynn and Reilly found that the visionaries and teams who created blockbusters followed a distinct, identifiable process that started with knowing the customer’s needs inside and out. Sometimes the visionary with the blockbuster concept was the customer himself.
Be Your Own Customer
The authors found that the “eureka” moment often occurred when product developers actually lived in the environment in which the innovative new product would be used. In effect, they were their own first customers. This happens so often with blockbuster products that we’ve come to think of this as the Golden Rule of Blockbuster New Product Development: You are your own first best customer. In other words, you’d buy and use your own product if it were available.Guy Kawasaki, one of the first Apple Computer employees and a highly regarded Silicon Valley venture capitalist, says unequivocally, “If you want to create a revolutionary new product, design something that you yourself would use.”
Go, Look and Listen
Sometimes, however, you can’t be the customer. You must find a way to get in sync with your target buyers, to find out what they want in a new product — or what they could want — when they may not really know. Developing this kind of consummate customer empathy won’t happen in a telephone conversation with a customer or a quick visit that’s little more than a hello and a handshake.It takes in-depth, on-site dialogue that sometimes does more than nail down the exact features of your new product. It can lead to a nugget of information that could spawn a whole new product category for your company.
What are the questions to ask when you visit your customers? Here are some suggestions:
●What can’t you do that you’d like to do?
●If you could change one thing about the product you’re now using, what would it be?
●Are there tasks you’d like to do with the product you are now using that you can’t?
●What does this product not do that it should do? The answers will probably give you insights you wouldn’t get otherwise. These up-close-and-personal interviews enable you and your team to make more informed decisions about the product you’re creating.
What can you achieve with go, look and listen?
●You identify unmet customer needs.
●You may uncover new opportunities.
●You hear firsthand the likes and dislikes about a product or service.
●You see how customers perceive a bundle of features.
●You learn how the customer will use the product.
●You understand what goes into making a purchase decision.
●You may generate alternative solutions to a design.
Knowing the Competition
However you choose to achieve consummate customer empathy, it’s only half the story when creating project pillars. You must also know the competition inside and out. Buy their products, study them, use them, take them apart. You’re looking for the answers to four questions:
1. Does any product already on the market solve the existing problem?
2. Does your concept do it better?
3. What are the advantages/disadvantages of competitive products?
4. What do customers like or dislike about those products?
When Lynn and Reilly asked blockbuster team members how they handled communication across disciplines,they found that this wasn’t a problem at all —team members readily shared information.How effective information exchange can strengthen your NPD is best demonstrated with the story of Apple Computer.
Creating a Knowledge Core at Apple
Steve Wozniak, Steve Jobs and Ron Wayne started a computer company on April Fool’s Day, 1976. Their goal was to design, produce and sell an affordable personal computer primarily targeted to electronics enthusiasts.The group first introduced its “computer” three months later. It was a kit with a printed circuit board that you plugged into the back of your television set. With a modest four kilobytes of memory, it didn’t even have a keyboard. It sold for $666.66 and was one of the first computers to be mass-produced, even though they made only two hundred. All but twenty-five of those early models were sold. The following year, Wozniak worked on Apple’s next computer, designing it almost completely by himself — for himself. And when it came to market the following April, the Apple II was a huge leap forward. It had color graphics, a keyboard, a power supply in a distinctive case, and eight kilobytes of memory, all for $1,298. It appealed to many people because its operating system was easy to use, unlike the other computers available at the time that were too complicated for the typical user. You could play games on it. You could remove the case to see how it worked. You could work on two tasks at once using its split-screen capability. Apple II was a big success for the fledgling company.More than 4,000 units were sold in nine months during 1977. Within two years, the company had shipped 35,000 units. By late 1981, more than 300,000 units were sold, and demand was growing. For those glorious years in Apple’s checkered history, the Apple II was the computers broadened, the Apple II found a place in the home, the classroom and the office. Wozniak and Jobs knew their early successes would be difficult to follow. Still, they were determined to make a better computer. They went on to create the legendary Apple IIe, the product that secured Apple’s lead in PCs for nearly a decade. How did an upstart little company create such phenomenal blockbusters? When the authors interviewed people who worked on the IIe, they learned that the team excelled at sharing information. When Wozniak created the Apple II, the company had only a handful of employees literally working out of a garage, so communication was free and easy. It was as if they were in an all-day meeting every day. But, by the time they developed the Apple IIe, the company had grown to over 2,500 employees. Now Apple Computer needed to create a real system for sharing information, and the one they created was simple, yet incredibly effective.
The War Room
Apple designated a conference room as the “War Room.”There, everyone working on the project could easily find the many bits of information amassed on the project. In the War Room the status of the different functions (R&D, marketing, manufacturing) was constantly updated on handwritten notes posted on the walls. It looked untidy, but that comfortable, lived-in feeling made everyone feel welcome — not just those on the team, but also customers, suppliers and company representatives.The War Room was a communication conduit that embodied the “collective consciousness” of the project. Some days the key people on the team spent whole days in the War Room as others streamed in and out with updates, concerns, criticisms and suggestions. The whole team met there once a week. Any significant changes on the project filtered out of the War Room within minutes, so all functional areas knew promptly if they needed to make an adjustment.