WHY IT IS NEEDED
New product development is a process which is designed to create, test and consider the viability of products which are new to the market. Even though the whole process might differ depending on industry and product specifics, generally there are the same main stages and key milestones that must be achieved. New product development milestones are all about moving from one stage of risk to the next. If you plan your product development milestone correctly it will help you to:
- Avoid unpleasant surprises and pitfalls because you will foresee most of them in advance;
- Increase your chances of success in fundraising and building a business because you will have a detailed plan: what tasks and when should be done and how much investment will be needed to achieve each of key milestones.
If you meet sceptics telling you that it’s impossible to precisely plan the development of a new and innovative product, just have in mind that any plan is better than no plan at all. Do your homework and keep your plan regularly updated. This will provide you guidance and save your nerves.
HOW TO PLAN THE DEVELOPMENT OF A NEW PRODUCT
1. Start with a SMART goal
First of all, you should clearly know what you are seeking. It would not be wise to think that simply creating a new product is a good goal by itself – it’s too generic. You must be more specific and action-oriented. Use the SMART methodology to define your main goal for new product development:
- S (specific) – The goal is clear to anyone that has a basic knowledge of the project.
- M (measurable) – It’s easy to find out when you have achieved the goal.
- A (action-oriented) – Sounds not like a dream, but as task or job to be done.
- R (realistic) – Is possible to achieve given the availability of resources, knowledge, and time
- T (time-based) – There is a defined time when the goal should be achieved.
The SMART goal for new product development could look like:
To build a personal productivity app that at least 10,000 target customers will pay 49$ one-time fee. The product should be built and successfully introduced to market till December 2018, do not exceed the total development and marketing budget of 100,000$.
It is specific, measurable, action and time-based. It indicates what product must be created and how the success will be measured. It also provides limitations and conditions not only in the time frame but in the budget as well. Yes, it could be even more specific by defining more details about the product. But the main attention here (as well as in every business startup) is focused on market success – who wants to build a product that nobody buys? Is this goal realistic? Well, it depends on the team capabilities, their “know-how” resources, competitive situation and many other factors. You should have the goal that is challenging but yet realistic in your situation.
2. Prepare to go through all stages
There are two different approaches (marketing and technical) to new product development that startup founders should take into account. A marketing approach to new product development helps developing products that customers love and are willing to pay for. According to the traditional marketing approach, there are 7 stages of new product development that must be walked through if you want to have good odds for your product’s financial success in the market.
1. Idea generation
Idea generation is continuous, systematic search for new product opportunities. It involves listing sources of new ideas and methods for generating them. Ideas for new products can be obtained from basic research using a SWOT analysis (looking for opportunities), market and consumer trends, competitive intelligence, focus groups, employees, salespeople, etc.
2. Idea screening
Idea screening focuses on eliminating unsound concepts prior to investing a significant amount of resources. The screening stage must answer these questions:
- Will the customer in the target market benefit from the product?
- What is the size and growth forecasts of the target market?
- What is the current or expected competitive situation for the product idea?
- Is it technically feasible to manufacture the product?
- Will the product be profitable at the target price?
3. Concept development and testing
Concept development and testing present the consumer with a proposed product and measure attitudes and intention at this early stage of development. Concept testing of prototypes can help avoid costly mistakes that we have already talked about in Business Model Validation.
4. Business Analysis
Business Analysis estimate likely selling price and sales volume based upon competition and customer feedback. Estimate profitability and breakeven point.
5. Marketing strategy development
Marketing strategy development includes the development of a strategic plan that addresses key questions, such as:
- describing the market’s size, structure, and behaviour,
- product positioning strategy,
- product pricing strategy,
- distribution strategy and marketing budget for the first year,
- expected sales and market share,
- expected profit goals for the first few years.
6. Test marketing
Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan. But most of the successful startups do that already in concept development and testing stage – if target customer “don’t buy” the concept of the product, it’s a bad product concept and poor value proposition that must be improved.
Commercialization involves implementing a total marketing plan, full production, filling the distribution pipeline with product.
The technical approach ensures that products are created and put on manufacturing schedule. The technical approach suggests that there are only 4 main stages of new product development: concept design, detailed engineering, pre-production testing, and manufacturing.
1. Concept design
Concept design stage is focused on research and product planning. It is key to defining the product concept, end user and market requirements, regulatory impacts and determining technical feasibility. You should try to identify any risks up front and outline financial implications and timelines. Develop design concepts and minimal prototypes suitable for investor presentations and initial user experience verification. The milestone is achieved once you have a single product concept direction ready for detailed engineering. If there are few different concepts, your task is to run experiments and identify the most promising one.
Concept design stage usually has at least these key milestones:
- Key requirements identified
- Primary product features determined
- Industrial design concept confirmed
- Technical architecture (mechanical, hardware, firmware, etc.)
- Initial regulatory and legal plan prepared
- Key components and materials selected
- Product costs estimated
- Marketing images and animations (for investor presentations and pre-sales) ready
2. Detailed engineering
Detailed engineering stage is focused on completing the detailed mechanical, hardware and firmware design, regulatory compliance, design and usability requirements. Engineering and design teams collaborate, research, test, evaluate and implement technical solutions for the primary product features and key components. Ready for production and the fully defined solution is the essential milestone in this stage.
- Industrial design analysis done (i.e., colour, finish, power connections, operating systems, etc.)
- Detailed technical design (mechanical, hardware, firmware, etc.) prepared
- List of components and material for prototyping and mass production
- Key components selected
- Documentation for prototypes and final product prepared
- Detailed cost estimated
- Market feasibility done based on updated production costs
3. Pre-production testing
Pre-production testing stage is focused on delivering a production-ready This stage is critical as it validates product requirements, usability and look and feel of the design. The project manager should ensure the tens or even hundreds of production considerations are met.
- Parts and materials ordered
- The prototype built/assembled
- Product testing (mechanical, hardware, firmware, etc.) done
- User testing done
- Testing reports prepared, conclusions and decisions made
- Risks re-assessed, risk reversal plan prepared
- Documentation for mass production ready
- Marketing images and animations upgraded
For startups, it’s highly important to be serious about usability testing. Even just watching users using new product can provide valuable insights if the product use is intuitive or something must be improved. Startup founders have to find answers with proofs if the new product is engaging or confusing.
Manufacturing stage is focused on overseeing the transition of knowledge to the manufacturing team and ensuring the required level of quality, precision and reliability.
- Product modifications
- Documentation updates
- Off tool part approvals
- Quality testing coordination
- Marketing materials for sales (packaging, labels, user manuals etc.)
Each stage (in marketing and technical approach) has multiple milestones that are not equally important to all startups. You should be aware of all those stages and focus only on those key milestones that are most meaningful in your case.
3. Identify key milestones and tasks to be done
Once you have a clear and measurable goal, try to figure out what generally needs to be done to achieve it. What are your key milestones? You already know main stages of new product development and key milestones in each of them. Now you need to create clear and actionable instructions for yourself on how to build your new product in the most efficient way.
The next step is to break out each milestone into smaller more detailed tasks. Yes, it’s easy to say “do the pre-production testing with 100 potential customers” but when it comes to the implementation of such objective, you might get frustrated. In order to avoid getting stuck, ask yourself one simple question: “what needs to be done to achieve this objective?” Also, always double check if the objective will be achieved if you successfully complete those tasks.
Check the Excel template for new product development schedule. It’s just a template, not final plan for your new product development, but you might find it very helpful in setting up your milestones and tasks. Here is what you should do:
- Review suggested stages of new product development and update them to be more specific and measurable;
- Check suggested milestones and adjust them according to your unique case;
- Include sub-tasks if needed
The serious project manager would say that each of those tasks should be made according to the SMART methodology. But, actually, it’s up to you to decide if you want those tasks to be highly specific or more like major guidelines. The more specific you make the tasks, the easier it will be for you to implement the plan, because you’ll already know precisely what has to be done and that it is more or less realistic. But in some cases, startups always face a lot of uncertainty and it’s really difficult to set highly specific, lower level tasks because so many things can change very quickly.
4. Tie tasks to dates in a simple Gantt diagram or Excel
Now, it‘s about time to make your new product development plan more actionable and trackable. Having a plan is good and helps a lot, but if you want to achieve even greater results you must plan your actions based on time and money. Basically, you must decide when each of your tasks will be done and how much money it will cost. There is no one-size-fits-all solution.
You can put your tasks in your personal calendar (online or offline), time planning app or software, or your company CRM if it has objective and task functionality. There are many specialized free and fee-based software solutions for drawing Gantt diagrams for your projects, including your plan. Using a Gantt diagram for planning and managing tasks allows opportunities to join, combine, or even do some tasks simultaneously (even from different stages) which might save you time.
The example shows the main principles of putting your product development plan in Excel spreadsheet. Most startups find this solution for planning easy applicable and very helpful because it allows them to:
- Create tasks for objectives, subtasks for tasks, and so on and put comments on each of them. So you can go as deep into details as you want and everything will be on track. If you want to see the general, strategic view, you can hide grouped rows with sub-tasks and tasks.
- The top row of the table shows the timeline (usually months or weeks). Marking certain cells with your chosen colour allows you to easy to see the tasks you should be focusing your time on.
- The bottom row of the table shows the sum of money required for all product development tasks each month. All you need to is to add the amount of money required for each task in cells.
By following these steps you will have your new product development schedule in Excel spreadsheet or any other format you choose. This will allow you to see all the way you’ll have to go. The schedule shows not only key milestones and tasks but also helps you to plan your time and funds. Use this schedule to communicate with your team members as well as potential investors. However, keep in mind that new product development schedule is not ‘one-time-done’ task. Review and update it on regular basis to keep it actual and live.