Three measures seem to hold the key to new product success:
■ Predicting financial and business performance of a product in the marketplace by satisfying customers at a competitive price
■ Ensuring alignment with company strategy and workforce competency
■ Building a strong risk management system and way of thinking that anticipates risks and mitigates them through contingency planning.
Financial performance. Accurately predicting the financial performance of a product is key to success. Lack of good marketing and pricing data to make the business case for profitability is a major problem for new product development. The team must envision a cost and revenue scenario, discount it with the company's preferred discount or hurdle rate to calculate new present value, and then continuously update the picture as the product is developed.
Strategic thinking and company competency. The product should be closely aligned with the company's past history and future plans. New product designs must be used in strategic ways to build company competency and further the company's goals. And new products must be within the company's capacity to design and produce based on proven success in the past.
Risk management. The company must be attuned to risks and opportunities, e.g., what is likely to happen that will inhibit the success of the product, and what opportunities are created when the company overcomes those risks? And what will it cost to implement various contingencies in case of high-risk events?
These three measures—a strong case for product success and enhanced financial performance, alignment with the company's proven capacity and strategy, and a risk mitigation process that avoids surprises—appear to be the most salient ingredients to predicting new product success in selecting projects.
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