BRINGING NEW PRODUCTS to market quickly is the single most important factor for enterprise success in many industries, yet project managers have traditionally brought their disciplines to only a fraction of the total effort of creating new products. In today's market, the race is so urgent that project management disciplines must be brought to bear across all the activities. Doing the whole job, and doing it quickly, is now the name of the game.
The need for urgency crosses all industries and all players within an industry: project management must expand its role in commercial product development if cycle times are to continue to shrink.
Among the forces driving the concentration on time to market is the tendency toward shorter product life cycles that reduce the period during which a company can reasonably expect to recover its development investments. A track record of rapid product development can bring a firm many benefits: market share, margin, an enthusiastic workforce, access to capital, cooperative suppliers, cooperative marketing channels, and acquiescent competitors. All of these benefits add up to profits. The winner in the time-to-market race usually wins the profit race as well.
The art and science of project management has traditionally been confined to a few of the processes of product development. In this traditional model, the “goo” in the tube of toothpaste is the product that project managers have been concerned with. The project manager's processes have been the processes of developing better goo. More recently, project managers have been asked to extend their purview to include aspects of the manufacturing process. By designing products in collaboration with industrial designers responsible for the manufacturing design, project managers have been able to improve quality and reduce time to market.
Introducing a new product to the marketplace requires the careful coordination of 10 elements that are critical to success. By stretching syntax, the 10 can all be summarized in words that start with the letter P for easy memorization: positioning, planning, partnering, producing, processing, packaging, pricing, promoting, placing, and pleasing. These elements have customarily been the sole responsibility of the marketing product manager. In the time-to-market race, they must also enjoy the attention, and the disciplined approach, of the product development project manager.
Edward J. Fern ([email protected].) is principal consultant of The Fern Group, a technology management consulting firm specializing in the application of project management and information technologies to the development of new products and services.
Traditionally, the project manager has played a role in the producing element, often being confined to the product development segment of that element. The recent popularity of Design for Manufacturing (DFM) techniques has extended the project manager's scope into the production segment by integrating design and production. Delivering a quality product on time and within budget isn't enough. Delivering a design that can be efficiently manufactured isn't enough. Because the finished product must generate revenues in excess of its development and manufacturing costs, the project manager must be concerned with all of the elements that contribute to marketing success.
Winning time-to-market races requires full integration and coordination of all 10 elements. The role of the project manager in ensuring integration and coordination can shave crucial days, weeks, and months from the total elapsed time required to bring a new offering to the market.
Positioning. A new product will not exist in isolation. Instead, it is likely to exist as a part of a firm's total product line and will certainly exist, and be evaluated by potential customers, in relationship to competing products that satisfy similar requirements. Identification of the context in which we want our new offering to be evaluated is critical to defining the characteristics that will allow the market to identify what it is that we will be selling. We must also identify the characteristics that will set it apart from alternatives within the context. A thorough analysis will include not only the similarities and differences but also will identify differences within the similarities and similarities within the differences.
This first step in product definition is critical to all of the steps that follow, but particularly to the promotion of the offering, where we must communicate the position of our offering to the market. The promotion effort will communicate information and that information will focus on the context and the differentiation chosen in this first step. Even if the product is unlike anything available, it must supplant some existing way or ways of spending time, energy, or effort. At its inception, the VCR was unlike anything in the market. It supplanted the requirement to watch television shows at the time they were broadcast. With the advent of rented movies, it supplanted the requirement to watch movies at broadcast time or in theaters. With the launch of the video camera, it supplanted the chemistry-based home movie camera, projector, and screen.
In this phase, the particular product being developed is distinguished from, and integrated with, the product line of similar products offered, or anticipated, by the firm. If the product is opening a new product line, preliminary determinations are made here to include or omit functions and features in the initial offering. What is clearly essential is included; what is clearly optional is omitted. Functions and features that cannot be identified as clearly essential or clearly optional are left as decisions to be made during the planning and processing elements. If the product will extend an existing product line, features and functions are included or omitted to distinguish the new product and to appeal to a new segment within the broader market.
In the toothpaste example, products currently offered include toothpastes for fighting cavities, for combating gingivitis, for eliminating halitosis, for producing whiter teeth, and for having a pleasant taste. Some brands tout that they are composed entirely of “natural” ingredients, others tout their special formulas. In each case, the toothpaste is at least advertised to appeal to a particular market segment. Project managers must not only understand this process, they must also control it to ensure that decisions made here can be quickly implemented in all the other processes.
Planning. Experienced project managers are familiar with the processes involved in project planning. Applying these processes to the full spectrum of product launch activities may, however, be a fresh experience for many project managers. Using the 10 Ps as the Level 1 work breakdown structure, the project manager can establish a comprehensive project plan that incorporates all of the elements required to bring the new product to market. Clearly the successful accomplishment of all of these tasks requires efforts that cross multiple organizational boundaries. An integrated project team is an effective means of establishing and maintaining the coordination that is essential to timely achievement of the goal.
Understanding and managing the dependencies and interdependencies across every element of the effort can minimize rework and delay. This understanding forms the basis for establishing a schedule and assigning task responsibilities.
Partnering. Identifying opportunities to leverage the skills, technologies, and positions of strategic partners and potential strategic partners should begin at this early stage of product development. Reinventing wheels is not the way to win time-to-market races. Once the product concept has crystallized, supplier and channel partners should be involved in every step of the product development process. Your suppliers have much to gain from your success and should be viewed as sources of efficiency that can shave valuable time off your development cycle. Your channels are valuable sources of information that will allow you to identify, and subsequently develop, the minimum functional feature set that will allow you to bring your new product to market ahead of your competitors. Project managers can use their contract management experience to ensure that suppliers and partners are in step with the total product development effort.
Producing. This is the traditional realm of the project manager. This element includes the product design and manufacturing design processes. In the toothpaste example, this element includes selection of ingredients that will not only produce a customer-satisfying effect within the targeted market segment, but will also allow the goo to be effectively and efficiently packaged, warehoused, and shipped. With more complex products, where project management techniques have more frequently been employed, the challenges of producing may be of sufficient scale to overshadow the other requirements.
Processing. Processing includes procurement of parts and components, manufacturing and packaging, maintenance of inventories, order processing and shipping, and billing and collection. To the extent that a new product requires modifications of existing processes, or the creation of entire new processes, these modifications and creations must be parts of the project planning and implementation. Without their readiness, the new product cannot be delivered to the marketplace. Here too, project managers have a wealth of experience in planning, organizing, and monitoring processes that will ensure timely results.
Packaging. Packaging should not be confused with wrapping. While the wrapping is what allows us to distinguish one brand of soap chips from another in the supermarket, packaging can bring much more to product differentiation. In the toothpaste example, the package may offer the consumer the ability to extract the goo from its container in a novel way, and induce many consumers to at least try it out just to try out the new package.
Packaging also refers to bundling. Intel's family of processors constitutes a product line. Primarily, though, consumers see the Intel processor as a part, albeit an important one, of a much more elaborate package, a personal computer. The PC is likely to include an array of hardware, an operating system, application software, and free trial memberships in various networks offering access to the Internet. The Intel processor is, in fact, of little use without at least a major portion of the other pieces with which it is customarily bundled. Here the project manager will recognize that his project is only part of a larger program, or of many larger programs, and that the project must be coordinated with the larger programs to deliver optimum value.
Pricing. For each targeted market segment, there is a “right” price. Too much above that price will be too expensive. Too much below that price will be too cheap. Unless the price is right, the result will be no sales. A critical deliverable in market research is determination of the right price for each of the market segments into which the new product will be sold. Because price can have a dramatic impact on so many other choices that must be made, pricing must be a high priority at project inception. Pricing activities have their own work breakdown structure involving market research, competitive analysis, and cost accounting. Project managers will recognize that these activities must be scheduled in conjunction with other development activities and that information learned in other parts of the product development project must be communicated here.
Promoting. The scope and scale of promotion for a new product will depend on the awareness of need in the market segment for which it is intended and on the maturity of the benefit the new product will offer to that segment.
If the new product represents an incremental improved solution to a need the market already recognizes, promotion can focus on the improvements because a baseline solution is already established in the minds of buyers. If, instead, the new product represents an entirely new solution, promotion must both overcome the bias toward the familiar and educate the market about the new solution paradigm and its presumably superior characteristics. Promotional activities are often carried out well before product availability—witness Microsoft's aggressive promotion of new releases months, and even years, before planned release dates. Project management discipline can ensure that there is congruence between promotions and products, that the product delivered is what the publicity promised.
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Placing. The identification of appropriate and effective distribution channels has frequently been key to product success or failure. As pointed out earlier, being first to market with a winning new product is likely to offer the broadest field of choice of distribution channels. It is also likely to attract the highest level of attention and marketing effort from selected channels. Whether your new product will employ existing marketing channels or require development of new ones, the total time to market must include the time required to bring these channels to readiness to distribute the new product.
Bringing the marketing channels to readiness must include the creation of awareness of the new product, sales training, and incentives to stock inventory. Determining the right level for inventories is all the more difficult because the product is new and sales cannot be accurately forecast. Once again, project management experience and discipline can ensure concurrence and coordination of all these activities and take precious time off the product launch schedule.
Pleasing. Customer service has justifiably received a great deal of attention in recent literature about product success. Studies indicate that one unhappy customer is likely to report his or her unhappiness to between 10 and 20 other potential customers. This is about triple the number to which a happy customer will act as a reference for a product. The penalties for allowing an unhappy customer to stay unhappy are severe.
The requirements for building and operating a successful and effective customer service operation are beyond the scope of this article. What is within the current scope is to point out that an adequate customer service operation is part and parcel of the product and must, therefore, be a part of the product development project. Whenever the first customer has the first opportunity to become less than satisfied with the new product, customer service must be ready and waiting to restore the customer's confidence in the product and in the firm that provided that product. The final test of the project manager's planning, scheduling, and monitoring is the reaction of the first customer who calls customer service.
AS WITH ANY PROJECT, concurrent work on each element of a time-to-market product development project adds complexity and risk and may not reduce total project elapsed time. Project managers practice the art of balancing the triangle of scope, budget, and schedule. In the time-to-market race, the schedule leg of the triangle must receive the highest priority. In many companies, the budget leg must be optimized. Scope, the features and functions delivered by the new product, will be the result of the other two. The job of the project manager is to ensure that communication and coordination minimize costs and the negative scope impacts of concurrent efforts while delivering in the shortest possible total elapsed time.
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