Product Leadership: Pathways to Profitable Innovation

Overview

As we learned from New Coke, Pets.com, Apple's original handheld device, the Newton, and the reissued Ford Thunderbird, all the promotion in the world won't save a product that somehow isn't right. Robert Cooper is the world's leading expert on making sure your new-product introductions are more like Apple's iPods and less like Newtons.Cooper invented what's called the "stage-gate" process of new-product development-a process used by 60% of all businesses today. For this second edition Cooper has completed a ...

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Overview

As we learned from New Coke, Pets.com, Apple's original handheld device, the Newton, and the reissued Ford Thunderbird, all the promotion in the world won't save a product that somehow isn't right. Robert Cooper is the world's leading expert on making sure your new-product introductions are more like Apple's iPods and less like Newtons.Cooper invented what's called the "stage-gate" process of new-product development-a process used by 60% of all businesses today. For this second edition Cooper has completed a major new study-the largest study of product development practices and results ever undertaken. He analyzed thousands of new success and failures from hundreds of companies, with a particular emphasis on high-technology products and services. Product Leadership won't just tell you what things are helpful to your company's success. Now it will tell you how and how much they help.

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Product Details

  • ISBN-13: 9780465014330
  • Publisher: Basic Books
  • Publication date: 1/1/2005
  • Edition description: Second Edition
  • Edition number: 2
  • Pages: 288
  • Sales rank: 452,861
  • Product dimensions: 6.20 (w) x 9.54 (h) x 1.00 (d)

Meet the Author

Robert G. Cooper is a professor of marketing at McMaster University. Founder of the widely employed StageGate product development process, he lives in Oakville, Ontario. Scott J. Edgett is associate professor of marketing at McMaster University and director of the Product Development Institute. He lives in Ancaster, Ontario. Elko J. Kleinschmidt is professor of marketing and international business and director of the engineering and management program at McMaster University. He lives in Ancaster, Ontario.

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Read an Excerpt

Winning IS Everything

New Products Warfare

Companies everywhere are engaged in a new products war. The battlefields are the marketplaces around the world for everything from consumer electronics to new engineering resins, from potato chips to computer chips.

The combatants are the many companies who vie for a better position, a better share, or new territory on each battlefield or marketplace. They include the large and well-known combatants-the IBMs, Procter & Gambles, GEs, Du Ponts, and 3Ms, as well as an increasing number of foreign players-BASF, Sony, ICI, JVC, and Siemens. More recent entrants have gained prominence in the past few decades because of new product victories: Microsoft with computer software, Glaxo with pharmaceuticals, Hewlett-Packard with laser printers, Nortel with telecommunications equipment, and Intel with computer chips.

The costs of this warfare are enormous. By the 1990s, the cost of R&D in the G-5 countries* had exceeded one billion dollars per day! That's far higher than the cost of any recent military war.1 And as much as 5 percent of national economies are devoted to this new products The United States, Japan, Germany, Great Britain, and France.

warfare.* Other, not so obvious costs are the many victims of this warthe companies that simply disappear or are gobbled up by the victors.

The weapons of this war are the thousands of new products devel- of successfully invading chosen market- oped every year in the hope the quest is for places. But most new product attempts fail. increasingly weapon superiority-seeking product differentiation in order to secure a sustainable competitive advantage. Positioning plays a key role too, as combatants deploy their troops to secure an advantageous position on the battlefield. They use tactics such as frontal assaults, outflankings, and even attempts to reposition the enemy.

The combatants have their shock troops that lead the way into battlethe sales teams, advertising people, and promotional experts. The cost of these shock troops is enormous (it costs Procter & Gamble more than $100 million to launch a new brand in the United States). But the battle is often decided by the unsung heroes-the infantry-the many engineers and scientists in R&D labs and engineering departments around the world-less glamorous and less visible, but at the heart of almost every victory

The Generals Decide on the Strategy

As the senior executives, you are the generals. it is you who plan and chart direction, and attempt to define a business and technology strategy for your business. You generals speak in terms of strategic thrusts, strategic arenas, and the need for strategic alignment. Sadly, many generals have not really grasped the art of new product or technology strategy very well. So, as is often the case with ill-defined strategy, the battle is won or lost tactically in the trenches by the shock troops and infantry. As a result, you generals must also be concerned about tactics as wellabout the details of how the battle will be fought. This means that the generals must ensure that the right processes are in place to make the tactics happen, namely, an effective new product process. Finally, generals concern themselves with resources-about how many resources to commit to product development, and about where to deploy them-to which battlefields or arenas of strategic focus.

*For example, the United States spends about 3 percent of its GNP on R&D. We estimate, from our studies, that about half of this R&D goes to product development (as opposed to process development and improvements, and other technical activities). For every dollar spent on new product R&D, about another two dollars are required for marketing, capital, and production expenditures.

Winners and Losers

As in any war, there are winners and losers. The winners are those firms, such as Merck, 3M, Microsoft, and Hewlett-Packard, who have an enviable stream of new product successes year after year. There are losers as well: General Motors, who for the past decade or so, failed to launch new products that captured the consumer's interest (while Chrysler, given up for dead in the 1970s, rebounded with the K-car and Minivan, and has hit the market with one winning new product after another in recent years). Sometimes the defeat is so great that the combatant collapses and simply disappears. Apple Computers, once the leader in PCs, faced difficult times in the '90s. Although there are many reasons for Apple's problems, its unsuccessful Newton, the much-heralded handheld personal digital assistant, symbolized Apple's slide. Remember the Newton: it could read handwriting as data entry But the product didn't work: it was unable to read up to half the handwritten input. Users quickly became frustrated, and the word got out. Sales never materialized, and Apple was finally forced to withdraw the product. Fortunately, Apple's more recent product, the I-Mac, has been a great success and has restored the company's fortunes. New product winners and losers had profound impacts on Apple through the '90s!

It's Wan Innovate or Die

As the twenty-first century begins, this new products war looms as the most important and critical war the companies of the world have ever fought. The message to senior people is this: innovate or die! Winning in this new products war is everything. It is vital to the success, prosperity, and even survival of your organization. Losing the war, or failing to take an active part in it, spells disaster. The annals of business history are replete with examples of companies who simply disappeared because they failed to innovate, failed to keep their product portfolio current and competitive, and were surpassed by more innovative competitors.

Profitability and Speed

In winning at new products, as in warfare or war games, the goal is victory~a steady stream of profitable and successful new products. On this new product battlefield, the ability to mount lightning attackswell-planned but swift strikes-is increasingly the key to success. Speed is the new competitive weapon. The ability to accelerate product marketing ahead of competition and within the window of opportunity is more than ever central to success. And so this book is about more than success.
it's about how to get successful products to market, and in record time. There are major payoffs to speeding products to market:

  • Speed yields competitive advantage. The ability to respond to customers' needs and changing markets faster than the competition, and to beat competitors to market with a new product often is the key to success. But too much haste may result in an ill-conceived product, which has no competitive advantage at all!
  • Speed yields higher profitability. The revenue from the sale of the product is realized earlier (remember: money has a time value, and deferred revenues are worth less than revenues acquired sooner); and the revenues over the life of the product are higher, given a fixed window of opportunity and hence limited product life.
  • Speed means fewer surprises. The ability to move quickly to market means that the original commercial assumptions are probably still valid, and that the product as originally conceived is more likely to meet market requirements. The short time frame reduces the odds that market conditions will dramatically change as development proceeds. Then consider the seven-year development effort incurred by some U.S. auto companies: here, market requirements, market conditions, and the competitive situation are likely to have changed considerably from beginning to end of the project.2
So speed to market is a preoccupation throughout this book but not at the expense of managing the project properly.

There is a dark side to speed. Our studies of hundreds of new product winners and losers show that there is a strong and positive connection between speed and profits; but the connection is anything but oneto-one. Many of the actions project teams take in the interest of saving a little time often have the exact opposite effect, and in some cases, destroyed the profitability of the venture. So, I will never recommend cutting corners in haste or executing in a sloppy fashion in order to save time-it just doesn't pay off. In short, speed is important, but it is only one component of our all-important goal of profitable, big new product winners...

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Table of Contents

1 Winning is everything 1
2 What distinguishes the best performers 32
3 A product innovation strategy for your business : what markets, products, and technologies? 51
4 Product innovation strategy to portfolio management - resource commitment and deployment 91
5 Portfolio management for new products - picking winners and investing in the right projects 135
6 Building best practices into your idea-to-launch framework 164
7 A world-class stage-gate idea-to-launch framework for your business 200
8 The people in the product innovation war - the right climate and environment, effective NPD teams, and the role of senior management 238
9 Taking action - executive summary 266
App Effectively run gate meetings - a good procedure 281
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