Stunted growth
Why do so many new products fail? If the question is depressingly familiar, so are the answers. So why doesn't the industry learn from its mistakes?
In many cases, it has upped its game, says International Food Network group leader Nick Henson, who has worked on development projects with manufacturers of branded products from Dorset Cereals to Unilever.
Indeed, many larger players have significantly improved their new product development (NPD) processes and developed tools to help them manage projects more efficiently, he accepts.
But many products fail simply because circumstances change, he says. "If a project is being developed over 18 months or longer, change is almost inevitable: budgets are cut, the economy could take a turn for the worse, your business could be restructured or taken over, a trend you were tapping into could turn out to be a fad or a rival might launch a competing product weeks before your launch date."
More often than not, he says, the determining factor in the success of new launches is how well companies adapt to these changing circumstances - rather than a fundamental flaw in their original concept. And sometimes that might mean scrapping projects altogether, however much time and resource has already been devoted to them.
When does it make sense to outsource?
But how do you minimise risks from the outset? One obvious way is to reduce the lead time, which will, in turn, reduce the likelihood that changing circumstances will scupper your plans, he says. And one way to do this is to outsource some or all of the development process - or indeed its production. "If you have a truly revolutionary concept or a completely novel process, you will want to do everything in-house. But this is actually very rare."
In future, he predicts, there will be even more pressure on product development departments to do more with less and manufacturers will be forced to adopt a leaner structure and buy in external expertise for special projects or to help them diversify into new areas. "Even larger manufacturers with more internal resource often have more projects on the go than they can effectively manage and are increasingly using third parties at busy times."
Contract manufacturing, meanwhile, will continue to rise. "Why invest a large amount of capex and spend 18 months on sourcing and commissioning new equipment to produce a product that may not be successful?"
Get in touch with a third party and it could be making your product in a couple of months, leaving you to focus on sales and marketing, he observes. "At the end of the day, if it doesn't work out, you have far less to lose." FM
Tips for successful NPD
HAVE A CLEAR BRIEF
Clarify precisely what you are trying to achieve from the beginning. Avoid vague, woolly briefs.
BACK THE RIGHT HORSE
Less is more. Focus resources on projects with legs and beware senior managers' 'pet projects'. Ruthlessly scrutinise concepts before advancing them to the next stage and repeat the exercise when circumstances change. Are you still meeting the brief? And is the brief still relevant?
GET YOUR COSTINGS RIGHT
Wildly optimistic cost estimates at the start of a project can cause big problems later on - potentially destroying a business case altogether or forcing firms to make changes that compromise the original concept.
KNOW WHEN TO QUIT
Never let emotional attachment to a project or the 'momentum' it has generated cloud your judgement. Sometimes you have to count your losses and move on.
PLAN THE FACTORY TRIAL PROPERLY
A surprising number of NPD projects miss budgets and deadlines because of silly mistakes and poor planning of factory trials, says Henson. "Production staff are not properly briefed and raw materials are not ready on the day of the trial. If you miss your slot in a very busy factory schedule, you could delay a launch for several weeks."
USE SUPPLIERS & EXTERNAL EXPERTISE
Look beyond your own four walls for inspiration, practical assistance, technical support, and manufacturing capabilities. Challenge your ingredients and packaging suppliers.
