The pressure on businesses today is intense. To remain competitive, or even relevant, organisations must have the ability to innovate and to test, fail and succeed quicker in developing a new offering and new features. New product development can provide companies with fresh opportunities and has become increasingly crucial in the modern-day business battleground.
Not only has market competition increased, but more demanding consumer requirements are forcing companies to play a trump card time and time again. This involves being able to bring out new products at a faster pace to keep up with customers’ evolving needs and expectations.
Overall, the bar for standards of quality has been raised, along with that of price, performance and time-to-market. This reality doesn’t only apply to high tech companies, with their fast-changing business environments calling for shorter product life-cycles. It is today a keystone for any company, across sectors, to ensure survival.
A McKinsey survey shows that more than 25% of total revenue and profits across industries comes from the launch of new products. For this reason, organisations are constantly looking for ways to generate and execute new product ideas, while also mitigating risk and reducing costs.
What is NPD and how can it benefit from effective innovation?
New product development (NPD) is a structured process that involves bringing a new product or service to the market. It can be completely original or an existing product that has been adapted and improved.
However, of thousands of products, only a handful make it from conception to market: those that deliver superior value. This is why it is crucial to understand consumer preferences, markets and competitors to truly give them what they want or need.
A structured, customer-driven methodology to develop novel products – from the perception of a market need through to the production and sale of the product that meets that need – gives organisations vital competitive advantages. This complex process requires the involvement of several different areas, from management to research and development, but also marketing, production, purchasing, quality control, sales, consumers and suppliers.
The ultimate goal is to develop products more quickly, more efficiently and with less costs, tightening processes and cutting out extra steps. The application of innovation management in product development maximises companies’ dynamic abilities to become more competitive in the market.
It involves various fronts and actors, from initial market prospection through to product development. When it comes to the production and launch of new and competitive products, continuous, efficient innovation management enables companies to:
- Quickly understand consumer trends
- Cover stages of a product’s life-cycle over time, ensuring sustained success
- Get equipped to be flexible if a crisis hits
- Be faster than their competitors in entering new markets and exploring new opportunities.
But how exactly can we bring together NPD and Innovation Management? We will see that next.
Diana Neves de Carvalho, Exago’s CEO