Every company wants to have a ‘Pull Sales’ (where customers’ demands business from you) than ‘Push Sales’ (where you are asking customers to buy from you). Greater are the ‘Pull Sales’ for a company, more profitable and high-growth it will be. The most effective method to generate pull-sales is to have a world-class set of products, delivered on-time, with assured quality and backed by great customer service. A successful company is the one that has a ‘Product-Driven’ instead of ‘Sales-Driven’ business.
If you look at the entire history of successful companies. They became successful through solid sales machinery, BUT they became great through fantastic products and their ability to deliver and service the same. Here are 10 Must-Haves to Develop Highly Successful Products:
Must-Have #1: Solve an Unsolved Problem- What, Why and How?
What?– Consider a Product like a Start-up. It should solve a problem or fulfill an unfulfilled need. Every product should be considered as a business/P&L unit. So for any new product or a variant should be asking the following questions:
- What Problem this product is expected to solve?
- Is the problem critical enough for the customer?
- If a problem is solved, what benefit it will deliver to the customer?
- If the problem is not solved, what loss the customer has to bear?
- How far or close the potential competition is in solving the problem?
- How the product will solve the problem?
Everything else in a great product comes after the ‘Problem Definition’. The problem has to be mostly unsolved, critical and mostly unsolved.
Action– Problem identification is a completely ‘outside-in’ thinking process. Central products team need to:
- Get inputs from multiple sources, including sales, marketing, competition intelligence, research reports and much more.
- This discussion should generate ‘Product Requirement’ Document, which should detail out:
- What is the Problem
- How Product will solve the problem?
- Which Customers will be targeted?
- How Product will offer a competitive advantage?
- High-Level Feasibility to develop and Scale-up the product
- How many customers will be ready to pay for it?
- Will it be able to be within Top 5 Products within the portfolio?
- Product Requirement Document will need to have a holistic sign-off and ownership from all stakeholders- Including Sales (sell it), Marketing (Promote it), Production (Produce it) and Finance (fund it)
Must-Have #2: Product Research and Development
What?– Every one dollar spent on product development gives a better return than 10 dollars spent on sales and even branding. A great product sells by itself, gives you better profitability, and creates long-term competitiveness.
It’s always a strategic choice for a company if it wants to go for the ‘Product-Driven’ vs. ‘Sales-Driven’ model, however, my strong vote will be for a product-excellence model over sales-excellence model. Product R&D investments take some time to give back the returns, but it adds much more value compared to the same investment in aggressive sales.
Any Organization should have a distinct, high-energy and skilled product and R&D management function. In some companies, they have a separate R&D unit and Product management unit. R&D unit becomes like an internal service provider to Product management function. The good news is that product development life-cycles are getting short with better tools and service providers.
- An organization needs to keep a benchmark on the %age of profits or revenue they will spend on product R&D. This should be management commitment, irrespective of the returns from this investment. Product development is like a start-up portfolio of an investment company. It has hits as well as misses. Shareholders need to have patience and persistence.
- Product Management + R&D needs to be reporting directly to the CEO, it is a strategic function. Product development heads need to be a heavy hitter with similar skills as that of a CEO, including strategic mind-set, solid business acumen, leading change and driving results across the functions. R&D head needs to be having a business mind-set and should score very high on applied research.
- Product and R&D organization needs to hire the best & the brightest, and given enough space and empowerment to churn-out killer projects.
Must-Have #3- Accelerate using Tools and Services
What?-Product development has mainly three stages post concept stage, and how quickly one is able to cover each stage, determines the success of a product-centric enterprise:
- Technical Validation- How quickly a product idea can be converted into a prototype, and we can confirm that it will work and it can be produced in large numbers.
- Market Validation- How quickly a technically feasible product can be test-launched and all the business assumptions like Price vs. Demand, Distribution Logistics, Sales team’s ability to sell and fit in the overall product portfolio.
- Scale-up – Once the technical and business feasibility is confirmed, how quickly can the product be scaled-up.
For all the three stages, as of today, there is a wide array of tools, techniques, and services available. A smart organization will use Design & Simulation Software, Product P&L modeling, Project Management, Production Simulation Software, Online Collaboration platforms, Tools & Dies Fabricators, Custom Engineering Companies, Material testing labs, 3D printers and many such enablers to super-charge their product development. These are worthy investments, as speed to market can make or break your product’s success.
- Ideally, a company should set-up a tough benchmark for product development from start to finish. For example, a two-wheeler manufacturing company could set-up a world-class benchmark for (say) 4-month duration for the EACH stage (Technical, Market, and Scale-up), with an ability to launch a product in a big way from the date of conception.
- Post that it needs to work backward and identify all possible tools & services to make it happen. You would typically need a focused team to identify the possible options, evaluate and deploy. For example, there are dozens of 3D printers, and it takes some effort to find the best choice. Typically it will take a year to equip your product development and R&D function to achieve first level ‘High-Speed’ Capabilities.
- Develop Teams & Skills to use best of breed tools- You need to invest in the training & development of your staff to become experts in using and getting the maximum out of the tools and vendors. It takes anywhere from 1 to 2 years to fully align the technology and manpower.
Must-Have #4- Inorganic ‘Building-Blocks’ Process
What?– This may not be applicable to the leading/bleeding edge companies who are into ground-breaking research and are investing in long-term competitiveness. They are focused on creating deep intellectual property and have huge capital at their disposal. This point is more for 99% of companies that are looking for shorter ‘Product to Profits’ Cycle.
‘Building-Blocks’ approach is ‘Best of Both the Worlds’ when you are looking for Highly Competitive & Innovative Products while delivering them quickly. Here are the building-Blocks (I will use the example from the four-wheeler industry):
- Reverse Engineering Existing Products- If you want to develop a new product, you should identify the ‘base’ product, on which you are going to innovate. For example, if you are creating a higher acceleration by innovating on an existing pre-firing booster technology, you would not like to reinvent the wheel.
- In most of the products, 75-80% of the product has existing features already offered by you. You need to design your innovation in a way that ‘Pre-Existing’ Product components are used and your latest upgrades ride on them. Of-course every 3-4 years (say) you will need to have a totally new platform. Therefore your product development should be working on two tracks-
- ‘Fundamental Product Platforms’ like Frame and chassis, with the transmission.
- Product Upgrades & Innovation- Engine Power, Brakes, Sensors, Shock-Absorbing, Body Design, etc..
- Plug- & Play Blocks- A Company can keep a standard list of Tyres, Differentials, Brake Systems, and Self-Driving Assists. It can keep on upgrading them through ‘Product Component Innovation’. When a new car model (or a series) is conceptualized, the company can quickly pick-up relevant components depending on the ‘Pricing vs. Sophistication’ equation.
Product development is not sequential.
- A company needs to develop a product road-map and keep on reviewing it every 3 months. This road-map needs to have:
- Individual Project milestones for each Product Launch- New Model or Series
- ‘Building-Block’ Map, which is then tuned with the Product road-map.- New Sensors, Wheels, Differential systems, braking systems.
- Laydown clear norms for the ‘Building-Block’ Approach and ensure that all employees understand it and there is a culture to develop better and faster products.
Must-Have #5- Premium Category in Every Segment
What?– Strategically, the true test of a world-class product development is that both your product ‘Price & Demand’ is higher than that of your competition. This should be applicable in any segment. In a ‘Mass-Market,’ your product should be ‘Mass-Premium’ product and in ‘Premium’ Market your product should be ‘Premium-Premium’. Essentially you should be at a higher altitude in whichever orbit your product is in vis-à-vis your competition.
Assuming that a company has a solid product backed with great customer service, every company should invest in building fundamental capabilities in the above-said functions.
- Flexible Production Lines to be able to Product new Products and change product-mix.
- Branding through Below-the-line or/and above-the-line promotion
- Deep Customer Engagement and Service
- Product Design and Packaging Capacity for Premium Presentation
- Range of Vendors who can deliver a wider variety of raw materials, dies, components and semi-assemblies.
Must-Have #6- Product Strategy Blueprint
What?– Each product development (or its variations), needs to be part of the overall strategic game-plan of an enterprise. This means that one key block of your strategy blueprint will be the product-map over the next 2-3 years. All world-class companies have their product plan worked out well in advance. This helps in multiple ways:
- Product Management spans across Technical, Design, Commercial, Logistics, Production, Supply-Chain, Packaging & Presentation, Positioning, Sales, Branding, and Promotion. Many of the investments like branding, production capacity building, vendor development, promotion, and product development tools are strategic and cut across the entire product portfolio.
- Companies can work on different product calendars in parallel. This means that you are not working in sequence (launch a product and then start work on the next one). The whole product development is like a well-coordinated effort. This also means that you can launch new products in quick succession. As a simple example, a company like Apple is working on the next 4-5 iPhone releases at the same time on parallel tracks while sharing technology and components across these tracks.
- A longer-term product map gives enough time to a company to invest in right technologies, work-out stronger propositions, plan out customer up-sell and cross-sell strategies.
One needs to have a product road-map as a core piece of overall strategy blueprint. This road-map should contain:
- The Product Calendar (which Car Model to be launched by what date)
- High-Level Milestones (For specific car model- the dates of design, prototype, technical, Production Validation, Road-Test, Test-Launch, Full-Scale Launch)
- Core Technologies Calendars (Transmission Train Upgrade, Advanced Fuel Release systems, Hybrid Shock Absorber), and how it will fit into individual product launches
- High-Level Pricing, Demand, Cost, and Margins
- Product Development Tools and Services (Design Tools, Testing Tools, Engineering Tools) deployment calendar
Like strategy, this product development road-map will be needing to be reviewed on a quarterly or monthly basis, depending upon the industry dynamics.
Must-Have #7- Agile Product Development
What?– With the business environment become hyper-competitive and uncertain, an enterprise needs to be agile on all fronts, including product development. There are two parts of this equation:
- Alertness- Management needs to keep their eyes and ears on the ground to know the latest trends, customers’ demand patterns, competition product launches, response to previously launched products, emerging technologies, any new disruptions, changes in tariff structures and availability of vendors & raw material. This ensures that you are revising your strategy and response on the ongoing basis, and prepared for best & worst-case scenarios
- Flexibility- One needs to design all aspects of an enterprise to ensure a quick response to any threat or opportunity. Here are some examples:
- Design and Fabrication Tools able to quickly prototype any new Product needs
- Flexible manufacturing lines to change the production-mix or product new products with changes in the dies and fixtures
- Multi-Skilled manpower or ability to quickly hire new skills.
- Flexible supply chain- with an ability to change or add to the storage spaces and transport load based on the demand
- Vendor-base which has the capability to produce a wider range of requirements. Also, three-tier vendor structure to have reasonable back-ups
It’s not possible to have maximum alertness and ultimate flexibility. An enterprise needs to maximize its capability to anticipate and respond within its boundary conditions.
The above-mentioned capabilities are strategic capabilities and are not only limited to products, and so this is a large subject. In short- you need to invest in ‘information & intelligence unit’, which should be part of the overall strategy department. It should gather and process all the data from outside and inside of the company and provide highly actionable information.
Secondly- as part of your strategy blueprint- you need to have ‘Flexibility’ at the core of all investment and organizational decisions.
Must-Have #8- Product Excellence Culture
What?– If you ask any function- they will mostly say that their function is the most critical to the success of the enterprise. Sales will say that they are the bread-earners for the company, Production will say that people are able to sell because of timely and quality delivery, Finance will say that it’s the money management which is keeping the company afloat and so on.
Here is the fundamental shift in the mindset and culture-
Every function is supporting the ultimate goal- To Churn out world-class products, which address critical customer problems &needs, Sell them with full energy, deliver them and service them to ultimate customer satisfaction. An enterprise needs to achieve the following shifts:
- ‘Sales-Centric’ to ‘Product-Centric’
- ‘Short-Term’ Sales to ‘Long-Term’ Brand
- ‘Push-Sales’ to ‘Pull-Sales’
- ‘Operational’ Product-Development to ‘Strategic’ Product Development
We have discussed these shifts in previous points. All these shifts need to be deeply inculcated at all levels of leadership.
- Executive Coaching at mid and senior levels to become product-centric
- Compensation & Rewards structures to be aligned to Product-Driven Sales. It should be a collective target of all the functions to make every product successful. This will mean that people will sincerely participate in all stages (Concept to Sales) of a product life-cycle.
- Product and R&D heads to report to the CEO