Manage your New Product Development effectively: the stages of the process and tips for avoiding risks
When you need to create your own IT product, automate a business, or launch a new startup, you are often faced with a set of questions. In particular, how to properly approach the process? What does it comprise? How to ensure the market-oriented and economically viable product? What risks do I need to pay attention to?
To evaluate the above and other questions related to New Product Development (NPD), you need to have an accurate understanding of the step-to-step plan, as well as the possible challenges you may face.
In our post, we’ve introduced the stages of NPD, along with a set of practices to reduce the likelihood of major risk factors during the process.
- The concept of New Product Development
2. The stages of NPD
- Generating the idea
- Idea verification
- Concept definition
- Business analysis
- Product development
3. Practical recommendations for managing the risks
The Concept Of New Product Development
NPD is the process of unique product creation, its improvement, and modernization, which will be in customer demand. In other words, it is converting market needs into the idea that is realized with the help of a finished product.
With an accurate NPD process, you will:
- reduce mistakes on the initial phases;
- significantly save costs;
- assess the demand for a product and understand its key tasks;
- clearly estimate prospects, risks, and negative factors that may affect the ultimate cost;
- form a clear vision of the final result;
- reduce the time for the development (some stages are simultaneously carried out, which also allows you to control the process and speed it up).
The 1st step. Generating the idea
An idea is one of the crucial stages in the development of any product. It starts with assessing the market and target audience.
The main recommendation here is to focus on customer problems and tasks. Your users’ insights and needs provide quick generating of an idea and create a product with a high level of market demand. This can significantly reduce development costs and speed up the launch process.
At this phase, you should also see how the product is being marketed, how it will be offered to users in the future, and how it will help the company benefit.
The 2nd step. Idea verification
At this stage, conduct SWOT analysis. It is a method of examining the Strengths and Weaknesses of the product in order to determine its prospects. It allows you to understand all the Opportunities, potential Threats, and risks associated with competitors, market changes, or other factors.
The major task of a SWOT analysis is to ensure the effectiveness of an idea, to understand whether it is worth implementing and by what means it can be done. There are several guidelines to help you analyze your data as accurately as possible:
- Involve several specialists from different departments. Everyone can contribute to analytics and, thus, you collect more accurate data.
- Evaluate your specific niches. You do not need to rate users if they are not part of the target audience.
- Conduct in-depth interviews with potential clients and detailed analysis of competitors. This will help you understand what is important and what is secondary.
- Focus on the essentials. In order not to get confused, it is necessary to collect all the data, and then highlight the most significant ones.
The 3rd step. Concept definition
Create a detailed concept that displays the fundamental characteristics of the product. You need to clearly understand what you are developing, for what purposes, what tasks it will solve, how it will help your customers, and what benefits it will bring. Draw up the business plan and the strategy for its implementation.
At this stage, pay attention to the next major points:
- Quantifying the profit/pain ratio
Find what needs potential customers have and what you can offer them in order to profit from it. Your product should solve the particular pains of your users. For example, the need to automate business processes, simplify specific actions, offer new features. Then you need to assess whether the development of a new product will bring your company profit.
- Competitors’ analysis
You don’t need to compare with them, you need to become different, and learn well from other companies’ mistakes. A detailed analysis of your competitors will help you understand where the problems are, how to find ways to solve them, how to avoid mistakes that your competitors made. This is an opportunity to significantly save time and money.
- Creating a value proposition
Clearly formulate the one particular value of your product. You can think of as many advantages as you want that will separate your product from the competition. However, the value that will be given to your customers should be only the one.
- Proof of concept
You can test your concept in several ways, from conducting brainstorms and discussions within the development companies, to real surveys and collecting data from the target audience. It gives you an understanding of whether you choose the correct path.
The 4th step. Business analysis
Business analysis is a detailed assessment of the prospects for the commercialization of a new product in relation to the initial investment. In simple terms, a market strategy allows you to assess how profitable the development of a new product is, how quickly it will pay off, and how much income it can generate.
Well-conducted business analysis requires the investment of time and money in the work of experienced analysts. They need to have experience and knowledge in the financial, marketing, engineering, and manufacturing areas, as well as in strategic planning. The ultimate goal of business analysis is to provide a reasoned, thorough, and balanced assessment of the profitability of a proposed new product.
The 5th step. Product Development
There are several ways to develop a product. We do not recommend creating an immediately ready-made solution, since changes and revisions may occur in the course of further steps. Therefore, either a prototype or an MVP is better to take initially. This is a way to save money and find how successful and appropriate it is for the market.
The prototype of a product is its concept in a minimal shell. As a rule, the prototype is drawn schematically or using special programs. With it, you figure out what the future product will look like and what changes need to be made.
Minimum Viable Product (MVP)
An MVP is a working off-the-shelf product that launches for customers. It has limited functionality and capabilities. After the successful launch of MVP, you can create a new product taking into account all the MVP improvements and features.
With prototype and MVP approaches, you solve several key problems:
- test hypotheses, confirm the effectiveness of an idea, and optimize further operations;
- simulate the final product with high accuracy, timely identify inconsistencies, errors, and obstacles;
- check usability and understand how convenient it is for users to interact with the product;
- improve the idea, introduce new tools, and determine which technology stack to choose for development.
The 6th step. Testing the product
Testing the new product allows checking not only the technical condition and errors but also usability, the effectiveness of the interaction between the user and the product itself. Typically, there are two types of testing.
Alpha testing is manual testing of a product by the developers themselves or an independent group of experts. As a rule, it is carried out at the development stage, where most errors are eliminated.
Beta testing is the analysis of a product and its check on real users. Typically, personas are selected from the target audience that was identified in the early stages. The task of beta testers is to detect blockers, inconsistencies, and monitor the stability of work.
The better you carry out the tests, the more efficient your new product will be.
The 7th step. Commercialization
At this stage of developing a new product, the business must choose the most appropriate time to market, the sequence and volume of activities in different channels, the most effective methods of distribution and promotion of the product. That is, develop a detailed operational plan for marketing activities.
Naturally, it is recommending to thought out the product marketing in advance, and begin to actively promote it even before the official launch.
Practical recommendations for managing the risks of new product development
You got familiar with the NPD procedure. Now we will consider a few tips based on the experience of FreySoft project managers to make the process smooth and to prevent the NPD risks.
1. The close and well-organized collaboration of the IT team and the business.
The technological world develops very quickly. The initiator of the project often cannot fully estimate from the beginning what he will receive at the end of the project since the vision of the ultimate goal is formed after a series of experiments and testing hypotheses. That is, if you do not establish close interaction between the business and the development team, the volume of work and the time can significantly increase, and the budget inflates. As a result, you got the outcome that will diverge from your initial expectations.
2. Clear identification of all stakeholders of the project.
All stakeholders and responsible managers, who have certain requirements and expectations regarding the new product and equally influence it from a financial and organizational point of view, need to be involved in the process. The primary task is to identify their expectations and concerns. Hence, you will exclude a situation when at the ultimate stage of work, one of the key stakeholders may not be satisfied.
3. A single information field for stakeholders and project managers/developers.
All background information and agreements on the project should be recorded in one unit information field. First, you can always revert to the fixed source version in case of dispute or doubt. Secondly, the project roadmap, reflecting the tasks and the sequence of their implementation and being in the public domain, will provide a single view of the project for everyone who needs this information. Thirdly, it will quickly give answers to many questions and will save time for communication to find out the details.
4. Breaking down the project into small iterations (work cycles).
Working in the mode of short iterations allows you to quickly identify risks, blockers, problems and correct them immediately. When planning a sprint, it is more efficient to analyze the results of the previous stage and clearly identify the next tasks, correctly distribute them to the development team, etc. In case of disagreement or issue, you can timely solve it. This is the best way to control quality in the software development process.
5. Establishing regular feedback.
Daily reports from the project manager, weekly demonstrations of progress, and work results are the important points of ensuring feedback. As a result, all stakeholders regularly receive information about what is happening on the project. It also affects the development team. For example, if there is a trend towards an increase in the budget, the project manager can see it on the roadmap and reports, think in advance about options for optimizing costs and propose them to stakeholders.
6. Don’t stop improving the product
A common mistake of novice entrepreneurs is stopping work on the product after its launching. Without innovations and improvements, demand will not be long-term, even if you have offered some unique idea to the market. Sooner or later, competitors can do better. This will lead to a loss of audience, even of loyal customers. That’s why, do not forget to regularly study the market, look for new options for improving and scaling the product. Direct communication with clients can help in this. Often they offer options for development that company leaders have not even thought about.
Launching a new product on the market is a complex and multi-stage procedure. Before you get the first customers willing to pay for your solution, you will have to put effort into the preliminary work.
Making research, planning an NPD strategy, workflow, etc. is not time- and cost-effective for doing it without professional support and assistance. Take care of recruiting a team of qualified specialists. FreySoft possesses all the necessary tools and expertise to ensure a successful New Product Development. Together, we will succeed!