Product Launch

New Product Development and Introduction Opportunities for Small and Medium Manufacturers

What makes it difficult for Small and Medium Manufacturers (SMMs) to innovate? This post explores new product development and introduction (NPDI) opportunities for SMMs and presents a few suggestions about paths to successful implementation.

Listen to New Product Development and Launch Opportunities for Small and Medium Manufacturers [8:31 minutes, 4.4 MBytes, Apple QuickTime / iTunes is required]

According to Bill Canis, "More than 60% of small manufacturers lack a defined new product development and introduction process. In most companies, ownership of innovation is distributed throughout the organization, but in SMMs, this function is typically managed by a single senior executive or business owner."

Canis, the acting President of The Manufacturing Institute, an arm of the National Association of Manufacturers (NAM), was quoted in the 19 December 2007 issue of IndustryWeek.

Why Innovation is Important to SMMs

In 2007, many companies made innovation commitments. The NAM report summarizes why innovation is important to SMMs.

It states:
"Improvement and innovation go hand in hand. A commitment to innovation and new ways of doing business—in products, processes, technologies and strategies—frees assets and opens up selling opportunities for SMMs. A focus on innovation will keep your company from becoming a stagnant operator (incapable of improvement) or a commodity player (always under price pressures)."

The Quest to Innovate

While SMM efficiency experts may strive to produce undifferentiated products at incrementally lower and lower costs, innovators tend to focus on the design and development of new, differentiated components.

The quest for innovation has become so important that many large companies have begun to import innovation from their partners. Sometimes such an arrangement is formalized and called co-development.

How can SMMs be both a preferred supplier of commodity items and a source of innovative components and products?

Why Successful NPDI is Difficult for some SMMs

When executives ask their organizations to be more innovative and to produce new products, their organizations may tend to temporize - to yield to the current circumstances. For some, resolving today's problems and attending to daily administrative duties tend to overwhelm innovation initiatives.

Beside competing priorities, company leaders may be unsure of what to do because of the multitude of opinions and choices about how to become more successful. There are many advisers, many templates, and a large variety of tools. In addition, many of the common processes and tools are better suited to development groups of 50 people or more.

Existing NPDI Advantages for SMMs in 2008

Because of a flatter organizational structure, SMMs should be able to implement faster than larger companies. Because of proximity to end customers, SMMs should have the insights to make informed new product decisions. When these advantages are combined, SMMs can have a greater potential be the first to adopt the new technologies that will enable them to produce high value components and products.

SMMs already embrace some concepts familiar to NPDI specialists. For example, items 1-3 of "The 15 Best Practices of Today’s SMMs" summary contained in the The Future Success of Small and Medium Manufacturers: Challenges and Policy Issues publication relate to voice-of-the-customer (VOC), product differentiation, and benefits derived from a defined new product development process.

An NPDI Implementation Plan

Here is a portion of a general plan for the transformation of a SMM that produces undifferentiated components to an organization that is also a NPDI innovator:

1. Senior management makes the commitment to NPDI and dedicates resources to architect the transformation. Success requires more than a cursory effort. Typically, when internal resources are assigned to such a task, they will not be successful if they can allocate only 10 percent of their time to innovation while maintaining their other daily responsibilities.
2. Initially, the innovation leaders receive an appropriate budget to enlist the help of external specialists. In the second and third years, the innovation budget grows appropriately.
3. Middle management communicates that they endorse the participation of employees in the NPDI activities. Individual employees are rewarded (not penalized) for participation. The metrics used for employee reviews are modified. For example, a monthly quota may need to be relaxed to accommodate an NPDI effort.
4. The innovation leaders are given the authority to recruit other employees to be dedicated to cross- functional, NPDI teams.
5. The organizational culture evolves to embrace NPDI efforts that include new risks and new uncertainties.

The transformation will require additional organizational capabilities. The organization has to gain expertise in making decisions about which new product opportunities to pursue (which is also known as the front end of development), building a product development network, and implementing launch and commercialization decisions. Typically, a list of new contributors will include:

• Domain experts that can predict specific industry trends
• Designers
• Communication specialists
• Regulatory compliance experts
• Knowledge workers that can adapt to changes
• Supply chain experts
• Collaboration facilitators
• Product development and introduction (commercialization) specialists

These resources do not all have to be employees. Dynamic, virtual networks can be very efficient. It is more important to select the appropriate resources and maximize collaboration to plan and implement new product development innovation.

What suggestions do you have for SMMs to actualize an NPDI process?

Why Successful Developers Invest Their Time to Create Diehard Fans During Product Launch

This post explores ideas that can guide some of your new product development decisions to a higher return on investment (ROI) at product launch.

This post was inspired by a video featuring David Maister titled Marketing to Existing Clients. Maister is an authority on the management of professional service firms. I will start by reviewing the primary idea that Maister proposed in his video and then I will show how this idea can be applied to new product development and launch decisions.

Listen to Why Successful Developers Invest Their Time to Create Diehard Fans During Product Launch [9:08 minutes, 4.9 MBytes, Apple QuickTime / iTunes is required]

The Best Investment for Your Non-billable Hours
Maister was speaking to a group of professional service providers who were exploring ways to grow their business. He asked, "What is the best investment you can make using your non-billable hours? Where do you get the highest ROI?" To explore these questions, Maister fashioned a 2x2 matrix to represent their market. One dimension specified awareness of a particular problem that had been solved by this service provider. If the prospect is not aware of the problem, the prospect has to be educated about this problem. The other dimension characterized the relationship. If the prospect is not a client, trust has to be earned before a sale can be made.

In this 2x2 matrix, the quadrant in the lower right represents prospects that are not aware of the problem and not a current client. Business development in this quadrant will be characterized by cold calls and assertions about the capabilities of the service provider. Operating in this quadrant usually requires a hefty advertising and promotions budget.

Based on the shear number of prospects, there is great opportunity but let’s focus on the ROI from the non-billable hours perspective. If you are a respected service provider, is this the most effective place to spend your non-billable hours looking for business? The answer is no. This is the quadrant that represents the hardest to get new business.

Now compare the opportunity in the quadrant in the upper left where the prospect is your client. Here, the prospect is familiar with the problem and your company. With the appropriate communication, your company should be favored to get any new business. If you are a respected service provider, the quadrant in the upper left has the best potential for gaining new business with the fewest hours of investment.

The Ultimate Question and Positive WOM
The quadrant in the upper left is very important to the rest of the discussion. Let’s take a brief look at two concepts.

According to loyalty expert Fred Reichheld, the author of the book Ultimate Question, the key predictor of long-term growth is the response to the question "Would you recommend us to a friend?" Imagine a small group of passionate advocates recommending your product to their friends. Now imagine the results of an online community of passionate advocates. Geometric growth is possible.

What I am describing is naturally occurring marketing. John Moore of Brand Autopsy refers to this as Evolutionist word-of-mouth, WOM. It is about diehard fans spreading favorable experiences. A Creationist Word-of-Mouth vs. Evolutionist Word-of-Mouth video by Moore is available on YouTube.

Applications to New Product or Service Development
If you are involved with new product development and launch, the potential for geometric growth from favorable WOM is very attractive. Favorable WOM during launch can produce high ROI. Unfavorable WOM can be devastating.

Favorable WOM is important because it drives sales in the yes/yes quadrant and it helps you make sales in the other quadrants. Existing, knowledgeable clients can help you make more sales by recommending your company and your product to members of their trusted network of friends and colleagues.

Impacts of Negative WOM
All of us have had frustrating experiences with new products. You probably have a list of things that irritate you.

As a new product producer, you probably know that bad experiences are more likely to be shared than positive experiences. Enabled by the Internet, bad news spreads very quickly. It is easy to retrieve and read unfavorable customer reviews. Unfavorable WOM reduces ROI. Unfavorable WOM can overwhelm the intended impact of an expensive advertising and promotion effort.

Guiding Product Development and Launch Decisions
In almost all cases, there are specific development team efforts that have a significant impact in determining if the majority of WOM is favorable or unfavorable. What efforts are likely to result in your customers favorably recommending your product to their friends?

In this episode, I will summarize three of the many methods to improve favorable WOM without big additions to the budget.

The first is to focus on the efforts that produce better experiences for your customers. Ensure that your solution will stand up to their scrutiny. Beside the core product or service, ensure that the other commercialization tasks such as packaging, documentation, installation, and training provide a positive experience for your customers. Invest to eliminate hassles. Enlist the appropriate team to be prepared for launch, minimize the errors of omission, and minimize the time it takes to resolve problems.

The second method is to scrutinize communication strategies. Invest in communication strategies that will make your customers successful. Crafted advertising or assertions about specifications may not persuade prospects.

The third method is to facilitate ways for existing customers to share their positive experiences. For example, items like a helpful user manual or comprehensive online information make it easier for an existing customer to recommend your product to a friend.

To validate these ideas, think back to one of the most successful product launches of 2007.  The Apple iPhone team successfully implemented all three methods. For addition insights, listen to my Product Launch Buzz: Zero to Contender episode.

Let me close with this insight. Product launch is a wonderful opportunity to begin favorable new relationships with clients. Maximize your development investments to produce favorable WOM during product launch because diehard fans tell their friends.

Did your product launch strategy miss this unique opportunity?

A product launch strategy that includes a Woot-like launch can provide unique opportunities for development and launch professionals to sample customer’s buying behavior and improve launch campaigns. The inclusion of a Woot-like product launch provides a burst of insights about many individuals that are one click away from purchasing your new product. In this episode, I will share the critical difference between the opportunities of a Woot-like launch and other launch activities.

Listen to Did your product launch strategy miss this unique opportunity? [8:38 minutes, 4.6 MBytes, Apple QuickTime / iTunes is required]

Background on Woot and Woot.com

Woot is a relatively new word. A woot is an expression of delight and it is derived from a combination of the words “wow” and “loot.” Extending this idea, Woot.com attracts bargain hunters and well-informed buyers.

Woot.com pioneered the ‘one deal a day’ business model on the Internet by offering one discounted product for only 24 hours or until all the inventory is sold. Usually the motivation for the sale is to liquidate inventory of consumer electronic products. Occasionally, manufactures launch new products using Woot.com. These launch efforts provide a sneak peek for customers and valuable market insights for developers and manufacturers.

A Woot-like launch can be characterized as a “soft launch.” During a soft launch, activities are limited to a small segment of a defined market. Soft launches minimize risk while testing assumptions.

For example, an 8th of November 2007 product launch on Woot.com produced nearly 400 comments from a community of analysts and potential buyers. The discussion topics included product price, specifications, and value. Products from competitors were discussed. During the 24 hours of the sale, there was a debate about the price of an important consumable but after a few hours, the price of the consumable was resolved within the online community. Manufacturer’s representatives monitored the online discussions and occasionally contributed to the conversation.

The online discussions are candid. Comments about the product and the company are posted for all to see. The product is researched. Problems are highlighted. The online community may reject your product’s value statement.

What distinguishes a typical online sale from a Woot-like product launch?

The distinction is not about the size of the price discount or the number of units sold in a day. A product launch features a new product. One of the definitions of product launch is the initial presentation of your product to a target market.

A launch establishes the first impressions of your product. Customers will share their experiences of your product and other products from your company. For example, was it easy to start using the product? How was the customer service experience? Was the actual performance less than the specifications implied? Often, these first impressions are difficult to change.

Product launch is more than an opportunity for early market validation. For savvy developers, a soft launch provides an opportunity to uncover problems and resolve them before exposure to larger markets.

Practical considerations

When you are developing a launch plan for a new product, what is the outline for adding a Woot-like launch to your product rollout?

1. Have a good product. Ensure that all the commercialization tasks such as packaging, documentation, and training are ready for scrutiny. Ensure that adequate quantities of the product will be ready to ship at launch.
2. Before the launch, brainstorm ideas that you believe will create buzz. A common tactic incorporates an aggressive introductory price.
3. Before the launch, create the press releases and advertisements to communicate the exclusive offer.
4. On launch day, your home page should feature the new product. Prominently link to the site hosting the sale. Prominently link to the press release. Create special landing pages to support these launch promotions.
5. On launch day, assemble your team to monitor discussions, participate, and make adjustments. Typically, this team will include the product management representatives, sales representatives, tech support representatives, and specialists that can create and post web content. Ensure that other team members are available to handle all the questions.
6. The moment the Woot-like launch ends, update your new product content on your web site to reflect your new insights.
7. Review and revise plans for future launch activities

Implications of Community

What I have been describing is a Web 2.0 experience. It is social networking in action.

A Woot-like event provides real-time insights that can be used to adjust future launch plans. During a Woot-like launch event, buyers make actual purchases. This is more insightful than a proxy for customer intension.

A community of online buyers is more likely to include informed buyers. A community of online buyers is empowered by the diversity and expertise of its members. A community of online buyers provides comprehensive assessments that include more than the technology factors. A community of online buyers asks and answers questions.

For developers that desire to improve launch results, the great news is that certain mistakes or errors of omission can be corrected very quickly.

Implications

I am presenting the Woot.com story as an example. The challenge is to find ways to incorporate this type of opportunity into new product development and launch activities.

A Woot-like launch provides a burst of data. Your team should quickly analyze the data and respond to correct mistakes and improve the offering.

With opportunities such as a Woot-like launch, development and launch professionals can move beyond survey data and predictions as they adjust campaigns using the social networking capabilities of new online sites to test new product advertising and promotion.

Now new product development and launch professionals can monitor the discussions of potential buyers that are one click away from purchasing an actual product.

Can You Correctly Guess the Number of New Search Terms on Google?

According to Jonathan Rosenberg, Senior Vice President, Product Management and Marketing at Google, "20% of all Google searches every month are brand new search terms never typed in before."

This quote was reported by Mitch Joel via Twitter today.

Twitter is a mini-blog that imposes a maximum length of 140 characters per post. Twitter was founded in March 2006. A year ago, Twitter was a curiosity but services such as Twitter are poised to grow as mobile communications grows.

How does the quote and the source impact product development and launch?

The Impact of Social Networks is Expanding

Information from social networks is trusted more than many other sources of traditional product information such as press releases or brochures. The expectation is that professional spin experts do not embellish the information.

Do your development and launch plans address social networks? Is the quality of your product good enough to generate positive word-of-mouth reviews? Can your target customers repeat the key messages in one or two sentences? What changes are you planning in your advertising strategy?

New Search Terms

Since 20 percent of the terms Google users submit are new each month, Google must continuously gather and process new data to ensure that searches represent current perceptions.

How often will you refresh your product requirements for your next new product? How often do you refresh documentation for current products? How will you ensure that your search engine marketing efforts are effective? Will you bid on different pay-per-click terms next month?

Have you tried anything new?

What new communication methods do you plan to try in your next product launch? I'll cover one example of a unique launch, communication effort in the next podcast.

Is this the reason your new product launch will be late?

In a report titled "Best Practices for New Product Development and Introduction" from 19 June 2007 Ralph Rio, Research Director Enterprise Software at ARC Advisory Group states:

"On average, 45% of the products are released on schedule which means over half of new products miss their schedule."

Listen to Is this the reason your new product launch will be late? [8 minutes, 4.5 MBytes, Apple QuickTime / iTunes is required]

To improve these results, Rio recommends focusing on company goals and metrics that reflect top line revenue impact. Rio's summary provides insights on solving the problem of missed introduction schedules. His report uses the phrase NPDI leader - new product development and introduction leader. He reported:

"The NPDI leader also needs good skill in persuasion to gain agreement from managers to do something that is not optimal for their department, but is in the best interests of the corporation."

The NPDI leader's goal is to ensure that the appropriate people are engaged in development and launch activities and that their activities are coordinated to maximize efficiency to achieve the desired business results for the company.

Why it is important to fill this leadership role?

When new products are not available for purchase by customers on the promised launch date, top line revenue suffers. When missing information or services cause potential customers to abandon the sales process, top line revenue suffers. When customers that purchased your products are reluctant to recommend it, top line revenue suffers. Fixing these problems should be a new product development and introduction imperative. Some product launch problems are a result of errors of omission and that will be discussed later.

Assigning blame for poor performance

When there are inefficiencies and delays in the new product development process, who is blamed?  Frequently, one functional group blames another functional group. For example, a contributor with a strong allegiance to engineering may blame management for delays. This has been a recurring them in the Dilbert comic strip from its inception on 16 April 1989 to the present.

Here is some hyperbole about the cause of delays:

• Marketing and sales don't share the same goals
• Sales may criticize the 'factory' for not understanding the customer's needs.
• The product manager frequently complains about not having enough resources.
• Team members complain that their favorite solution was not selected.
• The project management specialist may rebuke contributors that miss critical milestones that were meticulously documented in the project schedule but were unattainable in practice .

Who fulfills the new product development and introduction leadership role?

"NPDI leader" is not a common job title. Who might fulfill this leadership role?

In some companies, the Product Manager is expected to provide new product development and introduction leadership. As described by David Daniels of Launch Clinic in "The Role of the Product Marketing Manager" the Product Manager and Product Marketing Manager have specific strategic and tactical roles but typically their influence is limited within the company.

In other companies, business development managers have broad responsibilities for several product lines. Usually the role of the business development manager is multi-disciplinary and impacts engineering, marketing, and sales activities. Therefore, business development managers are positioned to provide NPDI leadership.

The product champion or sponsor has broad influence and may be positioned to provide NPDI leadership.

Leadership and risk reduction

My July 2005 Visions article titled "Making Robust Launch Decisions - Part 1," suggested another way to analyze launch delays. The potentials for launch delay can be attributed to three types of risk. These three risks are based on an article titled "Why Good Projects Fail Anyway" by Nadim F. Matta and Ronald N. Ashkenas in the September 2003 issue of Harvard Business Review. The three types of risk are:

• Execution risk—The risk that designated activities won’t be carried out properly
• White space risk—Some activities will not be identified in advance
• Integration risk—Disparate activities won’t come together at the end

An NPDI leader must have a system-level perspective to minimize these three types of risk. Errors of omission increase these risks. To ensure top line revenue success, an NPDI leader must have a broad understanding of development and launch fundamentals and interdisciplinary expertise.

The Impact of Reductionists

In the absence of an NPDI leader, the viewpoints of reductionists prevail. Often, reductionists are masters of one discipline but a reductionist has a biased view that overemphasizes specific activities.  Reductionists at your company may have job titles such as lead engineer, manufacturing supervisor, purchasing manager, or market analyst. For example, a reductionist might declare that the "all the engineering drawings for a product have been approved" or that "the brochure is finished." The problem is the failure to appreciate the other contributions necessary for a successful launch.

Reductionists are specialists. Their contributions are required for successful new product development and launch. For maximum success, an NPDI leader guides the activities of these specialists.

Examples of successful new product development and introduction leadership

Here are a few examples of successful companies that have NPDI leadership.

• At Toyota, this new product development and introduction leader is called a shusa [see Results and Rewards of Sustained Innovation in Development and Launch].
  
• At Apple, an NPDI leader is Steve Jobs. He provides system-level thinking that dramatically coordinates development activities and impacts launch schedules.
• The 37signals team of experienced, enthusiastic, multidisciplinary designers and developers has adopted a unique commercialization philosophy.

Who is best equipped to provide effective and efficient new product and development and introduction leadership at your company?

Lessons Learned for Market Launch - 2007 B2B Survey

In a 17 October 2007 press release, Schneider Associates, a marketing communications firm, and the Center for Business Innovation at Babson College announced a report on the best practices for conducting Business-to-Business (B2B) launches. The research identified 10 lessons that improve the chances of launch success. As listed in the press release, the 10 lessons were summarized as:

• Have a documented launch process.
• Establish a separate launch budget.
• Establish your launch budget as early in the product development phase as possible.
• Try to keep your launch budget stable throughout the implementation phase.
• Determine your launch performance measures before the launch begins.
• Measure the right success metrics.
• Include the right external professionals on your team.
• Fight for bigger budgets.
• Do a great job educating your sales force and other internal audiences about your new product or service.
• Spend money on word-of-mouth campaigns rather than on advertising.

For comparison, the 10 strategies for launch success presented in Joan Schneider's 2004 book were:

• Treat Launch as a Separate Phase
• Have a Plan
• Don’t Carve Your Plan in Stone
• Learn to Live with the Inevitable Delays
• Spend Money on Products That Are “New”
• Assemble an Expert Launch Crew
• Brand/Product Managers Make the Best Team Leaders
• Bigger Budgets Fuel Success
• Consumer-focused Spending Prevents Crash Landings
• Don’t Overlook PR

Both lists include the recommendation regarding the selection of the appropriate people for the design and implementation of the product launch.

How do you ensure that the appropriate people are engaged in development and launch activities and that their activities are coordinated to maximize efficiency to achieve the desired business results for your company? I will explore that in my next post.

Results and Rewards of Sustained Innovation in Development and Launch: Toyota’s Success

This post explores the results and the rewards of Toyota’s sustained innovation in development and launch.

Listen to " Results and Rewards of Sustained Innovation in Development and Launch: Toyota's Success " [10 minutes, 10 MBytes, Apple QuickTime / iTunes is required]

Two articles published about Toyota in the Summer 2007 issue of Strategy and Business magazine inspired this podcast. Strategy and Business magazine is a Booz Allen Hamilton Incorporated publication.

In an article titled Innovation Agility, authors Kevin Dehoff and John Loehr summarized. “Toyota can launch more new vehicles than its competitors in the same timeframe, trying new designs in the market sooner. Faster market feedback means less reliance on long-range ‘guesses’ about customer preferences three years hence. This significantly reduces Toyota’s market risk.”

Toyota is expected to become the global leader in vehicle sales in 2007 taking over the position that General Motors has occupied since 1931. Let’s explore how has Toyota systematically strengthened its position.

Dehoff and Loehr propose a set of six capabilities that enable Toyota launch projects to succeed. These are:

1. Structure and organization
2. Development process
3. Extended enterprise
4. Institutional learning
5. People development
6. Culture

The following examples from each these six capabilities highlight the essential factors that work together for Toyota’s success.

Capability Number 1 - Structure and organization
A key element of the Toyota product development engine is achieving a harmonious, efficient team effort. Program leaders called shusa’s are key to the success of this management process. The shusa provides the system-level perspective to direct contributors to an effective, unified effort that leads to a successful launch.

As explained by James P. Womack, the author of the book “The Machine that Changed the World,” a shusa is a super-craftsman. The shusa’s role is interdisciplinary. In addition to engineering decisions, the shusa is responsible for the program’s business success. The shusa must have the technical skills, business insights, and managerial experience to ensure that everything works together to create value for customers. At Toyota, becoming a shusa is a 20-year process.

In companies that don’t have the equivalent of a shusa, launch results are often less successful because of differences in priorities and preconceptions in groups such as engineering, marketing, and sales. Concepts such as launch architecture can provide the unifying design that maximizes synergy.

Capability Number 2 - Development Process
Toyota’s development process enables them to design, develop, and launch great products faster with fewer resources than most of their competitors.

The Toyota Production System emphasizes quality and efficiency to reduce waste through lean manufacturing concepts. John Krafcik coined the phrase lean production to emphasize that lean methods uses less resources than many traditional mass production methods to produce outstanding products in less time. The Toyota Production System has been described as a manufacturing phenomenon that seeks to “maximize the work effort of a company’s number one resource, the People.”

According to Dehoff and Loehr, the Toyota development model incorporates an intensive form of coordination. Their development process relies on concurrent engineering. Parallel path development activities are encouraged. The Toyota development model uses “a great deal of communication among engineers on product launch, an activity that is often seen as a waste of time in other companies.” This system delivers value and reduces project risk.

The bad news for Toyota’s competitors is that Toyota’s development process is very good now and because of the reinvestments they have made, the momentum for continuous improvements within Toyota will likely surpass the efforts of many of their competitors for the foreseeable future.

Capability Number 3 - Extended Enterprise
The goal of program success is shared throughout the extended team. In the Win-Win Sourcing article, Bill Jackson and Michael Pfitzmann conclude that “The most effective procurement model fosters knowledge sharing, not mistrust.” Toyota prefers suppliers that favor quality to cost reduction. Toyota’s prefers to treat its suppliers as partners.

Contrast this with price-based sourcing which may foster a combative posture between manufacturers and suppliers.

In the “Get it right the first time” section, Jackson and Pfitzmann state “But no matter how it’s justified, the net effect of the price-based system is to raise costs.” The authors cite three insightful reasons for the unintended result of lost opportunity. They conclude that price-based systems can:

1. Sanction sloppy engineering
2. Foster gamesmanship that includes initial over-design of components to facilitate cost reduction efforts later
3. Penalize developers by requiring them to fix old problems instead of creating new products

Toyota’s implementation of extended enterprise maximizes cooperation within a diverse development team.

Capability Number 4 - Institutional Learning
Toyota success depends on its systematic effort to capture, institutionalize, and share knowledge. This enables teams of multi-skilled workers to develop and produce a large variety of products.

Capability Number 5 - People Development
Toyota invests in developing its best people. Their system nurtures technical and functional excellence. In contrast, typical mass production favors unskilled or semiskilled workers that produce standard designs for as long as possible.

Capability Number 6 - Culture
Toyota’s culture encourages changes for the better within the company. In combination with people development, institutional learning, extended enterprise, Toyota’s culture is fundamental to their approach to competitive advantage.

Toyota’s core values include continuous improvement and collaboration. A core principle of the Toyota system is Kaizen - the Japanese term meaning, “change for the better.” Contrast this with the “if it is not broken” or “good enough” approach in use by too many development teams.

Dehoff and Loehr reported, “It has taken Toyota 60 years to perfect their product development process.” Congratulations to Toyota. Through sustained innovation in new product development and launch they have become number one.

What is your strategy for attaining the top spot in your sector? If you already are a recognized market leader, what will perpetuate your prominent position? What steps will you take to ensure a better, faster, and more efficient path to launch success?

Product Launch Press Conferences for Financial Analysts: What is Most Important Question?

If you are planning a product launch press conference at a premier industry event, what will be important to a financial analyst? What would motivate a financial analyst to attend a product launch press conference?

Listen to Product Launch Press Conferences for Financial Analysts [8 minutes, 8.5 MBytes, Apple QuickTime / iTunes is required]

In this post, I will address what I believe is the most important determination for a financial analyst.

Here is a hint. Analysts that personally attend product launch press conferences are more interested in the future than the past. Financial analysts are interested in the future because they are making recommendations about purchasing, selling, or holding company stocks.

A product launch provides an extremely valuable insight about the future of a company. A successful launch provides an innovation assessment of functional areas such as management, development, marketing, sales, and distribution. A successful launch validates strategy and tactics. A product launch press conference is a critical part of a product development and launch process because it can reveal the current operational excellence of the entire organization. Specifically, a company that systematically introduces differentiated and innovative products is more likely to be an attractive investment.

Earlier this year, I attended a major conference and exposition as a media representative. Historically, these events are a preferred venue to introduce new products. My original goal was to find at least one great story about a new product. I scheduled the time to attend two, on-site press conferences.

The first company, a mature, industry leader, spent most of the first 15 minutes of their high profile press conference reviewing financial results. Although there were hints about new products, the presentation focused on history and not news. Eventually, information about the new products was revealed as part of an overall status report for the company. When the press conference was opened for questions, it became clear that there were two kinds of specialists in the audience of more than 100 people: industry journalists and financial analysts.

The second company, also a mature, industry leader, spent some time during their press conference addressing the implications of a recent merger but did highlight many new products that they were introducing.

During the press conference luncheon, I sat at a table populated by financial analysts. For half an hour, I just listened. One of the analysts was familiar with the financial reports from both companies and it was clear that he had studied this market sector. I learned that he had allocated only a few hours of his time for this industry event.

When I had the opportunity for a private conversation, I had only one question. I asked, “Why did you invest the time and effort to attend this event in person?”

The seasoned veteran replied, “There are specific meetings for analysts but I come to this meeting to get another perspective. Is anyone really going to buy this stuff?”

At a product launch press conference, the financial metrics provide the historical summary of a company’s performance with the old products while the press kits provide specifications about new products. Remember that financial analysts have historical data about performance and great industry data back at their office. They have access to a lot of official information. The additional perspective that they hope to gain by attending an onsite, new product press conference at a major trade show is about future performance.

If you want to build confidence about future product sales, here are three suggestions to consider when planning a press conference that financial analysts will attend.

The first suggestion is about the inclusion of enthusiastic customers or other experts.

• Present reference customer that can showcase improved ways to solve old problems using your new products. Enthusiastic users are essential ingredients to a great story and an indicator of the future sales of a new product.

• Provide opportunities for the financial analysts to interact with these evangelists.

The second suggestion is about demonstrations.

• Beside static images of the new products, consider showcasing the products in context using both live and prerecorded demonstrations.
• Showcase enthusiastic representatives using your product. Great demonstrations are powerful. Instead of a customer saying that your product was “powerful” imagine the reaction if they did something powerful using your product.
• Find passionate people to demonstrate your product. If your CEO or the product manager can’t masterfully demonstrate your product, find someone who can.
• Find a way to let analysts experience the product. Can you provide a sample? Is there some way to develop a connection with your product? Is there a way for analysts to use your product even if it is a virtual experience?

You may by thinking “But things can go wrong at a demo” When the demo design and preparation are poor, awful things frequently happen. However, when the demo design is innovative and properly prepared, the results can be amazing.

If you are thinking about the investment for a powerful, proficient demo ask yourself another question. When is a great demo more important than at the press conference where you are launching your new product?

The third and final suggestion deals with the future.

• Present reference customer that can showcase improved ways to solve emergent problems using your new products.
• Demonstrate that your product roadmap is aligned with future trends and that your team is agile enough to adapt.

What is important
Customers and competitors are likely to engage in discussions about features, advantages, and benefits. Industry journalists are likely to report on what happened at your press conference. Financial analysts want to know about the future. “Is anyone really going to buy your stuff?”

Product Launch Buzz: Zero to Contender

Buzz equals interest. How do you generate favorable buzz at launch? This post includes several observations on the buzz surrounding Apple's iPhone and a few extracts from a recent white paper.

Listen to "Product Launch Buzz: Zero to Contender" (3.6 Mbytes, 6 Minutes, QuickTime required)

Imagine a Product Manager asking about an upcoming launch.

The iPhone Buzz Begins

When the iPhone announcement was made at MacWorld on the 15th of January 2007, Steve Jobs said:

"Today, we're introducing THREE revolutionary new products. The first one is a wide screen iPod with touch controls. The second is a revolutionary new mobile phone. And the third is a breakthrough Internet communications device."

"An iPod, a phone, an Internet mobile communicator.... these are NOT three separate devices! And we are calling it iPhone!"

Jobs words have became the model for communication efforts for both paid advertising and consumer generated media. Jobs words have been accepted because Apple designed and introduced a compelling product.

The Buzz Builds

Apple's iPhone generated a lot of buzz in the months before it was available on the 29th of June 2007. Pre-launch buzz contributed to the excitement level. The effectiveness of the buzz was confirmed by the lines of eager buyers waiting for Apple and AT&T stores to re-open so that select individuals could be among the first to purchase the product. The obsession to have the new product received at lot of coverage in the news media and on the late night talk shows.

Since the 29th of June, there has been a large amount of consumer generated media (CGM) posted in blogs and sites such as YouTube. One of my favorite videos is a fan produced spin off of an official "Mac and PC" commercial that presents a visualization of an iPhone and a BlackBerry.

Six months have passed since the iPhone product announcement. Now, Apple's television commercials are emphasizing the same points that Jobs made in January. Occasionally, I find myself asking "The iPhone launch has been one of the most publicized product launches in history. With all of that attention, why did Apple purchase television advertising?"

Buzz Analysis

A June 2007 white paper titled "The Origin and Impact of CPG New Product Buzz: Emerging Trends and Implications" (registration required) provides insights for new product developers. Nielsen Buzzmetrics and BASES conducted the analysis.

The report includes entries for brand investment and uniqueness of solution. Three of the questions to assess buzz potential are:

• "Is this product bringing anything new to the table?
• Is the product interesting or exciting?
• Will passing product information along say anything about me?"

The iPhone gets a favorable rating for each of these questions. Apple's current advertisements clearly communicate the ownership messages of new, exciting, and desirable. These characteristics reflect the culture of Apple's product development organization.

I have observed that abundant, favorable buzz before a product launch improves the sales trajectory. The report agrees:

"Products that solve consumer problems in new and better ways have an advantage in the buzz-generation game."

"Buzz tends to occur very early in relation to a new product launch, with peaks in buzz that tend to precede peaks in sales."

So why is Apple running television advertisements for the iPhone?

The buzz generated from both traditional and consumer generated media is part of the strategy that is enabling Apple to go from zero percent market share in the phone sector to a contender. As long as there is no significant bad publicity, the improved sales trajectory removes opportunities from iPhone competitors. Note that this is unique variation of a first-mover advantage strategy.

So what is the oversimplified formula for new product developers?

1. Design and introduce a compelling product
2. Provide a clear model for crafting the message for the product launch buzz
3. Promote even more buzz generation through proactive communication channels such as paid advertising

More buzz leads to more sales. For the iPhone, more sales have been producing more buzz.

Pricing in New Product Development

"The final summary point is about profitability. The supporting idea is about designing a new product launch. I introduced you to Launch Architecture. It includes the entire launch environment. It is an interdisciplinary approach that pulls from areas such as engineering, communications, training, pricing or the next-big-thing to create a robust, system-level plan to complete all the development activities within the project constraints. The goal is to design and implement an effective solution that the customer will pay for at launch."

Listen to the "Pricing in New Product Development" presentation [37 minutes, 19 MBytes] [Apple QuickTime / iTunes is required]

This summary was extracted from the transcript from the presentation, "Integrating Pricing into the Back End of Innovation: Pricing in New Product Development" by Mark A. Hart recorded at the Pricing Institute’s 20th anniversary of PRICEX on the 27th of June 2007 in Key Biscayne, Florida. The Institute for International Research produces the PRICEX conference. You can find them on the web at www.iirusa.com. The online home for Visions Magazine is at www.pdma.org.