Every company wants pull-sales (customers’ buys from you) than push-sales (you sell to customers). Pull-sales leads to greater profits and higher-growth. The most effective method for pull-sales is to build great & successful products.
Enterprises become good with ‘Sales-Driven’ machinery, and they become great with ‘Product-Driven’ business.Click to Tweet
What are the most critical factors for successful products?
Solve an Unsolved Problem
Product Research and development
Product acceleration with tools and services
In-organic building blocks
Premium category in every segment
Fail-Safe product strategy blueprint
Agile product development
Product excellent culture
Must-Have #1: Solve an Unsolved Problem
Successful products needs to solve a problem or meet an unfulfilled need. Every product is a business/P&L unit. So for any new product, ask the following questions:
The problem the product will solve
Is the problem critical enough for the customer?
If a problem is solved, what benefit it will deliver to the customer?
What loss the customer has to bear due to an unsolved problem?
How far or close the potential competition is in solving the problem?
How will the product solve the problem?
The problem has to be critical, urgent, and unsolved.
Action–
Problem identification is an ‘outside-in’ thinking process. Products team need to:
Get inputs from sales, marketing, competitive intelligence, research reports, and much more.
Generate ‘Product Requirement’ Document, which should detail out:
Which customers will we target?
How will the product offer a competitive advantage?
High-Level feasibility to develop and Scale-up the product
How much will the customer be ready to pay for it?
Will it be able to be within Top 5 Products within the portfolio?
Product requirement document will need a sign-off and ownership from all stakeholders. Signatories should include Sales, Marketing, Production, and Finance.
Every one dollar spent on product development gives a better return than 5 dollars spent on sales and branding.Tweet
Must-Have #2: Product Research and Development
A great product sells by itself, gives better profitability, and creates long-term competitiveness.
The Product-excellence model is a higher priority over the sales-excellence model. Product R&D investments take some time but add much more value.
Organizations should have high-energy and skilled R&D functions. R&D unit becomes like an internal service provider to product management.
Action
Keep a certain %age of profits reserved for product R&D. It should be a commitment, irrespective of the returns from investment. Product development is like a start-up, having its hits and misses. Shareholders need to have patience and persistence.
Product Management + R&D should report directly to the CEO.
The head of product development needs to be a heavy hitter. He should have:
A strategic mind-set
Solid business acumen
Ability to lead change
Driving results across the functions
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
Product development has three broad stages. How quickly one can cover each step determines the success:
Technical Validation–
Converting an idea into a design
Translating design into a prototype.
Confirming that the prototype works.
Validating production viability.
Market Validation–
Test-launch of technically feasible product
Validating business assumptions like Price vs. Demand, Distribution Logistics
Sales team’s ability to sell
Fitment 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. They include:
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
Action-
Step 1– You should set-up a challenging benchmark for product development from start to finish.
For example, a two-wheeler manufacturing company could set-up a (say) 6-month benchmark for each stage (Technical, Market, and Scale-up).
Step 2– Post that it needs to work backward and identify all possible tools & services to make it happen. You would need a focused team to identify 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.
Step 3– Develop Teams to use best of breed tools- It takes anywhere from 1 to 2 years to align the technology and manpower fully.
Must-Have #4- Inorganic ‘Building-Blocks’
A few leading-edge companies invest in ground-breaking research. They are focused on creating deep intellectual property and long-term competitiveness. However, 99% of companies are looking for a shorter ‘Product to Profits’ Cycle.
‘Building-Blocks’ approach is the best of both the worlds. It helps you deliver competitive products quickly.
Here are the building-Blocks (example of the four-wheeler industry) for successful products:
Reverse Engineer existing products– Adopt ‘base’ product, and innovate on top of it.
For example, if you are creating a higher acceleration, you will first adopt existing pre-firing compression technology. On top of it, you will apply new methods for faster combustion.
Innovate in a way that your latest upgrades ride on ‘pre-existing’ product components. At the same time, every 3-4 years (say), you will need to have a new platform. Therefore your product development should be working on two tracks-
‘Fundamental Product Platforms’ like frame and chassis, with the transmission.
A Company can keep a standard list of tires, 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, a company can quickly pick-up and plug-in relevant components.
Action- Product development is not sequential.
#1– A company needs to develop a product road-map and keep on reviewing it every three months. This road-map needs to have:
Individual Project milestones for each Product Launch- New Model or Series
‘Building-Block’ map, which is synched with the Product road-map.- New Sensors, Wheels, Differential systems, braking systems.
#2-Laydown explicit norms for the ‘Building-Block’ approach. Ensure that all employees understand it, and there is a ‘quick’ product assembly culture.
Must-Have #5- Premium Category in Every Segment
Great products will ideally have a higher ‘price & demand’ than that of competition. This principle should be applicable in any segment. In a ‘mass-market,’ your product should be ‘mass-premium’ product, and in a ‘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.
Action-
If your product has to fall in a premium category, you need to work on fundamentals:
Small but high impact innovations for high value-perception.
Branding through Below-the-line or/and above-the-line promotion
Reliable quality and post-sales service
Product Design and Packaging Capacity for premium presentation
Each product development is part of the overall enterprise strategy. It helps in multiple ways:
Product Management spans across all functions, including design, commercial, logistics, production, packaging, sales, branding, and promotion. Many of the investments like branding, production capacity, and vendor development are strategic and cut across the entire product portfolio.
Companies can work on different product calendars in parallel. The whole product development is a well-coordinated effort. For example, a company like Apple uses on the next 4-5 iPhone models in parallel. At the same time, it is investing in fundamental research and developing plug & play technologies.
A longer-term product map allows the company to invest in the right technologies and better manage product life-cycles.
Action- One needs to have a product road-map as a core piece of the overall strategy blueprint. This road-map should contain:
Product Calendar– Which car model to be launched by what date?
Product-specific milestones– End-to-end calendar for design, prototype, production validation, road-test, test-launch, and a 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
Financials– High-Level Pricing, Demand, Cost, and Margins
Product development tools and services– timelines to acquire design tools, testing tools, engineering tools, and deployment capabilities.
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
With the business environment becoming hyper-competitive, an enterprise needs to be agile for successful product development. There are two parts of this equation:
Alertness– Keep eyes and ears open on
Latest demand patterns
Competition products
Response to previously launched products
Emerging technologies
Changes in tariff structures
Availability of vendors & raw material.
This awareness 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 a responsive enterprise 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 produce new products.
A multi-skilled workforce or an ability to hire new skills quickly.
Flexible supply chain– for example- an ability to change storage spaces and transport loads based on the demand.
Vendor-base, for a wide range of requirements. Also, three-tier vendor structure to have good back-ups.
It’s not possible to have maximum alertness and ultimate flexibility. An enterprise needs to maximize its responsiveness within its constraints.
Action
The capabilities, as mentioned above, are strategic and are not only limited to products.
#1– Invest in ‘information & intelligence unit’ as part of the strategy function. It should gather data from all sources and provide highly actionable information.
#2– Include flexibility and agility at the core of all investment and organizational decisions.
Must-Have #8- ‘Great Products’ Culture
An enterprise needs to achieve the following shifts, for building great products:
‘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 ingrained at all levels of leadership.
Action–
Executive Coaching at mid and senior levels to drive the shifts mentioned above.
Align reward structures to product-driven sales. It should be a collective target of all the functions to make products successful. It 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
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