At the ABC Expo, one of the most common requests from members whose booths I visited was for advice on how to create or improve their new product development process. Having a well-designed NPD process can be a powerful source of competitive advantage. You might be surprised to find that even some of the larger companies in the industry have far less than optimum product development methodologies.

But before I talk about the latest and greatest best practices in NPD, it’s important that I remind you of one of the universal principals of management excellence—holistic thinking. Don’t create/fix the parts, create/fix the whole business. Improving product development involves more than just the product development process itself.

Your Business Model

In a recent post (“Is Your Business Model Obsolete?”), I outlined the six components of all business models--Value Proposition, Culture, Channels, Processes, Resources, and Financial Formula.

A properly drafted Value Proposition will dictate what type of product development you need. It defines who your target customers are, what products/categories you will produce, and where your superior value versus competition will come from. For example, you might decide that your competitive advantage will be superior in-use performance. Or, conversely it might be comparable performance at a lower price. You can’t really start to put in place an effective NPD process until you’ve determined these things—in writing.

With respect to Resources, you will need process “performers” who have the appropriate skills for each process step. For example, no matter how good your development process is, if you don’t have people involved who are creative enough to come up with great ideas or access to engineers who can convert the ideas into reality, you’re dead in the water.

And, you better make sure your company’s Culture attracts and retains the right kind of people and supports the behaviors you’ll need. For example, if you want to be an innovator, you’ll want your culture to encourage and reward creative thinking and intelligent risk-taking. 

A Proposed NPD Process Framework   

What follows is an outline of a basic, flexible, 6 stage framework that I believe could be customized to work for the majority of companies in the juvenile industry.

General NPD Process Principles

Of all the common business processes, new product development has probably seen more innovation in best practices over the past 20 years than any other. No doubt this is due to the impact it can have on the bottom line. Here are some generally accepted current principles to help you better understand and use this framework to design your company’s complete process:

·         Dividing the process into stages separated by critical checkpoints for CEO or senior team approval before proceeding to the next step.

·         Performing functions concurrently where possible to save time.

·         Understanding that consumers will generally not tell you what they need but they can recognize a good idea when they see it.

·         Recognition that you need to sift through a large quantity of possible ideas in the “Idea Generation” stage to find one great idea—i.e. you need to kiss a lot of frogs to find a prince.

·         The use of observation of consumer behavior as a source of new product ideas—e.g. watching parents putting their baby to bed to gain insights into possible product features.

·         Getting general market and competition input from trade customers (buyers) in the “Design Strategy” stage but not showing concepts to trade customers until you have a final working model at the end of the “Development” stage.

·         Thinking of the “Development” stage as a series of relatively rapid and cost-minimized design—test (with consumers)—learn—redesign iterations where the concept evolves over time rather than being totally defined and financially justified upfront. The idea is to get feedback from consumers early, often, and at as low a cost as possible.

·         Not having an itchy trigger finger but killing projects that are clearly not viable as early as possible.

·         Getting to market quickly—proceeding to “Deployment” and launch with an acceptable but maybe not perfect product and then refining it in later versions (see stage no. 6 “Product Improvement”).

·         Keeping the process simple and bureaucracy at a minimum.

Next Steps

In preparation for introducing a new or improved NPD process in your company, get all those in your company who will be involved in product development, as well as any appropriate outside resources, to talk about and clarify/revise if necessary your Value Proposition, needed Resources, and desired Culture. Once those components are set, you could begin to document your process by simply creating a checklist for each of the 6 stages in the framework. Getting even a basic process in place is far better than having no process at all. You can always get more detailed later.  

If you’d like some guidance or suggestions, you can set up one or more Skype sessions or telephone conferences with me under JPMA’s CEO Mentor Program that benefits K.I.D.S. Contact Kyle Schaller at kschaller@jpma.org.

If you weren’t able to attend my presentation at the recent ABC Spring Educational Conference in Orlando, here’s a summary of what I talked about. Hope you find it interesting.

Everyone seems to agree that the world is changing more rapidly than ever. I started The First Years, Inc. in 1972 and ran it for 32 years until it was sold in 2004. At the time of the sale, our sales were over $140 million and growing, we had $28 million in cash, and we had a solid business model in place. However, if I were starting a company today, the model would be quite different. Too much has changed.

If you’re not getting the financial results you’d like, it may well be that your business model has not kept up with the times. But even if you are doing well, it’s wise to have a mindset of continuous evolutionary business model improvement.

What do I mean by a business model? It’s your company’s entire system for delivering value to your customers while making a profit. It includes the products you sell of course but it’s not just about products. For example, the IPod would have been nothing without ITunes and the ITunes store concept. For the purpose of creating or improving a business model, it’s helpful to understand its components. Every company whether it’s a juvenile product manufacturer, retailer, restaurant, or airline has the same six components.

Your Value Proposition is who your customers are, what you provide them—your products or services, and why they will prefer you to the alternatives—specifically what unique benefits you provide. How you make their lives better?

Your company’s Culture is the critical “soft” stuff that holds everything together. Culture includes your core values, your shared vision of what your company can become, your brand identity, and even your compensation and rewards policy because of how that impacts core values like teamwork. Companies with long-term success typically have strong cultures that are vigorously enforced—like Walmart, Apple, Disney, and Southwest Airlines.

You need a way to get your products or services as well as your all important “why we’re better” message to your customers. You do that through Channels. You may sell through specialty retailers, mass retailers, etailers, your own web site, mall kiosks, drones? Some combination? Your “why we’re better” message may get delivered via the same routes for example packaging, store personnel or signage at retail or information on a web site or through other media?

Your Operating Processes are all the ongoing routine functions your company performs. Like developing products, managing your human resources, maintaining relationships with retailers and consumers, producing products, etc. This is a component that should be improved continuously no matter what.

Resources are the people, skill sets, facilities, equipment, and financial strength required to perform your processes. This is another component that should continuously improve—especially the quality and skills of your people.

And, finally Pricing is the financial formula of your business. What are your revenue streams? Just product sales or also fees for services? What’s your pricing structure? What margins do you and any intermediaries make? What are your costs? Will all these components work together to make a profit?

So that’s all there is to it. These components are the dials you can turn, so to speak, to create and improve your business and there are an infinite number of potential variations limited only by your imagination.

I recommend to my clients that at least twice a year they update their understanding of internal and external current reality and gather their key staff members to review the current business model and identify possible improvements. The question to be asked is, “If we were starting the business today, how would we design our business model?” This “business model evolution” process is replacing the old annual strategic planning exercise we’ve all used in the past. It takes a holistic view of the entire company rather than a piecemeal approach that can produce unintended consequences. It’s more likely to generate breakthrough versus incremental improvements. And implementation is more straightforward. I’ll get into the detail of the process in a future post.

At The First Years, our original business model was changed somewhat dramatically over the years as new competitors appeared, retailers changed their strategies, new technologies came along, or opportunities presented themselves. The result was that we kept what started as a family company in 1952 going for 52 years before a successful sale and created a brand which is now 42 years old and still in existence. It’s all about staying up with the times.   

In his speech at his recent induction into the NFL Hall of Fame, Bill Parcells referenced a quote that he said was at the heart of his coaching and leadership philosophy.

"The players deserve a chance to win, and you as an organization, a university and a head coach have an obligatory responsibility to give it to them."

What struck me is how much that also applies to managing a business and what a great perspective that is for any leader to have. Your employees absolutely deserve a chance to succeed and it is your job to enable them to succeed.

That’s a lot different mindset from the “hire the right people and get out of their way” approach that I’ve heard espoused far too often and which I firmly believe is really abdication of leadership responsibility. The “hire the right people” part is obviously crucial. But, any great coach knows that throwing a bunch of star players on a court or field does not produce a winning combination. I’m not advocating micro-management but I am suggesting that you as leader need to provide your staff with a framework within which they can flourish.

Business is a team sport and it’s the collaboration of the players towards a common goal that creates success. The players play the game, but the leader needs to do three things to enable them to be successful:

1.       Design (and redesign periodically as necessary) an effective operating system that defines how the players (employees) will interact to achieve the overall corporate mission.

2.      Deploy that system by recruiting the right types of players (knowledge, skills, and attitude), providing needed training and guidance, creating the appropriate culture and compensation/rewards, and supplying the necessary equipment and facilities.

3.      Direct the day to day activities monitoring how well the system is working, facilitating ongoing communication, and implementing corrective action when appropriate.

These are three very different types of top management activities that require different leadership and management skills. In some companies, one person plays all three roles but in other companies, the “Design” role is played by someone with more visionary talent while the “Deploy” and “Direct” roles are played by someone with more operational skill and experience.

Ask yourself these questions. When things go wrong in your company, before you place blame, have you and the other managers in your firm made sure you have designed the work flow such that people can do their jobs successfully? If your departments are not working together smoothly and collaboratively, have you checked whether you might have inadvertently exacerbated the problem by establishing a compensation system that rewards department performance at the expense of corporate performance? Are you providing employees with sufficient process training so that you are giving them “a chance to win” or are you throwing them into the fray and expecting them to figure it out for themselves?

For a limited time, JPMA is offering a special CEO Mentor Skype consulting program called “The Business Checkup”. It’s designed to help you answer these questions and implement a leadership system tailored to your organization at this stage of its growth. It consists of a 45 minute Skype sessions with me designed to help you make sure you are optimizing your opportunities for business success. The CEO Mentoring Program is available to any member willing to make a $150 contribution to Kids in Distressed Situations (K.I.D.S.). If you’re interested, you can contact Kyle Schaller at 856-642-4416 or by email at kschaller@jpma.org.  You’ll be asked to fill out a totally confidential questionnaire in advance of the Skype sessions which by itself will cause you to think about your business in some new and revealing ways. If you’d like to take a look at the questionnaire click here.

Of course, you can always sign up for individual CEO Mentor Skype sessions as well. Just contact Kyle and he will take care of the details. I’m looking forward to meeting with you.

One constant in business is that the business environment is never constant. In recent years, this has been particularly true with respect to the way consumers select and purchase juvenile products. The question you might want to consider is whether your channel strategy—the process you use to get your products into consumer hands—is still optimal given the new reality?

When I first started in the industry in the late 60’s, the road from manufacturer to consumer went first through wholesale distributors and then retailers. However, a major channel transformation that would be the death knell of many distributors was in its early stages. The pioneering "discount department stores" were changing the retail financial model to a low margin high volume formula that was attracting consumers in droves. As these chains got big enough, they no longer needed the services or economies of scale that their distributors had provided. Any distributor that did not see this coming went the way of the wooly mammoth. Fortunately, we changed our company’s business model from distributor to manufacturer (not an easy task) and prospered as a result. 

So what’s happened recently in the marketplace that might require you to change some of your channel assumptions to avoid the possibility of extinction? 

·         Consumers have many more ways to get unbiased product preference information than they’ve had in the past. There are almost too many sources to mention—consumer magazines, consumer guidebooks, social media, independent web sites, bloggers, government web sites, etc. This arguably enables them to make more objective buying decisions and to be less influenced by traditional advertising and PR. The days of dazzling the consumer with b.s. are over. 

·         Price comparisons are available at everyone’s fingertips. Consumers can readily compare prices for your products from one outlet to another and can easily compare the price of your product to competitive offerings. We’ve all done this to check online prices but now apps like Red Laser and others are even allowing consumers to easily check online and local store prices while in store by scanning bar codes with their smart phones.    

·         Resistance to online purchasing of products in just about every category has decreased. Consumers not just in the US but globally are becoming more comfortable buying online—even for so-called "touch and feel" categories. Also, shipping costs have come down making total pricing more attractive. In their October 2011 article, Harvard Business School professors Rajiv Lal and Jose B. Alvarez mention baby products as one of the categories moving to online retailers most rapidly.         

·         Brick and mortar retailers are at a tipping point that is changing the dynamics of the traditional retailer-manufacturer relationship. Largely because of the preceding bullet points, conventional retailers are under increased stress that is in many cases translating into increased pressure put on their suppliers, including JPMA manufacturers. The previously mentioned HBS article outlined what they need to do to survive which includes moving even further towards unique merchandise not available online and providing the kind of personalized selling or customer educating that web sites can’t do effectively. 

Here are some interesting questions to ponder as you do a "situation analysis" of your current channel strategy:

1.       What buying process are consumers now using to buy your products and similar competitive products? Are you talking to new parents and gift-givers about exactly how and where they are making up their minds? Given that understanding, are you getting your product information and products to them at the right time and in the right place?

2.      What would be an improvement to that consumer purchasing process that would make it easier for them to buy, reduce their cost, decrease their risk, etc.? What if you mapped your consumers’ current buying process for your products and then applied process improvement thinking to come up with a better way for them to obtain them? In other words, are you being as innovative about the process you’re using to deliver your products to consumers as you are about the products themselves? Should you have a multi-channel or hybrid strategy to accommodate all consumer preferences? Are you taking full advantage of what the online revolution has to offer? Have you discussed possible new delivery options with your target consumer customers?

3.      How can you streamline the flow of goods through the pipeline to reduce your costs and/or prices? Can you eliminate any intermediaries or steps? Or, as my company was in the late 60’s, are you the intermediary in danger of being eliminated? Is there a shorter route to the consumer?  Should you consider more direct-to consumer selling? Are you leveraging the best shipping options? Do you have better or more flexible production options? Are there any applications of technology that could reduce channel costs?

4.      Should you proactively find ways to provide unique products to your major retail customers? How will you respond to your retail customers’ need for unique merchandise? Can you afford to produce multiple versions of the same product? Should you become a private label supplier? Or, can you make your products so important to your retail customers that they can’t do without them? 

There’s a lot to ponder. What’s important is to be ahead of the curve. Start to make the necessary changes in your business model when it’s first clear in what direction things are going rather than wait until your financial performance is already suffering. It takes time, often years, to make significant business model changes.

If you’d like to discuss any of this with me, you can do it through JPMA’s CEO Mentor Program. Just contact Kyle Schaller at kschaller@jpma.org to set up an appointment for a Skype or Face Time session.

My guess is that most JP industry CEOs dream of finding at least one product that is so successful that it is transformational from a company sales and profit standpoint. So, how do you develop blockbuster products that generate tens of millions in sales for years and years and elevate your brand to the "must-have" category in the eyes of both retailers and consumers? You can get some clues by looking at some of the most noteworthy industry product success stories. There are many to choose from but I selected a few with which I am most familiar. What you will see is that there are 4 interesting things that these examples have in common:

·         They solved a previously unsolved significant parenting problem. 

·         They are protected by patents or other competitive barriers such as high cost of entry. 

·         They were not necessarily "overnight successes". 

·         They were not ideas generated by market research.

 Avent Bottle 

This was one of those classic tipping point stories of a product that travelled under the radar for years before catching on. The parent company had the good fortune of generating healthy revenues from a non-juvenile division that enabled the owners to stick with this product for a number of money-losing years until word of mouth took hold. The Avent bottle was one of the first to claim that it could reduce colic and extensive advertising and PR efforts in support of this feature triggered positive word of mouth that helped catapult the product to international success. This was also a story of a husband-wife team with a mix of talents that blended beautifully together. The husband was an outstanding, quality-conscious, patent-savvy engineer and the wife a highly experienced marketer. Their idea of market research was simply to create a product that they themselves would want to use. Restricting distribution of their product to specialty stores also helped enhance the cachet of this premium made-in-the-UK product line. 

Boppy Pillow

It also took a while for the Boppy Pillow to become a phenomenon. The product was initially created by a mom to satisfy a request from her daughter’s daycare center for something to help prop up babies. However, its ultimate success came from serving a completely different purpose than even the inventor was aware of. With the increased popularity of breastfeeding, there was a growing need for something that would allow moms to prop up their babies in a position comfortable for both mom and baby. The Boppy Pillow filled that need and was protected by a strong patent. Yet, in spite of winning a JPMA show new product award when first introduced around 1990, the founder faced significant financial difficultiesearly on and needed aid from an SBA microloan to carry on. A PR breakthrough occurred in 1998 when the product appeared in an episode of Friends. Spurred on by that publicity, 12 years after being introduced it was named by American Baby as the #1 baby product and is still a leading "must-have" product today.  

Take & Toss Cups

Forgive me for including one of my own creations, but I think it’s fair to classify this product and the line of related spinoff products it inspired as a true industry success story. First introduced in 2002, it is still a strong multimillion dollar product line ten years later. This was a case of applying a production technology from another industry to juvenile products. Gladware had been introduced in the housewares industry using thin wall injection molding for containers where traditional injection molding had previously been used. The result was a significantly lower cost per piece and the introduction of the concept of "semi-disposability". We felt that by applying this technology to training cups, we could create a product with considerable appeal to parents because of both higher value and the added convenience of not having to worry about losing or throwing away cups. While the idea was not patentable, the cost of tooling and equipment for this type of manufacturing was so high that it acted as a barrier to competitive entry long enough for us to get the product well-established. The long, stressful lead time for us was the time from the initial idea to actually getting it on the market with a level of performance that met our standards. As I recall, this was about 3 years. Fortunately, the risk paid off and the product was successful almost immediately because of the appeal of the price proposition.  

Breakthrough products like these can be the key to achieving the kind of financial success we all would like to have in our businesses. There are many ways to create them but what at least these examples indicate, is that you don’t necessarily need a huge marketing and product development staff and budget to create winners. What you do need is a "better mousetrap" idea that you can protect and the patience and financial wherewithal to stick with it until it catches on.

Disclaimer: No warranties, express or implied, are contained herein. Purchasers, or users, of this information acknowledge that any errors or omission in the performance of the material contained herein or, any injuries resulting from its use, are the sole responsibility of the purchaser or user, and not JPMA or the author. Opinions expressed are those of the author only.