New product innovation is a vital sign that is not so easy to monitor. Metrics of production using well-defined resources and outputs don’t translate well to the world of managing work-in-progress (WIP) in Research and Development (R&D). Mike Dalton, author of Simplifying innovation: Doubling Speed to Market and New Product Profits with Your Existing Resources, contributed an article this week to the online publication CFO, entitled Unclogging the Innovation Pipeline. Dalton addresses the issue of managing WIP for R&D, presenting an approach that starts with screening out “poor performers early by establishing commercial, technical and manufacturing feasibility.” This screening process is hampered by poor visibility of WIP for R&D, which involves ideas, and unprecedented projects, rather than well-defined production processes. Dalton asserts that the root cause of this poor visibility is too many programs in execution. He advocates an approach which limits the number of projects in execution at one time, “based on resource bandwidth.”
The success of this method depends on the ability (or luck!) to make the correct prediction about which projects can wait for a place in the innovation pipeline. What if the project projected to be a “poor performer” is put on the back burner, and a competitor brings a sucessful comparable product to market first? There is small consolation that your strategic delay of one project exposed you, at the time, to a reduced risk, possibly allowing you to respond to market changes or a better opportunity, supposed benefits Dalton gives for staggering project start dates.
This is not to say that there is no merit in managing internal R&D resources to optimize the number of new projects a company can finish in a period of time. Far from it. As Dalton puts it, “with fewer plates spinning at the same time, the management team will have better visibility into what’s really entering the pipeline so it can capitalize on the critical few and avoid the trivial many.” However, when venturing into uncharted new product territory, who can truly say what is critical and what is trivial? Important product introduction may be delayed because other new products need to be ready for a particular trade show, holiday season, or to meet an expected demand based on the buying patterns of a customer segment.
While not disparaging methods to optimize a company’s ability to manage its internal R&D resources, remember that performance-enhancing outside resources can help you win the race to market! Companies typically have no lack of creativity but lag in execution of their ideas, as overwhelmingly evidenced by Vijay Govindarajan and Chris Trimble’s research work leading to their 2010 book The Other Side of Innovation: Solving the Execution Challenge. When you engage NPI Services, Inc.to amp up your innovation resources in whatever way fits best, you gain expertise and flexibility. Whether executing a new product is a little out of your company’s comfort zone, or you want to realize company-wide savings in the true cost of prototyping (http://www.npiservices.com/how-does-your-company-account-for-prototype-development-costs-may-2-2013/), or you need the speed and peace of mind that a great one-stop shop of services provides, NPI Services is your innovation resource. Call NPI Services today!