Gate 2
Exiting the concept stage and going through gate 2 is much like going through gate 1, except that the expectations are that you will have more robust information than you had for the initial screening process. While you will not have detailed information, it is also expected that you will have a preliminary idea of the likelihood of product success, which could include input from the sales team and/or customers, a high-level financial analysis that shows potential impact to the organization's bottom line, and input from the development team as to the risk and probability of success from a technical/development perspective.
Stage 3 – Detailed assessment
The Detailed assessment is where the bulk of the VoC takes place, as well as the remaining up-front work before development resources are committed. As we have discussed, this is the area where many projects fail in the rush to move on to development and get something launched. Often, organizations are so excited to commence development after the Ideation and Concept stages that many of the Detailed assessment deliverables are short-changed or product managers merely check the box in an effort to get through the gate.
The Detailed assessment stage, if done correctly, is the largest, most difficult, and expensive part of the predevelopment stages. Typically, the Detailed assessment stage will have a number of deliverables from three different parts of the product organization, the marketing team, the engineering/project management team, and the operations or manufacturing team. These deliverables will build the business case and justification, product deliverables, capital requirements, costs, resource requirements, and plan. In the following figure, you can see at a high level the various inputs required to create these deliverables and move into the development stage, as well as the typical part of the organization responsible for each. You will also notice that a high percentage of these deliverables also require some form of customer input or VoC to provide a complete picture of the market, competition, product requirements, sales assessment, and financial justification:
Figure 2.2: Assessment
Let's look at each of the deliverables in this stage and how customer input and VoC can help drive product success:
- Competitive assessment: This entails a detailed look at the competition, and could include a SWOT (a list of each competitor's strengths, weaknesses, opportunities, and threats), as well as your competitor's product features, pricing, and channel to market. By leveraging your customers' input, not only can you help to provide the details for a detailed look at your competition, but you can also learn what it is in the competitor's offerings that they truly value and how much they are willing to pay for these features. Customers can tell you the things you should emulate that your competition is doing, as well as things you should discard and how best to attack them in the market.
- Market assessment: This looks at general market dynamics, including market size, segmentation and segment size, buyer behavior, and trends in the marketplace. While much of this information would likely be gathered from secondary sources, who better to talk about buyer behavior than the buyers themselves? Insight into the target market and the market dynamics that could affect profitability and competitive response can be invaluable. Also, if you are fortunate to have innovative and lead customers, oftentimes they can share their view of market trends and the future direction of the marketplace well before the mass market makes the move.
- Customer needs assessment: When one thinks about VoC, this is one of the areas one tends to think about. This area includes VoC research to determine customer needs, wants, and preferences. This typically happens through face-to-face interviews and/or spending a day in the life with the customer. The engagement results in an understanding of the customer's likes, dislikes, and trade-offs when choosing a product design and functionality. It seeks to quantify what the customer's value drivers are and what the potential benefits are that your new product offers, as well as what they are willing to pay for these new-found benefits. This knowledge also helps in understanding future positioning and pricing for your product. Details of how to use various tools and technologies for capturing the VoC will be explained in Chapter 4, Gathering Customer Needs for Your Product, while preparing and conducting the customer interview will be explained in Chapter 5, The Interview Process – Preparation and Chapter 6, The Interview Process – The Interview.
- Product requirements: This is the other area one thinks about when describing how VoC fits into the new product development process. The product requirements definition will largely be an extrapolation and combination of the information gleaned in the customer needs assessment with an eye toward the competition and market dynamics gathered in those sections. Some would say this is where the magic begins as successful product managers and business people are able to bring together the needs of the customer with an eye toward the current competition, technical possibilities, and market dynamics. More information about understanding the needs of the customer and market and turning it into winning products will be covered in Chapter 7, Understanding the Customer's Voice.
- Concept test: This is the last, but very important part of the market testing section of the Detailed assessment gate. Before we move ahead with full-blown development, you must be certain that the new product will meet the target market's needs and wants better than the competition and will achieve your sales goals. Here, we test the product as we have envisioned it from the previous analysis and get direct feedback before committing large development resources by using wood block models, stereo lithography, and now 3D printers to help test the physical attributes and design of products in the market. 3D CAD drawings can also be helpful to show more complex products. In the case of software products, it is typically relatively easy to create virtual mock-ups and show UI design well before large development resources are committed. Oftentimes, no matter how good the market research and VoC done by the organization, the product will not be quite what the customer wants, or it might lack those key differentiators that would lead a customer to buy it over the competition. Most of the time, this is no fault of the marketer, as it is very difficult to understand the needs of the market when the customer does not always understand their own needs, or cannot verbalize them in a way we can understand. By doing a concept test, we hopefully reduce the likelihood of a failed product and also address what so many customers have told us in the past, "show me the product and I will tell you whether I like it or not".
As you can see in Figure 2.2, this is often an iterative process as the feedback gathered in this stage can be fed directly back into the product requirement deliverable to iterate to the next concept. We will also talk about concept testing in more detail in Chapter 4, Gathering the Customer Needs for Your Product.
- Financial assessment: Here, we will use the customer needs assessment to understand the customer value of your new offering and what they are willing to pay in conjunction with the market assessment and competitive assessment to determine the initial pass at a market price for your new products. We will also look at the technical and resource requirements to understand the costs to the business. Putting everything together, we can generate a detailed financial analysis and determine NPV, IRR, and others.
- Business assessment: In this area, we will look at the strategic fit of the new product we have identified and how well it aligns with the future goals and direction of the company. While the business/marketing side of the organization is conducting these assessments, the other parts of the organization must weigh the costs of developing the technology, deploying the capital equipment, and coordinating the deployment of resources. The business rationale for the product is conducted by reviewing the customer input we received in the earlier sections, weighing the potential market acceptance and profitability against the investment required by the business to create our new product or service. This must also be considered with an eye toward the question of making this product versus making another product, or making this product versus making nothing at all.
The typical deliverables for this stage in the development process is a marketing/business document outlining the customer needs, market trends, competition, product specification, alignment with company strategy, suggested pricing and profitability, investment, and market window. Oftentimes, this is referred to as the marketing requirements document (MRD). In addition, the engineering/project management organization delivers the technical assessment and resource requirements and plan while the operations manufacturing team delivers the capital requirements and manufacturing or supply plan.
Assuming the needs are robust, the payback is favorable, and the product is feasible, the product will likely pass on to the next stage unless there are competing projects that are a better investment for the organization.
Stage 4 – Development
You've conducted all of the customer interviews, organized the data, and put it into your company's MRD or business plan template. You've passed through all of the gates leading into development, so you can stop focusing on the customer and start focusing on development. Right? Wrong!
Now is the time we find out just how well you have integrated your customer's voice into your development and how well you have paid attention to the message of your customers and the market. We will see if you have internalized the spirit of your customers, or if you simply went through the exercise of "checking the box" during the interview and MRD development.
In this phase, your development team is allocating resources and starting to spend a lot of money. Invariably, there will be areas of discovery and unforeseen roadblocks during this stage, which would have been hard to foresee in the initial assessments made by the marketing and engineering teams. Conversely, they will constantly be pushed by the organization (and you) to accelerate the time to market and reduce the total spend on the project to meet the original budget. And here is where the "perfect product" you had researched and documented begins to unravel.
A popular approach by the project managers who are running the development team goes something like this: "to have a successful product, you need to have three things—the feature set as defined by the marketing team, the timeline committed to meet the market window, and the original planned costs and resource...but you can only have two". More often than not, the organization is not likely to want to commit more resources to your project, so you will be stuck with having to decide which product features and attributes you can live without or change, or whether you can wait for the product and potentially miss the market window.
And so, this is where the customer's voice is just as important than it was in the assessment stage, but you will likely not have a customer as part of your development team (although it is not a bad idea to consider having a customer advisory council who could act as your product "board of directors"), and you must act as a proxy to the customer, making the daily decisions and tradeoffs to ensure the customer's voice is ever present in all of your team meetings. It is important not to fall into the trap of "what I think", but rather, "what would the customer think" as you are confronted with decisions about product features, interoperability, product look and feel, user interface, navigation, and so on.
And while the product is of paramount importance in this phase of the development, one must also remember that it is not the product alone that defines the customer experience. There are a multitude of other decisions that must be made with an eye to the customer, including product packaging, product documentation, channel strategy, and so on, ensuring that the total customer experience is a delightful one. The customer product is not the only thing that is developed in this stage. You will also need to develop the market message, promotion strategy, and value proposition based on the previous customer VoC that you've done so that you will be able to take your shiny new product out to the market and have the potential customers recognize the value it will bring into their lives and company. In Chapter 9, Completing the Circle – Using the Customers Voice in Your Organization, we will talk in more detail about how to wrap the customer input into your promotional process and market message.
The end of the development stage is a functioning product and market message that hopefully has met the needs of the market and will delight your customers, but you are not done yet, and neither is your customer's input into the development process, as we will see in the next section.
Stage 5 – Test (and Readiness)
Now, we have our shiny new product and desperately want to go show it to everyone and start collecting those massive revenues as a result of all of the hard work we have done, but there is still one more step and one more area of vital customer input.
In the testing phase, the development team will take the results of all their efforts through a battery of internal tests. Even if you have been performing test processes during development, if you are making a complex piece of hardware or a pharmaceutical drug, this can still be a long process to reach final approval to ship.
While the internal tests are necessary and critical to ensure the product will meet the original specification, there is another test to get one last and critical piece of customer input before launch. This is through a customer test or beta evaluation. In this stage, a set of customers are given a fully functioning product to deploy in their application or to use as part of their day. Most of the time, we will give the customer the final product for free or give him a reduced purchase price for his willingness to commit time and resources to review our product. Ideally, giving this product to some of the customers you interviewed in the Detailed assessment stage would provide a closed-loop feedback process, and you could measure how well your new product met the original customer VoC.
Whether or not you have the luxury of going back to some of the original customers, it is just as important to collect and measure feedback from the customer at this stage as the previous ones. As part of the Beta evaluation, it is recommended that the customer be assigned to review specific features and functions in their application as well as record their impression and feedback as to how well the product performed. A customer test plan should be constructed and agreed to by you and the customer before engaging a beta evaluation.
And much like the Development stage of the process, this would also be a good time to get additional customer feedback on such things as the packaging, the documentation, the market message, and other aspects of the product.
I know many organizations will try to circumvent this stage in an effort to get the product to market faster. Don't do it! It is far better to take a little extra time making sure the product is everything you believe it to be before launching the product into the general market. Nothing can do more to damage a new product introduction than a product malfunction or product recall because you rushed the product to market. Even if the product does perform as well as you imagined, sometimes, the market will change during development, and this is your last chance to get feedback before committing a considerable amount of resources supporting the marketing and sales functions. It is still better to cancel a product that is complete rather than take a product to market that the market does not need and will not buy.
Assuming you have passed all the internal tests and the beta customers are as delighted as you imaged, it is time to pass through the final development gate and launch your new product!
Stage 6 – Sales
Finally! All the efforts in collecting the market data and customer VoC, all the horse trading in getting the product through the development process, all the checking and double checking to make sure the product will meet the original needs of the customer and the market hasn't changed.
While we may be in the sales stage, customer input must not stop. We'll need to verify that the product is meeting the needs of the larger market, not just the limited set of customers we engaged in the testing stage. Continual customer feedback will tell us if "the dogs are truly eating the dog food" and make us aware of incremental improvements we can make to the product for the next iteration or release, ensuring that the product will evolve to meet the ever-changing market.
I would recommend you do not just go out on "sales calls" and try and push the new product you've just released, but also go out in the same spirit that drove you in the Ideation and Concept stage. Try and truly understand what the customers like, dislike, would change, or how they are using the product in ways you never imagined. Most of the time, this section of customer VoC can provide real breakthrough opportunities as the customers actually have something in their hands and are much better equipped to provide feedback than they were in the early esoteric stages.
Of course, the data collection process must be as rigid and repeatable as it was in the Concept stage, and we will discuss ways to make these customers' VoC engagement more meaningful in Chapter 7, Understanding the Customer's Voice.
Stage 7 – Post-Mortem
This is the feedback loop stage of a new product's development, and in my experience, one that is rarely done. All too often, the marketing team is consumed with generating sales for the new product and the development team is off to the next project.
The post-mortem stage is designed as a way for the product team to look back on the project and determine how well they executed it. Which things went well and which went poorly? Which methods or processes worked well and should be incorporated into the organization's DNA, and which things must we shed or change to make the next product development better?
Figure 2.3: NPD Continual Process
While we talked about the NPD process earlier and how it is a series of stages and gates, world class organizations view it more as a continual process that feeds into itself even after the project is complete, as shown in the preceding diagram. As we can see here, the additional data collected in the sales part of the process should be reviewed and codified in the post-mortem stage so we can see what worked and did not work in our development. This is key both for our internal learning, but also so that the rest of the organization can learn from our successes and failures.