New Product Introduction (NPI): What is your target?

Businesses commit high-valued resources (people, cash and windows of opportunity) to develop and introduce new products to market. Unfortunately, in many cases, product development is well along before attention is applied to whether the NPI process is appropriate for the product and the targeted market. This is particularly true of products where the product definition was developed without broad based customer involvement known as the "Voice of the Customer (VOC)".

By not engaging sufficient customer or "market" input the NPI process is starved of critical information that is needed to determine what "acceptance" criteria the product will have to satisfy to be a success. This can be a critical problem for a company that has traditionally designed and developed products to an acceptance criteria defined by a narrow (often just one) set of customers and then decide to convert an existing product or technology for use in a larger market. The normal NPI process used for this new endeavor will fall short of what is needed. It needs to reflect the condition that many customers will determine the success of the product and not just a few or one.

In every case the NPI needs to recognize the unique constraints of the market (customer community) that the product is intended to serve - one customer or many. An NPI process designed to successfully guide development of a product to meet or exceed customer acceptance criteria is radically different than one that will need to measured by market acceptance. The precision of the effort to determine market acceptance into a design criteria by an anonymous customer is a critical and challenging task. The customers voice has to be represented (and defended) in the same way that a detail specification in a customer acceptance criteria is adhered to in order to deliver the product. Internal resistance to accepting external acceptance factors needs to be dealt with effectively or the success of the product will be compromised.

An extreme example of this problem involved a team of extremely talented engineers developing a software tool for a market unfamiliar to anyone on the development team. Developing the product was looked upon as solving a difficult problem. When the product was released the response was far short of what was expected.

I was asked to look into why the product was struggling and discovered that the product specifications were developed without any involvement from any users. I scheduled several meetings with "typical" customers and the feedback was valuable - but too late to save the product. The product did do what it was designed to do, it solved a critical problem, it was recognized by customers as a technical achievement but it did not integrate with the work flow of the user so that they could view it as an inline productive tool. The end result was that the product was withdrawn and the team dissolved.

Could this have been averted? Yes! Surveying customers ahead of time to determine how they would use such a tool would have revealed the critical work flow integration requirement that may have resulted in a successful product or possibly a decision to go in a different direction.

The moral to the story. Know your target audience. Make sure they are represented throughout the NPI process. Invest in a sold NPI process or spend more time (and money) later trying to get the product right, in front of the customer, once it is in the market.

Product Customization - Boom or Bust

A challenge that many companies (small & large) wrestle with is the issue of product customization outside of the standard features that allow some form of user customization at order configuration. This often requires an investment in engineering, new documentation, quoting an engineering change charge and/or new product price and tailoring the manufacturing/build/test cycle to deliver a quality product - on time.

Why is this a difficult question? Sales rushes in with an order from a valued or targeted customer to buy the standard product except for . . . In the desire to either keep the customer, add a new customer or (more probable) meet sales objectives the order is accepted. The question is whether your order process is designed to operate effectively in this mode.

• Is the sales process sufficiently capable of capturing the necessary specifications without committing an engineer to an onsite meeting with the customer?
• Do you have engineering change staff (often called sustaining engineering) or will you need to siphon off valuable engineering time from engineers who are committed and personally invested in the design of new products?
• Do you have a production build group that has the flexibility to efficiently do "one of" builds?
• Is your accounting process setup to accurately collect the cost of this type of business so that you know where your profit (or loss) is occurring separate from your normal production business?

The answers to these questions are not good if customized products are not the focus of your business model. Too often the end result is business that you wished you had not taken or "bought" which is more likely the case. The goodwill with a valued customer is put at risk, the future with a new customer is questionable, and your profit margin is unknown if the customized product does not have the same product quality and performance your standard products have.

More significantly is the lost opportunity of the organization to keep valuable (and hard to find) strategic resources applied to the future of the business. One hour (you wish it would be just one hour) of engineering time redirected to a "one of" customized project is not just one hour out of the day as it is difficult to get back into the flow with where the project was let alone the impact on engineering morale when they are used for a project like this.

Consequently the promised upfront gains of an organization redirecting their business model to take on a customization project are not met. A common result of this decision is:

• profits performance is compromised,
• customer relationships are strained, and
• strategic direction for the future of the business is put into limbo.

The answer? Stay the course and do what you do well and avoid the temptation to be a marketplace super hero!

Another Government Mandate To Take Care of You

A reaction to the east coast snow storm this weekend where there were several incidents of plane travelers strandede in planes for extended periods of time was for the Department of Transportation to order airlines to let passengers off stranded airplanes or face fines. The fine would be $27,500 for each violation over a three hour limit. This would total $1,375M for a commuter plane carrying 50 passengers or $5.5M for a larger plane carrying 200 passengers. Is this reasonable? What is our government doing to us in making this mandate?

It is true that there are a number of unusual stories where, in specific instances, mistakes were made and passengers were inconvenienced and kept for an unusually long time. However, for the number of trips per day that are taken by air travelers in this country these examples are few and far between. THis doesn't make it right but this new mandate will have significant ramifications to the relative low cost of air travel that the flying public has become used to.

Why will cost go up? Unfortunately the airlines are not omniscient and will have significant difficulty predicting when disastrous snow or weather conditions will create a situation where it will have a "stranded" passenger condition. This occurs when the planes themselves either cannot move on the ground (ice and snow) or cannot land at their destination such as when airplanes are grounded due to fog resulting in too many¨aircraft for the existing facilities to handle. The latter occurred to me flying from Denver to Seattle. Seattle closed while we were en-route and the decision was made to land in Portland and wait until landing conditions improved. We waited 6 hours on the ground partly due to waiting for conditions to improve and then for the few jetways to be available to land passengers. We were in a DC-10 at the time and Portland only had equipment and staff to handle three of jetways at a time and many aircraft were ahead of us.

Consequently we will have airlines faced with enormous fines if they cannot get passengers off the planes within three hours. How many extra staff will need to be on hand in the event of a weather or other incident that could "strand" passengers. What about baggage? Security is not too keen on passengers and baggage being separated particularly if when they re-board the plane the same passengers are not on the plane. What happens if the pane is at an airport where they do not have an office and use other facilities. Will the other airline or operation have liability if it does not have the crew and equipment to meet the need even if the primary carrier has the plane ready to let the passengers off? What an enormous problem and a great opportunity to finger point.

In this instance we have a government bureaucrat without any financial responsibility for the outcome making a decision so that we can all feel better. The traveling public used to be capable of letting an airline know when its service level was bad by avoiding it. The airline either corrected its ways or went out of business.

Who will absorb the cost of this mandate? You will! Will we still have isolated instances where conditions beyond the control of the airline result in inconvenience? Yes! But we will do it at a higher price because of mandates and fines imposed by an ever increasing governmental role in the lives of its citizens and free enterprise.

Do you feel better?

Is Your Organization Ready to Sell?

I recently considered (a pre-January 1st vow) expanding my workout schedule to include weight training in addition to lap swimming to address the rapidly escaping muscle mass that age brings in later life.

I regularly pass a well known gym in the area and thought that it would be convenient using that location for my new workout. I stopped in one morning to get membership information. The lobby desk was unattended so I waited a few minutes until someone returned. During my wait I scanned the counter looking for a brochure that might answer my questions.

I had visited the gym web site the night before but it did not show any schedule of membership rates or packages. A young woman soon returned and I asked to see a club brochure to understand what package/price would best fit my interest.

The woman looked at me sheepishly and said that they did not have any brochures and that sales people came in later in the day - it was 8:30am. I then asked her what the typical prevailing prices were for a membership. She quickly said that she did not think she could do that as everyone was different.

I was getting more confused and was hesitant to ask another price related question. She stood looking at me and seemed to want to leave it at that. So I saaid thanks and said goodbye. It was obvious that no one in ownership/management cared enough to create a customer experience encouraged membership.

It was obvious the woman at the desk had not been prepared for a sales scenario. She did not offer a tour (while she gathered her thoughts on how to address the price question), she did not get my contact information, she did not provide me with a contact name to reach later that day, she was not coached on how to keep a prospective member in the door until they made a buy decision or secured a commitment to meet or connect with someone who could.

• Is this the case at your company? Of course you are prepared to sell - aren't you - but what about your front office? How do you score on the following check list?
• Do you have an up-to-date price list of your products and services to answer customer inquiries?
• Do all people that have contact with customers know how to triage interest from a customer so that they do not get away without taking them to the next level?
• What is your policy on returning inquiries from a customer?
• Phone calls - within the hour or within thee promised period on voice mail.
• Fax - same day or no less than 24 hours.
• E-mail - same as fax or less.
• Are you on time with appointments?
• If customers come to your office for appointments, are you on time. If they have to wait are they notified before the appointment time passes, and are they kept abreast of delays as the time progresses past the scheduled time (i.e. waiting for your schedule doctors appointment)?
• Do you sit in on customer contact calls or visits to gauge the effectiveness of your sales training?
• How regularly due you audit your sales process and materials?
• If you use a web page (server side database) to collect customer requests information is it monitored regularly and are they responded to within the promise response time?
• Is your web page accurate, are the phone numbers correct, are the contact e-mail addresses current?
• If the customer request escalates into a quote is it processed in a timely manner with timely follow up to move the quote into an order.

Be ready to sell! A casual attitude toward a sales opportunity does not differentiate you in the market place and lead to a revenue opportunity. In the case of the gym above, I had heard that they were have trouble with membership. I thought it was due to the economy but now after experiencing the short comings of their sales process, their revenue problems could be greatly eased if they had a better "sales" attitude in their organization. How about your organization?

Bringing Order to Chaos

We have all been there! Taking over a company or group that has lost its way or suffering under market conditions that has overwhelmed it. Or, a major customer relationship erupts requiring immediate triage to stabilize and return to a normal business relationship. Or, you are blind sided by a third party trying to disrupt your organization by hiring away key employees affecting product development, sales and operations, or undercutting you position at key accounts. What do you do?

Your plan of action is a result of a quick but careful assessment of the conditions that exist. Many contradictory factors may be in play: Lack of organization and individual confidence, trust issues (mistrust, blame, defensiveness), break down in business discipline, poor communication, poor vision execution, etc. The effectiveness of your action plan is based on how you organize and prioritize what you do first, second and so on!

The following is a five-step process that I have used successfully to deal with severe organization dysfunction and poor performance:

• Focus Employees On What They Can Control - The biggest distraction that I find that needs to be contained is the disruption that things people cannot control causes. Uncontrollable events can be very distracting to many employees and they are far more productive and satisfied when they can offload the unexpected and uncontrollable issues and Focus on What They Can Control.
• Establish a Crisis Path - As a sizable part of the organization returns to processing controllable events there needs to be a timely response to the uncontrollable. Every organization has people who are more adept and comfortable dealing with uncontrollable problems where boundaries are poorly defined. They thrive on solving crisis. These people are capable of rising to the occasion in creating and developing solutions that solve tough problems in a timely and effective manner.
• Establish a Horizon - A dysfunctional organization has lost track of what it is working toward. It may be difficult to target a long term goal right away. Daily (or in more severe cases hourly) goals or targets might be necessary at the beginning to measure progress and accomplishment for the organization. A sustainable track record of attaining daily goals will lead to increased confidence in setting longer term weekly and then monthly goals.
• Eliminate the Root Causes of the Uncontrollable - As the organization begins to redirect itself toward a successful direction and uncontrollable crisis are contained; resources need to be applied to eliminating the causes of repetitive crisis. Possible reasons for this condition are:
• Poor quality that is either occurring in the organization or by a supplier in the supply chain.
• Critical business processes that are not being complied with.
• Customer communication on commitments and expectations has broken down leading to an unrealistic demand on company resources.
• Honesty, Transparency and Communication - Through all of this it is imperative to be as honest with employees and customers as possible. Ongoing urgent or crisis situations breeds skepticism. Telling the ruth is golden over telling people what they want to hear. I have had amazing response from employees and customers alike when I present the truth about a situation rather than using double talk or worse - delay and deny - to deal with a problem.

Are these the only steps you can use to bring order to chaos. No! These five-steps have worked successfully for me in laying a foundation of stability in addressing severe organizational dysfunction in a number of management assignments in my career. Some of you may have circumstances that required a different tact and I would certainly appreciate hearing from you on what worked best for you.