New product development is an essential part of innovation. Every day, engineering and manufacturing organizations across the world are challenged with the goal of developing new products. It happens in new product hardware startups and large enterprise organizations. How to help these organizations to achieve long-term success? According to a study conducted by CB Insight, 97% of hardware startups fail to deliver their product on time and 70% fail to deliver their products at all. According to MIT, 95% of new products miss the mark. No business small or large is immune to these stats, which include unknown garage teams, high-profile hardware started founded by star-level entrepreneurs, and large well established manufacturing organizations and giant tech firms. We all know the stories of big failures and we have no idea how many unknown failures are happening in the world of hardware startups and manufacturers.
What is common for both startup and enterprise organizations? The immense pressure to deliver the innovative product in a shorter timeframe while maintaining quality and cost efficiency. I’m sure you’ve heard about “better, faster, cheaper” demand. The need to develop new products is common for 5 people startups and for Fortune 500 organizations. The reality in both cases is that NPD (new product development) requires speed, focus, team coordination, the closed loop between design, engineering, and manufacturing, solving technical problems, organizing inventory and supply chain, orchestrating business processes, and working with contract manufacturing and contract engineering companies.
Altogether it sounds like a complex problem that required business management software, product lifecycle manufacturing, enterprise resource planning, and many other tools that are supposed to solve product development and supply chain management problems. The reality is that most of these teams’ conclusion is that the work they do is too urgent and the process is too fast to think about the product development process and systems that can help them. The initial attempt of all these teams is “to cut it short” with Excel spreadsheets, emails, and data sharing and collaboration tools.
Seeing many organizations in this phase, I gathered many data points about typical aspects of how these teams are functioning and what are critical pain points for them to achieve success. It made me think about what would be the ideal software system to support hardware startups and enterprise manufacturing companies for their NPD (new product development process) work.
9 Common Characteristics of New Product Development Process
Here are collections of my thoughts after working with many small product development organizations, startups, and new product development teams of large organizations. Although the difference between small companies and large enterprises is normally huge, I found these teams are operating in a very similar way no matter if they work for a small startup or large enterprise. Both groups are equally ignoring data management, business processes management software, PLM, and enterprise resource planning tools and try to “cut it quickly” to make delivery happen fast. I will talk more about problems I can see it brings later, but meantime, let’s talk about common aspects of new product development.
Demand for Fast Product Delivery
The startup and NPD team is not a place to develop complex and well-aligned business processes. The market demands quick product turnarounds. Teams are looking for business models to deliver products fast. With technology trends shifting rapidly, the window of opportunity to introduce a groundbreaking product narrows with time. Delay can mean losing a competitive edge, or worse, obsolescence.
Iteration with Customers is Vital
Communication with customers is a core of modern business strategy. Modern businesses understand the importance of customer feedback. Instead of making assumptions, involving customers in the product development process ensures that the end result aligns closely with market needs and desires.
Complex Products, Remote Teams
Products today are more intricate than they’ve ever been, often integrating hardware, software, and intricate user interfaces. Additionally, the global nature of business means teams are dispersed across countries and time zones, adding another layer of complexity.
Communication is Killer
Given the dispersed nature of teams and the intricacies of products, clear, concise communication is paramount. Misunderstandings or misalignments can result in costly mistakes and delays. A successful launch of the product is key in new product development.
The Assembly Line: Prototyping and Purchasing
Prototyping has become an integral part of NPD, allowing teams to test and refine their ideas before mass production. Likewise, efficient purchasing mechanisms ensure that materials and components are available when needed.
Early Stage Cost Estimation
Financial forecasting, particularly cost estimation, in the early stages of NPD, is crucial. Without a clear financial roadmap, projects risk becoming too expensive or unfeasible.
Re-use is Key
Innovation doesn’t always mean reinventing the wheel. There’s immense value in reusing proven components or concepts, which can expedite the development process and reduce costs.
Re-use in Enterprise Context
For larger enterprises, leveraging an organizational component base is equally important. Shared resources or components across projects or departments can bring about economies of scale.
The need for speed conflict and the outcome of ignoring data management
While “cutting things short” is always tempting, I’ve seen how companies are struggling after they ignore data management discipline. I purposely say data management because PLM alone doesn’t solve a problem. A traditional focus of PLM is to manage CAD data and engineering change processes, leaving aspects of costing, inventory, and procurement to other enterprise systems. However, in a small organization (like a hardware startup or new product development organization of a large enterprise), they have no luxury to implement all these tools. Even more, using all these tools is quickly becoming a hurdle to the new product development speed.
In the conflict “speed vs data management”, the speed wins, but it comes with the high cost of Excel data management, manual inventory control, missed cost, delayed deliveries, and the failure to deliver on time. For most companies, time would be the most important thing. Very few companies (except some startups) will be concerned about the cost of prototypes. However, missing something fundamental that requires later rework, can kill the delivery timeline.
Is there NDP Opportunity for PLM Vendors?
The traditional PLM focus on enterprise companies, made them lose business of small agile firms and engineering organizations of large enterprises developing new products. PLM vendors provided a “scaled down” version of enterprise products usually focusing on some OOTB process support (release control + change management). Most of the companies did PDM, but in many situations failed to deliver even PDM since most of them are 20+ years old on-premise SQL-based vault management systems. Remote teams, distributed work and quick response is hard for them. There is very little that enterprise PLM products can do beyond the standard PDM check-in/out process.
At the same time, the complexity of new product development is skyrocketing. Complex mechanical shapes, electronics, and software, make these new product development projects hard to deliver. Distributed teams, the complexity of the supply chain, and inventory control for prototypes leave companies to use various disintegrated tools combined with Excel ware “stitched” together by home-grown solutions.
The problem above takes time, and resources and leads companies to mistakes and failures. This is an opportunity for PLM vendors to re-invent the way PLM for NPD is made, to focus on holistic data management, integration with design (CAD and software development lifecycle management) tools, and to support inventory and procurement processes for agile small teams and businesses.
Traditional enterprise software models focusing on well-established business processes organized enterprise resource planning, and product development processes using enterprise PLM tools, cannot make it. Traditional ERP software and PLM software hosted in the cloud cannot make it either because they missed the point of engineering to manufacturing integration. Cloud ERP alone and traditional cloud PLM tools alone cannot make it oo.
What is my conclusion?
New Product Development is undeniably a unique process. For startups, it’s often a make-or-break situation. They operate in environments where each decision could potentially lead to either roaring success or immediate downfall. Meanwhile, for established enterprises, NPD might seem like a detached process from the core operations, but it’s just as critical.
The intricate dance of managing engineering and production, especially when incorporating external entities like engineering contractors and contract manufacturing companies, requires dedicated attention and expertise.
Traditional enterprise Product Lifecycle Management (PLM) tools often struggle to meet the demands of modern NPD processes. They operate in silos and anticipate integration with other software systems (like ERP, MES, SCM), which is often an unrealistic expectation for many NPD projects.
So, how does one navigate the complex maze of NPD? Experience shows that a combination of agile methodologies, lean principles, and the right technological tools can create a seamless NPD process. The focus should be on flexibility, adaptability, and customer-centricity.
In a world where product innovation is the cornerstone of success, understanding and mastering NPD becomes not just a necessity but a competitive advantage.
Just my thoughts…
Best, Oleg
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital thread platform including PDM/PLM and ERP capabilities that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.
