Why do 80% of New Product launches fail?
Loopbacks in Development
According to Harvard Business School, over 30,000 new products are launched into the market every year, out of which approximately 80% fail to meet their objectives. Any product development process must move through several characterised stages, including Concept, Planning, Design, Testing, Launch and, finally, Production. The process itself must flow continuously and smoothly, with duly defined deadlines and multiple points of control.
Product- and process-related decisions are usually taken before customer interests have been properly understood and the viability of the concept has been demonstrated accordingly. This will have a serious impact on the final outcome, aggravated by the absence of a deep understanding of the reasons behind the success or failure of previous products. Traditionally, problems associated with designed products are discovered late in the process, imposing loopbacks onto the development journey. This leads to an additional consumption of 50 to 75% of a company’s engineering resources, with the occurrence of recurrent problems related to quality, overbudgeting, delays in delivery, dissatisfied customers, and discouraged teams.
The 4-Step approach
The set-based engineering (SBE) methodology came into existence at Toyota, and describes four steps considered to be fundamental if your project is to position itself among the 20% of those that succeed, instead of the 80% that do not:
1. Know and fully define customer interests – for the design of new products, it is crucial to listen to the customer and combine the findings to create genuine innovation, responding to the actual needs of the market and not the behaviour of competitors.
2. Perform a viability plan – to relate customer interests with technical decisions that must be taken. Existing trade-offs between different customer interests are identified, with a clear visualisation of the knowledge acquired. Set-based decision-making optimises these trade-offs, by making use of the set-based knowledge gained from the collaboration with other teams in the process and reusing information from previous products.
3. Implement learning cycles – more often than not, knowledge gaps exist; this contributes to a lack of information on trade-offs allowing for the adoption of concrete decisions. In these cases, learning cycles comprising the following steps are introduced: study, construction of models/partial prototypes, testing and documentation of knowledge. The various tests are a way of allowing for the definition of a range of conceptual solutions that will work in practice, and in identifying combinations of factors and solutions that are clearly limiting to smooth functioning – these are unviable options.
4. Hold integration events – this involvers leaders in the process, and aims at achieving a sequential convergence of decisions that funnel goals and lead to the elimination of weaker alternatives. The ultimate goal is to select the alternative that best meets customer expectations and needs.
This is how your organisation can, just like Toyota, lead a Product Development process with a low volume of rework and inconsistency, and a very quick market entry. This allows for greater and improved: product and market understanding, communication and negotiation between areas and functions, knowledge sharing, and incorporation of quality into the product. The great challenge for companies today is to innovate continuously so as to generate profitable businesses and more growth opportunities. All of this aims to combine technology with the quest for differentiation and leadership.
#research and development
See more on Research & Development
Find out more about improving this business area