7 Reasons Why Your Research and Development Is Falling Short
Common Product Development Mistakes to Avoid and How to Steer Clear
Several years ago, after doubling down on our investments, running wild with our tests and sprinting through patents to make sure we would be the first to market, we were finally ready to present our new technology to our target customer – a major global airline. After spending $3 million developing what we thought was a ‘game changer,’ we sat down at the table awaiting their response to our new technology. After a short pause, they said it: “This is interesting… But it’s not one of our top 50 problems.” Humiliated, the next day we killed the project.
In today’s marketplace there is ever-growing pressure on companies to remain innovative and to bring new products and services to customers. A successful research and development campaign takes careful planning, intelligence gathering from the marketplace, disciplined decision-making and a willingness to invest.
In order for your research and development efforts to be successful, however, your objectives need to be focused and must target your “big bets.” But how do you know where to invest in product development? What are the critical resources you need to effectively develop new products? How do you know when you’re getting off-course? Here are 7 common product development mistakes you’ll want to avoid as well as tips to get your R&D back on track.
Tip #1: Shying Away from Investment
Let’s start off easy. Research and development work in any organization requires funds. Understandably, these funds are needed to acquire materials, build prototypes, conduct trials and studies, and to pay the wages of the employees working in R&D. Many companies set a target of around 3% of sales to invest in R&D, but this number can vary widely across industries, so you should allocate an amount that works best for your organization.
Regardless of how much you may choose to spend, however, it’s important to acknowledge that you aren’t going to get anywhere without investment. Further, while you certainly want to allow for experimentation, a majority of your funds need to be concentrated around your “big bets” and projects with a high probability of success.
For instance, if one were to invest $100k into 100 different projects, that leaves about $1,000 per project – not a value that is likely to get you very far anywhere. By contrast, if you invest that same money into your top 5 product and technology ideas that hold the best market potential, the $20,000 average that each project may be enough to move the needle.
When evaluating your investment:
- Allocate a basic level of funds for general exploration and experimentation.
- Prioritize projects based on probability of success.
- Establish an annual project plan with goals to determine the necessary investment for each of your ‘big bets.’ This ensures you get real results and focus on a target.
Tip #2: Lacking the Ability to Quickly Prototype and Test
In virtually any technology or product development realm, there is always a need to prototype and test ideas. As technology leaders responsible for the development of new products, we need to provide our teams with access to the right equipment such that we can test and prove theories and ideas. The active word is access.
The idea here is to “fail fast.” Being able to quickly test ideas and disprove concepts to avoid wasting time is just as important as a successful test that validates your design.
This is not to say that we should invest all our money in a fancy 3D printer for every office, or spend all of our cash reserves on a special piece of machinery that we will only use in rare circumstances. But it does mean we should invest wisely in new equipment as well as provision time and capacity within our standard production to run trials and test pieces.
Alternatively, if you happen to work in a smaller company, you may want to consider establishing strategic partnerships to share the cost of capitally intense equipment with others.
To increase your speed and ability for prototyping:
- Develop a partnership with a local laboratory who can quickly test and study your product concepts.
- Allocate dedicated cells or factory space for building prototypes that won’t compete with standard production.
- Create special processes that allow product developers to work swiftly and not be limited by robust production protocol.
- Create isolated teams dedicated to prototyping to ensure sufficient focus on product development.
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Tip #3: Lacking a Commercialization Strategy
As illustrated at the very beginning fo this article, the next common mistake product developers make is chasing an idea that lacks a commercialization strategy. While great ideation environments will not limit the pursuit of ideas, any product or technology you develop should at some level be measured against the backdrop of generating profit.
Beyond the traditional way of selling the product in the open market to a customer, there are a number of commercialization strategies that may work for you. For instance, you may want to consider licensing your special process or technology to others in exchange for a fee.
Further, you may wish to develop the technology and sell the rights outright to another party for a profit. Or you may want to take the technology or product you develop to enhance or compliment another product you already offer in the marketplace.
The takeaway is simple – when it comes to your R&D work, remember that at some point, you will need to commercialize so make sure you don’t overlook that. Great technology without a market won’t get you anywhere.
Here are some questions to help test your commercialization strategy:
- What need in the market will this product fill? What is the best way to fill that need, using this product?
- What problem does this product or technology solve?
- Why is this product able to gain market share?
- Who is the target customer and do they have alternatives?
- How will your customers buy this product?
- Is there a difference between the user and the customer?
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Tip #4: Rejecting Ideas That Seem Wild
When the iPhone came out, I remember thinking that there was no way I would want one. “Why do I need it? I already have an mp3 player and a phone. Why do I need my phone to play music?” Today, like everyone else, my iPhone is my gateway to the outside world.
Great technology and game-changing products are the result of new ideas and the pursuit of creative solutions. And to borrow the cliché, there is no such thing as a bad idea – sometimes it’s just about timing.
Be sure to listen to ideas as they present themselves, and do not be too hasty to brush them aside if they may be a little different, or unusual. What may seem like a silly idea, when afforded the chance to mature and be combined with other ideas, may lead to your game-changer.
Even when some ideas may seem off-the-wall, it’s always good practice to document them in some manner such that you can to revisit them in the future.
To better incubate your ideas:
- Create an “idea bank” where ideas and concepts are stored. Regularly review them with a cross functional team.
- Test ideas and concepts with key clients or target customers.
- Avoid incremental thinking. Just because something doesn’t seem like the logical next step doesn’t mean it can’t be.
Tip #5: Developing Products Outside Your Core Strengths
Your R&D should maximize and be fueled by your expertise and special skills.
There is one caveat to Tip #4 – we need to remain true to what it is we are good at. In other words, align your product and technology development work to your core strengths.
For instance, if you are a software development firm, suddenly trying to shift gears and apply your software expertise to the development of a new type of flat screen TV display is unlikely to work in your favor.
Certainly, if you believe there to be a strong market trend that warrants you step outside your comfort zone, you should pursue it. However, don’t dismiss what it is you do well. If you are stepping outside your normal sphere, bring in the necessary expertise or hire an outside firm to partner with rather than trying to do it organically.
To remain true to your strengths, consider:
- Conducting a SWOT Analysis to better understand relevant market opportunities.
- Performing a competitor analysis to understand how competitors are growing and identify how you compare.
- Remaining disciplined about your business model. Build a product technology roadmap to identify a natural product evolution.
Tip #6: Failing to Separate Day to Day Projects from Your R&D
As mentioned above, many firms allocate approximately 3% of their sales to research and development activities. This is very small in comparison to the day-to-day activities that generate sales and cashflow. Thus, since R&D is typically so small in comparison to the main operation, many companies will often defer R&D efforts in support of the day-to-day.
While this tendency is understandable, it is extremely disruptive to conducting research and developing new products. R&D work needs just as much dedication as your normal operation. Further, robbing resources from your research and development every time there is a spike in customer orders is only going to hurt you in the long run.
To ensure you give R&D work the support it needs:
- Create a dedicated team, with representation from all functions, within your organization to focus on new product development.
- Separate the business metrics of your operations from those of the product development team.
- Isolate the product development team’s responsibility from your normal operation to ensure they remain focused on the R&D activities and don’t get pulled into your operation.
Tip #7: Unwillingness to Kill Bad Bets
Our final tip for avoiding common product development mistakes goes back to our story at the beginning of this article. Admittedly, there was skepticism. Internally, there was uncertainty if the technology was really useful to our customers. Discussions of killing the project were had, but stronger voices were lured with the potential of a breakthrough.
As managers of product development and research teams, we need to have the courage and willingness to put bad projects on the shelf. A healthy product development environment promotes ideas and encourages creativity. But we all know that not every idea will lead to the next iPhone or the next Netflix.
When setting out on a given research project, be sure to outline at least a basic plan, schedule and target objectives. Doing so will help you objectively evaluate the data you generate and weigh it against market needs. Further, engaging with your target customers earlier is always better to avoid wasting time developing something the market doesn’t want.
Research for the sake of research can be dangerous and lead to a lot of unforeseen costs when there is no framework against which you can objectively evaluate progress.
Establish evaluation criterion, performance measures and milestones to guide your decision-making. If the project is failing short of your goals, it might be time to move on to something else. It’s not about pride or ego, it’s about having discipline.
To enhance the discipline through which you manage your technology pipeline:
- Clearly define objectives and milestones. At every milestone, evaluate progress and viability before proceeding.
- Predefine performance targets. If targets become unobtainable, pivot or abandon.
- Let customers evaluate prototypes. Abandon projects where there is a negative response, after understanding the reasons why.
- Avoid throwing good money at bad money. If a given project is not working as planned, avoid the tendency to keep throwing money at it.
- Celebrate learning. Not all ideas will pan out. Create a culture where learning through failure is a core principle.
Common Product Development Mistakes to Avoid
If you’re struggling to develop new products, or you are looking for a jumpstart your technology growth, take a long look at how you are going about new product development. The common technology development mistakes listed above can derail your R&D work, but are all easily avoidable and solvable. Just a few simple adjustments and you may find yourself in the middle of developing the next market disrupter.