New Product Development
I remember the engineering days when I was able to build Apps and Websites for others I always thought why Cant I build something for myself? Why not a startup? But then I realize startup is not just about building the Product from an Engineering perspective. Looking at the Business Perspective is more important. So here I am writing down learnings from a course from IIM Bangalore on Product Development.
Decisions taken at the early stages can have a major strategic and operational impact on the success of the new product when launched.
- How bad decisions at early stages can restrict the range of customers that find it very suitable.
- The cost of late design changes is high. If the design change is done at the production it is even higher. Hence it is very important to revise the design and plan the design before the launch of the product.
Why Does Business Model fail?
A good business model requires articulation of how to make the product/service and how to deliver that product/service at a reasonable cost to the target customers.
- Why do existing some business models fail?
The current business model may not work for the new Product because the Parameters that were considered while making the Business Model has changed and no more should be considered. So it is important to first analyze if the existing Business Model should be considered or a new one shall be made.
Business Models can be analyzed on the following Test:
- Narrative Test and Numbers Test
Ask the Following Question while making a Business Plan
Business Model Example: Uber Taxi Service
Let’s look at an example of a business model. Let’s look at the Uber taxi service business model.
How is Uber better than call taxi service?
Uber connects customers with drivers who are very nearby and who can reach them fast. Customers have to wait less and the driver’s distance is also optimized. Uber is adding Value to both the Stake Holder using this Business Model.
How does Uber create value through this business model?
Uber's business model increases efficiency and lowers the cost for the drivers thus increasing their income while providing for fast availability of cars which is very valuable to their users. Uber raises prices during taxi shortages to get more drivers this increases car availability and builds the market supply while others do not get any cars at all during such a shortage. So while the customer may face a higher price during the shortage it at least ensures that the customer gets a ride whereas the other suppliers who are not overcharging may simply not be available when there is a shortage.
So overall, even though it seems like Uber is overcharging in a shortage situation it is actually giving a better service to its customers by bringing in more drivers who are willing to drive at a higher price but were not willing to drive at the lower price.
Business Model Vs Business Strategy
Developing Mission Statement
The entire process of managing a new product process starts with developing a mission statement. In this section, you will understand how a mission statement is developed for a new product.
Mission Statement involves product description, key business goals in terms of profitability and market share, identifying a primary market for the product, identifying a secondary market, assumptions, and identifying the stakeholders.
Product Description
Key Business Goal -> Reduce Time to Market and Aligning New Products to the Market Needs
Primary Market & Secondary Market -> what are your target customres?
Who are the Stakeholders for the Products?
While adding a new Product, a company must take several decisions regarding-
- Brand
- Market
- Pricing
- Cost
- Operations
When you introduce a new Product, you must focus on several dimensions and how the current strategy for the old products can be used for the new Product.
Project Management: Product Development Funnel
Product Development Process- Concept Generation, Concept Selection, Product Design, Development, Prototype Testing, and Product Release. Maximum flexibility is at the beginning of the project. As the project evolves, the funnel narrows. Start with a broad Funnel so that there are a lot of ideas to be evaluated.
Stage Gates Management
Stage gates on Product Development Funnel cover the following:
- Product Development activity in stages- Idea Generation Stage, a Feasibility check, Business Capability, and Launch Preparation
- Effective Management of Stage Gates
- How to Increase flexibility in Product Development?
Use Technology that allows low-cost and Fast Iteration. Keep Viable Backup Plans in Place and Use modular product structure.
These are few points that should be noted for a New Product Development Phase. There are some other Parameters as well that should be considered like the Customers, Product Strategies, Design Thinking, and organizing Products!
Have you launched a Product from 0? What was your strategy? Share the link of the product in the comments :)
