David V. Tennant - Product Development

What is contained in a business case and why do we need one? Before a company invests millions of dollars into a product, merger, etc., it needs assurance that the venture will be profitable, makes sense from a strategic “fit” standpoint, and will enhance a company’s competitive position. Table 2.4summarizes key topics usually included in (but not limited to) a business case.

Table 2.4 Business Case Contents.

Table developed by David Tennant

A note of caution: business cases usually have best case timelines and cost estimates. Many times, budgets, and schedules are assigned based on these estimates. However, these sometimes turn out to be unrealistic. Budgets and schedules should be refined with greater detail after formal approval during the project planning phase.

It is appropriate to note that investors and shareholders are generally risk averse. The business case is intended to provide a comfort level to decision makers; and to show that significant thought and research has been conducted to ensure the venture will be profitable. Companies that do not perform a business case for new ventures are taking unnecessary risks.

Someone from either department may serve as the project leader. However, the two groups generally have differing perspectives on priorities and timing which can lead to conflict.

Beyond the product, the marketing team is concerned with revenue, profitability, placement, and all of the previous topics discussed in this chapter. As a result, the marketing leader will be schedule-driven and concerned about containing costs. Remember, all of the costs of product development must be recaptured in the product’s pricing. Therefore, this can translate into a perception of impatience by other departments.

Engineering on the other hand, is focused on designing, testing, and delivering a product that is error free (a definition of “quality” by the way). By training and education, technical professionals have a tendency to downplay fast-tracked schedules and to a lesser extent, budget adherence. To the engineering leader, having a flawless (or “perfect”) design and manufacturing process is more important.

Consequently, the groups have differing perspectives and accountabilities, but are charged with coordinating their efforts to deliver a new product. Table 2.5shows these differing priorities.

Table 2.5 Marketing vs. Engineering Focus in New Product Development.

Table developed by David Tennant

Regardless of which team is leading the development effort, a certain amount of tension can be beneficial in forward progress. There will always be “give and take” in the design process. Figure 2.6, Product Development Process Flow, shows a sample process flow in the development of new products. This can vary between companies, but it provides a general sense that the development of new products is not a random series of actions, but rather, has well-defined steps with checks and balances along the way.

Figure 2.6 PD Process Flow. Credits: Diagram by David Tennant

The role of the product manager is to provide leadership to the project. This includes:

Ensuring the team has the tools, training, and support needed to be successful

Resolving conflict and building team morale

Coordinating the efforts of various departments working on the project

Serving as a conduit of information between groups

Serving as a direct link between the project team, executive leadership and external suppliers

Ensuring trust and a good working relationship between team members

Being cognizant of project quality, budgets and schedules

Ensuring all stakeholders are identified and key stakeholders are kept informed.

A product manager must be an active project participant and cannot ignore conflict, warning signs of failure, or the desires of key stakeholders. The role, whether from engineering or marketing (or any other department), is focused on managerial and leadership skills more than technical skills.

Although services can be thought of as a product, they must be marketed differently. When you buy a new computer or smart phone, you can look at it, feel if, and hold it; perhaps even try it out to see how you like it. If you purchase the product and don’t like it, you can usually return it for a refund or exchange.

Services are different. For example, if you provide accounting services to clients, it’s an intangible service. You cannot feel, smell, see, taste, or try it out. You may or may not get a refund if you’re unhappy with the result.

Like any product, one must obtain user input. What would a customer like to see in the way of customer service? Would guarantees of satisfaction make the product more desirable? What is the outcome if your client purchases the service (Benefit)?

Also, the use of data analytics can be useful. What are data analytics? Data analytics is a process to analyze raw data so that conclusions may be drawn from that information. In today’s technical world, a lot of the data can be analyzed using automation and algorithms. Data analytics can help manufacturing identify and remove roadblocks. It can help firms become more efficient in their business processes.

However, for services, it can also help a business understand their customers, and therefore improve their marketing campaigns, personalizing of their services and improve their products. This data can be collected from historical records or from customers directly. For example, a utility can pull up data from their customers showing electric use patterns, payment options used, and time of day peaks in electric use. This data can be segmented. From this data, new rates (a service) can be derived and offered to their customers. Other sources of data include companies in the marketplace that collect and sell data. Think about your web browser capturing you internet trail. They know when you’re most active (time of day), the types of sites you typically visit and what kinds of purchases you make online. For example, data analytics may be able to track and tell what music sites you visit, what topics you watch on YouTube (history videos for example), and what types of car accessories you like to purchase.

Services must have a different marketing strategy and data analytics can help a business hone their message, offer new services, help segment their market, and determine which online platforms would be most effective.