Published In The Leader’s Edge (American Management Association) February 2008 Linking New Product Development to Strategy By Gary Get and Pedro do Carom Costa Many companies implement Stage-Gate or other forms of new product development processes that promise to accelerate growth while managing risk. Few, however, are satisfied with the output of their efforts. One potential reason for their dissatisfaction Is the disconnection between their organization’s new product development (NYPD) and strategy development processes.
Without this connection, product development pipelines become stuffed with incremental extensions of existing products but void of breakthrough concepts. Is this your company? Ask yourself: ; Is it easy for your colleagues to justify the strategic alignment of their new product concepts? Between Apple’s new product pipeline for pods and Its overall strategy. Gary Get is a California-based Managing Director and Pedro do Carom Costa Is the Iberian office Managing Director of Strategies. Strategy and Innovation firm. Gary works with clients in industries from orange juice to computers, and from wireless ammunitions to insurance on resolving their most significant business strategy, corporate growth, and customer and channel management issues. Pedro helps clients architecture and deploying industry revolutions that challenge the status quo and create opportunities for growth. For more Information visit www. Strategies. Com or email them at ggetz@strategos. Com and pccosta@strategos. Com.
Imagine that you were a top executive at Apple at the turn of the millennium and that you were presented with the opportunity of developing a Macintosh-only digital music player. Would you have devoted your company’s top engineers and designers to this reject? If you say no, you are not alone. On the surface, a Mac-only anything was going to be a small opportunity, and MPH players were simply not core to computer makers. Therefore, most seasoned managers would also have said no. ; Does your organization consistently fall to provide adequate funding for longer- term opportunities? Does your organization reject many ideas because they are too risky (no one in the industry is doing anything like it) while at the same time rejecting cores of others because they are not different enough (the field is already crowded)? By now there Is no doubt the Pod family of products resurrected Apple’s fortunes by transforming the company from a niche player In personal computers to a market maker in consumer electronics. Today, no one would question the brilliance of the strategy.
But when Apple unveiled the first generation pod in 2001, few could foresee pod’s revolutionary impact on consumer electronics, music and the cell-phone industries. This was evident by looking at the postings of a Mac online community on he date of the pod unveiling (October 23, 2001). The reactions were universally something more. ” ; “No! Just what the world needs, another freaking MPH player. Go Steve! Where’s the Newton?! ” If you answer yes to any of these questions, the linkage between your NYPD and strategy development processes is probably broken.
Before we talk about how to fix the broken linkage, let’s first review what success looks like. Take, for example, the tight connection ; “What a load of tripe! Gee! An MPH player with a HAD! How original! Kind reminds me of a JUKEBOX I once knew… ; “This isn’t revolutionary! I still can’t believe this! All this hype for something so ridiculous! Who cares about an MPH player? I want something new! I want them to think differently! Why Oh why would they do this?! It’s so wrong! It’s so stupid! ” Fortunately for Apple, that’s not the whole story.
The initial pod and tunes were Just the first step in its ambitious “Digital Hub” strategy, where the ultimate goal was to allow O Copyright 2008 Strategies. All rights reserved. Users to have all of the entertainment content they want accessible to them whenever and wherever they want it (see Figure 1 for a hypothetical illustration of the Digital Hub strategy). With this strategic perspective, the Macintosh-only digital music player was therefore a low risk and logical entry into this robust new business space where Apple had limited knowledge.
The first few generations of pod and tunes were learning opportunities for Apple. From there Apple extended into the array of products we know today. Retrospectively, the product roadman probably looked something like the chart below (Figure 2 – Retrospective Illustration of Apple’s Digital Hub Product Roadman). Obviously, with the benefit of hindsight, the reconstructed product roadman is quite robust, and the 2001 version would not have been this complete, as the specificities of later products were based on the lessons learned from their ancestors and older siblings.
Figure 1 – Hypothetical Illustration of Apple’s Digital Hub Strategy Specifically, while great design and ease of use have always been a core value and a key competence of Apple, early lessons from the first few generations of pod and tunes helped Apple refine its overall strategy. One of the other key lessons Apple learned was how to generate consumer buzz. When launching the first three generations of ‘Pods, Apple’s marketing efforts were centered on touting the expanded array of functions and features (or WHAT it could do).
Instead, the buzz came from the slick click wheel (or HOW it’s done), as early owners were busily sophisticated technologies with coolness generated consumer buzz. So it painstakingly built nifty ways for performing ordinary tasks in later editions of everything, from scrolling Figure 2 – Retrospective Illustration of Apple’s Digital Hub Product Roadman Another key lesson learned was the need to integrate content distribution into the overall offering. The early version of tunes leveraged a third party provider for Internet radio services, and the pods used Mismatch for connecting Windows- based computers.
Then, tunes 4. 0 introduced a seamlessly integrated offering from shopping to content management to listening, miniature pictures of album covers for browsing the music library to “Jiggling” icons when customizing the home-screen on an phone. And this helped launched Apple into a music industry powerhouse. So, how do you fix the broken linkage between your new product pipeline and strategy? Step One: Make sure your strategy is discriminating and informed by actionable opportunities.
