By definition, projects are temporary in nature, require a skilled cross-functional team, and produce commercially valuable goods and services. Developing a new product certainly meets the definition of a project – perhaps, even, a new product necessitates multiple consecutive projects.
Project management is a collection of systems, procedures, and guiding standards that help teams and team leaders successfully accomplish the goals and objectives of their project(s). Innovation projects have a goal of commercial sales within a target market. Under the guidance of the Project Management Institute (PMI®), projects are associated with five process groups:
- Monitoring and Controlling, and
Key activities in the initiating phase of a project include constructing a business case and determining strategic fit for the innovation. Because the new product is in the early stages (an idea), the business case is at a rough order of magnitude (-50% to +100%). Ideally, a “back-of-the-envelope” calculation will reveal whether the idea is even marginally attractive from a financial perspective.
Second, strategic fit identifies the firm’s approach to its overall business as well as to innovation. (Read more about strategy at Making Sense of Innovation.) Firms may choose to be aggressive with new technology (prospectors) or may choose to focus on a core business with large market share (defenders).
They say planning should take at least the same amount of time as executing the project. New product development (NPD) efforts require a significant amount of project planning as well as planning customer engagement. From a project perspective, the innovation team should examine resource requirements (people, time, equipment, and money) necessary to develop the new product. From a customer standpoint, the NPD team needs to begin testing concepts and prototypes early in the NPD process in order to gauge customer interest.
All innovation teams work with limited resources. A well-designed project plan that accounts for adequate staffing and appropriate customer engagement will lead to a more successful development effort. Additionally, continuous customer testing and engagement throughout the life cycle of the product development effort ensures that needs are understood and designed into the commercial product.
Execution of an NPD project is perhaps more iterative than a typical construction or manufacturing project. Innovation requires establishing and maintaining deep relationships with customers and potential customers. NPD project execution will employ trial and experimentation as well as market research methodologies in order to ensure commercial success of the new product. In addition, traditional project management techniques are applied to the construction or manufacturing facility at the later stages of the NPD project.
Execution of the NPD project starts as early as the first market, technology, or product category is identified. Every new product project should be framed by a Product Innovation Charter (PIC) outlining the key deliverables and project boundaries (what’s in and what’s out of scope), as well as high level schedule and budget targets.
As an innovation project progresses, new knowledge regarding customer behaviors as well as technical feasibilities will inform the scope of work. Project execution is a busy time for NPD team members who must be properly organized to handle the complexity of the innovation effort.
Monitoring and Controlling
While an NPD project is being implemented, the project leader and upper management will be evaluating the probability of success. Market research techniques are crucial at this stage to verify and validate the new product concept.
For example, focus group testing brings together potential customers in a collaborative setting to gauge their interest in a product concept and/or to validate the functionality of a new product. Product use testing is also deployed during the monitor and control phase of the project management process to verify the new product works as designed and will leave the customer completely satisfied.
The purpose of the monitoring and controlling phase of work is to check that the plans and execution of the innovation project are on track. During this stage, there can be a substantial amount of iteration back to the planning and execution phases. A product should be thoroughly tested by real customers before it goes to market. Rework to ensure a strong design is far less expensive than launching a commercial product with little customer interest.
Closing an NPD project is not unlike closing any other project. The lessons learned review or post-launch review provides critical information regarding how the team worked and the effectiveness of the original project plan. A post-launch review should ask:
- What went right?
- What went wrong?
- What can be improved next time?
In addition, specific project data will inform future project schedules and budgets based on actual expenditures for the innovation effort.
Note that even if an NPD project is cancelled prior to commercialization, a post-launch review should be conducted. This information can guide the firm’s strategic decision as well as financial assumptions built into the business case.
Finally, project team members are released from the project to return to their functions as individual contributors or to be assigned to the next NPD project.
The Project Management Process
The project management process plays an important role in an integrated innovation system. Most specific deliverables and outcomes within an NPD effort are framed as individual projects making up the whole of the development effort. Using a structured process that emphasizes initiating, planning, executing, monitoring and controlling, and closing, will cause the projects to be fulfilled in an effective and productive manner to help deliver the commercial product successfully.
To learn more about project management as a tool for innovation, you can read Chapter 7 of “NPDP Certification Exam Prep” guide available at Amazon.
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