Did your company decrease its spending on new product development over the past 2 years? A lot of companies did, understandably, as they looked to preserve earnings in light of deep declines in top-line revenue. However, as we begin emerging out of the recesson, if you’re not re-charging your innovation plans you’re already behind the curve. Consider the following:
- Best-in-class companies strive for 30 – 50% of revenue in a fiscal year come from products launched in the past 3 years. This is a personal observation from clients and corporations I’ve worked for.
- A Deloitte study indicated that 70% of products will become obsolete in 5 years. This is especially true for companies who compete on a global basis, where buying patterns change more rapidly as information flows freely across borders.
- Consumer spending is expected to increase in 2010+, and most economists are projecting positive GDP growth in the US. As unemployment stabilizes and improves, consumers will likely feel more secure financially and will spend more than they did in 2009.
New product development should be an ongoing, iterative process for companies. However, if you’ve taken your eye off the horizon over the past few months, here are some broad questions for jump-starting your strategic planning process:
- Where does your company want to be in 3 – 5 years? Sure, this is so cliche, but a major economic downturn calls for this question to be seriously reconsidered. Ask yourself:
- has the competitive environment changed over the past 18 months?
- Have your customers’ buying habits changed due to the recession?
- Have substitute products emerged?
- Are your customers buying your products, or your competitors’ products, through different channels?
- Is your business model still sustainable?
- Is it time to enter new global markets? A lot has changed over the past 18 months; most importantly, the emerging markets continued to grow despite the global recession. Are there now potential customers for you in Brazil, Russia, China, India or the eastern European countries?
- Are there short-term incremental improvements that can be made to improve your products or services? These “low-hanging fruit” can yield huge dividends. Think about some of the incremental improvements that have yielded some of the most popular products of the last decade:
- the iPod and iPhone: MP3 players and cell phones existed long before Apple launched these products. Apple found ways of making these products more relevant to how people live and use these products.
- Wii: We all know that video games were popular before the Wii was introduced. Again, like Apple, Nintendo found ways of delivering a more realistic experience based on emerging technologies and a deep understanding of latent customer needs.
- Innovation isn’t just about new products; service and supply chain innovation are overlooked ways of differentiating your company and making your offerings more relevant to your customers. For example, think of how the internet has become an even greater part of peoples’ lives since the recession started. Has this created new ways for you to interact with your customers? Perhaps new, affordable customer service technologies have emerged online that can now be inexpensively implemented. Although they’ve been around for several years, think of how Awebber and Gotomeeting have made email marketing and webinars extremely easy to use and inexpensive.
With 2010 just around the corner, now is the time to be asking these questions and to be re-evaluating your company’s new product development plans. Best wishes and good luck!