Applies to
Microsoft Office Project 2003 Microsoft Project 2000 and 2002

Note  This article describes a Project template. You can download this template by clicking the link in the See Also list in this article.

Developing new products effectively requires a disciplined approach. This discipline comes from generating reliable data and reviewing it at regular decision points to reaffirm the organizational commitment to continued development of the new product. This template is designed to provide the framework for developing a new product using a disciplined approach that should increase the success rate for new product development.

Template design

This process can be used for minor product line extensions, in which case many of the steps can be taken quickly because reliable data is usually available, and the risks of moving to commercialization quickly are usually low.

The process should be used for major new products or product lines, which entail higher risks and uncertainty. New data generated during the development process can radically alter the course of action or the commercial viability of the new product. As new data is generated during the new product development process, it must be reviewed by key decision-makers and stakeholders to be sure that continued development of the new product is still consistent with the organization goals.

You should adapt this process to your specific organizational structure and products to help provide organizational buy-in. In addition, modifying the new product development process to make it more familiar to your organization will help you gain organizational acceptance and regular use.

Template organization

The template is organized into five stages plus a review stage after the new product has been commercialized. Each stage is followed by a decision whether to proceed to the next stage in the new product development process. These decision points force the organization to make conscious decisions and keep it focused on the critical issues. Such decision-making also helps the organization avoid activity that is not essential to commercialization of the new product.

It is strongly recommended that organizations also use a sixth stage, the post-commercialization review. This review allows the organization to learn how to use the process with increasing effectiveness on subsequent new product development opportunities and to build organizational support for the new product development process.

Each stage of this project brings together the best people from across the organization to assess the information generated and seek consensus on moving forward with additional resources (resources: The people, equipment, and material that are used to complete tasks in a project.), toward commercialization. If consensus cannot be achieved, team members should at least agree on which issues are the most critical to achieving success. These issues will guide the next steps in the development process.

New idea stage

In many organizations, a high percentage of new product ideas are generated within the research department. These ideas are based on the researcher's perception of opportunities for the organization. In some current management theories, the sales organization, which is most closely involved with key customers, should be a major source on market-driven new product opportunities. However, there is often a conflict between pressure on the sales organization to generate increased sales of current products at the expense of investing time seeking new product opportunities. Organizations must make a conscious decision about how new ideas should be generated from various parts of the organization.

A second area that will affect the source and quality of new product ideas is the balance between product line extensions and major new products. Product line extensions or variants on current products can often advance quickly through the new product development process because the quality of information about the product is high, and the risks and uncertainties are usually low. Major new products or product lines will take considerably more work, as well as longer cycle times, because the risks and uncertainties are much higher.

Organizations must consciously decide how to balance new product ideas in the portfolio. Normally there should be some short-cycle-time new ideas that can produce an evolutionary flow of continuously improved financial results. However, the balance must include some major new products that can build a more dramatic or revolutionary effect on profitable growth if they are successful. All parts of the organization must understand this balance, and the related allocation of resources (resource allocation: The assignment of resources to tasks in a project.), if personnel across the organization are to support and collaborate in decisions.

In the new idea stage, a decision must be made within one to two weeks, based on the best available information. The decision group may decide not allow the idea to pass to the preliminary assessment stage and may seek additional information before passing or rejecting the idea. A quick, formal decision is necessary to avoid diluting effort on noncritical issues, rather than on the most critical information needed to move the idea through the process. The new idea decision meeting also forces early cross-functional support for the new idea.

Advancing a new product idea into the preliminary assessment stage must include the following criteria:

• Strategic fit with the business direction
• Economics
• Uniqueness or potential for competitive advantage
• Market growth rate

Preliminary assessment

During preliminary assessment, the new product idea is advanced through limited experimentation and technical proof-of-concept. Data is gathered from available sources to confirm the idea's market, manufacturing, and economic viability.

During this stage, there must be an idea "champion," normally the idea generator. However, the champion must involve people from other functional areas to be sure the data from their areas of expertise is acceptable at the decision point at the end of preliminary assessment.

The biggest potential problem during the preliminary assessment stage is that the new product idea becomes focused on the functional area of the champion, for example, an idea that becomes a research project, focused on achieving technical objectives, when the critical issues might be related to marketing or manufacturing.

While the elapsed time for the preliminary assessment stage varies, it is important to advance to the development stage quickly. Preliminary assessment is intended to gather the best available information, and decide whether the new product warrants a significant allocation of development resources or not. Three months is a recommended target time for a new product idea to stay in preliminary assessment. This time limit forces a commitment to gather the best available data quickly and avoids a prolonged search for increasingly accurate data, much of which may be more appropriate for later stages in the new product development process.

A complex assessment may require more than three months in the preliminary assessment stage, but six months should be an absolute maximum before the decision meeting at the end of the preliminary assessment stage. It is better to hold a decision meeting, and decide to keep the idea in this stage until more data is obtained on one or more issues than to allow the idea to languish. In most new product areas, long cycle times allow competitors to find and develop similar products and greatly reduce the potential returns from your new product programs.

Advancing a new product idea into the development stage must include the following criteria:

• Product economics look attractive
• Key customers and competitors have been identified
• Simple written plan with milestones (milestone: A reference point marking a major event in a project and used to monitor the project's progress. Any task with zero duration is automatically displayed as a milestone; you can also mark any other task of any duration as a milestone.) for the development stage
• Selection of the right champion to lead the development stage

Development stage

When the decision is made to advance an idea into the development stage, there is a major commitment of resources as well as a cross-functional commitment. The written project plan from the decision meeting at the end of the preliminary assessment stage should guide this stage. Support from across the organization must be available to complete all necessary steps, because the new product is now part of the business portfolio. The new product is no longer isolated to one part of the organization under a functional area champion.

When the decision is made to move the idea into the development stage, the right project Champion must be selected. The selection of a champion should be based on where the critical issues are. If success depends on solving a technical problem then it may be appropriate to leave a technical manager in the champion role. If the critical issue is in manufacturing, then a champion might be selected from that functional area. However, it is imperative that the champion for the new product be capable and committed to the project.

When the development stage is completed, and the new product idea successfully passes into the pilot stage, the probability that the new product will be a commercial success should be at least 50%. The development stage is where it is most critical to develop good data on all of the factors critical to making an informed decision about commercializing the new product.

Advancing a new product idea into the pilot stage must include the following criteria:

• Customer response to laboratory or other small-scale prototype products
• Patent applications filed and other intellectual property issues resolved
• Marketing, manufacturing, and overall business plans written
• Leader and key team members for the pilot stage identified

Pilot stage

In the pilot stage, you should be able to produce quantities of the product large enough for a customer to evaluate on their commercial equipment. The pilot stage could be characterized by one of the following three scenarios:

• Pilot equipment is in place and can be used to product enough product for customers to evaluate on commercial equipment.
• Scale-up trials can be run on existing commercial equipment, which can shorten the commercialization elapsed time.
• Pilot equipment has to be purchased and installed, which lengthens the commercialization elapsed time considerably.

This template assumes that the pilot stage is one of the first two scenarios, with pilot or commercial equipment available for the production in the pilot stage. The critical outcome from the pilot stage is confirmation that the product can be made and will work in customer processes or by its users as appropriate.

Advancing a new product idea into the commercialization stage must include the following criteria:

• Customer commercial trial feedback and commitment to the product
• Manufacturing process plan established, including process and product specifications, required capital and equipment, staff, and operator training plans
• Logistics issues resolved
• Final business plan

Commercialization stage

When a new product enters the commercialization stage, the probability of success should approach 100%. Customer commitment or test market results should ensure that the product can be made and sold and that it is highly certain that the product will work for the customer use or intended market.

The focus in the commercialization stage is to implement the business plan developed as part of the decision at the end of the pilot stage.

Some process optimization and some product modifications or extensions are likely, but the fundamental processes and product specifications should not change dramatically. This is particularly true in capital-intensive manufacturing industries.

In some industries, such as software development, the risk of a radical and urgent reassessment of a new product in the commercialization stage is much higher.

Post-commercialization review

This stage is not a required step to commercialization. It is highly recommended as a component of product development. The review gives your organization an opportunity to step back and look at what was projected for a new product compared with what actually happened. This assessment of the economics, sales volumes, technical merits, and other aspects of the new product allow the organization to accomplish the following two goals:

• Learn what worked well and what did not, and learn how to improve the use of the process in the future.
• Gain increased organizational support for the value of the new product development process.

This post-commercialization review must be used constructively, as a learning tool to improve organizational skills in new product development. It will be detrimental if it is used to assign blame for the frequent surprises, setbacks, delays, or redirection that arise during the development of most new products.