06. Dec. 2017

Why do 80% of new product launches fail?

by Kaizen Institute United Kingdom

According to professor Clayton Christensen of Harvard Business School, over 30 thousand new products are launched every year into the market, out of which approximately 80% fail in their objectives.

Any Product Development process must move through several characterised stages, including Concept, Planning, Design, Testing, Launch and, finally, the so-called Production. The process itself must have a continuous and smooth flow, with duly defined deadlines and multiple points of control.

According to the experience gained by the Kaizen Institute in various organisations, product and process related decisions are usually taken before customer interests have been properly understood and the viability of the concept has been demonstrated accordingly. This is a serious situation impacting the final outcome - a tendency aggravated by the absence of a deep understanding of the reasons behind the success or failure of previous products. We know that, traditionally, problems associated with designed products are discovered too late, imposing loopbacks onto the development process. This leads to a consumption of 50 to 75% of companies´ engineering resources, with the occurrence of recurrent problems related to quality, overbudgets, delays in delivery, dissatisfied customers, and discouraged teams.

In concrete terms, what the KAIZEN™ methodology endorses is that this process consists in finding an innovative solution allowing for the achievement of business goals, the satisfaction of customer interests and the proper definition of technical specificities. In addition, it is essential to analyse and document lessons learned in the past, in order to prevent further loopbacks. Set Based Engineering (SBE) came into existence at Toyota, being a methodology that describes four actions considered to be fundamental for your project to position itself among the 20% of those who succeed, instead of incorporating the 80% who fail every year:

1.       Know and fully define customer interests

For the design of new products, it is crucial to hear the customer and combine the findings to a genuine innovation, responding to the real needs of the market and not to the behaviour of competitors.

2.       Perform a viability plan

A viability plan is carried out to relate customer interests with technical decisions that must be taken. Existing trade-offs between different customer interests are identified, with a clear visualization of the knowledge acquired.  A set-based decision-making optimises these trade-offs, using the set-based knowledge gained from the collaboration with other teams in the process and the reuse of information from previous products.

3.       Implement learning cycles

Frequently, there are knowledge gaps, i.e., a lack of information on trade-offs allowing for the adoption of concrete decisions. In these cases, learning cycles are introduced, passing through the following steps: study, construction of models/partial prototypes, testing and documentation of knowledge. The various tests are a way of allowing for the definition of a space of conceptual solutions that will work in practice and of identifying combinations of factors and solutions that are clearly limiting a smooth functioning, being unviable options.

4.       Hold integration events

Meetings between leaders involved in the process, aiming to achieve a sequential convergence of decisions that funnel goals and lead to the elimination of weaker alternatives. The ultimate goal is to select the alternative that best meets customer expectations and needs.

This is how your organisation can, just like Toyota, lead a Product Development process with a low volume of rework and inconsistency and a very quick market entry, allowing for a greater and better:

·         Understanding;

·         Communication and negotiation between areas and functions;

·         Cataloguing of knowledge;

·         Negotiation and communication between customer and supplier;

·         Incorporation of quality into the product.

The great challenge for the companies today is to innovate continuously as to generate profitable businesses and growth opportunities, combining technology with the quest for differentiation and leadership. 

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