Regardless of who you are, if you don’t have a rich pipeline of ideas to create new value to grow your business and the wherewithal to bring them to market effectively, efficiently and fast, you’re headed for trouble. In fact, the visibility into the pipeline that senior executives need to optimize returns usually isn’t available. They tend to fly a little blind and make strategic decisions regarding growth based on limited information. Consequently, what I call the Idea to Market™ process (I2M™ for short) is arguably the most critical process in the company. If you don’t know what I2M™ is, it’s the route ideas take to get through the Value Creation Funnel™ and get monetized in the marketplace. The process has lots of names: New Product Development, Commercialization, Innovation, etc. And there are lots of different types of value creating ideas: new products, line extensions, special seasonal initiatives, package innovations, customer-driven changes, productivity initiatives, marketing or promotional strategies, etc.
In most companies, it’s a complex process with tentacles everywhere: executive management, strategic planning, finance, marketing, research, supply chain, procurement, engineering, quality, information systems. It’s probably the most expansive process in the whole business and vital to any company that desires to stay in business, let alone grow. Yet, many companies haven’t taken the time or energy to design their process for strategic, holistic management to achieve competitive advantage, let alone achieve top quartile results from it. Here are three strategies that can yield industry-leading results.
Strategy 1: Activate the Gates
A well designed process is managed and approved at 4 gates: project initiation, concept to development, development to launch and resource release (resource release comes when all commercialization has been completed, transition to ongoing management has taken place and resources can fairly be released from the project in order to move on). These gates are managed by structured cross-functional teams with clear roles, responsibilities and accountabilities that leverage an integrated set of tools at each gate. All projects that are “activated” (i.e., approved) at a gate move to the next stage. Projects that are not activated do not receive resources and do not move on. Strategy 1 brings all value creating activity that affects product or package under strategic control and provides the necessary information for portfolio alignment, Strategy 2, to take place. Additionally, the business becomes significantly more nimble, flexible and capable of reallocating resources as consumers or competition dictate.
Strategy 2: Align the Portfolio
Many companies manage their strategic, financial, marketing and portfolio strategies separately. And in some cases, companies rely heavily on financial and marketing planning but not the others. To get industry-leading results, these processes need to be integrated and functioning well at the senior levels of the organization. Executives can then rely on the tools and information (e.g., data coming from category roadmaps, initiation charters, development requests, launch requests, and the like) to determine where to invest, where to pull back and how to balance the portfolio to achieve the overall business objectives. Until these processes are well integrated and managed, businesses run the risk of unaligned I2M™ efforts and resources and therefore, lackluster results.
Strategy 3: Accelerate the Process
The time to market for many large new products in the CPG industry is often measured in years, not months or weeks. Add to that the facts that study after study has shown that #2 to market loses at least 25% in sales to #1 and being late to market by 6 months cuts 5-year profitability by as much as a third and you start to get a picture of why speed to market is important. Many people cringe at this strategy because they hear “go faster”. But accelerating Idea to Market™ does not mean that individuals need to work faster. Indeed, many companies can accelerate by shedding layers of process and approvals – getting rid of low value work and non-value added activities. Technology is available to enable many aspects of the process, improve collaboration and project management, and speed up administrative and data intensive work. Speed is also enhanced by clarity; clear priorities, project direction, roles and responsibilities; clear accountability for decision making. And finally, speed is enhanced by stratifying the process according to project type (e.g., simple package changes or a new customer modules aren’t required to go through the same processes and approval layers as capital intensive new products and the like).
I’ve personally seen Idea to Market™ provide terrific benefits to global CPG businesses. Over the next several weeks, I’ll dig deeper into each strategy. And I’ll make the case for implementing these three strategies to produce significant, industry-leading benefits including bigger, better, fewer, and faster; each the topic of future blog posts as well. So, stay tuned.