Thursday Dec 04, 2014

Why New Product Development is so Important to Manufacturers

Written by the Aberdeen Group

Innovation has become critical to the long-term health of a business. No longer can a company rest on its laurels and keep doing “business as usual” you must always be looking at new ways to serve your customers. New products are an organization's most important source of revenue. New products bring in higher sales, increased customer loyalty, and ultimately higher profits. One only needs to look towards Apple back in 2001 when it released the iPod. A great product for its time that was extremely successful, Apple was not satisfied however and continued to focus on new innovative products. Instead they released new products like the iPhone and iPad, which directly contributed to Apple’s market share increasing at the rate that it has.

The data backs up that thinking, as half of the revenue for Best-in-Class companies comes from these new products, a clear gap between their peers (Figure 1).

It is true that the launch of a new product offers an organization's greatest opportunity for increasing revenue and profitability. However, new product development is not a simple, uniform or sequential process. Its complexity and risks arises from its many phases, its many stakeholders, and the intricacy of the product being developed. Increased product complexity, changing consumer demands, market globalization, extended supply chains and design networks, and regulatory compliance are all concerns that affect new product development. Executives that are considering how to improve this complex process must find the right balance between improving execution, efficiency and timeliness with the genius of innovation and problem solving. Executives that tip the balance too far in either direction end up with a great product that is late or a poor product that is on-time: and either makes for a commercial failure.

For those companies looking to improve NPD, read the recent Aberdeen Report on The Hidden Costs of Late Products.

About

Information and insights on EPPM trends and best practices.

Stay Connected

Twitter

Search

Archives
« July 2015
SunMonTueWedThuFriSat
   
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
 
       
Today