As I mentioned in my last article on new product introduction (NPI), launching a new product is stressful—even in the best of organizations.
At Arena, we’ve been working on a couple of new products ourselves, Arena PartsList and Arena PDXViewer, so I’ve gotten to see a bit of what goes into new product introduction first hand. (Admittedly, as a software company we’ve got it much easier since our products don’t need to obey the laws of physics!)
A lot of things can take you by surprise when introducing a new product. You may find that your internal resources are not always available in the time frame or with the required expertise to meet NPI demands. Your internal resources may also have limited bandwidth, forcing you to hire and manage outside partners. And if you are a global organization, the complexities of your global customers and supply chain pose an extra challenge.
The best way to deal with the stress of NPI is to create clear goals, processes and benchmarks from the beginning. These things can keep you on track when production ramps, it starts getting hectic and you find yourself asking, “Why are we doing this to ourselves!”
Our partner, Product Realization Group (who is hosting a webinar on NPI in February) shared with me a list of basic business questions that you can use to start drafting your new product introduction plan.
Kick off your next product launch with the following questions:
- What are the sales/revenue projections for this new product?
- As you move toward launch, will operations require additional/temporary headcount?
- What is the operations budget when it comes to expense and capital equipment plans?
- What are projections for gross margins? (Consider ASP targets and COGS targets)
- What are current and projected product costs? (Include inventory projections, warranty claims and returns and any additional facilities requirements)
There is a lot more to NPI than this checklist, but answering these basic questions is a good place to start. (For example, how can you determine the potential ROI of the product without an idea of what you expect to make? And how much does the extra required headcount impact overall revenue potential?) And if you’re interested in learning more about NPI, check out Product Realization Group’s upcoming seminar—Launching Success.
With the upcoming launch of PDXViewer and PartsList, I have NPI on the brain. Next week, I will share what each department should contribute to a successful product launch.