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April 2012

New Product Development and Lean Innovation: Cut Waste, Not Creativity

Written by Sean Klein, Business Analyst at Kalypso, and Avjit Dugal, Senior Consultant at Kalypso

Sean Klein   Avjit Dugal

In both operations and manufacturing, the concept of "lean," has earned its reputation as a powerful toolset that drives down cost and improves cycle-times. Lean manufacturing achieves this value through a focus on eliminating waste, standardizing processes, and creating value from an end customer standpoint. As companies strive to increase growth and profitability from their New Product Development (NPD) and innovation investments, some executives are looking to apply lean concepts in this area. But when it comes to the more creative and fuzzy practices of innovation, following lean practices without strategic direction from portfolio and pipeline management (P&PM) capabilities can have unintended consequences including: stifling ideation processes, focusing only on customer requests and not the next big innovation, over-standardization, and speeding up the wrong projects.

From our experience, lean NPD efforts without P&PM often prove ineffective because they:

  • Are unable to effectively communicate the value proposition and need for efficiency improvements to the NPD audience
  • Become too binary with metrics -- occasionally canceling lower "value" but strategic projects
  • Expend energy improving processes that aren't the constraint or that don't deliver results
  • Distract from delivering large scale, high growth innovations simply because these are not "repeatable"

Combining P&PM processes with lean practices for NPD and innovation shows companies where to focus their efforts for maximum impact, and once established, creates processes that can be further improved. P&PM ensures that companies stay true to delivering results by providing visibility into what is most important. They can then apply tactical lean approaches to help get there.

To hear more on how P&PM capabilities can help your company focus lean efforts to strategically drive new ideas to market while cutting waste -- not creativity, please join Kalypso's Pamela Soin for her session during PIPELINE 2012. Register today at

Winning in an Uncertain World

Written by Don Creswell, SmartOrg, Inc.

Don Creswell

40% to 75% of New Products Fail -- How to Improve Your Odds of Winning!

Innovation and new product development are risky. 40% to 75% of new products fail. This is not because people make dumb decisions; it's the nature of things when you face an uncertain future. Think about it. If you could consistently produce winners (products that meet revenue and profit forecasts) you would be very rich. The good news is that you can improve the odds of winning.

First, recognize that there will be a number of factors, like market size, market share, price and such that may be very uncertain. You can identify these using a technique called "sensitivity analysis" that identifies the impact of uncertainty on each variable in your business model. Experience shows that only three to four variables will account for 90% of the impact of uncertainty on your project's net present value. By focusing resources on these variables, you will avoid wasting time and effort on things that do not matter.

Second, success will come from assembling these carefully evaluated projects into a portfolio that compares projects based on the probability that you can successfully "pull it off" and, if you can pull it off, what the project is worth. A well-balanced portfolio will have some "sure things", but will also have a group of risky projects that, if successful, can be blockbusters.

Why a portfolio? Early on you cannot, as noted above, consistently identify individual winners. In your portfolio, some will lose and others will win; in the aggregate you will come out ahead.

In a recent white paper by Tech-Clarity, author Jim Brown introduced the subject of Advanced PPM to differentiate the use of enhanced analytics such as those described above, to provide deeper analysis of the economics and risks and uncertainties where subjective approaches like scoring rules, scorecards and questionnaires are not adequate. You can download a reprint of this white paper to learn more.

To delve deeper into this discussion, join me at PIPELINE 2012, the Online Conference for Innovative Product Development on May 10th. My Breakout Session "Winning in an Uncertain World" will provide insights to help you improve the odds of winning using the tools of Advanced PPM -- taking project and portfolio evaluation beyond scoring rules, questionnaires and other subjective methods. You can also learn more from Jim Brown who will participate in a panel discussion with Bill Poston, Managing Partner, Kalypso, and Carrie Nauyalis, Solutions Marketing Manager, Planview.

For additional information:

Why PIPELINE 2012 is the Place to Be

As I check TweetDeck again and again to see who's posting what about PIPELINE 2012 at #PL12, I acknowledge that I'm excited about this conference. Admittedly, it's good that I'm jazzed as I'm the event manager. But my job is to help you be excited and, honestly, I believe that will be a very easy task. I have two convincing points to "sell" my case:

PIPELINE 20121. PIPELINE 2012 is online, easy to attend and it's free. In my experience, in addition to being convenient and cost-effective, virtual events can be dynamic and fun. If you haven't attended one yet let me paint the picture for you: imagine a recent event you've attended in person and visualize seeing that on your computer while you remain comfortably in your office with your coffee mug in hand. That is what amazes me about virtual environments -- you enter a main lobby; you can see the other participants online; you can step into the networking lounge to chat with colleagues, speakers, and attendees; enter the exhibit hall and check out the sponsor areas -- each contains all the features of a physical booth. As a booth rep greets you, you download your collateral, (no more hassle with papers falling out of your arms as you maneuver through crowds at a physical event) and watch videos. And you won't want to miss the highlight of PIPELINE -- enter the auditorium where you'll have live access to presentations by best-selling authors, innovation experts, scholars and industry leaders.

This takes me to my second point.

2. PIPELINE is THE online conference for product leaders to gather knowledge, network and get inspired to innovate! The knowledge-sharing opportunity of this conference, I believe in many ways surpasses the average physical trade show. From the scheduled chats with speakers and sponsors to general sessions with live Q&A -- you will have ample opportunity to discover new ways innovation can drive your product pipeline. And, as an added bonus, the conference is available online for 90 days so you can stop back to view presentations any time.

Our lineup of speakers this year is sure to impress -- from authors and experts on innovation such as, Jeff Dyer and Jeff DeGraff; to professionals who've had to walk-the-talk on the job like Mona Mohan from Ghirardelli; to breakout sessions from industry leaders like Kalypso, IBM Rational, and SmartOrg. I've had the opportunity to speak with the presenters and I am jazzed to hear their unique perspectives on May 10th! As the host sponsor, Planview is particularly excited to share the results of the 3rd Product Portfolio Management Benchmark Survey during the conference. These results will reveal the top pain points product developers are facing and how they are (or are not) addressing them. You're going to want to hear what your peers shared!

If you're not excited now, I'm afraid I must check your pulse. PIPELINE 2012 will be THE place to be if you're a product leader and want to connect with innovation in whole new ways! You can learn more and sign up for your free spot on the PIPELINE 2012 website. So mark your calendar for May 10th, get your coffee in hand, and join us online. See you there!

Q1 Reflections

The beginning of any new year brings with it a familiar cadence of activities for our organization. Most revolve around ramping up a fiscal year with our sales team and launching the latest version of Planview Enterprise®. This annual cycle certainly represents one of the most intense times of the year. Preparing for sales and consulting meetings, launching the latest release, and the subsequent GA process make Q1 a big push across the country.

Part of our product launch plan is a comprehensive process of touching base and briefing all of the industry analysts that cover the portfolio management space. Every year, as the portfolio management segment continues to grow, this activity gets larger and larger. Globally, we are interacting with close to 30 analysts across a wide range of sectors. This body of work always provides interesting insights I thought I'd share a few highlights.

Enterprise software is a good place to be. In addition to introducing our latest products, part of these briefings is a review of our previous year performance as a company. We were fortunate to have a very strong 2011, a record year across most metrics. From our analyst meetings it was clear that we did better than average, but it was equally clear that enterprise software companies across the board had strong years. As we continue to read varying reports about the state of the economy, software is a strong sector. In short, organizations are still looking to drive efficiencies in their operations and focus their limited capital on innovation -- software is a good investment on both fronts.

Software as a Service (SaaS) continues to gain momentum and drive growth. It is no surprise that the cloud and SaaS are hot trends in software, but the full impact of this trend. We all read about the pure SaaS players that are the poster children for this trend may not be obvious. But the other side are the hybrid companies like Planview that for the past several years have aggressively retooled themselves to leverage the SaaS trend while continuing the commitment to new and existing on-premise customers. In 2011, SaaS represented over half of our new customers, and our SaaS offering created incremental new market opportunities that were not addressable before. The analysts I spoke with recognize that "established" software companies need to be hyper aggressive to serve this new landscape and this has been our approach.

Markets are built by best of breed players. Across the analyst community there is validation that portfolio management is seeing tremendous growth in traditional segments like IT and also in a variety of line-of-business (LoB) segments. IT product portfolio and program management (PPM) has been a vibrant market for many years and these new LoB segments are emerging markets that require commitment and investment to reach their full potential. In my conversations I think it is safe to say that it is the best-of-breed players, like Planview, that are making these investments. The mega-enterprise software players have too broad a product portfolio to apply the focus necessary. They are not agile enough to navigate the dynamics of these new segments. Someday they will look to harvest the opportunities created, but in the mean time, the best-of-breeds will drive forward. This is common in many categories; we are now living it in PPM.

Product Portfolio Management has "Crossed the Chasm." As mentioned previously, we are experiencing a period of rapid growth in the use of portfolio management. One of these areas is the use of PPM by product development teams looking to make the best pipeline selection decisions and ensure the optimal use of their precious engineering resources. This has been a growing trend, but during this year's analyst briefings there was a sense of critical mass to this conversation. Indeed, when posed the question, every analyst I spoke with agreed that this application of PPM has "crossed the chasm." I will spare everyone a lesson on the technology adoption lifecycle, but this is an important moment in the expansion of the portfolio management discipline. If you want to learn more, plan to attend PIPELINE 2012 on May 10.

Just a few observations from our annual analyst briefings, I hope you find them useful.