VentureOutsource.com rubs elbows with Richard Notargiacomo, a former product development manager with Eastman Kodak and now the chairman and president of the Product Development and Management Association (PDMA). Founded in 1976, the PDMA is a volunteer-driven, not-for-profit organization with the mission to improve the effectiveness of people engaged in developing and managing new products, covering new goods as well as services. (http://www.pdma.org/)
In this exclusive interview, read what Richard says about challenges electronics companies face when launching new products; quantifying value from innovation, common product development failures, and more.
Transcripts from that discussion follow…
VentureOutsource.com: You have an interesting background. Your work in product development management while at Eastman Kodak was during a time when Kodak, and the film industry in general, was reeling from dwindling sales. Kodak badly needed an injection of innovation into the Company’s existing and new product lines. Kodak later revealed several lines of high-quality, innovative electronics products to boost sales. Can you please discuss three (3) challenges electronics companies must address when looking to launch a new electronics product into a market that’s not been tested previously?
Notargiacomo: I tend to be concerned about fundamentals and the fundamentals couldn’t apply more than they do to new products into untested markets – in any industry. So first, I would want to understand how the product aligns with the customer.
What problem, need, or experience is being addressed, and what sort of customer will find the proposed solution sufficiently appealing to part with his/her money? Plus, how many of these customers are there apt to be out there?
You need to be careful on this one since the early adopters are going to look a lot different than the early or late majorities, (remember the early days of cell phones with salespeople thrilled to have ‘the brick’ that was in the market initially) but I think it’s still the critical question.
The second area of concern is how trends in the market, in technology, and in competition are affecting the fundamentals.
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Richard Notargiacomo President and Chairman Product Development and Management Association (PDMA) |
New data can emerge at any time from the market, from the labs, and from competitors. The more you’re ‘locked in’, the more you are vulnerable to any issues that arise from new information. You cannot afford to be vulnerable. In my work with companies large and small, I’ve been able to observe that getting these things right is a key precursor for market success.
VentureOutsource.com: You talk about “…quantifying value from innovation” as part of a product company’s risk (appropriate) management. Can you please explain this for our readers?
Notargiacomo: An innovation program, like other programs in a business context, should have a clear set of objectives and goals. I call it ‘the innovation imperative’. These objectives and goals need to indicate what’s expected from the innovation program and what sort of revenue / earnings profile will result. This will be determined over the interval the new products and services are in the innovation portfolio and should be reflective of the desired risk / reward profile. The key here is to use the appropriate methods to measure the risk at the individual project level while comparing results to the goals, over an appropriate time perspective, at the portfolio level.
You also need to be very aware of the pitfalls of using processes and measures appropriate for line extensions and derivative products on more disruptive or radical innovation projects. For more disruptive programs, you need to harness the risks and learn from them; something you probably cannot afford to do in line extensions where you simply want to manage and minimize risks. This is what I call “risk (appropriate) management”. And, don’t forget, in innovation there are really two classes of risk:
- risks that result from moving forward, and
- risks that result from not moving forward
VentureOutsource.com: The Product Development and Management Association’s (PDMA) mission is to improve the effectiveness of individuals and organizations in product development and management. What two (2) failures do you often see organizations make with regards to effective product development and, how does PDMA help companies avoid these two failures?
Notargiacomo: I’ll give you three.
The first one concerns the area of management commitment and strategic alignment as addressed previously.
The second one is that most firms try to do too many projects at once, exceeding their capacity, and having no reserve capacity to apply when things go ‘off plan’ as they often will. The result of this is all projects will experience longer time-to-market (TTM), and the consequences of longer duration, than you’d have with a more streamlined portfolio.
Finally, there’s the issue where teams and firms fall in love with their ideas and forget to focus on the customer. Each of these can lead you to a bad place.
PDMA helps companies avoid these issues: a.) through the support and / or sponsorship of research in innovation and product development by both PDMA and the PDMA Foundation, b.) by disseminating knowledge through PDMA publications like the Journal of Product Innovation Management, Visions, our Toolbooks and Handbooks for product developers, and through the many presentations made at national, regional, and local PDMA events, and finally c.) the networking that occurs through these events. As Paul Saffo from the Institute from the Future once told me, “The future is here, it just isn’t evenly distributed yet”. I’d say the same thing is true about innovation and product development practices and that PDMA is working to evenly distribute that future state while simultaneously extending it.
VentureOutsource.com: You’ve said “…innovation is a process with known best practices.” Can you please list what you feel are the top five (5) innovative process best practices companies should adhere to?
Notargiacomo: The PDMA Foundation, through its Comparative Performance Assessment Studies (CPAS) has identified a number of ‘best practices’ that separate ‘the best from the rest’ with regard to the success of their innovation program. Based on my experience, we recommend focusing on the following key items:
- Management commitment
- Strategic alignment
- Customer focus
- Tools and processes (used more often and applied flexibly)
- Risk (appropriate) management
I can’t emphasize enough how important items #1 and #2 are.
If you don’t have strong commitment, as measured by action (think Procter & Gamble’s A. G. Lafley), you’ve got the deck stacked against you.
Similarly, the management commitment you do have is going to waver if your work is not aligned with the company strategy over the appropriate time horizons. Innovation is a risky business where not all projects succeed and many that do may not pay out for a while. You need the commitment from the top.
The use of tools and processes, including those for team development, customer understanding, and engineering / design, is an area where the ‘better’ firms distinguish themselves in terms of applying such tools and processes more often and more flexibly than the other firms.
VentureOutsource.com: What trends in product development do you see emerging as globalization impacts more markets, more products?
Notargiacomo: With the obvious ones such as offshoring for manufacturing, back office services, and product development particularly in the area of software (and to some extent in hardware) already in place, I think in the near future we’re going to see some second-order effects from this group.
These would include innovation competencies in ‘developing; nations; some degree of equalization in wages within the global community, and the continued expansion of large consumer economies in the ‘developing’ nations.
Following this we may see offshoring continue its migration to newly emerging economies. The wildcard is the extent to which we see any backlash to the trends whether induced by rising energy prices; consumer dissatisfaction with quality, political tensions, to name a few.
In addition, the open innovation trend will continue with more collaborations and partnerships in innovation and product development, and finally, the extension of innovation to business models such as what Dell has done with the supply chain, Enterprise Rent-a-Car with distribution, and others.
Innovation is more than just the product – it extends through the entire business model.
VentureOutsource.com: If you could hold a long conversation over dinner with one person (alive, dead, or fictional) who would you select and what would you want to discuss?
Notargiacomo: This is a tough one…There are so many remarkable people in (or previously in) our world.
I think if I could only do this once, I’d like to have dinner with Abraham Lincoln. He assumed the presidency only weeks before the Civil War started and needed to step up very quickly to the evolving crisis. He built a group of his competitors into a generally well functioning team able to navigate the waters of the Civil War, through evolution of strategy and tactics, and managed to prevail. All in all, a pretty good set of lessons for leaders in any area.
I’d love to hear ‘the stories behind the story’ and understand what he really went through during this very difficult period in American history.
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