The Path to Successful New Products

(MoneyWatch) 

Businesses with the best product-development track records stand apart from their less-successful peers in three crucial ways.

Is your company finding it hard to develop new products? If so, you might try learning from the masters.

We found—after surveying more than 300 employees at 28 companies across North America and Europe—that the businesses with the best product-development track records do three things better than their less-successful peers: They create a clear sense of project goals early on, they nurture a strong project culture in their workplace, and they maintain close contact with customers throughout a project's duration.

The teams in our study that embraced these tactics were 17 times as likely as the laggards to have projects come in on time, five times as likely to be on budget, and twice as likely to meet their company's return-on-investment targets.

While we focused on companies in the automotive, high-tech, and medical-device industries, we believe that product makers of all stripes could benefit from our work.

Here is a closer look at what we found:

Keep it focused

Whenever project requirements were clearly defined and communicated to teams before kickoff, the project had a greater chance of success.

In our survey, 70 percent of the people working on high-performing projects—those that ranked in the top quarter of a performance index linking best practices to outcomes—said they had a clear view of the project's scope from the beginning, compared with just one-third of poor performers. We found that not thinking through a project's scope early on—say an appliance maker asks developers to design a new cooking range in the four-burner category but then later expands the project to include ranges with six burners—can create delays.

The teams with a clear understanding of project requirements appeared better able to make trade-offs between product performance and things like cost, time to market, and project risk. Only 19 percent of poor performers said they had the necessary information to make those decisions.

Top performers also focused more intensely than low performers on staffing projects with the right people: 47 percent of the former researched employees' skill sets before the project kicked off to ensure the project team was well rounded. None of the low performers did.

Additional writing by Chris Musso, Eric Rebentisch and Nisheeth Gupta

• To read the full article on The McKinsey Quarterly, click here ?