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Do You Have Tunnel Vision?
What it Takes to Have a Development Funnel |
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If product managers and their teams are to select the right ideas for development, a company must have solid concept screening practices within their new product development (NPD) process—a fact supported by Sequent Learning’s best practices benchmarking and other research carried out by professional organizations such as PDMA (Product Development and Management Association).
The first step in any gated NPD process should involve getting a significant number of ideas into the pipeline and selecting the one with the best probability for both business and technical success. More often than not, however, clients overlook this crucial step—creating a development tunnel instead of a development funnel. What do we mean by a development tunnel? A development tunnel occurs when an idea is presented by executives or by a strong functional group, such as engineering, and immediately a significant amount of work goes into defining the product. The idea is moved directly from pre-concept phase to feasibility and/or definition.
What’s missing is a prior step—a high level review of the idea against a number of set criteria to determine whether or not the idea even warrants the resources to determine feasibility. We talked about the implications of a development tunnel versus a development funnel with three executives. Read their insights on how a development tunnel mentality can cost a company millions of dollars—and what you can do to promote a development funnel.
SEQUENT LEARNING NETWORKS: WHY DO COMPANIES HAVE SUCH A HARD TIME SAYING “NO”?
David Reid, VP National Oilwell Varco: Generally, people who come up with an idea believe in it—which produces optimism and positive energy. We were originally run by a CEO who was an engineer, an inventor. To him, there was no such thing as a bad product idea, and he used the sales force as the only gate—with little success. When we adopted a phase-gate process and began focusing first on products, then on projects, our product successes improved significantly.
Johanna Boller, Vice President, Pitney Bowes: Part of the problem can be process. Companies may not let new product ideas into the funnel, or phase gate process, unless they’re rigorously vetted. And once one is in the pipeline and an investment has been made, it’s more difficult to justify abandoning the idea. A program may be adjusted and tweaked, when in actuality, it should be abandoned. And, a review process can be very formalized, so product teams may believe it’s their job to make a product idea look very good—when really it’s still sketchy.
Sheila Quinn Cuyjet, Director, Airlines Reporting Corporation: Also, people often have an emotional response to an idea—versus a business response. This is why at our company we’ve instituted a first-line screening that the product managers go through before any
resources are allocated. We ask questions such as: How does the request align with the corporate strategy and with the business line strategy? If the request passes those screens, the product manager considers how much money the product will generate and how much profit, how it aligns with our target markets and segmentation models, and whether the idea is repeatable or scalable. If it passes all those screens, then we start developing the business case more fully to determine both business and technical feasibility.
SLN: DO YOU THINK COMPANIES GET TO MARKET FASTER IF THEY HAVE A TUNNEL VERSUS A FUNNEL MENTALITY?
Reid: Perhaps, but you can be more successful if your filtering process is right because you’re putting your energy where you’ll have the best payoff. Being slower to market isn’t necessarily a bad thing. We held back on releasing a product for a new application until we felt the market was ready. We spent a lot of time fine-tuning the design and getting the correct price point for the application. As a result, the sales of the new product were 200 times that of the previous product.
SLN: WHAT IS THE MAIN ADVANTAGE OF HAVING A TRUE DEVELOPMENT FUNNEL?
Cuyjet: A development funnel allows a company to achieve its strategic goals by staying focused. It helps a company appropriately allocate resources and address a broader portion of the market instead of focusing on one or two key customers all the time. And, a development funnel that’s focused on developing viable products improves employee satisfaction, morale, inspiration, and motivation. Employees are focused and they’re delivering results.
I’m not saying rule out customization for your key clients. You just have to have some guidelines so that you can be responsive to customers (which is where some of the best visionary ideas can come from), but not get distracted from your strategic goals.
SLN:
Reid: The keys to a successful development funnel process include choosing the right screening criteria and assigning the right people to do the screening. People who love process for process’s sake may kill the business due to missing opportunities. An effective team is typically a mix of people willing to make the hard decision with an eye to the market and to what is best for the company. Making the go/no-go decision should not be based on personal agendas.
Cuyjet: You need a roadmap for your process. What we have found is that you need not only a good concept screening process, but also a list of all the projects that you’re working on, not just the business line, but across business lines. That way, you’re focused on the work that needs to be done versus working on scattered ideas. Should something get thrown at a project team, team members can point to their priorities—and stay strong in their response.
SLN: WHAT CAN THE BOSSES DO TO HELP WITH IMPLEMENTING A DEVELOPMENT FUNNEL?
Reid: Make sure the process is followed and then have the vision to sustain it until you hit your first success.
Boller: Management needs to adopt a structured method to evaluate opportunities, including an assessment of the market opportunity versus responding to the latest competitive move or missed sale. They need a review forum, instead of just an annual budgeting review, and then monthly budgeting meetings where the focus is on the project financials. They should definitely visit concepts often, say quarterly, considering market conditions and the multi-year impact, abandoning those projects that no longer make sense.
SLN: Thank you, Johanna Boller, Sheila Quinn Cuyjet, and David Reid, for your fabulous insights into this topic. For additional information about development funnels versus development tunnels, please click on “Articles and Papers where you’ll find a wealth of articles about product management as well as product development.
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