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Reducing Risk in New Product Development

Product Development PipelineBusinesses with a constant, full, new product development (NPD) pipeline are traditionally the ones that enjoy long term success and growth . During an economic downturn – like the one the world is currently experiencing – when cash and investment is difficult to secure, businesses must find a way to maintain their pipelines so they are positioned for growth when the economy improves.

You can save money and continue working with a smaller budget by implementing stage gates early in the product pipeline to examine risk – technical risk, market risk, manufacturing risk, regulatory risk, supply chain risk, etc. A well managed pipeline has procedures in place to identify areas of risk and evaluate them. The process of assessing and addressing risk is an excellent, cost effective means of advancing the product pipeline in lean times.

  • Technical risk is assessed with basic proof of concept prototypes and technology research that address specific aspects of the product that are considered high risk.
  • Market risk is assessed with targeted market studies, limited voice of the customer (VOC) interviews, and other information gathering efforts focused on reducing risk. For medical products, preliminary research to understand the reimbursement environment for the product may be of particular importance.
  • Regulatory risk can be minimized through careful planning of the submittal process and preliminary discussions with regulatory personnel. For products that will be launched into regulated environments (medical, nuclear, etc), regulatory acceptance of the product is critical to product success.
  • Supply chain risk is assessed through detailed conversations with manufacturing vendors and suppliers. Risk may be significantly minimized by reducing the number of “single-point failures” required for a product such as a sole-sourced component or highly-specialized service. Trusted vendors often prove to be invaluable resources later in the NPD process and should be involved as early as possible.

The risk assessment phase of NPD is absolutely critical to maintaining the health of the new product pipeline and preventing unpleasant surprises late in the game when a product is almost ready for release. By attacking and reducing risk early, unfeasible projects are eliminated earlier in the pipeline and feasible projects become easier to forecast. It is also a relatively inexpensive phase, as compared to the balance of the development process. In weak economic times, focusing on this early phase can filter multiple concepts, preparing them for the more costly process of advancing them down the pipeline when the economy improves.

Ben Lane


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