The Changing Rules of New Product Development

There’s been a perceptible change which has been sweeping the VC funding landscape for technology companies for sometime now. This in turn has ground-shaking implications for how new products are built, the time-frame in which they are built, and the way development teams need to respond to this change.

Earlier, software start-ups used to be in the incubation mode for months on end. Business plans and financial projections were made for 5 year periods. Initial seed funding was typically in the $5mn range. But in today’s fast-changing world, companies can no longer be in stealth mode for years.

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Product Concept Screening-A survival kit for small product companies

The major challenge of small product companies has been to increase the value of the products for their customers. It is probably known that there are as many ways to screen new product concepts as there are experts in the field. Quite a lot of them have been beneficial to these companies who cannot afford to incur a product development loss, unlike their bigger counterparts. These companies survive in the market on the basis of the reputation they have built with their few customers.

A sound screening of the product concepts is all that it takes to make that big difference. And it calls for a work around with their sales and marketing strategies and also with their key customers and buyers.

A concept screening against their marketing strategy will strengthen their focus and also will enable them to use their available resources for introducing new products. In fact a good marketing strategy should act as a good guideline. It should establish new product introduction standards and define the target buyers, translate the company mission into an achievable annual target and go on to achieve it in terms of key aspects such as product quality, brand positioning, market spending and pricing models. A new product concept must fit the company’s overall marketing strategy; else a serious thought must be given to either changing the marketing strategy or drop the idea of new product concept.

Screening new products against the company’s sales strategy also holds an equal significance. The new product must generate minimum sales and profitability goals for the company. When a small company is competing with larger companies, it can evolve a strategy vis-à-vis the new product minimums of the latter. Most small companies would be more than happy with dominating niche market segments that amount to $5 to $20 million in total competition sales per year.

Another important aspect that most of the large and small companies tend to overlook is roping the key customers and buyers in the loop, at an early stage, to obtain input and evaluation of new product ideas. This has to substitute the tendency of business owners and managers to get onto full development of a prototype without any external inputs.

A software product company that addresses these key aspects of product concept screening process will emerge as a clear winner in its chosen niche.