Developing New Products

Remember Indiana Jones in Raiders of the Lost Ark? At one particularly perilous moment he confides to an impatient colleague, "I'm making this up as I go!"

That's pretty good advice to an entrepreneur on the trail of a new product or service in the new business environment — seize opportunity from the moment, make up the rules as you go. As if you had a choice! Practically everything that used to be considered gospel on the topic of designing new products and services is in the trash can today thanks to technology and a little distribution channel called the Internet.

Product development is a process comprised of many tasks. It used to be that you could depict the product development process in a linear fashion that looked similar to Figure 1. Each task was completed before the next was started in a logical, orderly process.

This process works fine in a marketplace that's fairly stable and predictable, but it can't survive in today's dynamic and unpredictable markets. Today, companies focus on fast-cycle product development with a more integrated approach. Integrated means that all the company's functions are represented in the planning, design, and development processes. As a result, you derive input from engineering, manufacturing, marketing, finance, and the customer from the beginning. Dynamic product development looks more like Figure 2.

The advantage of getting everyone involved in the process from the beginning is that the ultimate product will reflect each participant's input individually and as a group. For example:

• Customer: Provides valuable information about the product design and functionality so that he gets what he needs.

• Engineering: Uses comprehensive product information to design the product right the first time.

• Finance: Follows production costs and warns developers if they're choosing a component or part that will be too costly in the final product.

• Manufacturing: Makes sure that a viable process for producing the product exists.

• Marketing: Keeps tabs on the marketplace to make sure that the product is well accepted when it's launched.

• Purchasing: Establishes reliable relationships with vendors to make sure that they deliver parts on time.

Notice that although these functions are listed as if they're major departments in your company, you may outsource many of these functions or have only one person responsible for a particular function. Perhaps your area of expertise is engineering, and your partner's expertise lies in finance. You'll likely have to hire or partner with employees, companies, and other independent contractors to perform the remaining functions to make your project happen.

If you get everyone involved in the process, you can develop your product much faster — and that's important in a world where customers' preferences can change overnight.

Getting the feedback you need

Here's a checklist of the kinds of feedback you need to solicit from all the people involved in the development of your product:

• What makes the product better and easier to manufacture?

• What does the marketplace think of the product?

• What improves the product, its components, and the way it's built?

• How reliable is the product? Are any components less reliable than others?

• Are customers satisfied with the prototype they've seen?

• Is the product easy to maintain?

• How will you service the product?

• How will you handle complaints?

• How will you get positive publicity for the product?

Answers to these questions are the basic information you need during the process of product development. You may think of more specific questions to ask about your particular product or service.

Overcoming scarce resources

Many solutions are available to help you overcome the limitations of a start-up company's scarce resources. Here are a few of them:

• If you have several products in mind, prioritize and start with the one that will bring you the biggest return on investment. Alternatively, if one of the products is the easiest and least costly to develop and has a good-sized market potential, you may want to start with that one.

• Don't reinvent the wheel. Don't try to manufacture products that others already do very well. Focus your energies on what you do well and outsource everything else. Doing so is called focusing on your core competencies. Later, when your company is well established, you can think about bringing some outsourced tasks in-house to save money, control quality better, and speed up your processes.

Tasks that you may want to outsource include component design, materials specifications, machinery to produce, ergonomic design, packaging design, and assembly drawings.

• Wherever possible, purchase off-the-shelf parts and components.

• Look into job shops that can do some of the work for you. Make sure that they will work as quickly as you need and that they're used to working with entrepreneurs.

Developing in a digital world

The Internet makes it possible to do a complete or partial development of some types of products in cyberspace. Entrepreneurs like Jef Chappell deliver digital products and services to their customers entirely over the Internet. Chappell discovered the power of the Internet for rapid prototyping and testing. He takes advantage of the free hosting services on the Web to put up a prototype Web site featuring his products and services. When the site garners enough customers to begin to show a profit, he shifts the site over to a full-service ISP and invests more significant marketing dollars into the company at that point. That way, if his product or service isn't working the way he wants it to, he has the option to tweak it or shut it down before it costs him a lot of money.

You can find a list of free ISPs by going to the Free Websites Directory.

Maybe you're not developing completely digital products. Even if you're doing something as traditional as a new toy, a line of apparel, or a mechanical device of some sort, the Internet makes it easier for you to collaborate with partners in any part of the world.

Design is not the only task you can accomplish by using the Internet. Today you can send your completed designs — say for a new part for your machine — to a rapid prototyping shop, where the design enters a computerized prototyping machine that spits out your part in metal or some other medium.

If your outsourcing partners are online, coordinating work and receiving regular progress updates are a snap. If you want to really go all the way, you and your partners can install digital cameras so that you can actually view what they're doing for you.

Don't assume that partnering in cyberspace has no disadvantages. The fact is that strategic alliances with other companies for product development are like any other partnerships: They can be fraught with problems if you don't choose your partners carefully. So choose partners that believe in what you're doing and have similar company cultures and ways of doing business.