How good are your assumptions?
After many years of designing and implementing phased and gated systems we have continuously tried to improve upon this approach. More recently, we have been getting ‘push back’ from some of our clients on a ‘better way’, of getting products to market quicker. And as a result, over the last couple of years, we have been incorporating risks and assumptions during the entire new product development process, including the early-stages. Understanding and getting a razor sharp focus on commercial and technical risks has proven to be quite successful for helping chose the right projects and gaining speed.
Check out this posts where Kathy Morrissey, Strategy 2 Market Partner, shares some thinking on how a phased and gated system may obscure risks. Let us know what you think. We would love to hear your input.
The phase and gated system has been a long time standard of developing new products but is not without fault. The system’s structure inhibits rapid development needed in order stay relevant in a competitive and ever changing marketplace. It is no surprise we are finding our clients craving a “better way”.
The thing is, with the phase and gated system, there is a lot of emphasis on big picture things. And more often than not, the little things, you know, assumptions and risks (i.e., the bull not in the picture) get forgotten, taking the project off its “perfect” course. The phased and gated system is guilty of:
- Managing process activities such as market studies, technology feasibility studies, financial analyses, etc. and less on the activity of monitoring assumptions and risks.
- Making investment evaluations only at gates. Whoops, there goes $1 million.
- Analyzing the every nook and cranny of a project. You know what I’m talking about – financial, technical, value proposition, market, competition, legal, regulatory, manufacturing, supply chain, sales and customer service. Did I forget anything? And of course as the project progresses through each phase, discrete project related risks show up to the party like unwelcomed guests.
Surprises from unrecognized risks can be a major source of delay and even product failure. Anticipating and dealing with important risks as early as possible will go a long way towards improving project cycle time and success.[i] A process that uses continuous risk management would allow more timely assessment and management of risk. For example, if we already know the size of the market and how to segment it, and adoption rates are one of our biggest unknowns, why wait until phase 3 to tackle it? Do it now. Taking inventory of assumptions and risks and addressing them early on could be the turbo boost your product development system needs.
It’s like attempting to find the most efficient rush hour route in the City of Chicago during the spring, and ignoring the fact that some of those low traffic streets will have potholes that will BOOM. Take out your front tire.
What do you think?
- How do you manage risks within your process?
- What are some of your most successful or unsuccessful product development projects, and how did you manage the risks during the project?
- Did you use a phased and gated system and did you integrate risks into the process?
- Do you have any tactical advice on managing assumptions and risks effectively in your product development process?
[i] Smith, Preston G. and Guy M. Merritt, Proactive Risk Management. New York: Productivity Press (2002), Chapter 1, “What Is Risk and How Is It Managed”
Where is the Bull Photo: by Helen Olney