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Michael Kapp has 20 years of high tech product marketing and product management experience and is currently VP of Marketing and Product Mgmt. for Control Solutions, a leading supplier of Enterprise Mobility  Solutions and Automatic Identification and POS equipment.  

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Adapting the New Product Development Process to a Small Company

Most leading companies follow a structured and highly disciplined approach to new product development. These programs are normally modeled along the lines of Robert Cooper's  Stage-Gate TM or PRTM co-founder Michael McGrath's  PACE TM(Product And Cycle-time Excellence) processes.  These processes are particularly effective at filtering a broad range of new ideas or initial product concepts into a portfolio of thoroughly vetted and properly resourced product programs.

The common features of such NPD processes are 1) a review board consisting of the heads of the departments that provide resources to development programs, 2) a core team responsible for managing the development implementation consisting of individuals of various functional departments, 3) management reviews that take place at significant milestones during development, and 4) clearly defined objectives and deliverables required at each milestone/management review.

Normally, the development process is divided into named stages, with the management reviews being the gates between stages.  Decisions at the reviews would typically be to move forward into the next stage of development, kill the program, or re-direct back to the current or previous stage with specific defined objectives for stage completion. 

New Product Development ProcessLarge companies have much to gain from following such processes.  But what about smaller organizations?  In reality, it is even more important for smaller companies to be vigilant in allocating their limited development resources.   Practical accommodations, however, will need to be made when adapting the NPD process to a small company.  Some of the more substantial considerations are as follows:

1.  No Product Manager/Limited Resources for Market Analysis 

In most small companies, there will be no dedicated product manager or product management resources will be severely limited.   This can affect the process in a number of ways.  The product manager is normally responsible for writing the business case/plan, market research/analysis, competitive analysis, pricing, and researching/documenting product requirements.   In a study published in the Journal of Small Business Management, market analysis and market testing of new products were determined to be key to successful new product development, and these were the areas where small businesses were found to be most deficient.   It is therefore critically important that these activities are not glossed over.

In a small company, there will normally be a product champion on the management team.  This person will most likely find it necessary to assign some of the product management/market analysis tasks to other individuals to accomplish.  For example, the detailed documentation of requirements may be divided between multiple individuals who know the requirements best - these individuals could be in engineering, technical support, sales, marketing, etc.  

2.  Smaller R&D projects

R&D dollars are more scarce in a small company.   Relative to larger companies, these R&D programs are more likely to be smaller in size, duration, and/or complexity.   Many of these programs will not warrant the overhead characteristic of classic NPD implementations.   In such cases, development stages can be combined so that there will be fewer management/gate reviews.   Stage-Gate TM has recognized this need and advocates the use of their truncated Xpress and Lite processes which are designed for simpler programs. 

Small companies can be quite resourceful at adapting a process that fits their business model and specific needs while maintaining the most positive aspects of the traditional NPD processes.  I have had success with a software development process were we routinely covered two releases in one management review meeting - for example, first covering a schedule review and launch preparations for the upcoming release, and then reviewing the feature priorities for the next release.   

3.  Less Defined Company Strategy

With many small companies, a company strategy either does not exist or is very informal.  It is important that the CEO and management staff develop a strategy and clearly communicate it to all individuals involved in the product development process.  The strategy provides a basis for consistent and rational decision making, and a focus for the company's limited development resources.    

4.  Small Development Groups 

Smaller development groups will have implications for the core teams brought together to manage a product through the development process.   Normally the core team consists of one member from each functional area. However, these teams may necessarily be smaller if various functional areas are combined (for example, engineering and testing).   In addition, a small company's limited development staff may require that the same team manage multiple products.

One advantage of being small is better lines of communications.  There are typically less barriers to communications between departments in a small company and more opportunities for management to stay connected with all developers.   In a recent software development that involved a total of three programmers, I invited all three programmers to attend the management/gate reviews.  This was beneficial in many respects, including having a fuller range of technical assessments and opinions during the reviews and communicating the decision making process further into the organization.  The bottom line was greater buy in and confidence in the product direction and development priorities.  


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Reader Comments (3)

Market analysis is always the first place an entrepreneur should start before launching a small business to find out if the venture is profitable in consideration of competition and demand. Only after conducting market research and analysis, should an entrepreneur proceed with product development, advertising campaigns, and everything involved with launching a product into the market.

August 5, 2009 | Unregistered Commentermlgreen8753

I wonder whether small companies should be multi-product companies. Focusing on what they do well - and filling the markets they set out to address in the first place - require different processes than are needed in companies with more substantial product portfolios.

October 23, 2009 | Unregistered Commenterbob corrigan


" Decisions at the reviews would typically be to move forward into the next stage of development, kill the program, or re-direct back to the current or previous stage with specific defined objectives for stage completion. "

Instead read...

" Decisions at the reviews would typically be to move forward into the next stage of development, kill the program, re-direct back to the current or previous stage with specific defined objectives for stage completion or Go-Live as the company can see delivery of enough User Benefit to warrant releasing it."?

April 24, 2012 | Unregistered CommenterSimon King

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