Tuesday, November 27, 2012

NEW PRODUCT DEVELOPMENT PROCESS


NEW PRODUCT DEVELOPMENT PROCESS

As markets and customer preferences change companies adapt to insure success. Adaptations usually are made to capitalize on markets and expertise a firm has developed over its life.

Some adaptations are limited to updating packaging or marketing approaches or finding new uses for established products.

There are occasions where new products are needed in order to meet new customer needs or address a disruptive market innovation.

When addressing changing market needs and market disruptions it is necessary to find good ideas and then have a process to evaluate and narrow the field to the ideas most likely to succeed.

Generating new product ideas

The first step in generating good ideas that will further develop the markets and expertise that defines the firm is to clearly articulate the job customers are hiring the firm to perform.

Here it is important not to be too restrictive in the focus of the definition. It is probably better for an owner of a baseball team to define his firm’s job as sports entertainment as opposed to the more focused definition of professional baseball.

Once the job the customer has hired the company to perform is defined then it will be easier to identify new product ideas that are based on the firm’s strengths.

There are several methods to develop new product ideas that are very useful such as brainstorming, market research and product attribute modeling.

Brainstorming is widely used and involves getting key employees (and sometimes customers) together to find solutions to challenges facing the firm. The key to successful brainstorming is good note taking, allowing all ideas to be presented without negative feedback and encouraging all participants to contribute without letting a few dominate the exercise.

Market research can be the result of research surveys designed to uncover market opportunities. This research involves current customers, individuals with characteristics similar to current customers or a random selection of individuals. Examining a firms records and reviewing sales staff information on the market and the competition can also provide solid market research.

Product attribute modeling is a unique way of generating new product ideas by choosing a job the company is hired to perform and describe the absolute worst outcomes. After identifying the bad outcomes participants go back through the exercise and determine what actions could be taken to eliminate the negative outcomes. For example if a company made suitcases an exercise might be to list all of the negative attributes for suitcases (such as not fitting in overhead bins in aircraft, wheels that wobbled, instability etc.). The follow up exercise would be to create a suitcase that addressed all of the negative attributes.

The best idea generation will likely come from a program that involves all of the idea generation techniques, First, market research, then brainstorming based on the research and finally product attribute modeling.

Identifying the best ideas

After the idea generation process there are likely to be a number of ideas that are attractive. The challenge is to find a way of objectively identifying those ideas that have the most promise.

For this process it is important to assemble a committee of key employees from each part of the business. The committee should have members from sales, IT, finance, accounting, production, R&D, and engineering. This structure allows any idea to have the insights of the various parts of the organization. The committee should be led by an individual that can keep the group generating customer focused ideas and prevent efforts to kill product ideas because they don’t fit with current thinking.

When evaluating new product ideas there should be specific criteria identified that the new product must meet before moving to the next level of consideration. A list of evaluation criteria might look like the following:

1.     Profitability/market acceptability  - will the product generate a profit and a market?
2.     Accreditation requirements – Does the product meet industry and legal standards?
3.     Length of project – Can the product be introduced in an acceptable time frame?
4.     Accommodate systems – Does the new product make use of current systems or will new ones need to be developed?
5.     Fit Image – Does the product fit the image the firm wishes to project?
6.     Resources – is the new product resource and capital intensive?
7.     Gateway capacity – Does this product lead to the possibility of new products or businesses being developed?
8.     Negative Gateway capacity – Does this product have the potential of damaging other aspects of the operation?
9.     Customer acceptance – will the customer accept this product over others offered in the market?

If product ideas successfully meet all of the criteria then product ideas can be chosen to move forward to a product planning process. Those chosen as having the highest priority should best meet all of the criteria with the least organizational expense.
 Copyright GWR Research



Friday, November 23, 2012

Case Study: Standards of Performance



SHOWING EMPLOYEES THE PATH TO SUCCESS


The Corpus Christi Caller-Times Newspaper was having difficulty with its financial reporting and its payroll costs for the financial area seemed high.

After spending a few weeks with the personnel in the departments and reviewing operations, we felt like there was poor coordination between the various accounting functions and that there was duplication of effort. I was pondering an approach to address these challenges when I ran across an American Management Association workbook on Standards of Performance. It suggested that a job should be broken down into responsibilities that related directly to organizational goals. Further it said that these responsibilities should have standards set that related directly to an employee’s job performance1. The article also suggested job appraisals should be objective and directly related to the standards set.

One of the most basic employee needs is the need for security and this need is a key motivational factor in the work environment. It seemed that the standards of performance would be a good way to provide the company with a clear path to achieving its goals while at the same time providing the employees with the ability to be secure in their position if they met their standards of performance.

Clearly, implementing the standards of performance program would be difficult. First, the employees were suspicious of any new program that focused on job performance. Second, to implement the program meant that we would have to sit down with each employee and understand how each task they performed related to the department’s success and then set a mutually agreed upon standard for each task.

The employees were set more at ease when they were told the standards would be the basis for performance reviews and that standards would be mutually agreed upon. During meetings with each of the employees, we found that these individuals had a good feel of work that was being performed needlessly and of how the departmental objectives could be met. The result of the exercise was a group of employees that clearly understood their jobs and how to be successful in the job by meeting the standards set for each task.

The implementation of the standards of performance program resulted in a significant improvement in financial reporting and management of the company’s financial assets. We also identified and eliminated information gathering and reporting that was either duplicated or not needed at all. Additionally, as folks left or retired, we found that we were doing about twice the work more effectively with half the staff. We also found that the employees had a real sense of security and wellbeing because they understood the specific requirements to be successful in their jobs and received recognition as they achieved success.

This program also allowed us to understand the value of each job function and to establish benchmarks for pay rates that were meaningful to the employees and to the company.

From that point forward, I used this standards of performance program every opportunity I could. I felt like it worked for the employees and the company.
I think the greatest standards of performance success occurred at the Houston Chronicle. It was also the most difficult implementation. In my areas of responsibility there were about 1,000 employees and about 2500 independent contractors.

The Houston Chronicle was very successful and had (during the same week I was named VP) just purchased the assets of the Houston Post, leaving the Chronicle the only major newspaper in the nation’s fourth largest city. The managers rightly felt like they had performed well enough to win a difficult market battle. As a result these seasoned managers felt like a standards of performance program would not bring benefits worth the efforts of implementation.

I felt like we had a lot of tough competition and that to garner a greater market share we would have to introduce new products and be very focused on organizational and financial goals. I really felt a standards of performance program would help with the focus.

The managers didn’t share my optimism. Indeed the inertia was so great that I had to tell the division heads that I would not approve any performance reviews or salary adjustments if they were not accompanied by standards of performance for the position being reviewed. I said that this rule would go into effect in six months. Within six months the Houston Chronicle had a standards of performance program for every position in the advertising, circulation and marketing divisions.

To their credit, once the program was implemented, the managers took it to the next level by including training classes that would have to be completed for the individuals to hold their position and progress to new, more challenging positions. Bonus programs were tied directly to the same objectives as the standards of performance.

From the time of implementation to my departure seven years later, revenues increased by 60% and company profits more than doubled. That does not happen without folks who understand what must be done and are focused on successful execution.

How To Motivate A Sales Staff


What Employees Want

Much research has been done on determining what makes individuals reach higher levels of productivity. The most renowned studies were done by Abraham Maslow and resulted in Maslow’s “Hierarchy of Needs”. This hierarchy explains that individuals first need to satisfy physiological needs (food, water, etc.) before moving to higher levels of the hierarchy. The next levels; Safety, Belonging, Esteem and, finally, Self Actualization were achieved in order and only if the lower levels of the hierarchy were satisfied to some extent.

Frederick Herzberg used a similar approach to explain how individuals could be motivated at work.  His work can be related to Maslow’s research by matching motivating factors in the work place with Maslow’s hierarchy. Basic compensation can be related to the most basic physiological needs. Benefits and job stability can be related to safety needs. Company and employee sense of belonging can be related to belonging needs. Recognition can fulfill esteem needs and employee self-direction can fulfill self-actualization needs.

Research has shown that employers that successfully employ Herzberg’s “Hygiene and Motivation Factors” in the work place can have higher levels of productivity, lower levels of turnover and employees with higher levels of self esteem at work and home.

Assuming the basic survival needs have been addressed by compensation (the employee accepted the job at the offered pay rate), safety and security needs are the next to be addressed. Usually safety needs relate to job security and an individual is more likely to feel secure if they feel they are performing as expected. Here the responsibility rests on the shoulders of the manager to clearly articulate how success on the job is achieved. An employee that has a clear understanding of what is expected will likely perform up to those expectations, which will, in turn, provide the manager with the results wanted and an employee feeling secure in the knowledge that the performance requirements are being met.
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Directing a Sales Force

Successful direction of a sales force requires clearly establishing the parameters of success and insuring the sales staff is properly trained. The most difficult part of a sales manager’s job is identifying the tasks that will lead to success and measuring the level at which each sales person is performing those tasks. Identifying sales responsibilities is critical. Those responsibilities include:
1)    Product knowledge – can be determined through questionnaires administered after an indoctrination course.
2)    Industry knowledge – can be determined through questionnaires administered after an indoctrination course
3)    Sales volume – For any business to be successful, a minimum sales volume must be attained and can be broken down to minimum sales volume per sales person per sales period.
4)    Sales Calls – To reach needed sales volumes, sales calls have to be made. Most organizations have statistics on number of calls made per successful sale that can be used as a target for the sales staff.
5)    Account development – To grow new customers added must exceed current customers that become inactive.
6)    Customer satisfaction – This can be measured through customer surveys and customer complaints.

This list can be longer and more complex, but it must be clear and objectively measured. The sales manager and sales person must be able to look at the metrics and arrive at the same conclusions regarding goal attainment. The list of responsibilities should lend themselves to easily being incorporated into a Standards of Performance program.


Motivating a Sales Force

Successfully motivating a sales force requires the recognition that sales people will perform best when they can achieve the needs outlined by Maslow and Herzberg through the sales process.

Basic compensation is important and assures that individuals will be able to meet their basic financial (and physiological) needs. This can be accomplished by providing a base salary or a list of regular customers on which a commission is paid.  Commission programs can provide basic income and incentivize sales people to find new customers as well. Components of the incentive program can focus sales people to increase the number of active customers per period or the revenue per customer per period.  The basic salary and/or commission should provide a living wage with the ability to provide an income equal to successful sales people in other industries in the same market.

Safety needs can be met through providing a reasonable amount of time for a sales person to achieve assigned sales goals. Sales people like a challenge but, as with all jobs, a new sales person will require an amount of time to become productive. Most companies have statistics on the length of time required to acquire sufficient product, company and customer knowledge to be successful. Safety needs can also be met through certain benefit programs such as health insurance and 401 (k) programs.

Belonging needs can be met through sales meetings and company wide meetings that create a camaraderie that is supported throughout the company. Good sales managers will recognize the importance of a sense of belonging and will work hard to insure favoritism and unfair management practices do not impair team building.

Esteem and recognition can be accomplished through setting meaningful goals that are achievable. This can be a part of the commission program that focuses on new accounts, active customers per period, revenue per period per customer, multiple products per customer per period and so on.  Additional recognition programs for certain achievements can be held monthly, quarterly or annually to further build esteem and recognition.

Using job promotions as a form of recognition should be used carefully. A good sales person does not necessarily make a good sales manager. It may be desirable to create several levels of sales positions if promotion is to be used as a form of recognition.

Self-actualization can be accomplished by allowing sales people to help establish sales goals and “stretch goals”, develop new sales approaches and participate in new product design and pricing.

As a manager, it is important to approach staff motivation with a process that keeps a focus on the company and the sales staff.  Programs should be designed within the company’s financial wherewithal and in a staged approach. In other words, identifying responsibilities and standards should be implemented before motivational programs. Salaries and benefits should be within the company’s financial capabilities and should be the first motivational/hygiene factors addressed.

If a company already has a stable sales force but needs to improve productivity, focus might be directed more to upgrading the standards of performance and recognition factors.

Additional motivational/hygiene factors can be implemented at any time but should not disrupt progress being made by the basic programs.  These additional programs should be added when there is a tangible benefit that accrues to the organization and there is minimal disruption due to the implementation.

Creating a successful sales force is critical to the success of most companies.  Screening and choosing qualified individuals and subsequent training is paramount.

Beyond screening and training, creating a successful sales team requires management to spend the time to clearly understand what is needed for the company to be successful and translate that to individual performance requirements. Additionally, management must pay attention to the motivation and hygiene factors that will make sales people want to come to work in the morning and leave at the end of the day feeling good about their accomplishments and their company.

Each company will have a different set of challenges, and the approach to improving sales productivity will be different.

If a company chooses the right people, trains them and manages through a focus on performance standards and hygiene factors, the chances for success are improved dramatically. Additionally, the chances are increased that productivity will continue to be high over the long term and that employee morale will be high and turn over will be low.