Getting new products to market ahead of the competition is becoming increasingly important for manufacturers. But a new report shows that established companies are often being held back by a lack of ideas, out-of-date procedures and poor management.
The Still in Development report from management consultancy the Bourton Group found that while companies were `satisfied’ with most aspects of their innovation projects few reported `great success’ on anything other than performance specification. On aspects such as cost, timeliness and fulfilling the original concept, most new products were not as successful as they could be.
The first problem for companies was that their ideas came from too few sources, according to the report. Customers were by far the biggest source of ideas – over 70% of companies regularly turning to them when developing new products. The second most popular source was competitor monitoring, just ahead of self-generated research.
Allan Parker, leader of Bourton Group’s new product introduction practice, says: `The problem is that if customers are telling you their ideas, they will also be telling your competitors. These leads often just give you small changes in products. So where are you going to get the idea which could change the market?’
The threat from new players was highlighted this week with the launch of washing machine manufacturer Monotub Industries on the Alternative Investment Market. Monotub hopes its machine, with features such as 40% larger capacity and easier unloading, will emulate the success Dyson had in challenging established vacuum cleaner manufacturers.
One way of finding new ideas is by using independent research. But just 12% of the firms in the survey got ideas from joint projects and even fewer from working with academic institutions. Parker says: `Universities are often the best place to find cutting-edge ideas and they have changed a lot in terms of being able to work with business.’
As well as working with more outside bodies, Bourton’s report suggests that manufacturers will have to improve their internal processes to become successful innovators.
Just a third of those surveyed consistently set deadlines for each stage of the process. `If you set deadlines all the way back, then you can spot when something is going wrong a lot earlier,’ says Parker.
And when things do go wrong, few companies know when to pull the plug – just 12% of the sample used clear criteria for killing a project, while 25% never did. Of those projects surviving to completion, most were assessed against whether they met financial targets. But generally this was done only in terms of short-term cost outcomes, with just 20% always using systematic cost control.
Sticking too closely to cost might seem like an easy way to kill creativity, but Parker disagrees. `I think you can still produce blue-sky innovations to targets but you have to make sure that the measures encourage innovation, rather than stifle it.
`One of the best examples was putting a man on the moon. The statement that we had to have a man on the moon by the end of the decade was like a timetable. It unleashed an enormous amount of aerospace innovation which would not otherwise have happened.’
Only around half the manufacturers in the report measured the success of new products by whether they met timetable targets. And just 12% looked at all four key factors – cost, development time, customer satisfaction and product performance. `Most people said using performance measures was the best way of enabling innovation, but it appears they are not practising what they preach,’ says Parker.
The biggest barrier to innovation, however, was lack of vision and a `stuck in the past’ attitude. `Bearing in mind that most of the respondents were managing directors, that is very worrying,’ says Parker.
Board members with non-engineering backgrounds often felt that they did not know enough about innovation, the report says. One of its main recommendations is that new product introduction should involve any non-technical departments.
Parker says: `The concept of team-based working, with multi-functional teams driving productivity, is well-established on the shopfloor and should be the case with innovation.’
This supports the findings of a recent survey by German consultancy Agamus, which showed that UK innovators tend to have isolated R&D departments.
The good news from Bourton’s survey is that UK firms are no worse than those in Germany or the US. The competition, however, is unlikely to stand still. `The product life cycle and development cycle are collapsing,’ Parker says. `People recognise the need for change, but so far haven’t delivered.’
Still in Development is available from the Bourton Group, priced £50. Contact Barbara Layton-Henry, 01926 633333.