Medical Device Link.

• Market definition. Under this heading can be grouped criteria for evaluating the technologies, customer segments, and geographic territories that will define the future position of the company.

• Market size and growth. In this area, company leaders seek to define the minimum market size and growth potential necessary to support a product development initiative, as well as other company objectives.

• Returns. In this area, management measures a proposed product development initiative against the minimum acceptable return on investment, net present value, or cash flow. Together with other factors, this evaluation can then be taken into account in determining whether to move ahead with the proposal.

Once such values-based criteria have been established, senior management must clearly articulate them throughout the organization. Doing so helps to build a common vision of the company's future direction, markets, customers, and products. When these values have been accepted as guiding principles throughout the organization, senior management must then take the next step of endorsing processes that will effectively mobilize the company's resources in support of those principles.

Product Development Process

No company's processes can ever be any better than the information supplied to them and the tools used to manage their outcome. In the case of product development programs, effective use of time and resources is critical. Waste of either can result in a missed launch window (defined as the point in time of a competitive product launch) and, ultimately, lost profitability.

It has been estimated that, for most industries, missing a launch window by six months can mean the difference between profitability and breakeven (see Figure 1). Alternatively, launching a product six months early can result in a threefold increase in profitability.¹

Figure 1. Relationship of cumulative profits over a product's life cycle to the product's launch date relative to that of a competing product. A launch date six months after release of a competing product can reduce profitability by nearly a third; releasing six months ahead of the competition can increase profitability by a factor of three. Modified from Wheelwright and Clark.1

 

Often, the difference between the success and failure of a product development process lies in the company's effective use of design control and project management to control the process. Many companies use a decision process similar to the development decision cycle described below (see Figure 2). Although there exist many variations as needed to address a company's particular needs, most such product development cycles include some version of the following nine phases.

1. Idea Generation. The development decision cycle starts with the search for ideas. The search should be a formal, structured process that seeks out and includes input from relevant medical and scientific literature, customers, advisory bodies, other company departments, and company partners (e.g., suppliers, distributors, development partners). Ideas generated in this phase should be tested for compatibility with the company's predefined innovation values—that is, its visible, articulated goals, objectives, and strategies.

2. Screening. In this phase, ideas should be further screened to determine whether the company possesses the necessary competencies and resources to support the idea. If not, a further examination should be considered to determine whether the company can obtain them, how it can do so, and what the cost of obtaining them might be.

3. Concept Testing. During this phase, the product development team refines the product idea into a product concept targeted to specific customer segments. The key question to be answered in this phase is whether the concept is marketable.

4. Strategy Development. In this phase, the team defines the size and structure of the product's target market, creates a strategy for positioning and selling the product, and establishes goals for market share and profit for the first few years after launch of the product.

5. Financial Analysis. Using information developed during previous phases, in this phase the development team conducts a rigorous examination of the marketing strategy to determine whether it is possible for the product to meet company sales, cost, and profit objectives.

6. Product Development. If responses to all the company's previous inquiries have been positive, the product development team is finally ready to turn its attention to the actual development of the product itself. During this phase, which includes an iterative loop linked to market testing (below), the team develops the product concept, drawing, or prototype into a physical product. The key question addressed during this phase is whether the product is technically and commercially viable.

7. Market Testing. In this phase, pilot production units of the finished product are tested to determine whether it performs as expected in final form. Questions asked during this phase include issues of functionality (e.g., are the packaging, labeling, and servicing characteristics as expected?) as well as business issues (e.g., will the product in this form meet the company's sales and financial expectations?). Feedback from this phase must be provided to product development personnel for needed refinements.

8. Commercialization. This phase is intended to determine when, where, and how the completed product should be launched. Fixing the timing of a product launch could be as simple as the date of the next relevant trade show, or as complicated as watching the competition in order to preempt, parallel, or follow its lead in the market.

The location of a product launch can be equally complex. The team must decide whether to launch its product in a particular region, nationally, globally, simultaneously in several places, or on a rolling basis starting in some defined locale and advancing in defined steps.

If the team has done its earlier work properly, how the product is to be introduced is usually a simpler question to answer. In effect, the task at this phase is to confirm the positioning, targeting, and distribution strategies already defined for the product (strategy development, above).

9. Postlaunch Review and Future Development. In this phase, the development team convenes to gather and critique user feedback necessary to update and revise forecasts and expectations. Such feedback should also be used as a basis for development of the next generation of the product, or for the generation of ideas for an entirely new development cycle.

• Less is more. Rigorous reduction by means of the product funnel ensures that only products with the best chance of market success receive priority. As a result, more products hit specified launch windows.

• Faster cycle times. With better management of a smaller number of projects, companies can ensure both better design and faster development cycles.

• Better integration. The use of institutionalized project management and design control ensures the integration of business functions and development phases, thereby promoting teamwork and accountability.

• Increased sales, profitability, and market share. Hitting or accelerating launch windows increases the chances of market success in terms of sales, profits, and market share.

• Success breeds success. As more successful projects hit their launch windows and meet company expectations, the slope of the learning curve will decline and the processes will become second nature.