According to the McKinsey Global Institute, for every 7 new product ideas that are ideated, only 1 will make it to the market. Even then, there’s a 25%-45% chance a company’s product creation may fail. However, the study also indicates that at least 25% of a company’s revenues stem from new product development. These numbers may seem insignificant, but they are the key reason as to why it’s important for companies to invest in the product development process.
Profits are just one of the few reasons why it’s crucial to build a strong and evolving new product development process. Further reasons will be explored within this article.
The Case for Creating a Robust Product Strategy & Product Development Process
Listed below are the advantages of developing a product according to a set-out new product development process:
A product development process reduces idea rejection and resource wastage
When developing a product, companies come up with multiple ideas. As we’ve seen, so many ideas don’t even make it to the end-user they were designed for.
The idea creation process can be time consuming and effort-heavy. When companies don’t have a set process for creating a product, they may end up wasting precious time, effort, and resources that could have been put to better use elsewhere.
The new product development process gives companies the guidance and support to screen and vet ideas for success, before actively pursuing them. For example, did you know that 30% of all new product development lead times involve waiting? When businesses are aware of what they need to spend time on, they can avoid wasting time on unprofitable ideas.
Additionally, if companies start to focus on ideas without screening them or testing them in the market, they may spend a lot of resources reworking these ideas.
A product development process can help companies get the most value out of their market research and digital product testing
Having the right information when creating a product, can ensure the product is developed more mindfully. But when businesses don’t have a set process for market research, it becomes difficult to develop the product.
For one, team members may start to work in an unsynchronized manner. They may follow their own leads for information, without collating their findings in a common research pool. This can lead to employees conducting the same research multiple times, which can be very wasteful. Additionally, employees may not seek input from one another and thereby develop MVPs that may be very limiting in their design & functionality.
When companies have a robust and focused new product development process, they automatically have a prescribed market research process. They will be able to coordinate their market research activities and ensure each member in the product development team has the information they need to design a product aligned to the target market’s needs.
One of the most useful practices that companies use when developing a product, is Python web scraping. It is the process of using certain tools to scrape the web for relevant, real-time information.
In particular, Python web scraping is used by reputed companies to extract all kinds of valuable information from websites quickly. This is because Python offers unique developmental advantages that very few languages do. With Python web scraping, companies will be able to access many more sources of primary & secondary research information, enabling them to convert the data into useful formats to make it compatible with internal software. This will reduce the need to go out and conduct research. Additionally, it will take significantly less time, money, and effort to research the company’s target market.
The alternative use of Python web scraping is the testing of web-based applications. One of the core stages of the new product development process is product testing. With Python web scraping, companies will find it easier to test if the codes of their new digital application/website/software are performing correctly or not. Additionally, companies can build and host their own APIs to interact with online data. This can help them identify issues and rework their product design, so that the final product that is launched, will be compatible with the target market’s needs.
A product development process can help businesses better cope with external change
The product development process functions as a default fall back plan in events when there are external contingencies. The process is crucial for finding grips on a situation that may be beyond a company’s control.
For example, a political, cultural, technological, or economic crisis may prevent companies from developing a specific type of product. Or, these changes may affect what materials the product is made of, where the product is sold, how quickly it is launched, and other product strategy-related decisions. These external changes may end up transforming the needs of the business’s entire target market.
Not knowing how to cope with these changes can be particularly debilitating for companies. In particular, studies show that 95% of new product innovations fail when companies have limited knowledge and support in managing external changes.
But when businesses follow a specific process for developing a product, they will have a tried and tested process that can help them limit the amount of risk they face. Product development teams will know where they may anticipate issues and prepare themselves in advance to tackle these challenges.
A product development process ensures the business has a long and healthy lifespan
Research shows that 20% of new companies fail within the first year of starting. This failure rate increases to 30% by the end of the second year, to 50% during the first five years, and to a whopping 70% within a decade of the business starting.
While there are myriad reasons involved, one of the primary issues is poor product innovation. In the absence of a product development process, companies may find themselves making all the wrong choices and taking decisions that can hurt their revenues and their life.
A new product development process will ensure that companies are able to identify pitfalls before they affect them. They will be able to take the necessary steps to create products that offer value to customers. Consistently creating products that can benefit target audiences, will empower companies to have long lives in their industry.
As we’ve seen, a product development process can serve various functions and affect the life of a company. By ensuring that companies develop a robust new product development process, they’ll be able to make sure that they make smart decisions that can benefit them in the long run.
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