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Developing and Using the Product Innovation Charter – Turning Corporate Strategy into An Easily Understood Action Document
By robbeachy | February 27, 2008
There’s a great Dilbert cartoon that starts with the statement, “all companies need a strategy so the employees will know what they don’t do.”
Did you know that 59% of new products launched in the market from market leaders are successful, meaning they meet their sales, market share and profitability goals?
Did you know that over 60% of all product failures in the market every year are because they failed to meet customer requirements?
What is your company’s strategy? More importantly, what is the substance, the vision, the objectives, the customers and markets your company serves and does your strategy define your tactical approach to the marketplace?
Do finance, IT, production, engineering, sales, marketing, R&D and all departments have the same vision and definition of strategy?
How much of your focus is “new to the world,” “new to the company,” “line extensions,” “response to competition” or “cost improvements?”
How much of your time should be focused on new?
What are the parameters of your market?
What are your core competencies and your core incompetencies?
Does your strategy drive product development or do ideas? Does your strategy clearly define what you do and don’t do?
According to the PDMA (Product Development and Management Association), the premier global advocate for product development and management professionals, the most successful companies lead New Product Development with Strategy.
It makes sense that we need a road map to get where we need to be.
Companies that drive their New Product Development successfully also employ some form of what we call PIC, the Product Innovation Charter. The PIC translates corporate strategy into an easily understood Strategic Policy with metrics and a tactical guide.
The Product Innovation Charter charts a company’s or product group’s direction, clearly identifying the conditions under which your organization will operate.
It identifies your markets and customers, and the strengths you will leverage to be successful in these markets.
It details the group’s goals and objectives, clearly aligned with corporate goals and objectives so every PIC builds toward corporate goals.
PIC also directs the tactical guidelines to the market from quality to the degree of newness in your plans and projects.
PIC goes by many names but it is any plan that translates Corporate Strategy into a Strategic Policy to communicate and guide idea generation. It also guides every aspect of product development from advertising to market research, R&D efforts, sales focus, profit, and loss.
Before we go any further, according to leading research, the PIC, in many companies is credited with helping to increase productivity by over 25% measured against new product development successes.
Most PICS Have the Following Four Key Components
1) Background: Key ideas from the situation analysis, core competencies, markets served, and how we approach the market.
2) Strategic Arena: The market and technology focus of your strategy, the size and shape of your market place.
3) Goals and Objectives: What the new products or services will accomplish, short and long term objectives and metrics (e.g. Sales, ROI, Investment, GM%, Price, SOM)?
4) Tactical Guidelines: Rules of the road, innovativeness/newness, time, quality, cost, branding or leveraging of markets, technologies and core competencies. Upper management “rules of the road.”
PICs are typically a 1 – 2 page document and can be read by anyone on the team or supporting the team to clearly understand what you do and don’t do.
PICs should be reviewed annually and be required for all new platforms/product lines/portfolios. How many PICs, or how broad or narrow their focus is determined by the groups and management, and varies greatly, just like other strategy documents.
According to PDMA research, market leaders strategically focus 33% of all new projects on New to the World and New to the Company products and services.
88% of the best companies drive new product development with strategy and 70% of other companies do too.
Of all the companies surveyed in the last two PDMA surveys, the greatest cause of product and service failure is not understanding the customer and the greatest focus of New Product Development is focusing on better understand the customer.
The first key to New Product Development success is knowing what you do and don’t do, and incorporating that critical knowledge into a document that leads all new product development and is shared, understood and followed by the entire company.
Topics: New Product Development Process |