It’s easy to imagine that building a new product is like building a house—first the foundation, then the frame, then the first floor, and so on. Unfortunately, product aspects are rarely locked in that way. Occasionally they are, as when a technical process dominates development, or when a semifinished product is acquired from someone else, or when legal or industry requirements exist.
We usually assume everything is tentative, even up through marketing. Form can usually be changed, and so can costs, packaging, positioning, and service contracts. So can the marketing date and the reactions of government regulators. So can customer attitudes, as companies with long development times have discovered.
This means two long-held beliefs in new product work are actually untrue. One is that everything should be keyed to a single Go/No Go decision. Granted, one decision can be
Decisive—at times, for example, when a firm must invest millions of dollars in one large facility or when a firm acquires a license that commits it to major financial outlays. But many firms are finding ways to avoid such commitments, for example, by having another supplier produce the product for a while before making a facilities commitment, or by negotiating a tentative license, or by asking probable customers to join a consortium to ensure the volume needed to build the facility.
The other untrue truism is that financial analysis should be done as early as possible to avoid wasting money on poor projects. This philosophy leads firms to make complex financial analyses shortly after early concept testing, although the numbers are inadequate.
Still another tentative matter is the marketing date. Marketing actually begins very early in the development process—for example, when purchasing agents are asked in a concept test whether they think their firm would be interested in a new item. Rollouts are now so common it is hard to tell when all-out marketing begins.
Often no one pulls a switch and marketing instantly begins. We more often sneak up on it, which clearly affects the evaluation system.
What results in some cases is a sort of a rolling evaluation. The project is being assessed continuously, figures are penciled in, premature closure is avoided, and participants avoid mind-sets of good and bad.
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