This content relates to : NEW PRODUCT & SERVICE DEVELOPMENT


Ensuring the marketing and financial success of new products and services is challenging.

Six principles can increase the odds of NPD success: supportive culture, appropriate structure, disciplined strategic approach, formal NPD process, applied NPD tools, and judicious market segment targeting.

These principles address NPD “not being a tactic in search of an enduring strategy.”

Peter Klein ‘68 and Harvard Business School (MBA, ‘71). He founded PK Associates, a consumer products focused growth management consultancy after serving as Corporate Officer at The Gillette Company and at Nabisco Holdings Corp. He co-authored the book THINK TO WIN — Unleashing the Power of Strategic Thinking, published by McGraw-Hill He holds two patents and Advertising Age recognized him as one of “10 Innovators” in 2005 and described his contributions to marketing as having “a pivotal role in reshaping package-goods marketing over the past quarter century.”

Hello, I’m Peter Klein.   

There are a lot of new product or service marketing successes, but financial failures. I define new product or service success as meeting both its marketing and financial objectives. Nothing else counts. But ensuring marketing and financial success of new products is challenging. It’s very challenging. And it’s far easier to say than do. In the global consumer products industry, the one that I’m most familiar with, and I have no reason why it isn’t true for other sectors also, data says that at least for the last five plus decades, Seventy to eighty percent of all new products or services fail to meet their financial and marketing objectives. So the graveyard of new products and services is massive. And amazingly, with all the lessons learned over the decades, and I’ve been involved in over five of those decades. Plus all the big data, all the AI, the New Analytics, the new development processes and testing tools that have been developed over the last five decades the failure rate has not changed. Something is clearly wrong with the new product or service model. My point of view is when you’re in a hole, stop digging.   

Over the last five decades, I developed and practiced six new product development principles. And I’ve been associated with some of the most successful new consumer products that have been introduced over those decades. The six principles that I’ll briefly discuss that can increase the odds of new products or service success are the following. Number one, a supportive culture, number two, an appropriate structure. Three is a disciplined overall strategic approach. Number four is a formal NPD – new product development – process. The fifth principle is the right applied NPD tools. And the final sixth principle, is a judicious market segment targeting. The six principles ladder up to the higher ground idea that all new product development; that includes new services development, should not be a tactic in search of an enduring strategy.   

Some comments quickly on each of the six principles. First, a supportive total company culture and behavior. A critical NPD success factor is senior executive management endorsement and support, or nothing meaningful will happen with predictability and consistency. Consistent and visible management support addresses issues such as a preoccupation with today, the next month, the next quarter, at the expense of tomorrow. The issue of typical organizational risk aversion, and the issue of second guessing from employees who never spent time in NPD and don’t appreciate the difficulty of the task.   

My second principle, is a formal NPD organizational structure. A fully dedicated NPD team is required with focused responsibility and accountability. The NPD organizational structure must address traditional, formal and informal team mental blocks. I call them mental blocks. And organizational disconnects with critical support groups. These are folks who spend five to maybe twenty plus percent of their time supporting new product development and commercialization. But they do not directly report to the NPD marketing or Research and Development group.   

The third principle, is a disciplined, overall NPD approach, a strategic foundation, including a well articulated organic growth vision and strategy that is communicated up, across and down the company is critical to ensure senior management buy-in and ownership. Adopting what I refer to as a total innovation perspective as part of an overall strategic approach to NPD. And including a proven left and right brain creative and disciplined stage gate NPD approach delivers a clear new product portfolio and plan that addresses key NPD challenges. One of those challenges is the lack of experienced NPD personnel, and typical budget constraints. The mental model for total innovation I used for decades as part of an overall NPD strategic approach is to characterize a portfolio of innovation in three groupings. One, continuous improvement, two, incremental improvement, and three, Big Bang ideas. In my second blog, “Do you want to succeed and grow by innovation?” I explain each of these three total innovation areas and provide examples to bring them to life. I won’t repeat them here so I’ll move on to the fourth of six principles that can increase the odds of new product or service success, which is, number four, a formal NPD process. 

This is all about consumer or customer driven idea development and qualification. Project screening against agreed to marketplace and financial criteria, senior management approval and implementation. A consistent well led and managed stage gate process that is understood and practiced by everyone touching NPD drives projects being developed and commercialized on time and on budget without excessive bureaucratic red tape.   

My fifth principle is applied NPD tools and techniques. Now beyond continuous improvement, which are product or service improvements, line extensions, or say flankers push the edges of innovation through deductive and inductive NPD tools that help identify and qualify incremental and Big Bang ideas and projects. Understand and apply what has and what has not worked in the past. And also recognize emerging new consumer and customer insight research tools that are sufficiently fast and cost efficient.   

My final sixth NPD principle is that judicious market segment targeting is a mandatory, a necessity. You must clearly define the consumer or customer. Beachhead target, what I call the To whom? For what? And why? And remember, to leverage brand equity wherever possible, into adjacent or new segments, maybe even into new categories, or into new store sections. Marketing 101 to me says that whether you are involved in an existing brand or service, in the world of marketing, or in specifically, new product or service development, always drive to be both relevant and competitively differentiated among the target, including critically, heavy and super heavy category users. Remember the words relevant and differentiated. That’s the breath test through the eyes of the consumer or customer.   

Finally, practice these six new product or service principles, and my experience says, you’ll meaningfully increase your marketing and financial success odds. But never forget to get senior management buy-in and ownership to the principles to assure that their cross company endorsement and continuity exists. Otherwise, new product or service development will be treated like a water faucet, with new product development budgets turned on and off based on quarterly or monthly sales. And the company chasing mostly or only close in continuous improvement new product projects. And the CEO asking, “Why is there no meaningful growth and innovation being delivered by my company?”.   

Thank you. 

Peter Klein, ’68 

Founder, PK Associates