The Secret Recipe for Success - Bayly Group

Mark Bayly Creating a New Product

The Secret Recipe for Success An eBook for Businesses creating physical products for other businesses

Ph +61 3 9413 9000 [email protected] www.bayly.com.au

Contents What’s the secret? ........................................................................... 3 Introduction ...................................................................................... 4 Is this you? ....................................................................................... 5 Using your sales team ..................................................................... 6 What you need to do ........................................................................ 6 Step 1 - Market Research ................................................................ 7 Step 2 - Customer Research............................................................ 8 Discovery interviews ................................................................... 9 Preference interviews ................................................................ 10 Step 3 - Product Research ............................................................. 11 Step 4 - Product Architecture ......................................................... 11 Why does this approach work? ...................................................... 12 About Mark Bayly ........................................................................... 13 About Bayly Group ......................................................................... 13 Contact Bayly Group ...................................................................... 13 Recommended reading .................................................................. 14

Page 2 Creating a new product: The Secret Recipe for Success

What’s the secret? In truth, there really isn’t one. Creating, launching and selling physical products is the key process for many businesses. Some businesses sell products to other businesses (business to business, B2B). Some businesses sell products direct to consumers (business to consumer, B2C). Published research from Copper finds that an average of only 25% of products that make it to market are successful. 1 Research from Strategyn suggests the rate of success is only 5% to 10% on average. 2 Where else in our businesses do we accept these success rates? Successful businesses really own their new product development processes and are able to design, manufacture, distribute, sell and support products on a global scale. They shroud their processes in mystique, personality,

25% of products that make it to market are successful

stories of outrageous brilliance and foresight to create emotional engagement between

- Dr Robert Cooper, Winning at New Products

customer and brand. However, there is really no secret to how they achieve new product success. In simple terms, successful businesses have an effective new product development process which is designed to: 1. Understand who their customers are 2. Discover the important problems their customers are experiencing 3. Provide the absolute best and most valuable solution to their customers problems When you add to that a great design and development process, you can achieve great new product developments that are successful 86% of the time, an improvement of 300%+.2

1. Copper, RG, “Winning at new products”, 3rd Ed, page 11 2. Stragegyn, “Innovation Trade Record Study”, 2014 Page 3 Creating a new product: The Secret Recipe for Success

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A New Product Blueprinting process can improve your probability for new product success

Introduction The purpose of this ebook is to share a way of increasing the probability that your new B2B products will be successful. Most businesses do not use a structured process to find out what their customers want, nor do they know how to consistently deliver a product that satisfies their customers needs. As a result, businesses waste extraordinary amounts of their precious cash designing products that their customers don’t want or need to buy. What you are going to discover in this ebook is how having a clear product vision, a blueprint for uncovering your customers’ needs, a proven and robust product development process and faultless market launch approach can improve your probability for new product success. Through this ebook you will learn how the most successful businesses use a New Product Blueprinting process and how to apply these same ideas and processes to your business.


Is this you? Business owners and senior managers come to me all the time with a similar story. “I don’t have the time to focus on making sure that my new products will be successful. I rely on trusting my gut about what the new product should be, what features it should have and how much it can be sold for in the marketplace. I have some close customers that I trust to give me feedback on some of the product ideas. The rest of my team don’t have the knowledge or the experience to make the call about what is going to work and so it always ends up my decision. “I feel like I am usually right but there is a lot of risk in doing things this way. A lot of the time the product ideas don’t get to market because the risk of investment is too great and I can’t take the chance on whether I can get the returns I want. As a result, we tend to stick to minor product innovations and updates to the products in the marketplace. We spend a lot of time looking at what our competition is doing. It makes it really hard to grow the business because the competition is always working on their products too. “I wish my business would be able to make more money, that our products were market leaders and that we could take them to markets all over the world.”

Is this you? Do you make decisions based on your gut feel too often? Do you have accurate information on what your customers want so that you can make effective decisions based on facts instead of hunches? You are not alone, just about everyone relies on their gut feel to some degree. A lot of business owners feel that they are the only people with a complete view of what their customers want, what they will pay for it and what it will cost to develop and launch the new product.


Using your sales team Your sales team probably think that they know what your customers want, and to an extent that is true. Your customers are likely to tell your sales team about what they want all the time. Some successful companies are organised well enough that they have a system that gathers this information so that it can be reviewed on a regular basis to help guide the strategy behind your product development objectives and this helps increase the success of your product in your market. We all know that customers love to have a whinge right? So it is also true that those same customers are telling your competition’s sales team exactly the same thing, or even worse telling them about the things that are more important because they like them better. How can you deal with that? The downside on relying on customer feedback is that it doesn’t offer you an advantage of differentiation over your competition. You are all likely to have the same information about what your customer thinks is important. You are also missing any insights of what these expressed needs mean in terms of the level of performance required, how much more they would pay for this problem to be solved and whether this really is the most important opportunity for innovation in the market.

What you need to do Use a proven structured process to really determine what your customers want, analyse and value the characteristics of the products they desire and connect with their emotions to make your products great, successful and very profitable. There are four fundamental steps identifying your customers important problems which need solving: 1. Market Research 2. Customer Research 3. Product Research 4. Product Architecture

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Step 1 - Market Research Customers come in all shapes and sizes across an infinite number of demographics. Is it reasonable to think that the customers might have equally diverse problems that are waiting to be solved? Of course it is. For your business, it is critical to try and prioritise the groups of customers, or in marketing speak, the market segments and their specific problems that provide the greatest commercial value for your business. This is very important because you don’t want to waste your money developing products to solve problems in low value market segments. In summary, when considering the market segment data, be as specific and detailed as you can. We recommend that you start with the following characteristics of the market segment for B2B products:  Size of revenue opportunity  Market segment growth rate  Market segment profitability  Unmet customer needs  Likely power of value proposition  Likelihood of technical solution  Current market presence The segments that you decide to try and dominate are chosen based on these characteristics. The segments also needs to align with the strategic goals of your business so you should validate your thinking and decisions based on your:  Company Vision  Brand positioning  Comparative technical advantages  Core R&D strengths These activities should happen hand in hand and the problems you identify in the next step should influence the decision you make on which market segments to dominate.

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Step 2 - Customer Research Customer research is a really critical aspect to making sure you define the requirements of your new product and it is the area that has the biggest impact on your end results. If you are going to just focus on one area of the four steps, this is the one to focus on. Conducting customer research will usually highlight any concerns about the consistency of the assumptions and decision made during market research. The customer research step consists of two interviews that are undertaken with a small subset of 6 to 10 important customers in the market segment you have identified.

What are your customer’s important problems? Make sure you understand these before you start designing your product


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Discovery interviews This first interview is focused on discovering problems. Conduct a series of discovery interviews with 6 to 10 important targets / clients in the market segment you have identified. Using a properly structured interview process in a one off interview arrangement, work with the group to determine and tease out what their problems are with the current products in the market segment. From the interview results it is be relatively straightforward to evaluate and rank the 10 or so most important problems that this group of customers face. You now have the most critical needs of this market segment from just a small sample of interviews.

By focusing solely on identifying problems and not solutions, you will gain the key insights through a small market sample


Preference interviews The second interview helps you determine the most important problems under-served by existing solutions. Focusing on the most important problems identified in the discovery interviews, work with your 6 - 10 target customers / clients to rank or score each of the needs in terms of their importance, and how well the need is met in the current market.

Armed with the preference interviews results, a simple market satisfaction gap analysis can isolate the handful of problems that are both important to customers as well as badly served by the current market. These are the items that you need to focus on solving to produce a product that will outperform any other competitor.

The extreme opportunities are the fundamental requirements that your new product needs to address


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Step 3 - Product Research Conduct side-by-side testing of competitor products against the key needs identified in the market satisfaction gap analysis.

During the preference interviews you also need to collect information about how customers normally test the performance in these key areas as well as an understanding of what levels of performance they would value. Competitor testing will form the baseline of the current market performance. Use this baseline to set the performance targets for your new product.

Step 4 - Product Architecture Compile information from the previous steps and output a set of product objectives which can be presented in a business case for review and approval before moving into detailed development of the product.


Why does this approach work? There are good reasons why you should use this approach.

It is cost effective This process is advantageous in that it can usually be achieved with existing business resources and does not require costly market research investment. You can avoid ambiguity in the direction of the costly product development programs. By defining the key requirements of a product at the beginning of development it is easier to minimise feature and performance creep and reduce the number of iterations in the design process.

It builds your relationships This process builds and enhances your existing customer relationships by helping produce a product that solves the customers most important and most poorly served needs.

It focuses on solving real customers problems The biggest advantage of this process is that it creates new product opportunities away from the temptation of boardroom groupthink. The process explores ideas away from marketing, sales or engineering departments and allows you to gain a deep understanding of market needs.

It’s a proven process This is not a new process but has been developed over more than a decade. It forms the fundamental new product development process at successful companies like Du Pont, John Deere, GE, Dow Corning, ITW companies and more. It is not complex and is accessible to any B2B business to use to help create great new products.

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About Mark Bayly Mark Bayly is an awarded engineer with over 30 years experience in the design and engineering of products in an ever widening range of markets for business and consumer products. For the past 23 years, Mark has run the family business previously known as Bayly Design in Melbourne, Australia. Mark’s experience provides him with the real insights earnt through hundreds of design projects. After playing his part in the proliferation of “idea” based design processes, Mark is committed to helping businesses to make better use of the knowledge that exists in customer insights, and use this knowledge to design successful products. Contact Mark at [email protected]

About Bayly Group Bayly Group was established in 1971 to provide Australian businesses with the best industrial design consulting services available. Bayly Group recommends that our B2B customers use a New Product Blueprinting process at the beginning of projects to develop effective product requirements based on real market needs. We have tools that greatly simplify and streamline the process. We can assist in planning and conducting interviews as well as presenting interview data to make adoption as easy and as effective as possible. Bayly Group is renowned for its product design and development services and supports its customers at all stages of the product development process.

Contact Bayly Group 9/84 Church Street, Richmond VIC 3121 Ph +61 3 9413 9000 [email protected] www.bayly.com.au


Recommended reading Christensen, CM, Hall, J, Dillon, K, Duncan, DS, “Competing against luck, the story of innovation and customer choice” Adams, D, “New Product Blueprinting, the handbook for B2B Organic Growth” Ulwick, AW, “Jobs to be Done, Theory to Practice” Ulwick, AW, “What customers want”
