“In this world you’re either growing or you’re dying so get in motion and grow.”
–Lou Holtz, Football Coach
I like to ask media CEOs what their top growth priorities are. Many seem to focus on finding growth through optimization levers. How can we get just a few more subscribers to our existing publication using existing marketing channels? How can we shave a few cents off our printing costs? How can we reorganize to reduce payroll? I’m not saying these are bad ideas, but growth through core business optimization is not sustainable. The only truly long-term growth strategy includes innovation and new product development.
New products are the lifeblood of an organization. Given changes in technology, consumer preferences, and cost structures, if you don’t innovate you will die. Don’t believe me? Out of the companies that were in the Fortune 500 in 1955, only 61 are still on the list. 88% of the companies have gone bankrupt, merged, or have fallen in stature. What makes you think you are immune to this phenomenon?
Many companies think they have launched a new product by putting a pdf version of the print product online, or because they created an iPad digital edition of their magazine. I hate to break it to you, but this simply isn’t sufficient.
I have found that too many complacent content companies do not take advantage of rigorous New Product Development (“NPD”) techniques, that the best and most innovative companies apply.
Core Principles of Successful New Product Development to Monetize Your Content
I am passionate about the topic of New Product Development and taught a course on the subject at Boston College. I practice what I teach. Here are what I have found to be the core principles of good NPD practices
1.The Board and CEO commit to investing in New Product Development
I have heard all the excuses. “We don’t have time.” “Resources are better spent focusing only on our main product.” “We have tried new things, but nothing works.” While you need to keep focused on your core business, that’s not an excuse to turn a blind eye to innovation. Stop thinking solely about short-term earnings and visualize the long-term. You won’t have a long-term if you choke off investment in NPD. The firm Change Logic understands this conundrum and developed frameworks for organizational change needed to both manage the core and innovate. You might want to check out their latest book, Lead and Disrupt.
2.NPD goals link back to an overarching strategy
The temptation may be to have a great, creative idea and just run with it. That’s better than doing nothing, I suppose, but aligning NPD efforts with strategy increases success. According to a study by Dr. Christopher Bart of the DeGroote School of Business in Ontario, Canada, there is a positive correlation between using a “product innovation charter” (a strategic mission statement for NPD) and success of new products. Keep efforts moving towards a big picture strategy – the specifics will morph based on marketplace feedback.
3.The team tracks progress toward a set of measurable goals
Set some targets from the beginning and measure movement toward them. With advances in technology, it’s possible to keep track of just about everything. Companies should set short and long-term goals for new products across key metrics, for example: revenue, profit, traffic, email sign-ups, new business conversion, renewal rate. Some leaders resist setting targets, because “they are often inaccurate.” I do agree that targets are often inaccurate, but the purpose is not to tell the future for the sake of telling the future. The purpose is to diagnose where things are working and where they aren’t. You need some stakes in the ground to measure progress.
Let’s say our goal is $1 million in revenue through 100,000 monthly visitors, 10,000 new email sign ups per month, and 1,000 new customers per month. If we don’t meet the $1 million revenue goal, we can look at which one of the three components was off to identify where to spend effort in the future.
4.The firm uses critical go/no-go decision points to reduce risk
The fancy term for a process with checkpoints is a “stage-gate process.” When we link to a strategy and have measurement mechanisms in place, we can make sure we place the right bets, at the right time, on the right initiatives. While it is essential that leadership fully commits capital to NPD projects, it is not essential that the company spends the money all at once. Investment should be made gradually as experiments yield favorable results.
5.Leadership injects marketplace feedback across the process
I cringe when people tell me they do not use consumer research because “Steve Jobs didn’t listen to the customer.” That’s simply not true. His vision may have come from within, but it was grounded in being empathetic with the reader/viewer and building products that they would want. The good news is you don’t need to be the creative genius that Steve Jobs was to understand what consumers want. There are proven quantitative and qualitative tools that can be used to solicit feedback during many stages throughout the product development process.
New Product Development is a Must – and It’s Fun
New Product Development is risky and complex – it’s also vital to long-term success and fun! It’s a mix of left brain analytics and right brain creativity. Advances in data science and software development methodologies, along with the framework developed by The Sterling Woods Group, have made it possible for media companies to reduce the risk and increase the success of new initiatives. In the next article, I will describe our New Product Development framework.
The challenge is breaking through the natural resistance to change that permeates many industries, including media and publishing. Companies who refuse to change and try new things will join the 439 companies who fell off the Forbes 500.
How The Sterling Woods Group Can Help
We work with clients to develop new products in one of two ways. One option is to have The Sterling Woods Group do everything for you, while you focus on your core business. For those who prefer a more “DIY” approach, we offer training and coaching services, through which we teach you our methodologies and help you develop a team to make you more successful at new product development.