New Product Development:
Issues for Project Management
DENNIS M. SMITH, CEO, DENSMITH, LLC
Product development is a specialized case of the project methods described in the PMBOK® Guide. By adding productspecific focus, the product development leader can increase the probability of success over what otherwise would be attained by implementing a process that might be applicable to other types of projects, such as IT, construction, or public works.
Focus areas include understanding and factoring customers’ requirements, ensuring distribution channels, cost and price goals, and building competitive differentiators.
If one of these were to be singled out as the most important, it is clear that the majority of product development projects that fail do so because of defects in requirements. New product development failure rates are reported to be as high as 85 percent to 95 percent.1
Failures due to problems with requirements account for 50 percent to 60 percent of those total failures. Too often enthusiasm predates facts, and that enthusiasm—while a necessary ingredient—if not surrounded by practices that make sense, can be the downfall of a project.
A second reason commonly cited for failure of product development projects is failure of distribution. Especially in engineering or technology driven companies, not having sales, marketing, physical distribution, and appropriate access to customers in place when the product is ready leads to loss of competitive advantage due to a slow rollout or canceling of a great product idea due to inadequate access to customers.
Unclear or unrealistic goals for product factory cost (cost) and net sales price to the customer (price) are also leading