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- Spotting Inefficiency in New Product Development: Where to Look, and What to Do About it
Spotting Inefficiency in New Product Development: Where to Look, and What to Do About it
Product Portfolio Management
Product Lifecycle Management
Food & Beverage
Posted By: Selerant
As part of our series on business process reengineering (BPR), we’ve looked how BPR transforms new product development and Selerant’s time-tested approach to BPR. Next, let’s examine the need for BPR through the problem it reverses: process decay.
All companies are vulnerable to process decay. Regardless of how well-intentioned those involved are, or even how effective processes used to be, inefficiencies creep in. Those inefficiencies tend to cluster into three areas:
- Manual, non-automated document creation
- Information redundancy
- Lacking a single source of truth
These inefficiencies feed on each other. Manual document creation is inefficient in and of itself, but it also leads to information redundancy (more than one person entering the same information in multiple places). That leads to the lack of a single source of truth, making it difficult and wasteful to track down information.
This cycle has an outsized impact on whether or not corporate objectives are met. Process decay affects profitability, success rate, hurdle rates, and even compliance.
In other words, it affects everything new product development touches. The surest sign that some spring cleaning is necessary, then, is simply failing to meet corporate objectives over and over.
Telltale signs of process inefficiency
Bottlenecks and breakdowns in process are the obvious place to start for sources of inefficiency. Spending some time to identify exactly where those bottlenecks and breakdowns occur is critical. This, unsurprisingly, is the first and most important step of BPR.
When allowed to fester long enough, process breakdowns make everyone’s job harder than it has to be. High turnover rate can consequently be a strong indicator of a problem with process.
Process inefficiencies also create a lack of governance around portfolio management. There may be no predefined intake process at all, such that various functional groups dump new projects into the pipeline willy nilly. As a result, there are too few resources to support all those projects, so hurdle rates are inaccurate from the start. There’s no structured business case around the project, and no one has a clear picture of how the product will perform. Because of that lack of clarity, the inefficiencies multiply as the new product development process plays out.
And don’t forget about manual approval processes. In 2020, approvals should be automated, full stop. If they aren’t, they’re a problem.
Finally, misalignment and lack of clarity between roles often signals a process breakdown. If no one knows who should be doing what, inefficiencies abound and multiple people end up performing the same task without even knowing it.
This lack of alignment is one of the trickier signals to spot, which speaks to the need for a formal process to uncover such signals methodically. A recurring theme of Selerant’s BPR process is the “aha” moment when, during the initial stages of BPR, everyone realizes how little visibility they had into what was going on upstream or downstream of them, because there wasn’t a review process to uncover such things.
Addressing process decay with BPR
The goal of every BPR is to address each of these process inefficiencies and get to a desired future state. Of course, every company’s ideal future state is different, but the overarching tactic used to get there is mostly the same: getting to a comprehensive, front-loaded analysis.
By performing analysis upfront, everyone involved in the NPD process will understand their own role more clearly—and the impact that their responsibilities have on other parts of the process.
When everyone knows what to expect, what’s expected of them, and what success looks like, development gets easier, too. There are no surprises. The same principle can also be applied to innovation, so that insufficiently vetted products don’t get dumped into the portfolio in the first place. (Selerant’s product lifecycle management (PLM) tool Devex has an ideation module specifically engineered for this purpose).
All this begs the question: do you need BPR?
Probably. Process decay is inevitable. If you’re not currently engaged in (or haven’t recently engaged in) a formal review process to uncover inefficiencies that result from process decay, you can benefit from BPR. Once you know where to start looking, the signs are hard to miss.