What are late new product launches costing you? I recently saw that missing the launch date for their 3D Gameboy is costing Nintendo $1Billion in lost profits by missing the Christmas buying season. When Nintendo issued the profit warning cutting it’s fiscal 2011 profit forecast that news wiped out 10% of the stocks value in a single day (ouch!).
While $1 Billion in damages may sound surreal to most of us, new product delays can have a big impact even on smaller companies. As I shared in a previous post, the COO of a medium size company had shared his frustration with continued new product delays – just one of which was costing his company over $50,000 per day in lost revenues. You don’t have to be a electronics giant to feel the pain of late new product launches.
So why are new products late so often and what can be done about it?
Here are a few key reasons for projects running late that you can address with a critical chain approach:
1. Too many projects running for the number of resources – Assigning development team members to more than one or two projects spreads them so thin that they spend more time on juggling priorities than productive work.
2. Running projects in parallel rather than sequentially – People are always amazed to see that running one project at full speed rather than two projects at half speed increases cash flow and reduces risk.
3. Not planning time for unexpected problems or Student Syndrome – The start of individual tasks are often delayed until the last minute before they are started. This squanders buffer on procrastination rather than its intended use to protect against Murphy’s law events.