Could it be that your priorities or maybe a lack of prioritization are constraining your new product growth? To answer that, it’s helpful to take a step back and ask, “Why are you investing in new product development/ R&D in the first place?”
At a strategic level, you invest to grow revenue. To grow cash flow – now and in the future. And if your company wants to make more money with less effort, the next question to ask, is “What’s constraining that growth?”
For most companies, the limitation is market demand. You and your competitors have more capacity than the market needs. For some, the opposite is the case, and they can sell everything they can make.
It’s about creating more demand
The latter is a very desirable situation. So companies invest in what Peter Drucker called the two essential functions of any business – marketing & innovation. Marketing works to generate more demand and sales leads for what you already make. Innovation seeks to create new and differentiated products to profitably serve unmet needs. Together they work to elevate demand to a level where the constraint is no longer in the market.
One of the challenges that many organizations have is prioritizing the resulting opportunities. When marketing and innovation work uncovers numerous opportunities, it’s easy to try and work on everything. Here’s a reminder of why that’s a bad idea. Instead, the key is to focus your limited resources on a few of the best opportunities.
Making sure that your choices aren’t constraining new product growth
But you want to make sure that your choices aren’t constraining new product growth. So how do you decide between numerous good opportunities? Assuming that they all have the hallmarks of a clear winner, the next step is to estimate the effort and the return. Because the way you make more money from limited resources is to work on the opportunities that offer the highest return per unit of constrained resource. That can be NPV per Engineering Hour, 3-Year Cash Flow per R&D hour, etc. Whatever matches your situation and can be readily estimated.
Sounds simple, but get your new product priorities clear, and with a little hard work, you’ll find yourself with a growing backlog of great opportunities. And the good news is that prioritizing your backlog this way makes it clear to everyone which opportunity offers the most growth and should start next. That’s how you make sure your priorities aren’t constraining new product growth and are instead driving growth to new heights.
Some Free Resources to Help Prioritize for Faster Growth
If you don’t have a clearly defined and communicated set of priorities, you can download our free Growth Prioritizer Framework by following the blue button below. It’s a spreadsheet to help you prioritize the best opportunities in your innovation pipeline so that everyone knows what starts next.