Many industrial companies find improving new product performance harder — and more complex — than it should be. But better results don’t always require bigger teams or bigger budgets. By pulling the right growth levers, you can dramatically accelerate innovation throughput and new product success.
As shared in my original Industry Week article, The Growth Equation Framework identifies the four levers that give you greater control and better results.
There are four levers you can pull to increase your growth through new product innovation. These levers come together to make up our Growth Equation Framework:
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Frequency or flow: The number of new product programs that you launch each quarter, year, etc.
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Predictability: The percentage of new products that you launch when initially promised and with all of the features initially requested.
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Time-to-Revenue: The cycle time it takes your new products to go from proposal to generating cash flow. Time-to-Revenue is in the denominator so it should be decreasing.
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Market Impact: The cash flow or throughput increase that your new products deliver.
Launch Flow/Frequency
This article will focus on the first lever, Launch Flow/Frequency which measures how fast and effective you are at bringing new products through all of the steps required for launch. The better you are at managing innovation resources and navigating the internal and external obstacles, the more new products you can launch each period, accelerating innovation throughput .
The biggest impediment to flow or frequency that I run across in my consulting work is that too many companies fall into the trap of believing that they have to work on more projects to get more done. But once you reach the number of projects that delivers optimal flow, every project you add reduces the number that you can complete during a given period.
Multitasking is at the heart of the problem here. While pop-culture may laud the ability to multitask, it’s really one of the biggest productivity drains there is. This two-minute test should prove that to you.
Time how long it takes you to write out these two lines in sequence:
Task 1: RAPID NEW PRODUCT INNOVATIONS
Task 2: ABCDEFGHIJKLMNOPQRSTUVWXYZ
Task 1:____________________________________________________________
Task 2:____________________________________________________________
It probably took you anywhere from 10-20 seconds to complete each task for a total of 20 to 40 seconds.
Now let’s add multitasking. Start by writing one letter for Task 1 on the line below, then one letter for Task 2, then back to Task 1 and so on. The sequence should look like R,A,A,B,P,C,I,D,D,E,N,F…..
Task 1:____________________________________________________________
Task 2:____________________________________________________________
How long did it take this time? Most people take between 50% and 100% longer. And notice how uncomfortable it felt switching back and forth. The interruptions make it impossible to get into a rhythm or flow.
The Benefits of Focused Execution
Now let’s apply this to the work in process (WIP) in your new product pipeline. Let’s say you have four opportunities in front of you:
- All four are for equally important customers
- If you put your entire team on one project they can complete it in 3 months
- Each has the same return – $1M cashflow per quarter once complete
- Each project has an influential internal sponsor pushing to start ASAP
What are the chances that your organization wouldn’t spread the resources out and have someone working on each one? Here’s a one-year snapshot of what that would look like with each project represented by a different color and W’s indicating wait time:
Over the year, your resources move back and forth between projects, with a significant amount of each project’s timeline spent waiting. At the end of one year, all four projects finish and deliver $4 million in cash flow.
But wait, it’s worse than that. We already saw that multitasking made the work we did less effective. Even if we only assume a 33% reduction in output, the loss in effectiveness due to multitasking means it will actually take closer to 18 months to finish all four projects.
So let’s compare that to 18 months of focused execution with each project resourced for full speed.
After 3 months, the first product launches and starts delivering cashflow of $1 million. At the end of the second quarter, another product launches and now 2 products are generating cash flow for a cumulative of $3 million. And so on…until at the end of 18 months we have 6 products out in the market delivering $21 million in cash flow and doing so much earlier. Dramatically unleashing capacity and accelerating innovation throughput – that’s the limiting WIP t0 focus execution.
If you want to build even more predictability into your innovation flow, check out the next part of the series tackling the second lever—predictability.
Growth Equation Diagnostic
To help you accelerate innovation throughput, we’ve also created a diagnostic to go with the framework that you can see here. It’s a simple but effective tool you and your leadership team can use to evaluate your potential for improvement.
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