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How Prioritization Accelerates New Product Growth

Prioritization Accelerates New Product GrowthCould your priorities or a lack of clarity around them be constraining your new product growth, and could the right prioritization accelerate new product growth? To answer those questions, it’s helpful to take a step back and ask another. Why are you investing in new product development/ R&D in the first place?

At a strategic level, you invest in new products to grow revenue. To grow cash flow – now and in the future. And if you want to make more money without increasing your investment, 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. Few can sell everything they can make.

It’s about creating more demand

The latter is a very desirable situation. It’s why companies invest in Drucker’s two essential functions of any business – marketing & innovation.   Marketing generates more demand and sales leads for what you already make. Innovation creates new and differentiated products to solve customers’ problems. Together they work to elevate demand to a level where the constraint is no longer in the market.

Making sure that your choices aren’t constraining new product growth

One of the challenges that 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 very best opportunities.

So how do you get that kind of focus? Assuming that they all have the hallmarks of a clear winner, the next step is to estimate the effort and the return.  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.

The way you make more money from limited resources is to work on the opportunities that offer the highest return per unit of constrained resources. So the next step is to force rank your opportunities based on that return per unit of effort.  

It can be a tough conversation, 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 accelerating new product growth.

Some free resources to help prioritize for faster growth

If you don’t have a clearly defined and communicated set of priorities, download our free Growth Prioritizer Framework. It’s a spreadsheet to help you prioritize the best opportunities in your innovation pipeline so that everyone knows which programs are running and which starts next.

Book a Free Zero-Pressure Session to Discuss Your Situation

 

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