Creating new products is the lifeblood of any successful business—especially in today’s competitive landscape. It’s why 83% of companies are focusing their current business strategy on growth over any other objective, according to PwC. To accelerate growth, businesses are looking at expanding their existing product offerings.
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The growing focus underscores the recognition among industry leaders that the ability to introduce fresh, innovative products is not just a competitive advantage—it’s a necessity for survival in today’s fast-paced business landscape. In fact, 43% of business executives agreed that innovation is a “complete necessity” in product development.
However, creating and developing new physical products is rarely seamless. It requires constant vigilance and a well-defined process to guarantee work is aligned with business strategy. Additionally, it’s the best way to ensure new products are successfully introduced to the market and meet organizational objectives.
Below, we’ll look at the seven stages of new product development, their best practices, and how product portfolio management solutions can streamline the process. But before we dive in, it’s essential to understand why a standardized approach to new product development that breaks it down into specific, intentional stages is critical for a successful launch.
- “83% of companies are focusing their current business strategy on growth over any other objective…”
- “43% of business executives agreed that innovation is a ‘complete necessity’ in product development.”
Why It’s Crucial to Get New Product Development Right the First Time
Introducing new products has become increasingly important in today’s dynamic business market. New products or innovations are necessary to stay ahead of the competition and customer expectations. According to McKinsey, 80 to 90% of executives feel that innovation and new products are essential for their growth strategy. However, the same report also states that only 6% of business executives are satisfied with their current innovation levels.
A clearer picture of the challenges related to new product development can help us understand why organizations struggle to succeed in such a critical area. Some of these challenges include:
Market changes and ever-evolving consumer demands:
Today’s consumers have access to a myriad of brands and products, meaning businesses must provide new, innovative products quickly or risk losing customers. However, the pace at which the market and customer trends change has made it increasingly difficult for businesses to keep up.
Understanding/controlling supply chain and resource costs:
Creating and introducing new products is typically an expensive process. Businesses must strike a perfect balance between supply chain and resource costs to improve the new product’s chance of survival.
The pace of innovation also poses a risk to the stages of new product development. Slow feedback and review cycles can make it difficult for organizations to complete timelines and launch new products on time successfully.
Personalization is a top priority among today’s consumers, and companies that excel at personalization generate 40% more revenue than those that don’t. However, some new products fail to provide significant value to consumers, which may result in product failure.
To overcome these challenges, organizations must align each decision or dependency in new product development—from ideation to execution to commercialization—with their overall business strategy and objectives. When organizations delineate and define the different stages of the new product development cycle, they can:
- Confidently pick the right products/innovations to focus on
- Successfully transform ideas into a marketable product that meets customer needs and expectations
- Gain foresight that helps reduce risk and increase speed to market
- Ensure new products deliver maximum value to consumers
The 7 Stages of New Product Development
Creating a standardized process for new product development provides organizations with a solid framework for successful product development and launch. The stages of new product development include:
- Building a business case
- Testing and validation
By understanding and sharing best practices for new product development, organizations can streamline and improve the entire process and avoid common pitfalls. Below, we’ll take a deep dive into the stages of the new product development, outlining core activities, challenges and risks, and best practices.
New Product Development Stage 1: Ideation
The first stage of new product development is ideation. This stage refers to generating, screening, and prioritizing product ideas that can create value for customers and the business.
”According to one source, 60% of organizations feel the ideation stage is the most critical phase.”
Core Activities of New Product Development Ideation
Ideation often begins with conducting thorough market research and product analysis, employing customer interviews, focus groups, and surveys. Collaboration with product marketing and sales departments may also facilitate the execution of user tests.
In addition, ideation involves dynamic brainstorming and crowdsourcing initiatives to foster the generation of diverse and innovative product ideas that cater to customer needs. Subsequently, product stakeholders meticulously prioritize these ideas using various criteria, including feasibility, profitability, alignment with business goals, customer value proposition, and competitive advantage.
The most promising concepts are selected for further development, validation, and strategic innovation management, ensuring a refined and customer-centric product portfolio.
Top Challenges and Risks of New Product Development Ideation
- Generating too few or too many product ideas. Some ideas may be too similar (i.e., cannibalization) or too different from existing products or customer needs (i.e., poor product mix).
- Failing to screen out unfeasible or unprofitable product ideas that waste time and resources in later stages of new product development.
- Rejecting potentially valuable product ideas due to cognitive biases, groupthink, or lack of diversity and feedback.
New Product Development Ideation Best Practices
Use various source methods: Organizations should rely on multiple sources and ways to generate product ideas, including expanded crowdsourcing, observation, ethnography, data mining, trend analysis, and more.
Involve a diverse group of stakeholders: Including a diverse and cross-functional team opens the door to different perspectives and insights that may not have otherwise been considered.
Utilize a structured/systematic approach: This method should be used when selecting product ideas and should also rely on scoring models, decision matrices, SWOT analysis, and more to evaluate product ideas.
Test and validate product ideas: All product ideas should be tested early and often using methods such as surveys, interviews, focus groups, and prototyping. This enables organizations to gather feedback and measure customer interest and satisfaction.
New Product Development Stage 2: Discovery
The second stage of new product development is discovery. This is where in-depth research and analysis on the selected product ideas are conducted to understand the customer needs, market opportunities, competitive landscape, technical feasibility, and financial viability of the product.
“Fewer than 20% of new products make it through the discovery stage.”
A critical difference between the ideation and discovery stages is that the discovery stage explores new ideas already selected and approved by business leaders. The previous stage—ideation—is focused more on gathering the ideas.
Core Activities of New Product Development Discovery
While still in the initial stages of new product development, critical steps involve defining the target segment and creating customer personas that form the foundation for the product. This includes meticulously examining market dynamics through comprehensive market research and analyzing factors such as market size, growth trends, drivers, barriers, regulations, and overall market dynamics.
Additionally, a thorough competitive analysis is conducted to identify the strengths, weaknesses, opportunities, and threats (SWOT) posed by existing or potential competitors.
A technical feasibility analysis should also be performed during discovery to emphasize the practicality of bringing the product to fruition. This involves a detailed assessment of the technical requirements and specifications for developing the new product.
Lastly, during the discovery stage, a valuation analysis can estimate the cost, return on investment (ROI), and net present value (NPV) associated with the development and launch of the new product. These comprehensive analyses collectively form a strategic framework, guiding subsequent stages of new product development, supporting informed decision-making, and successful market entry.
Top Challenges of New Product Development Discovery
- Relying on inaccurate or outdated data
- Failing to conduct sufficient or comprehensive research that results in gaps or errors in understanding customer needs, market opportunities, or financial viability of the product.
- Conducting too much or too little research or analysis that causes delays or inefficiencies in moving forward with the remaining stages of new product development.
New Product Development Best Practices
Use various sources: Teams should use numerous sources to collect and analyze data, such as secondary or primary quantitative and qualitative research, to check the validity and reliability of results.
Use appropriate tools: Select tools that enable individuals to organize and visualize data effectively. This ensures proper understanding and communication of the findings.
Use frameworks and models: This will help to synthesize and present data or information to highlight key aspects and assumptions of the product idea.
Test and validate data: Data should always be validated using surveys, interviews, and more to refine the findings and assumptions.
New Product Development Stage 3: Scoping
Scoping is the process of defining the breadth of the new product, in other words, what features, functions, specifications, and requirements will be included based on the research and analysis conducted during the discovery phase.
Core Activities of New Product Development Scoping:
The most successful product development teams begin this stage by creating a product vision statement a comprehensive narrative delineating the purpose, value proposition, target market, and overarching goals of the forthcoming product.
Following this, a product roadmap is meticulously crafted, outlining the high-level plan, timeline, milestones, deliverables, dependencies, and necessary resources for the development and launch phases. Simultaneously, a product backlog is compiled, cataloging the myriad tasks, bugs, and enhancements integral to the product development process.
Developing a Minimum Viable Product (MVP) is another part of scoping that helps outline the minimum features necessary for testing and validation with customers. By introducing the MVP, product teams can gather valuable insights, refine the product based on real-world feedback, and iteratively enhance its features and functionality.
Top Challenges in New Product Development Scoping
- Defining an unrealistic or unclear scope that leads to scope creep, over-engineering, under-delivering, or misalignment with customer needs or expectations.
- Creating too many or too few features results in a product that is either too complex or too simple for customers to use or appreciate.
- Defining vague or ambiguous specifications or requirements that cause confusion or errors in product development or testing.
New Product Development Scoping Best Practices
Choose the right tools: The right tools should be used to define and document the scope, features, functions, specifications, and requirements of a product. This provides clarity and helps to define the completeness of a product.
Use agile methodologies: Agile for new product development is highly effective for defining and managing the product scope, ensuring flexibility and responsiveness to changing customer needs or expectations.
Rely on prioritization techniques: Using this approach to define and rank the product features or functions makes certain there is alignment with perceived customer value propositions and business goals.
Use validation techniques: This helps to properly define and test the MVP to ensure continuous learning and improvement of the product.
New Product Development Stage 4: Building a Business Case
Midway through the stages of new product development, you need to begin building a business case. This process involves formalizing all the work that has thus far been completed in previous stages in hopes of obtaining approval, funding, and support from senior management, investors, or other decision-makers.
When creating a product development business case, the following elements should be included:
- Executive summary that provides a brief overview of the product idea
- Market analysis describing the customer need and market opportunity
- Competitive analysis identifying existing or potential competitors in the target market segment
- Technical feasibility section detailing technical requirements
- Financial visibility with cost, revenue, and profit estimates
- Product scope defining the product vision, roadmap, backlog, and MVP
- Risk analysis identifying and evaluating potential risks and uncertainties
- Conclusion that summarizes the main findings and arguments of the business case
New Product Development Stage 5: Development
During the “build” stage of new product development, the product is designed, constructed, tested, and refined.
“Actual development of a new product is informed by the scope, specifications, and requirements defined in the earlier stages.”
Core Activities of New Product Development
The actual creation of a new product is a multifaceted process that encompasses various crucial elements. This begins with the thorough design of the product architecture, user interface, and user experience, employing appropriate tools and techniques that drive optimal functionality and user satisfaction. The subsequent step involves building the product in adherence to industry best practices and standards, encompassing considerations such as the bill of material, supply chain management, coding conventions, documentation, and version control.
A comprehensive testing phase is essential to ensuring a robust product with an acceptable life cycle. Some testing methods might include, but are not limited to, unit testing, integration testing, and system testing. Each test is conducted in alignment with established best practices and standards.
Notably, the iterative nature of product development incorporates feedback loops, facilitating product refinement based on customer input. This continuous feedback and refinement process is critical for seamlessly aligning a product with market expectations and industry standards, resulting in a high-quality, customer-centric offering.
Top Challenges in Product Development
- Designing a product that is not user-friendly, intuitive, attractive, or consistent with customer needs or expectations.
- Building a product that is not functional, performant, secure, reliable, or compatible with customer devices or platforms.
- Testing a product that is not comprehensive, accurate, or effective in identifying or resolving errors or defects.
- Refining a product that is not responsive, flexible, or adaptable to changing customer needs or expectations.
Best Practices for Improving New Product Development
Use the right tools: The right tools should facilitate collaboration throughout new product development and with product development teams and other stakeholders.
Measure quality and consistency and quality: Conduct regular testing designed to check for compliance with product scope, specifications, and requirements.
Monitor product development progress: Use metrics, indicators, dashboards, reports, and other tools that offer transparency and assign accountability for the final product development outcome.
Optimize product development efficiency: Utilize automation or optimization tools to support quick and timely product delivery within budget constraints.
New Product Development Stage 6: Testing and Validation
The testing and validation stage is essential for checking that the product resonates with customers and stakeholders.
“This stage is essential to verify that the product meets—if not exceeds—customer needs and expectations. Testing and validation increase the product’s overall chance of success.”
Core Activities of Testing and Validation
Organizations can use the following methods to test the effectiveness of new products:
Alpha testing – Internal users evaluate product functionality and performance and identify any errors or defects that must be fixed before beta testing.
Beta testing – External users evaluate the product value proposition and overall customer satisfaction. Additionally, this approach can be used to identify any improvements or enhancements needed before launch.
Pilot testing – A small group of customers or stakeholders evaluate the product’s market response and adjustments needed before launch.
Top Challenges of Testing and Validation
- Using methods that are not representative, realistic, or sophisticated enough to capture the actual customer needs and expectations or to detect the potential errors or defects of the product.
- Testing that is too costly, time-consuming, or complex to execute or analyze.
- Validation that generates conflicting, inconsistent, or inconclusive results or leads to scope creep, feature creep, or customer dissatisfaction.
Testing and Validation Best Practices
Select the most appropriate, effective, and efficient testing tools: Be intentional with testing. The methods chosen must be relevant and make sense with the product type, stage, and objectives.
Collect and analyze results: Review/share data with teams to check for reliability and validity and ensure it is actionable.
Standardize testing and communicate findings: Make output digestible without getting mired in the details.
New Product Development Stage 7: Launch
The final stage of new product development is launch and involves introducing the product to the market. This is also when customers and stakeholders can interact directly with the finished product in a non-test-controlled environment.
“95% of new products fail in this stage of new product development when they are under the most scrutiny out in the real world.”
Core Activities of Product Launch
An effective product launch requires systematic and well-coordinated execution that starts with developing a robust product launch strategy. The launch strategy must consider key objectives and results and the more significant overall business strategy. From this strategy comes a detailed product launch plan, outlining essential elements such as launch activities, timeline, budget, required resources, and the roles and responsibilities of each team member. This plan serves as the roadmap for executing the product launch strategy seamlessly.
An integral part of the launch plan is a launch campaign that aims to generate awareness, spark interest, create desire, and drive action. The campaign becomes the vehicle for communicating the product’s value proposition to the target audience, ensuring a successful market entry.
Following the launch, a thorough evaluation is conducted to measure and monitor the outcomes, providing valuable insights into the launch’s effectiveness. This assessment gauges success and identifies opportunities for improvement, allowing for continuous refinement of future launch strategies.
Top Challenges of New Product Launches
- Launch strategy not aligned with customer needs, market opportunities, competitive landscape, or business goals.
- Launch plan that is not realistic, feasible, or effective in executing the product launch strategy.
- Launch campaign that lacks creativity or consistency in communicating the product value proposition and positioning statement.
- Evaluation that is not comprehensive, accurate, or timely in assessing the product launch outcomes and performance indicators.
New Product Launch Best Practices
Develop and document everything launch-related: Record events and milestones in the strategy, plan, campaign, and evaluation, checking for completeness and quality of launch deliverables.
Adopt methods of facilitating collaboration and communication: Encourage the product launch team to communicate in an open forum with other stakeholders. This collaboration promotes seamless coordination and alignment of product launch activities.
Incorporate analysis methods: Continuously measure and monitor product launch progress and performance using key performance indicators, dashboards, and reports that champion transparency and accountability for the product launch outcomes.
Adopt tools that optimize the product launch: Automation or templating presents excellent opportunities to increase efficiency, reduce waste, and secure a successful product delivery.
How a Product Portfolio Management Solution Helps Optimize New Product Development
Managing the seven stages of new product development requires a carefully planned, systematic approach. At each stage, product commercialization leaders need visibility into data, cross-functional workflows, and resources to identify opportunities to avoid developing products that will not generate revenue or be successful in the marketplace.
Compared to their more static counterparts, digital-forward product portfolio management solutions better provide the data visibility, work management, and analytical capabilities new product development and commercialization managers need. By consolidating all product development-related work into a shared, easily accessible knowledge base, these solutions act as a hub of collaborative work focused on aligning new products in a portfolio with strategic objectives.
Successfully Navigate the Innovation Landscape with Planview
The seven stages of new product development provide organizations with a strategic pathway to successfully create and launch innovative products. Additionally, following each process stage and harnessing the power of product portfolio management solutions like Planview elevate a company’s capacity to introduce successful and impactful products.
With Planview, organizations can follow and optimize the seven stages of new product development. Tools such as IdeaPlace and Planview Advisor enable organizations to connect strategy and portfolio management to ensure the successful development of new, innovative products.
Discover more about Planview’s product portfolio management solutions by reading our comprehensive guide.