5.4 The Big Picture: The Cycle of Satisfaction

Exciting new products often seem to appear out of nowhere. That seldom happens. Great products come from diligent effort and disciplined product design processes. For almost 10 years, Strategy& (formerly Booz & Company) has asked the question, "What leads to R&D success?" To get an answer, Strategy& has conducted an annual survey of the 1,000 largest corporate R&D spenders to uncover their secrets. Here are some of the key findings:

1. Spending. How much money you spend on R&D does NOT determine success. How you spend it does. The remaining points focus on how; that is, they share best practices!

2. Strategy. Based on its innovation strategy, your company might be a Need Seeker, Market Reader, or Technology Driver. Need Seekers go straight to customers to generate new ideas. Market Readers are fast followers—they monitor the market and incrementally improve the cool ideas. Technology Drivers rely on their technological expertise to drive both breakthrough and incremental innovations. Alignment between strategy and practice is critical.

3. Deep Customer Insight. You have to know what your customers want—even if they can't articulate their needs. Deep customer insight helps you make the key trade-offs inherent in creating new products.

4. End-to-End Process. Innovation is a cross-functional capability, involving all of the functions in your company.

5. Visibility. You need real visibility into what is going on throughout the NPD process.

6. Use Digital Tools. Big data and digital reality are beginning to shape understanding of customer behavior.

What does Strategy&'s research really mean? High-leverage innovators know that success depends on the quality of the innovation process. They invest in and carefully manage an end-to-end, collaborative idea infrastructure (see Figure 5-5). Let's take a closer look at the core elements of an effective NPD process.