The Business Briefs series of articles takes you through the basics of developing and presenting a design idea, obtaining funding, protecting and licensing your intellectual property, and getting your ideas to market. This month, learn how Lean Product Development and Marketing can help you avoid costly mistakes when launching your product.

Lean manufacturing has revolutionized entire industries and is a major part of the incredible productivity gains of the U.S. economy in the last two decades (see graphs). U.S. manufacturers have applied lean principles to dramatically reduce operating costs while improving quality, competitiveness, and productivity. Now, these same principles are also being translated to the development and marketing of new products.

Lean Product Development is a complete system that enables businesses to develop the right product for a targeted market and get it to that market in the shortest possible time. As marketing consultants who specialize in technology product marketing, we created Lean Product Development to incorporate best practices we’ve developed over our combined 50 years of experience. Lean Product Development can reduce product launch time by as much as 50%.

Lean Product Development is a streamlined tollgate process that uses Voice of the Customer (VOC) to quickly focus new product efforts and eliminate costly mistakes. VOC helps product engineers and designers understand the precise customer need set the first time, which in turn eliminates the false starts and restarts so common in new product development.

There are many more benefits to the process than speed-to-market. Technology-driven companies run lean to begin with — they don’t have the time or resources to make mistakes. Lean Product Development can increase their net revenue in two ways: first, by lowering development costs, and second, by enabling them to price the product to value.

The eight steps in the Voice of the Customer exercise examine the cost-value dynamics of how a customer currently addresses a problem and uncovers the associated costs of that particular solution. For example, take a $1.00 component that has to be replaced four times a year. The actual cost of using that component is the annual replacement cost of $4.00 plus whatever labor is required to do the replacement. Say it takes a technician 15 minutes to do the replacement, and the technician has a fully loaded cost of $60 an hour. In the course of a year, the actual cost of the component is $64. So, if you have a product solution that does the same job and only needs replacement every three years, you could price it anywhere below $192 ($64 x 3) and it’s still a bargain! This simple example doesn’t take into account other possible costs such as downtime or the cost of failure, but it illustrates the point.

Other benefits of the program are improving communications among marketing, engineering, and sales; increased customer retention; and lower cost of new customer development. The Lean Product Development System is packaged into a two-day training seminar; custom versions of the program are available to accommodate the needs of different businesses and business models.

NASA Tech Briefs Magazine

This article first appeared in the May, 2006 issue of NASA Tech Briefs Magazine.

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