Achieving Planned Innovation: A Proven System for Creating Successful New Products and Services - Hardcover

Bacon, Frank R.

9780684839905: Achieving Planned Innovation: A Proven System for Creating Successful New Products and Services

Hardcover

ISBN 10: 0684839903 ISBN 13: 9780684839905

Publisher: Free Press, 1998

Despite promising marketing research, most new products and services fail. However, with Frank R. Bacon's and Thomas W. Butler's Planned Innovation� system, any firm, of any size, in any country in the world can achieve high rates of success in new-product innovation. Like a preflight instrument check done by a cockpit crew, Planned Innovation is a disciplined and practical step-by-step sequence of procedures for reaching the intended destination point -- successful products -- every time. In an easy-to-read fashion, the authors explain their Planned Innovation system -- their action-oriented program for continuous success in new-product innovations without major failures. Their practical program features five steps to success, including: (1) a disciplined reasoning process, (2) lasting market orientation, (3) proper selection criteria that reflect (a) both strategic and tactical business objectives and goals, (b) dynamic matching of resources to present and future opportunities, and (c) positive and negative influences of major external trends affecting present and future business opportunities, (4) scientific reasoning to determine requirements before making major expenditures, and (5) proper organizational staffing. With this market-tested five-element paradigm, the authors explain what to do and why in evaluating the potential of any new product or service, ranging from ventures in retail distribution to the manufacture of products as diverse as bicycles, motorcycles, aerospace communication and navigation equipment, small business computers, food packaging, and medical products.

Other topics covered include how to cultivate a lasting market orientation, how to choose selection criteria that reflect strategic objectives and tactical goals, and how to assess the positive and negative influences of external trends on business opportunities. The authors also explain how to creatively exhaust all the 'near-in' opportunities available, from modifying existing products for familiar existing markets and extending their product-life cycles -- with minimal cost, time and risk.

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About the Author:

Frank R. Bacon, Jr., is a professor of marketing at Michigan State University. The originator of the Planned Innovation process, he has assisted many foreign and domestic companies in the development of market-oriented plans and new products for commercial, industrial, military, and aerospace markets. He lives in East Lansing, Michigan.

Chapter 1

What This Book Is All About

The message of this book is simple: High rates of success in message new product innovation are possible for any firm, of any size, in any country in the world. Planned innovation is a proven, action-oriented, results-producing recipe for achieving such success. The purpose of this book is to explain the philosophy and procedures which lead to that success.

Do any of the following four scenarios fit your firm's situation?

1. Your firm already has a new product development process which is not functioning smoothly and efficiently, and/or is not producing a high rate of success.
2. Your firm has recently decided it needs accelerated sustained growth through new product developments (possibly because the benefits from a reengineering or cost reduction program have been exhausted, leaving a need for increased profit from accelerated growth).
3. Your firm has concluded that, despite its suitable position in existing product-markets, it needs to modify and extend its current products to maintain or expand its future position in these markets.
4. Your firm has a central or regional R & D group which is operating with little or no input regarding future product-markets.

If you answered yes to any of the four questions, you should read on. The examples given will illustrate how Planned Innovations addresses each of these situations.

Example #1: What We Mean by a High Rate of Success

A ninety-seven percent (97%) commercial success rate is the conclusion from a recent study of the effectiveness of Planned Innovation at The Dow Chemical Company. Amazing, astounding, unbelievable results? Here is a summary of the study's conclusions, in the words of Greg Stevens, former opportunity analyst at Dow, and now president of WinOvations, Inc., of Midland, Michigan.

As part of my independent work, I had occasion to carefully quantify the returns to The Dow Chemical Company over a ten-year period from implementing the Planned Innovation procedures which you have developed. This is the only time such a quantification has been done. It required a great deal of effort, because so many projects were done (277) by so many individuals (73) over such a long time period, both in North America and Europe. Ultimately, I was able to quantify virtually the entire sample.

Key findings from this analysis follow:

1. Ninety-seven percent (97%) of the positive recommendations which the businesses developed made money (33 of 34 projects developed). These results show that it is possible to determine with near certainty which opportunities to develop, even when commercializing substantially new products.

2. The cumulative profits earned (as measured by return on sales) using the Planned Innovation process have exceeded $200 million over a ten-year period, and are rapidly climbing, as many of the ideas being developed are just now entering their commercial stages.

3. In addition to a 97% commercial success rate, virtually all (95%) of the positive projects developed by the businesses moved The Dow Chemical Company in the strategic directions desired by top management.

4. It is clear from the above analysis that it is possible to virtually eliminate major mistakes in new product development, while simultaneously developing substantial numbers of commercially profitable new products that fit the company's strategy. The projects identified as winners virtually all won.

This exceptional result at Dow is, of course, not a result only of Planned Innovation. The Dow Chemical Company is an excellent firm in every respect -- management, personnel, and facilities. Planned Innovation was especially helpful in providing improved guidance and direction at the "fuzzy" front end of an existing development and commercialization process, including determining total product requirements early in the process. This example illustrates that Planned Innovation can help even sophisticated firms with existing new product development processes.

Example #2: Achieving Accelerated, Sustained Growth

Our objective from the beginning has been to develop a philosophy and process that will produce continuous successes, year in and year out, without the high cost of major failures. The net result of such a process is to produce steady growth in sales and profits through new product innovation.

The Donnelly Corporation, a medium-size firm headquartered in Holland, Michigan, is an international supplier of high-quality parts and component systems, mainly rear view mirrors, window systems, interior lighting, and trim systems. The Donnelly management was one of the earliest to embrace the Planned Innovation philosophy. The steady growth achieved by the firm over the 1985-95 decade, shown in Figure 1, was directly related to the use of Planned Innovation procedures.

Rich Cook (who is now president of Cascade Engineering in Grand Rapids, Michigan) was formerly involved with much of this new product development activity at Donnelly.

As a young physicist working for Donnelly, learning this approach to marketing and product creation was a life-transforming experience. This training enabled me, working with the other team members at Donnelly, to create the first glass moonroof/sunroof for Ford Motor Company and the "opera lite," a small decorative window for the Mark and Lincoln Continental. The profitability of the glass moonroof prevented significant job loss at Donnelly during the first oil shock. The opera lite decorative window turned out to be the immediate precursor of the automotive modular window.

Using the principles of Planned Innovation, many significant and innovative products were rapidly created over a decade. These included: (1) coated glass for LCD displays used in consumer electronics such as computers, watches, gas pumps, and clocks; (2) most of the computer touch panels used in the U.S.; (3) the new lighted rear view mirror used in cars, leading to totally new interior lighting in cars, enhancing the safety, comfort, and convenience of all occupants; and, finally, (4) the new large-area, electrochromic mirror for heavy-duty trucks, which will improve long-haul trucking considerably.

In summary, the experience with Planned Innovation has affected the company over the past 20 years in a very positive manner, with the immediate or derivative products creating well over half of all the good-paying jobs at Donnelly today, the vast majority remaining in Western Michigan.

Example #3: Growth Through Improvements in Existing Products

Anyone who has witnessed recent Olympics gymnastics events or has watched them on television has seen the tangible benefits of Planned Innovation in action. Over the past twenty years, virtually every item of gymnastics equipment used there, from floor mats to high bars, was redesigned and improved by American Athletic, Inc. (AAI), of Jefferson, Iowa, using Planned Innovation principles. The net result is explained by Bill W. Sorenson, former president of AAI and now chairman of the parent company, American Sports Products Group, Inc., of White Plains, New York:

American Athletic has made many significant engineering, design, material, and performance improvements in their gymnastics equipment over the past 20 years in a sport that for a long time was dominated by Eastern European countries. By following the principles of your Planned Innovation program, they became the world leader in new product innovations and the most respected international manufacturer of equipment for the sport of gymnastics.

It is significant that the world-governing body for gymnastics, the Federal Internationale de Gymnastique (FIG), quickly adopted these innovations into their official apparatus technical specifications, and the higher level of

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