Last month, in Part 2 of our series The Artemis Approach: Legacy, we discussed the way in which the legacy of a Business Owner goes beyond the capital or time they have invested in their companies, the way in which culture affects business performance, and how Artemis seeks to preserve the legacy of founders as the business transitions into its next generation of growth. In this third piece, we walk through one of the most critical steps in any New Product Development (“NPD”) initiative, the challenges of NPD in founder-owned manufacturing businesses, and how Artemis fuels innovation at our Industrial Tech portfolio companies by leveraging discipline, collaboration, and investment in search of a healthier, safer, and more productive future.
While there are a variety of differing opinions on the specifics of the new product development process, there is one thing that is hard to dispute: the urgent necessity for consistent innovation in an era of manufacturing where new technologies are reshaping the competitive landscape on a daily basis.
The beginning of any new product development initiative is the evaluation of market demand. At the core, innovators must consider the perspectives of their engineers, customers, and competitors. Questions like:
Asking these questions has a variety of benefits that increase the likelihood of optimal taking and successful decision-making. The questions position the innovator's efforts in relation to the entire industry, ensuring that any successful solution solves for a legitimately necessary function of the market. The answers provide guardrails to the brainstorming, concepting, prototyping, and launch phases that posture the efforts within each phase toward the satisfaction of stakeholders – a necessity in any successful product development initiative.
After successfully aligning efforts with the considerations of necessary parties, the company can begin the actual process of creating new and innovative products. At this point, from the generation of ideas to the official product launch, there are a number of guiding principles that business owners and entrepreneurs balance to manage their teams. Arguably the most essential to project success is a focus on Collaboration. As we spoke about in The Artemis Approach: Day 0, a culture of Collaboration can be incredibly valuable across company functions but has an outsized importance within the NPD process. Renault, an innovative car manufacturer at the forefront of the future of sustainable mobility, took an interesting data-driven approach to proving this simple truth and the results were illuminating.
From increasing the likelihood of internal support to the implementation of collaborative community culture, Renault’s strategy led its employees to push the boundaries of innovation as engineers were encouraged by “highly novel and technically ambitious ideas”. The bottom line is that consistently remaining ahead of the competition requires both a sober-minded consideration and an energetic community-driven approach.
While these ideas can seem simple, their practical implementation can be incredibly challenging and costly for founder and family-owned businesses in the lower-middle market. Without a tested and disciplined approach to this critical component of innovation, the risks can often become overwhelming as costs and obstacles accumulate. Whether it be distractions from blue sky opportunities or missing the post-launch review, a focus on process, an objective evaluation, and strategic risk-taking can boost the team’s NPD success rates– a metric that is far from encouraging. According to the McKinsey Global Institute study only 1 out of 7 ideas will yield a successful product. This statistical reality only bolsters the justification for inviting a tenured partner into the operations and ownership to leverage decades of experience in a potentially volatile business segment.
Artemis has a long history of successful product development initiatives that have yielded both attractive financial results and intended customer satisfaction. One place in which our experience has allowed us to navigate NPD efforts is in the implementation of thoroughly tested and proven processes from our portfolio companies that ensure we put ourselves in the best position for success
Often times, engineers will be excited to move the product forward in the process before it has met all the criteria necessary for approval – something that we value as it inspires urgency and excitement surrounding the new product. Just as the engineer has a role to play in envisioning the product's final build, Artemis evaluates from a process perspective, rounding out the process to minimize risk and maximize potential. Artemis’ influence on the NPD process can be more explicitly seen in the implementation of a phase-gate or stage-gate model. In its simplest form, this model ensures that the company doesn’t skip ahead in the process, expending valuable resources.
At Artemis, our customers are key stakeholders in the evaluation of NPD opportunities, but at the end of the day, it is the ingenuity and determination of our engineers that bring these creations to life. With that in mind, be sure to check back for our next post on Collaborating with Engineers. We’ll discuss the optimal balance between financial and strategic considerations, the importance of bridging the technological chasm, and highlight some of our portfolio companies’ greatest achievements. As always, be sure to follow the Artemis LinkedIn and check back on the website (www.artemislp.com) next week for the next installment in The Artemis Approach.