roadmap5Assuming that a Strategic Plan is already in place, the next challenge is to map out a plan to deliver the products and services that realize that strategy.  The best way to start this process is to conduct a gap analysis, which compares your current state (what you have to sell today) with what you need in your future state (what you will deliver to customers in order to realize your strategy).  The gap analysis should involve input from all major functional areas of the business, including sales, marketing, engineering, operations and product management.  It should be not only product and service related, but also grounded in finance, as the effort should stay focused on meeting business goals.  The following questions should be addressed:

  • Are there important gaps in products or services that prevent your company from being successful in your chosen markets?  What needs to be developed to meet strategic goals?
  • Are there gaps in other functional areas of the company (sales, marketing, manufacturing, etc.) that will need to be addressed if a given product or service is developed?  What changes in the budget and execution plan should be made in order to realize the benefit of any such program?
  • Are there gaps in your business value proposition that prevent you from being sufficiently differentiated from your competitors?  What differentiation is needed to meet target customer needs and allow significant market share gains?  Are proposed differentiation plans consistent with the strategy and business plan?
  • Are there gaps in given markets or with given customers that can only be filled by collections of product and service offerings that are dependent on each other to achieve “critical mass”? That must be delivered together or they offer little benefit?

Once completed, this gap analysis implies a plan.  The product management team – with regular executive review for guidance – should develop a product and service development roadmap to close the gaps.  Other functional leaders should take on the strategic development efforts that have been identified to support the go-to-market aspects of the roadmap deliverables (such as adding new sales channels, bringing on new suppliers, developing ways to better reach target customers, etc).

If done right, gap analysis and roadmap planning is a big job for anything but the smallest enterprise. The translation of the business gap analysis into the product roadmap will almost certainly be an iterative process in order to be optimized.  The main issue is that there will always be more gaps and potential investments than you can afford to address within business constraints.  In my experience, to get prioritization right and to build the best roadmap, the best practice is to leverage several tools that make the process less subjective and more focused on financial results:

  • First, create a playbook (I prefer PowerPoint) to highlight the proposed roadmap items and explain each potential program.  This can be used to communicate the concepts and proposed implementation methods for each NPI concept and how the programs support the business strategy.  The playbook should be owned by product management, but engineering should be very involved in creating high level plans regarding design concepts, implementation goals and needed resources.  Drawings, pictures, illustrations, etc., should be included to convey the scope of intended programs.  The playbook may be vague at first, but as a program gains legs, its entries should quickly evolve to include financial information (annual revenue & margin), development cost and time to market.
  • To coordinate competing programs and prioritization, a spreadsheet should be created to identify key parameters for each proposed program. I recommend using a structure along these lines:  for each proposed program (a row), there should be cells (columns) which list program number, priority, summary, projected units sold, price, cost, annual revenue (net of any cannibalization), annual margin, engineering cost estimate, time to market, and product EOL value (does it replace an ailing piece of the portfolio?).  Using these metrics, multiple competing programs can be compared in a less subjective manner.  The information can be sorted in various ways in order to assess possible new priorities, so that final prioritization can be established with cross functional visibility and approval.
  • Also, a tool (spreadsheet, MS Project, Database, or alternative) is needed for resource planning.  As programs are selected for funding and implementation, the people and dollar resources for those programs need to be booked against the overall resources you have available (otherwise overly optimistic outlooks may result in significant overbooking of resources).  This allows you to fully staff and fund the top priority programs until you run out of resources.
  • To reflect the financial outlook of the plan, a spreadsheet (or similar tool) should be used to aggregate revenue and profits from current and ongoing business with the incremental revenue and profits forecasted from the addition of new products and services.  This tool should show when new products will launch, how they will ramp, and what impact (if any) they will have on sales of existing products.  This should also show any projected sun setting or decline of existing products for a complete forward-looking view of the P&L.  (This tool should be used in conjunction with, or actually be, the P&L management database I described in the P&L management section.)
  • Finally, as a means of testing the competitive value of your plan, another relatively simple tool can be created to evaluate how the plan measures up in the competitive landscape.  Here you need to log the current size of your target markets, your current market share (in $) and an assessment of the expected growth rates of your markets.  You should then set targets for share capture (modest or aggressive).  With this data, you can now assess your plan.  If the incremental planned revenue from your roadmap plus your current revenue does not allow you to maintain your current share of the market, you are falling behind – implying that you have a bad plan.  If executing the plan does not indicate that you should gain share, you need to figure out what is wrong, because what it does indicate is that your competitors have a better plan.

These tools and the data collected for them can then be used to identify and prioritize the optimal roadmap items to fund with NPI dollars.  Leveraging the associated analysis in fact-based communication and planning sessions (with the Core Teams) and in roadmap and program recommendations (to the PAC), your business can dial in a well-understood, well-vetted and detailed roadmap and NPI plan that the whole team is behind.  Once this process is established, incremental reviews and plans can be prioritized and committed to, based on updated information as programs are completed and new resources become available.

If this seems complex, it is – at least to start.  But I argue that, without this kind of fact based management, you are really just casting lots.  While some visionaries may be able to successfully lead without a fact based system, they are exceptions and not the rule.  I have found that with a bit of discipline, these tools can be used and re-used, with quarterly updates for validation or re-planning.  Given the cost of NPI activities that miss, the cost of doing your homework in order to optimize your chances of hitting the target with development dollars is money well spent! This is professional product management.

It is also very important that the process of roadmap creation and NPI prioritization be customer and market driven, meaning that all decisions need to be heavily influenced by financial metrics and projections.  Programs must be planned, analyzed and assessed as fully weighted “whole product” plans, taking into account not only development costs, but also the cost to market, sell, manufacture, deliver and support the product.  Too frequently the full cost of a program is not included in its assessment, leading to either budget overruns or underperforming results from the investment.  NPI assessments must also include execution risks.  The business case for a program must be constantly adjusted to include changing information or market conditions.  The many considerations involved in making the optimal plan are simply too complex to be done without tools and processes to guide you.  While you may decide in the end to trust your gut in some prioritization, you will still have a better chance of success when you are well informed.  One of my favorite sayings is, “Fortune favors the prepared mind.”

As outlined earlier in the discussion on organizational Gate Processes and Core Teams, it is the responsibility of the product management team to manage these NPI tools and to drive the business cases, P&L analysis and roadmap forecasting.  However, the Product Manager should leverage Core Team structure to integrate the efforts of sales, marketing, operations and, especially, engineering in NPI program execution.  The Product Manager must also drive the process to ensure the executive team’s  (the PAC’s) alignment and support.  I believe it goes without saying that the most successful New Product Introduction (NPI) teams have a very tight coupling between engineering and product management.  The VP of Product Management and the VP of Engineering should both champion this process and ensure that it is executed in best-in-class style.