Challenges In New Product Development

Challenges in new product development are one reason to consider if the investment to convert your idea into a sellable product is worth it. They are usually not so daunting that they cannot be overcome. They range from initial development cost to complexity of testing and certification to overall production ramp up and distribution costs. These can be addressed as you go through the development process but they should be understood and accounted for when considering if you have the personal or financial stamina to proceed.

If there are hurdles that are difficult for you, but have already been overcome by others, you could consider doing a more modest development of your product idea and then license it to others to be built, promoted, distributed or sold by them.

Challenges in new product development will be most easily addressed if you break down the product development into sections and identify challenges in each.

1. Solution
   1. What pain points are you addressing and how do you educate users to your solution?
   2. Who is the customer? Could there be more that one user or purchaser like shown below?
      • Medical Device
        • Patient
        • Doctor
        • Caregiver
      • Home Automation Product
        • Architect
        • Contractor
        • Homeowner
   3. Can you identify who they are and how to connect with them?
   4. Will the be receptive to your product offering?
   5. Can you leverage user groups, social media or other low cost marketing methods to reach and test their receptiveness?
2. Product Development- What will it take to develop the product?
   1. This is directly related to its technical complexity, market scale, and competition.
   2. Technical complexity is the largest definer of challenges. A toothbrush is much simpler than a smart phone accessory and the development costs of a toothbrush are probably 80 or 90% less.
   3. Mechanical or electrical improvement versus innovation– some people call this evolution versus revolution of a product concept. Refinement of a product is not as complex or expensive but will also be more difficult to gain market share while innovation often takes many iterations of the invention to get it right but this ultimately it what it takes to disrupt a market and or create new markets. Ex: We once tried to design a unique folding chair to compete in the folding camp chair market. 1000 hours later, it was still taking iterations to solve the folding while meeting the extremely low retail cost thresholds.
   4. Complex testing– if a unit has a safety certification or biocompatibility requirement, this will add challenges to new product development through additional cost and time. It’s always our belief that we should bring in safety experts early on. They often guide a multitude of early choices to stay out of trouble later on when it is audited for compliance by the agencies.
   5. Complex environmental, thermal or other performance attributes– this can be as little as a 30” drop test off a table on 26 sides (every side, corner and edge of a cube) to as complex as thermal convection cooling a tech device at 20,000 feet altitude where the air is so thin it does not remove heat well. To make something water proof to meet a 30 minute leak test is harder than making it water resistant to blowing rain. All these things influence the challenges in new product development.
3. Manufacturing
   1. Production quantities drive manufacturing methods and can define if there will be significant tooling and production ramp up fees.
   2. Low production methods (such as sheet metal, RIM molding, casting) are always more expensive per unit and may still require somewhat large tooling budgets.
   3. Production ramp up is always complex and expensive so planning for this will be critical to success. Ramp up costs could include tooling budgets, assembly fixtures, raw materials, test protocols, shipping container design and testing, box cardboard stamping dies, packaging insert documents etc.
4. Fulfillment- Dealing with shipping, returns and warranty repairs.
   1. Will this be provided by your contract manufacturer?
   2. If the manufacturers is also going to support returns, warranty issues, and replacement parts, the agreement will take months to negotiate, with lots of details to resolve, along with the legal fees to assure each side is covered.
   3. Sometimes containers are shipped to the USA distribution locations which handle the shipping to the store or customer, returns and warranty responsibility is often handled by the same entity.
   4. National big box stores can require a full time product manager to make sure their stores are always stocked with the right quantities of products.

Challenges in new product development can be tackled in steps, each coming up as the development process flows through its cycles.

When a product solution is created to solve a problem it usually addresses a pain point of some kind in the world. This initially seems exciting that the problem is solved but to really jump from solving it to producing a product that will engage the market and user is so complex and costly, it is usually necessary to “prove” there is a market first. So the first thing to do is research the market size, would the pain point you are solving be worth what you need to make on it to that market? How much market share you could hope to gain to make the “return on investment” (RIO) you would need to justify your time and money?  If the numbers work out that you can solve a real problem with a product cost that the market would accept and if you sell the quantity in your prediction, you would pay back the investment plus a healthy return, you proceed.

Challenges in new product development now move to the actual design and development of the product. Typically this entails Industrial Design of the look, feel and functional experience of the product. If it includes a mobile or web app, you would add User Experience and User Interface Design (UX/UI) too. The main thing here is to invest in good product design, with that investment balanced against the competitiveness of the market. In other words, if you intend to compete in a very crowded market against a worldwide brand, design is much more significant than if you are offering a new product in a smaller market category, solving a pain point without any competitors.

Mechanical and maybe Electrical Engineering is next or could have been started in parallel with industrial design. It also could include other engineering skills such as optical, structural, safety and test engineers. These would be driven by the product requirements, and again, as noted above, the more complex such as environmental issues (water tight, caustic chemicals, heat, cold etc.) or if it has electrical components, batteries etc. then add electrical and maybe a software engineering. Each one of these roles can be done by an internal team member or a consultant brought into the team.

Safety and other Standards Compliance for things like UL, CSA, CE, etc. are often required especially if your product has full line voltage (120-240v) coming into the unit. If it plugs directly into the wall then UL certification will probably be required by any store selling in the USA, but if you reduce the voltage to the unit using a power supply (dropping the voltage to 24 or less) then the UL requirements change to be much simpler and reduce cost and time. Other compliance requirements include RoHS rules for products designed to sell in Europe, FCC (Federal Communications Commission) if there is any wireless transmission, Bluetooth or emitting chip within the system. Or FDA (Food and Drug Administration) if there is any medical use.

As you migrate into manufacturing, there are large and small entities who can help. There are specialty manufacturers such as sheet metal formers or injection molders, and sub assembly companies that make things like wiring harnesses but someone has to assemble it and put it into a box. These are often called Contract Manufacturers. CM’s are often a perfect partner to produce a product. There are large, worldwide, CM’s which require at least a million dollars of production annually and many small ones including specialty ones for things like complex optical systems or micro assembly for things like hearing aids.

If possible, we recommend bringing in the specialty process manufactures like sheet metal stampers or injection molders very early and engage them in the development process to help us design for manufacture…their manufacturing. This can also apply to unique assemblies like optical or heater assemblies or special valves and sensors. We try to always verify we can make the thing we engineer in the most cost effective way possible early enough that if we find they prefer something different, it will not be too difficult to integrate their input into the design. Once, during a review, the CM told us of we turned the PCB over they could perform in-process testing. All that meant was modifying the rear connector openings in the chassis to be flipped over. No big deal to us and super helpful and cost saving in the manufacturing process.

This choice could also be driven by the production quantity and country of manufacture. If the production figures are at 10,000 or greater over the life of the product, we can often justify injection molding. At this figure, it may be possible to justify manufacturing in China or another offshore solution but most often the figures are in the 100’s of thousands before justifying the expense of managing off shore manufacture. For these mid- volumes and even lower, we regularly produce the molds in China to gain the 50-60% cost reduction but move them to the US for injection molding of the parts.

Partnerships:

Because customer engagement and distribution is so expensive and difficult, it may be best to sell, license or partner with a company or brand, already selling into that market. They will have the sales and distribution set up and the infrastructure already in place, saving a huge investment of time and money. This can be very lucrative if your product solution is compelling and defendable. In other words, if it’s a great product and you “own” the intellectual property and can defend it. Many times it is in the best interest in the larger brand to integrate this new product into their line. This saves them development time and cost and keeps you from later competing with them. It is also a way to expand faster into new product areas without the time investment to innovate themselves. This also means that the further you are along in your development the more value they gain and the greater amount they would pay you for it. In this case, you would only want to develop the solution up to a point where they can take over since they may have in-house manufacture and would want to adjust things to their process. In this case, any time applied toward detail engineering and setting up contract manufacturers could be wasted.

Additional resources on product development can be found Here.

About the author: Philip Bourgeois is the founder and president of StudioRed, a product development consulting company in Silicon Valley with Brand Positioning, UX/UI and Industrial Design, Mechanical, Optical and Structural Engineering and Prototyping in-house with one team. StudioRed has been doing medical product design since 1983. Products from large floor mounted systems for Becton Dickinson and Abbott labs to carts for Medtronics and Syneron to surgical wands for Arthrocare or Medtronics even consumer medical devices such as Therasense or Resound. This experience in medical product design and engineering is reflected in over 3500 programs to date.