Here's the backdrop...

The economy continues to grow stronger. Most organizations are indeed over the hump.  Yet cost controls remain stringent across industries. Nonetheless, there is a shift underway from a sole emphasis on bottom line profitability to a comlementary emphasis on the top line revenue growth. The root of this change is Wall Street. Investors want the promise of growth. And they are willing to bid up the value of equity for it. Naturally, Management is responding.

For NPD managers, this is good news... at least a lot better than it was a year or so ago.  More top managers are viewing new products and innovation not as a cost center that can be cut, but as a growth center that needs to be better nourished. Such NPD groups, though, are still languishing in 2004 budgets created under highly uncertain economic forecasts.

By now, most groups have worked through their first pass for budget estimates for 2005. Its that time of year. Hopefully, your organization budget for all NPD projects has increased. (email me at paul.oconnor@adept-plm.com to let me know about this in your organization). But it is time to also increase the budget for improving NPD processes, practices, support systems, and people skills. These components make up the infrastructure of NPD. Combined, they are the goose that lays the golden eggs. 

There have been a number of advancements in NPD over the last five years. Organizations need to embrace these. Yet, it is still common to see organizations maintain strict policies against attending conference, workshops, and training session. The notion of buying enterprise software to help drive NPD is so far out of the norm for some, that it is almost laughable. 

Infrastructure Investment Gains

The gains for investing in infrastructure can be enormous. Using rough numbers based on Adept's NPD Diagnostics and Maturity Assessments conducted over the last three years, here is what is minimally possible:

1. Speed: reduce time to market by 15% to 20%
2. Strategic Impact: Increase the nominal value of projects by 20 - 50%
3. Risk: Increase the probability of success of projects by 10-15%

By combining these factors, we see that at the low end, most organizations stand to increase Product Development output by at least 50%. The implications on strategy and equity valuation are significant. The basic question at budgeting time is how much to invest in dollars and man-years in NPD infrastructure improvement. It is not whether to invest. Indeed, that is the purpose of conducting NPD Capability Maturity Assessments: to determine the best path forward in term of investments and specific actions to realize the most gain as fast as possible. 

Several management consulting firms, including The Adept Group, offer services to help organizations conduct such assessments. Consider these offerings. Budget for improving your NPD Infrastructure.  The gains are simply too large to ignore.

I hope your budget decision prove intelligent and productive.