The role of Product Manager in many firms is often described as one of unlimited responsibility for the success of a product line with absolutely no authority over those who are critical to achieving this success. Development of new products within a firm’s existing portfolio of products is no exception. Product Managers are expected to manage the development process by exerting influence over others in the organization with no real authority to call upon. This article is intended to explore the reasons that firms pursue new products and provide guidance on how the product management team can be used to maximize results.
Why is New Product Development Important?
New products are critical to the long term success of any firm. Firms may pursue new products for a variety of reasons.
Regardless of those reasons, the intent is clear: to improve market position and to improve profitability. The Product Manager is in a unique position to recognize opportunities for new markets and products. The most prevalent reasons for pursing new products include:
Market Share Growth: Apart from the sales force, Product Managers are the individuals in an organization who are closest to the market, and hence, the customers. Product Managers hear, every day, about what new segments are emerging in the market and are called upon to know the difference between a real opportunity and a “red herring.”
Product Managers must also clearly separate those opportunities which represent incremental growth in market share versus those that will merely cannibalize the sales of existing products. In the orthopaedic industry, those devices that pushed the average age of patients down were the ones that provided the best opportunity for real growth. Such innovations as porous coatings on implants and modular/replaceable bearing surfaces were real advancements and fueled growth for many years for their innovators. Product Managers should be searching for the next big advance in the field.
Competitive Response：The first mover advantage in a market is well documented. Firms that are first in a market, in most cases, are able to dominate the market throughout the product life cycle. Unfortunately, not everyone can be first to market. This places tremendous pressure on those firms who are not first to be fast followers. In many cases, a good Product Manager can direct substantial improvements to a competitor’s product in the fast follower mode and create a dominant market position.
This calls for the Product Manager to be in tune with the reasons for the competitor’s new product. Is the product in answer to a real demand from customers? Or is the new product just a “lemon scented” version of an existing product that will simply cause the competitor to cannibalize its existing products?
In the former case, the Product Manager may be well advised to pursue a new product that addresses the same issues. In the latter, the Product Manager should simply monitor the competitor’s new product.
Early in my career, I was the Product Manager for Zimmer’s Miller/Galante Total Knee System. We were competing successfully against Howmedica’s PCA Total Knee System, the market leader at the time. Both the Miller/Galante and the PCA were introduced with resurfacing tibial components— tibial plates with small pegs. I remember taking a number of calls from our sales force alerting me to a new device on the market—the PFC from Johnson & Johnson, featuring a stemmed tibial component. The sales force was adamant— the market was moving toward stemmed tibial components and away from tibial resurfacing. Fortunately, we listened to our sales force and were able to react quickly and add a stemmed tibial component to the Miller/Galante line to address the emerging issue of stability of tibial components at a critical time. Care should be taken to avoid legal entanglements through patent issues, but a good Product Manager should also not shy away from the alternate definition of R&D: Rob and Duplicate.
在我职业生涯的早期，我是Zimmer 's Miller/Galante全膝关节系统的产品经理。我们成功地与当时市场领先的Howmedica公司的PCA全膝关节系统竞争。Miller/Galante和PCA均采用胫骨表面修复-带小钉的胫骨板。我记得我们的销售人员给我打了好几个电话，提醒我市场上有一种新设备——强生公司的PFC，其特点是有茎状胫骨组件。销售人员态度坚决——市场正在向有梗的胫骨组件发展，而不是胫骨表面修复。幸运的是，我们听取了销售人员的意见，并能够迅速做出反应，在Miller/Galante生产线上添加了一个茎状胫骨组件，以解决关键时刻胫骨组件稳定性的新问题。应该注意避免由于专利问题而引起的法律纠纷，但一个好的产品经理也不应该回避研发的另一个定义：掠夺和复制。
Complementary Products: The best Product Managers are able to provide incremental sales to their firms by pursuing new products that do not compete with their existing products.
Such product development strategies answer the question, “What else can I sell my customers that might go with what they are already buying from me?”
Such opportunities, while providing purely incremental sales to the firm, may also serve to increase the sales of existing products, as well. Product Managers should be at the forefront of answering such questions. Through contact with the sales force as well as with customers, we learn valuable information. During my time as a product director with DePuy, we introduced a product in the acetabular cup line—the apex hole eliminator. This simple UHMWPE plug was designed to be screwed into the apex hole of an acetabular cup prior to the installation of the cup liner. Surgeons were concerned that the presence of a hole in the outer profile of the cup might invite soft tissue impingement and compromise the stability of the acetabular cup liner. The apex hole eliminator provided a simple solution that added incremental sales to the company and actually drove the sales of the complemented product even higher by addressing one of the objections to the device expressed by customers.
Environmental Changes: Some changes in the marketplace are beyond the control of any of the competitors. Such environmental changes may spur new product development, as well.
Continuing price pressures on manufacturers has created a whole sub-category of products intended to meet the emerging need to control health care costs. The current healthcare debate continues to challenge manufacturers to create products that both meet high standards of patient care and, at the same time, address the cost of care issues prevalent in the debate. Product Managers must stay vigilant and monitor potential environmental changes that may affect their product lines. The global warming debate may eventually find a foothold, even in our industry. Firms must take steps today to consider changes in manufacturing practices that might decrease a firm’s carbon footprint. Product Managers that successfully address such issues may well gain a sustainable competitive advantage in the eyes of consumers who are in tune with this debate.
Excess Capacity: Some firms find themselves with idle capacity from time to time due to poor economic conditions or lower than expected demand for their core products.
Executives know that idle capacity is expensive, particularly regarding fixed investments like machines and warehouse space. Some firms get creative when faced with such a problem and seek product opportunities totally outside their primary focus. At least one firm in the medical device industry also makes high tech parts for the aircraft industry, finding that machining titanium parts for the medical device industry is not that different from machining titanium for jet engines. Such diversification strategies do come with some inherent risk that can be mitigated by operating as a subcontractor for an established firm, rather than trying to enter the market to compete with firms who have a reputation for expertise in the field.
Product Managers as Catalysts in New Product Development Cycle
Product Managers should be integral to the new product development process. These individuals serve as a vital interface between the sales force and the firm. Further, the Product Managers are charged with the overall responsibility for the success or failure of a product line. As such, Product Managers are in a unique position to filter new product ideas from both outside and inside the firm. Product Managers should be prepared to vigorously defend new products and line extensions of existing products, but should also enjoy some freedom to take on a more entrepreneurial approach to seeking new products. This is especially true when trying to avoid simply cannibalizing the sales of an existing product with a new product.
The Product Manager serves as coordinator of the new product development cycle from inception to product release.
This means developing and maintaining relationships with engineering to coordinate specifications and to insure that the customers’ needs are being met. Product Managers must work closely with accounting and finance to stay abreast of cost issues and to insure that the manufacturing costing methods used allow a positive contribution margin once the price is established. Manufacturing must be consulted to make sure that the new product is accurately forecasted and put into the production schedule. The sales force must be educated about the new product, and a distribution plan must be developed. Literature must be developed and distributed to the sales force and to customers. In each of these activities, the Product Manager serves as both point person and as champion for the product in an all-out effort to make the new product a success.
Despite all that I’ve noted, surprisingly few channels of clear communication exist between Product Managers and the various departments that they interface with. How did this happen? What’s being done to improve this situation? What could be done better? If a company wished to take one small step toward truly integrating the Product Manager in the development process, instead of just relying on them to be stewards of the day-to-day business, what would that first step be?