Successful Product Innovation: Three Critical Success Factors, from McKinsey

Innovation Blog

Successful Product Innovation:  Three Critical Success Factors, from McKinsey

By Shlomo Maital

    The January issue of McKinsey Quarterly has an interesting article, rated highly by its readers, on the three critical success factors for new product innovation, based on field research. [1] Here is a short summary.

    According to the four authors:

We found—after surveying more than 300 employees at 28 companies across North America and Europe—that the businesses with the best product-development track records do three things better than their less-successful peers:

* They create a clear sense of project goals early on,

* They nurture a strong project culture in their workplace, and

* They maintain close contact with customers throughout a project’s duration.

   The impact these three success factors had is enormous.  According to the authors:

The teams in our study that embraced these tactics were 17 times as likely as the laggards to have projects come in on time, five times as likely to be on budget, and twice as likely to  meet their company’s return-on-investment targets.

    Some 70 % of those working on high-performing projects had a clear view of the project’s scope from the outset,  compared to only a third of poor performers.  There was also a “project management culture” in the high-performing projects, rather than a self-managed approach in which individuals made decisions, under stress, which generally were sub-optimal for the project as a whole.  And most important, customer intimacy:  Some 80 % of the top performers said they validated customer preferences during the development process, compared to 43 % of the laggards.  

      The high performers were also far more likely to do research on what customers wanted, in advance.  For instance, notes McKinsey, a medical device maker  used a weighting matrix to identify and weigh the importance of various features, then tested the tradeoffs and consulted with specialists and surgeons who used the product in clinical settings.  That fine-tuning was crucial, it emerged.

     All these three success factors are plain common sense, like so many aspects of good management — but nonetheless, so many are ignored by so many ‘innovative’ companies.