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By Chad McAllister

At what stage or phase of new product development should a comprehensive business plan be developed?

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This question came up in a workshop the other day! Many want to rush to a full blown business case once they think they hear a good idea. However, we know that a business case requires a great deal of resources – money and time. This rush to business case takes time away from new product concepts that are already proven. Nine out of ten ideas fail to produce a profit. How do we know that the idea is “the one”?

An idea may be a very good one but we do not actually know that until a number of questions have been asked and answered. Think back to the new product development process. Does our idea fall under any of the opportunities/markets that we have identified as ripe for change? Does the proposed idea/product solve a customer problem? Is the idea/product technically feasible? And from a “preliminary” business case analysis is the idea/solution/product economically feasible?

When I say “preliminary” business case I am talking about a one page rough estimate of cost to produce, value to the customer, sales price, and potential value to the company. That is it. A preliminary business case should not require more than eight people hours to produce.

During stages 1 and 2 of the new product development process our investment is minimal. Only when a new product idea has successfully moved to stage 3 Concept Evaluation due we begin our investment of time and money in the idea and conduct a comprehensive business case as one of the “tests” to determine if the idea should move on to the Development stage.

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Filed Under: Concepts

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Chad McAllister - Product Management and Innovation TrainingThe primary responsibilities for an organization are product management and innovation. They deliver value to customers. They're also exciting responsibilities for those properly equipped. That is my job - equipping product managers and innovators.
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