This is a guest post by Kathy Morrissey from Strategy 2 Market, a Playbook partner that specializes in new product development consulting for medical devices and industrial products.
How Effective is Your Risk Management Process?
After many years of designing and implementing phased and gated systems, Strategy 2 Market (S2M a Playbook partner), had continuously tried to improve upon this approach. After receiving "push back" from some of their clients to find a better way of getting products to market quicker, S2M has spent the last couple of years incorporating risks and assumptions during the entire new product development process, including during the early-stages of new product development.
Understanding and getting a razor sharp focus on commercial and technical risks has proven to be quite successful for helping chose the right projects and gaining speed.
Where is the Bull in Your New Product Development Process?
The phase and gated system is a long time standard for developing new products, but it is not without fault. The system’s structure inhibits the rapid development needed in order to stay relevant in a competitive and ever-changing marketplace. It is no surprise we are finding our clients craving a “better way."
Project Risk - the devil is in the detail
The thing is, with the phase and gated system, there is a lot of emphasis on big picture things. And more often than not, the little things -- assumptions and risks (i.e., the bull not in the picture) -- get forgotten, taking the project off its “perfect” course.
Waterfall Project Management and Risk ManagementThe phased and gated system is guilty of:
- Managing process activities such as market studies, technology feasibility studies, financial analyses, etc., but spending less effort on the activity of monitoring assumptions and risks.
- Making investment evaluations only at gates. (Whoops, there goes $1 million.)
Analyzing every nook and cranny of a project. You know what I’m talking about – financial, technical, value proposition, market, competition, legal, regulatory, manufacturing, supply chain, sales and customer service. Did I forget anything? And of course as the project progresses through each phase, discrete project related risks show up to the party like unwelcome guests.
- Surprises from unrecognized risks can be a major source of delay and even product failure.
- Anticipating and dealing with important risks as early as possible will go a long way towards improving project cycle time and success.[i] A process that uses continuous risk management allows more timely assessment and management of risk. For example, if we already know the size of the market and how to segment it, and adoption rates are one of our biggest unknowns, why wait until phase 3 to tackle it? Do it now. Taking inventory of assumptions and risks and addressing them early on could be the turbo boost your product development system needs.
Not effectively managing risk is like attempting to find the most efficient rush hour route in the City of Chicago during the spring, and ignoring the fact that some of those low traffic streets will have potholes that will take out your front tire.
What do you think?
- How do you manage risks within your process?
- What are some of your most successful or unsuccessful product development projects, and how did you manage the risks during the project?
Did you use a phased and gated system, and did you integrate risks into the process?
- Do you have any tactical advice on managing assumptions and risks effectively in your product development process?
[i] Smith, Preston G. and Guy M. Merritt, Proactive Risk Management. New York: Productivity Press (2002), Chapter 1, “What Is Risk and How Is It Managed”
Where is the Bull Photo: by Helen Olney https://creativecommons.org/licenses/by/2.0/legalcode