Looking for Opportunities Through Innovation
Product innovation helps companies grow and lessens the risk of one’s products becoming obsolete. Many companies that had previously slashed their research and development (R&D) budgets are again spending money on this critical activity. Most companies reduced their R&D budgets in response to the market downturn. Some companies confess that they have been in “survival” or “maintenance” mode and have literally dedicated no funding over the past several years to developing new products. These companies have blown the dust off of their prior innovation and new product development plans and are restarting their efforts. It is critical, though, that they check in with the market prior to spending any precious capital on product development.
Of late, we’ve encountered several components manufacturers that work closely with their customers as they develop new products. This increases efficiency and reduces risk on a number of fronts. Not the least important of these risks is avoiding the “Oh … no thanks” response when you announce your newly unveiled, previously top-secret product to your customers. If customers provide feedback as you’re developing your new products and innovations, they will come to have an emotional investment in the final product. Not only will it precisely meet needs they consider to be important, they will have a stake in its success. In the door and window industry, component and finished goods manufacturers don’t usually have perfect visibility as to the challenges and opportunities surrounding the ways in which their products are used in the field. This holds true for any supplier-customer relationship in the door and window industry, whether it is a component supplier selling to a manufacturer or a manufacturer selling to a dealer or builder. Customer input will almost certainly make the product better.
As with most things in life, the notion of cooperating with customers in developing new products is not without its risks. A key risk that must be addressed is maintaining the element of surprise and the first mover advantage inherent in developing a new product. Manufacturers of components or finished doors and windows that choose to collaborate with their customers must stress to them the importance of maintaining confidentiality surrounding the new product being developed. Even an off-handed question to the company’s competitor regarding the competitor’s plans to develop a similar product can ignite the spark that leads to sooner-than-expected competition. Suppliers know that their customers don’t usually ask questions like that idly, so if they’re asking about it, there must be some interest in that direction.
In my next blog, I’ll cover some of the more attractive macro-level drivers for new product development in the current market.