A product development strategy provides the framework to orient a company’s development projects as well as its development process. There is no one right strategy for a company. The strategy takes into account the company’s capabilities (strengths, weaknesses and core competencies), the competition’s capabilities (strengths, weaknesses, core competencies and strategy), market needs and opportunities, goals, and financial resources.
As a starting point to develop a product development strategy, the company must determine its primary strategic orientation. A company must recognize that it cannot be all things to all people and that it must focus on what will distinguish it in the market place. There are six primary product development strategic orientations:
| Time-to-Market | This involves an orientation to getting a product to market fastest. This is typical of companies involved with rapidly changing technology or products with rapidly changing fashion. Pursuit of this strategy will typically will lead to tradeoffs in optimizing product performance, cost and reliability. Technology development must occur on an independent path from product development and technologies inserted on a “modular” basis, often with frequent product upgrades to make this strategy work. |
| Low Product Cost | This orientation is focused on developing the lowest cost or highest value product. This is typical of companies with commodity type products, products reaching a mature phase in their life cycle, or where there is consolidation or a shrinking market. This orientation typically will require additional time and development cost to optimize product cost and the manufacturing process. |
| Low Development Cost | This orientation focuses on minimizing development cost or developing products within a constrained budget. While this orientation is not as common as the other orientations, it occurs when companies are developing products under contract for other parties, where a company has severely constrained financial resources, or where a “stealth” development effort is being undertaken on a “shoestring”. This orientation is somewhat compatible with time-to-market, but involves tradeoffs with product performance, innovation, cost and reliability. |
| Product Performance, Technology & Innovation | This orientation focuses on having the highest level of product performance, the highest level of functionality or functions and features, the latest technology or the highest level of product innovation. This orientation can be pursued by companies in many industries or many products except commodity products. Pursuit of this strategy involves higher risks with newer technologies and accepts a trade-off of time and cost to pursue these objectives. |
| Quality, Reliability, Robustness | This orientation focuses on assuring high levels of product quality, reliability and robustness. This orientation is typical of industries requiring high quality because of the significant costs to correct a problem (e.g., recalls in the automotive or food processing industries), the need for high levels of reliability (e.g., aerospace products), or where there are significant safety issues (e.g., medical devices, pharmaceuticals, commercial aircraft, nuclear plants, etc.). This orientation requires added time and cost for planning, testing, analysis and regulatory approvals. |
| Service, Responsiveness & Flexibility | This orientation focuses on providing a high level of service, being very responsive to customer requirements as part of development, and maintaining flexibility to respond to new customers, new markets and new opportunities. This orientation requires additional resources (and their related costs) to provide this service and responsiveness. |