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New Product Launch

You settled  down at a table in the company cafeteria with status reports on three of the projects in the program you were managing. You decided to start with the most problematic of your projects and opened that folder, managing to remove the staple with a knife without stabbing yourself. At a neighboring table, people from sales, marketing, production, engineering and accounting were having an intense, heated discussion. You knew all the managers involved and you’d had each of them as a stakeholder on more than one of your projects. You had at least a productive working relationships with new product launchall of them and two were your close friends.

Join a New Product Launch Meeting

One of the friends spotted you and waved at you to join them. As you took a seat you said, “From the gaiety, I would say you’re planning the holiday parties. Am I right?”
Your friend said, “I don’t make jokes at your project planning meetings. Our new product launch session is every bit as divisive.” Your friend looked around the group, held up his hands to all of them, and said, “I’m not trying to score debating points. I’m just trying to summarize everybody’s position on the new product launch.”
The rest of the group nodded but watched your friend warily.
“Okay,” he said, “my friends from accounting think this new product will lose money. They don’t think we can cover the fixed costs in the first two years. My colleagues from sales and marketing take issue with that. They say this new product could be a home run for the organization. The production managers think the new product is too complex to manufacture with a low defect rate. They are concerned that a high defect rate will cause this product to fail. Warehousing and shipping managers think the transportation costs are going to go through the roof because the salespeople want to promise 24 hour delivery.
You listened carefully and nodded at each of the managers as their position was stated.
Your friend turned to you and said, “Pretend this is a project. How would you address this? What do you call it, stakeholder conflict?”  Project Planning Main Page

New Product Launch as a Project

You laughed and said, “What you have here is a project; I don’t need to pretend it’s one. But it’s a project without a defined scope. The scope is what the product will deliver to the organization; its goal. You’re arguing about various deliverables without any framework to define them. Can I ask a couple of questions?”
All the people at the table looked around a bit uncomfortably and then nodded.
“Okay. Am I correct that the goal of this new project is to generate a positive cash flow for the organization?”
Everyone nodded and a few made faces at the obvious statement.
You continued, “How much cash flow do you need to generate in each of the first five years for this project to be a success?”
A manager from sales said, “That depends on how many units we sell.”
You smiled and asked, “How many units are you committed to selling in each of the next five years.”
He replied, “That depends on the price and the features we can offer our customers. That’s the way sales works.”
“Humor me,” you said. “Tell me how many units you can sell if the product contains a specific set of features and a specific production cost.”
The sales manager shook his head angrily, “You’re asking me to go way out on a limb here.”
You smiled and said, “Well eventually you have to commit to how many units you can sell. That allows everybody else to plan on how many units they have to produce and ship.”
The irritated sales manager looked at you and said, “That’s not how marketing & sales works. We sell as many as we can and everybody else has to adapt.”
There were loud groans from production, engineering, accounting, shipping and warehousing.
“It seems to me,” you said, “that there is some disagreement with that approach. I can see how the volume of your sales is going to have a drastic impact on these other parts of the organization. So it’s reasonable that they want to know what sales level to prepare for.”
The sales manager said, “You don’t understand. This is not project management. We can’t specify in advance how many units we’re going to sell because the market is far too turbulent. And we can’t anticipate all the actions of our competitors.”
“You make your point eloquently,” I replied, “but I’d be surprised if good product development procedures let the marketing and sales people off the hook on hitting a sales target.  Having that data and your commitment to it is the only way to start this new product launch. You don’t have to consider it a project but you must follow certain procedures. Like any business person, you come up with an idea for a new product that you think makes sense for the market. That’s what we call a business case. In that document, you justify this product by making commitments to the following:
  • the number of units you can sell
  • the profits
  • the investment
  • the people resources it requires.

That’s what the executives look at decide whether to approve or disapprove this new product. They’ve got to know it makes sense financially, operationally, and in terns of capacity and human resources. I’d imagine, just like in project management, there are other new product ideas or other investments that the executives have to weigh versus your new product.”

The accountants started clapping first, then the operations manager said, “You mean we’d be able to plan production levels based on a sales forecast?”

You nodded at all of them and said, “Right. This is the project management world. New project launches aren’t begun without first being justified. Most importantly, the people who want the project need to make commitments to the benefits the project will produce. They have “skin in the game.” That’s what makes the business case process so worthwhile. Once you get agreement on the scope of the new product (the project), I’d be happy to help you break it down into the production costs, delivery costs, personnel costs and so on. All of them will be part of your network of product deliverables.”

You looked around the table at their approving faces.

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