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This Month's Question:
My Company evaluates the success of new products by means of a structured review meeting held 9 to 12 months after launch. Invariably, the only metric considered is sales revenue and margin relative to the predictions originally made to justify the project. When revenues and/or margins meet or exceed projections, the meeting is very short and pleasant. Everyone pats themselves on the back, then return to their offices/cubicles to plan how they will spend the consequential bonus payout. Conversely, when revenues and/or margins fall short of the original projections, the meeting is long, contentious, and unpleasant. The focus becomes assignment of blame or fault. Typically marketing laments that the product development missed schedule, and engineering bemoans that the specifications and/or sales estimates were unrealistic. In a scene reminiscent of “The Apprentice” Boardroom, management asks a series of embarrassing questions, then assigns fault to either an individual or group (nobody is fired, however).
These sessions mark the close of a project; there are no assigned actions. The only obvious outcome of the meeting seems to be either short term euphoria or demoralization. What’s the point?
Victoria;Dracut AskSCPD:
We suspect the intent of these sessions is to drive better product selection and new product development performance by way of a classic “carrot and stick” approach. The “carrot”, or reward, is a bonus, while the “stick”, or punishment, is embarrassment. We see at least two fundamental flaws with this assessment method:
-1- The assessment criteria are too limited, because they consider only financial objectives. New products should be justified based on strategic objectives as well. A new product can have poor sales and/or margins, yet be considered a success from a strategic viewpoint. Consider a family of widgets that are being sold in 6 colors. Other colors are not offered because the coating materials have environmental challenges and are more difficult to apply. Marketing is concerned that a competitor could gain a foothold in this market by offering a new color, so proposes 3 new colors. Even though these new color widgets will have a lower margins and only incrementally add to sales, their development can be justified based on a strategy of blocking the competition. Should they later be assessed solely on financial metrics? We think not.
-2- The assessment lacks a “lessons learned” feedback component. Rather than assignment of blame, the core obsession should be to come away with an understanding of how to reinforce positive results and diminish negative results going forward.
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