Risk vs. reward

A new software program helps Mott's keep the two in balance

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How do you measure success before the launch of a product? How do companies chart, let alone plan for, something as elusive as creativity?  Mott's, the division of Cadbury-Schweppes, plc, is giving these issues a go with some help from technology.

 

Mott's has recently implemented a software program designed to create and chart the metrics of creativity, as well as assess risk vs. reward for selected products, in order to better measure their progress from ideation to loading dock.

 

Mott's has no less than five separate divisions churning out products ranging from apple sauce and Hawaiian Punch to Holland House Cooking Sherry. Managing innovation across all five divisions , and across all potential skus -- represents a colossal undertaking.

 

"We're focused on organic growth," says Amy Connery, value development process manager with Motts, "so we need to set the stage structurally and culturally. From an ideation standpoint, idea exchange is far more than a suggestion box; often it revolves around a set of challenges."

 

Two years ago, the company implemented a "value development" procedure for new product development in an attempt to standardize innovation without hampering it.

 

"We want to help manage the stage-gate innovation process," says Chris Curran, manager of corporate communications, Mott's. "In order to stay top-of-mind, we need to be able to measure output from concept to packaging. That's why value development was started. It's been in place two years and we've seen an improvement."

 

Because management of resources is paramount to Mott's, the company installed NewPortMax, part of the Accolade software solution from Sopheon, a software services company based in Minneapolis. In a nutshell, the software allows companies to examine the rationale behind each idea in the product development pipeline and justify them based on standard metrics. The risks vs. reward scenarios are charted for easy digestion. One of the aims is to increase speed to market by as much as 30 percent.

"We initially implemented Sopheon's portfolio management software to help us with our data management challenges -- bringing all critical data into one place and strengthening its integrity," explains Rose Grabowski, vice president of value development for Mott's.

 

"The focus is on technically driven companies looking to advance performance in innovation and product development," adds Ron Helgeson, vice president of corporate communications, Sopheon.  "It's a blend of software technology with content (best practices) and expertise."

 

Like many food companies, Mott's employs cross-functional teams in new product development. R&D, marketing, finance and manufacturing are all involved from the onset, and remain so to the project's end. But with numerous products wending their way through their respective divisions, there is a need for a comprehensive overview of operations that can also home in on product development at each stage and compare movement among various undertakings.

 

"We aim to streamline and capture internal information and streamline the process," says Ken Huskins, senior solutions consultant, Sopheon. "One of the interests in product development is a more efficient manner of organizing portfolio management. With more than 60 metric values measuring such variables as risk, market acceptance risk and financials, as well as resource deployment and the amount of time spent in each stage."

 

"[NewPortMax] looks at a variety of metrics," says Connery. "It's geared toward helping us develop effective statistics that provide direction and help us evaluate the overall product development portfolio. We've only scratched the surface -- the system has been in place for only a few months -- of what it can do."

 

 "Value creation is a big [concept] here and we have to make sure the new products are creating value," adds Curran.

 

The program, which is used to oversee all product development efforts, can only be accessed by Connery and Grabowski, who receive data in the form of graphs, charts and measurements. Connery and Grabowski then share their findings with senior management and project teams, who use the information as a yardstick for performance and to project what projects are worth pursuing in the future. The goal is to minimize the costs of products whose risks exceed potential returns.

 

"The portfolio management software provides decision-making support that helps us ensure we're investing resources in the right product ideas," says Grabowski. "We've seen significant improvement in our ability to access and apply data for strategic decision- making related to our project portfolio. The result is that we're able to prioritize projects more effectively. It also helps us make sure that we have the right balance of product development risk and reward within and across our brands."

 

 "We started with the program because we wanted to make sure our direction was in one place. We wanted to make sure we had enough [in the pipeline] to meet the goal," says Curran.

 

"The software can do far more than what we are demanding of it today," adds Grabowski. "In the future, for instance, we expect that it will help us determine how much value is coming from each of our brand segments.  We will also be using it to quantify the allocation of development resources across types of projects and to assess project development cycle times." 

 

 

SIDEBAR

 

Corporations don't "kill" bad ideas early enough

 

75 percent of new product screening decisions are wrong.

 

46 percent of PD resources are spent on products that fail commercially or never make it to market.

 

78 percent of products launched in the food and beverage industry fail.

 

Sources:

Booz Allen & Hamilton

Cap Gemini

Cooper & Edgett

The Performance Measurement Group

 

 

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