From From trash to treasure: A checklist to identify high-potential NPD projects from previously rejected projects, Qin, Jian and van der Rhee, Bo in Technovation (2021).
In the ever-changing landscape of today, companies need to ensure that they continue to innovate to create long-term sustainable advantages. New Project Developments projects (NPD projects) are the cornerstone of any company’s corporate survival and growth. There is potential for companies to leverage NPD projects, both successful and failed projects, to create better future outcomes.
It’s important to recognize that these NPD projects and the innovations that come alongside them aren’t always successful and can fail before they are even publicly launched. A Project Management Institute report in 2017 finds that 31% of IT projects do not meet their goals while 14% of projects utterly fail. Additionally, it is found that 20% of projects are canceled in their ideation stage. These could be caused by a lack of technology, unfavorable market conditions, and incompatible business models among many other factors. Although, it is important to remember that these aforementioned variables that can cause the downfall of these projects change over time. For instance, in 2001 Microsoft attempted to introduce the idea of a tablet computer but the product failed. Yet, almost 10 years later, Apple revitalized the tablet computer market with their iPad which earned the company 7.5 million in sales for that year.
Previously rejected NPD projects that had faced innovation failure have the potential to present new strategic paths for their companies that, ultimately, can lead them to new growth and opportunities – a source of treasure.
Identifying treasure from your company’s trash
Qin and van der Rhee’s study titled “From trash to treasure: A checklist to identify high-potential NPD projects from previously rejected projects,” proposes a modified stage-gate checklist that can serve as the guide of how companies can determine which previously rejected NPD projects are worth reviving.
A stage-gate model methodologically breaks down an NPD proposal in separating the project into different stages from production ideation to full launch. At each stage, the gatekeepers, or the managers assigned to make decisions regarding NPD projects, decide to “go” which would allow an NPD to proceed into the next stage of development, or to “kill” which would terminate the project at its current stage.
The authors were able to further improve this model by taking into consideration open innovation, lean and agile management, case-based reasoning, and learning from innovation failures. Ultimately, this allowed them to create a checklist that leverages new knowledge to advance innovation, recognizes changes in user needs, and learns from past failures to improve the present and future. This enables managers a systematic method to consider the different aspects of NPD with the use of a clear structure and standard criteria to identify high-potential projects. This shift from ad hoc practices into a systematic method encourages innovation performance in companies for ideas and projects that were ahead of their time.
Outlined below is an overview of how this modified stage-gate checklist can be implemented:
Before going through the stages illustrated above, it is important to determine the following information:
- The stage at which the project was previously killed
- Each reassessment must begin from Gate 1 and work its way up to this stage. Any stage past this point must be created as there is no more previous material available.
- The gatekeeper that previously killed that project
- The reason why the project was killed
- The changes in variables that make the project a candidate for revival i.e. technological advancement, change customer needs, changed business strategy, improved financial benefit
Moving forward with the stage-gate model
Why should a firm bother going through all this trouble? More than the potential treasures to be found in previously rejected NPD projects, reviving previously rejected NPD projects reduces the sunk cost in their initial development. Though there is no information on revived NPD projects outperforming newly created NPD projects and vice versa, revived projects are the most cost-effective way to develop as companies would not be starting from scratch whenever it comes to development and resources already expended in the project. A firm must overcome their innate resistance to be associated with failure as it is ultimately that mindset that can hold them back.
To be able to effectively apply this framework in any company, it relies heavily on three things: identified gatekeepers, proper information management systems, and a change in mindset.
Proper Information Management Systems. Mining rejected NPD projects for possible projects is easier said than done as, more often than not, companies do not document their failed NPD projects as the proponents of such do not want to be associated with the failure of the project. The entire implementation of the checklist relies on the availability of this database and the lack of such prevents companies from the opportunities available here.
Identified Gatekeepers. Companies need to identify who their company gatekeepers are when it comes to NPD projects. These must be informed individuals who can ultimately make smart resource allocations decisions that allow for optimized company spending. As mentioned previously, there is a growing amount of resources that are spent on NPD projects and they go along the development stages and it is the job of the gatekeepers to kill projects that do not align with what the company goals are at the moment.
A change in mindset. Dealing with failure is tricky as many see it as the end of the road. It is important to remember that there is always something to be gotten from innovation failure, may it be knowledge or revived NPD projects. Failure is something inevitable but it can serve as a catalyst for change that enables future success.
With all these factors, companies can leverage on their failures to create better future outcomes that enable them to reassert themselves in an ever-changing and highly competitive landscape. Before being able to reap the benefits of failures, there are changes that must be made today – identified gatekeepers, proper information management systems, and a change in mindset when dealing with failure. It is important to recognize that failures are not ends in themselves, rather they are potential successes – potential treasures.
Should you want an overview of everything discussed in this article click here for a short video lecture prepared by the Research and Development department.
Should you want to learn more from the authors themselves about the methodology behind the study, implementation of the checklist, and managerial implications of the framework click here for a short video lecture.