Instruments of success.
Any of us could collectively brainstorm 75-100 new product and service ideas for most associations. Some would likely be viable. But ideation is not the hard part. The difficulty lies in making the right choices.
How do you know which ideas have the greatest chance of success? Which will best meet member expectations? Which do you advance to the next stage?
New product and service screens make it a lot easier to find answers to these questions. Think of screens as idea tollgates through which new ideas must pass before going further. For instance, "achieves $150,000 in revenues" is a screen that sets a minimum revenue projection for any new product or service. Screens allow you to focus your development efforts and satisfy your association's mission and goals while leveraging your internal strengths.
It also helps to think of new product and service screens as a succession of filters through which only a few new ideas will make it all the way. It is a process that efficiently sorts through many ideas to identify the most viable for your organization. Used wisely, screens enhance the success rate of your development process.
Some organizations may not see the need for screens because they think, "Our ideas are all member driven. If there is a big enough demand for it, we will do it." Or, "if it looks good, we just run with it."
This approach may be adequate if you're lucky. But you can significantly raise the chances for a successful product launch by using product and service screens tailored to your association.
Bruce Balfe, vice president, American Medical Association, Chicago, describes screens as an effective way to consistently limit management emotion and bias when comparing new product opportunities with one another.
Screens ensure that all ideas receive the same examination while filtering out less viable ideas at an early stage. In addition, gathering and summarizing these screened ideas into a matrix provides a powerful visual summary that facilitates management review and resource allocation.
New product screens are just as necessary for small organizations as for large ones. Smaller associations, however, tend to use fewer screens because they are usually less complex. A smaller association, for example, may have no need for a screen measuring the fit between the association and its for-profit subsidiary if no such entity exists. If membership is fairly homogeneous, segmentation screens also might not be necessary.
Stages of development
Look at the chart entitled "The Eight-Step Nonprofit New Product/Service Development Process." There are two stages where you can apply screens. The most common time to apply them is before the priority-setting stage (Step 5). This avoids the expense of performing extensive business analysis for ideas that do not merit further attention. For example, if you generate 140 new service ideas, you would not want to incur the time and expense of conducting business analysis for each. Screen first for the viable ones, then do the analysis only on those ideas that pass through the screens.
Though not on the chart illustrating the process for developing new products and services, the second stage at which you can apply screens is prior to the idea-generation stage (Step 3). This will help focus ideation on concepts that make the most sense to pursue. For instance, a national association decides not to offer any products or services for which it will have to charge members a fee in excess of $100. Any ideas that will cost members more than $100 are automatically eliminated. Preliminary screens should be broad in scope and not too restrictive or you'll reject some good ideas prematurely.
A case study
Let's look at how one association set up a screening process. A national professional association recently set a strategic goal of developing new products and services in the financial arena. It had introduced several financial products and services over the years, with varying degrees of success. The association's management was very sensitive to serving the needs of its members and wanted to offer financial products and services either currently not available to members or difficult to obtain.
At the outset, the association's management developed a mission statement for this new financial business. Second, new products and services were made an integral part of the new business's growth objectives. Next, management conducted an assessment of the association's strengths and weaknesses, past performance of new products and services, and senior management commitment to new products. They also researched how close competitors had performed on new products and services.
With this information in hand, management was ready to develop a viable new product and service strategy for the association and establish screens that would help satisfy these objectives.
For example, one of the association's strategies was to develop new products that would add significantly to its bottom line. They set up a financial screen specifying that within three years, each new product or service had to generate at least $200,000 annually. Another screen dictated that any new product or service had to have the potential to enhance the perceived value of the association.
Categories of screens
There is no one right set of screens for any association. This particular association found it easiest to think of screens as being either internally or market driven.
Internally driven screen categories are set up to leverage an organization's internal strengths and core competencies while keeping in sync with the association's mission. These screens could have a strategic, financial, risk, internal strength, or association-specific focus. For example, a strategic-fit screen might require any new product or service to fit the association's mission. A financial screen might dictate that any new product or service meet certain minimum profit requirements.
Market-driven screen categories address such areas as identifiable member needs and wants, market potential, market growth rate, and market size focus. Screens can also define member or customer segments targeted by the association.
For example, a market-potential screen might require that all potential new products and services have an expected minimum purchase potential of at least 20 percent of the association's membership. An identified member-need screen might specify that all potential new products and services meet the members' professional needs.
Setting up screens
The association set up a new-products task force of managers responsible for developing new products, staff accountable for sales of existing products, and one staff person each from planning, finance, and operations. They were to determine which screen categories were most important to the organization's new product and service process.
One task force responsibility was to review, with senior management, what new product and service introductions were under consideration. They would report this information semiannually on a screen review matrix, which not only lists potential new products and services in the pipeline, but also notes how they perform when measured against the various screens. In effect the matrix provides a visual aid to prioritize which new products should be developed, and in what order.
The task force listed appropriate preliminary screens under the main listings of internal and market-driven categories. They included identified member need, defined market potential, strategic fit, financial requirements, and value to the association.
The task force then developed screens within each of these main areas by drawing on the internal assessment by senior management. For example, in the financial area, senior management directed that any new products introduced must reach a $150,000 payback within three years. Given this mandate, the task force knew it needed a screen to reflect the minimum payback period.
One lesson learned from the senior management assessment was that most of the previous new products that failed had not been backed by adequate market research. So another screen required that any new product have a demonstrated member need potential identified by market research.
The task force assigned numbers, dollars, percentages, and timing to screens where appropriate, making sure these measures fit the association's goals and objectives. They set the payback period at three years and the minimum demonstrated member purchase potential at 30 percent. The final step was soliciting senior management's buy-in for their screens.
Once the screening process was complete, task force members prioritized screened ideas. They evaluated the amount of capital, cash, and people investment required to launch each new product and service. They also considered the availability of association resources. They then ranked ideas as either short- or long-term and determined which ideas could be quickly commercialized to establish a favorable track record for new product performance.
The association further fine-tuned this process by setting up primary and secondary screens. All new ideas had to pass through primary screens, which were considered imperative to success. Secondary screens set forth additional benchmarks--for example, developing products or services that do not have dominant competitors. While this standard may be preferable, it is not mandatory to achieve success.
Here is a list of the screens developed by the task force:
Screen 1: Identified member need. How well does the potential new product or service meet an identified member need? Primary--the new offering must
* satisfy an unmet need of at least 20 percent of the membership; and
* be pretested with members.
Screen 2: Defined market potential. What is the market potential of a potential new product or service? Primary--the new offering must
* be applicable to a minimum potential customer base of 500; and
* be in a nonthreatening competitive environment--fragmented competition means that no one organization dominates the marketplace.
Secondary--the new offering should provide products and services to emerging female member segments.
Screen 3: Strategic fit. How well does the potential new product and service fit the association's strategic plans? Primary--the new offering must
* fit the association's financial business mission statement; and
* be expandable from other existing association financial products and services, that is, leverage current financial offerings.
Secondary--the new offering should
* complement other association-wide offerings; and
* fit into the association's current distribution and marketing system.
Screen 4: Financial. What financial criteria must potential new products and services meet prior to introduction? Primary--the offering must
* realize a minimum 8 percent return on investment in three years;
* provide a minimum $150,000 in annual revenues in three years; and
* have a minimum 20 percent operating profit margin in three years.
Secondary--the new offering should have some degree of commercial predictability, with at least a 70 percent estimated chance of success within three years.
Screen 5: Association value. What is the ability of the potential new product or service to enhance the association's position with its members and the public? Primary--the new offering must
* fit the association's overall mission; and
* support and enhance (not compromise) the association's image.
Activating the screens
The next step was to take the new product and service ideas already in existence, plus those generated in a brainstorming session, and screen them (Step 4, "The Eight-Step Nonprofit New Product/Service Development Process"). Each idea was evaluated against each screen to see if it satisfied the screen fully, partially, or not at all.
The task force summarized the results on a screen review matrix. The association now had a visual summary of how each idea performed relative to the others. The task force was then able to prioritize ideas to carry to the next step. Based on the application of these screens, the association established a member newsletter as its first priority. A second priority, a member information list, also had high potential for commercial success.
For the long haul
"We make sure new products and services relate directly to our members," says Carolyn Tatar, manager of product research and development for the American Dental Association, Chicago. "We have criteria that must be met before we introduce any new products or services."
New product and service screens are instruments of success. Putting new product and service screens to work for your association will help you identify the ideas with the greatest potential. Knowing which ideas truly merit the association's investment of time and money will increase your chances for a successful product launch.
The Eight-Step Nonprofit New Product/Service Development Process
1. Strategic role determination
2. Member needs/wants assessment
3. Idea generation
4. Screening and concept development
5. Business analysis, member feedback, priority setting
6. Development and final testing
7. Rollout to members
8. Attrition/retention measuring
Developing Screens That Work
Here are some lessons learned that can help develop or refine your association's new product and service screens.
* The new product process relies on continuity to be effective. Once screens are in place, their strength lies in the fact that they transcend the power and influence of any one individual. If a manager is promoted or leaves the organization, the screens are still in place, and the process is preserved.
* Don't cast screens in cement. As your association changes over the years, periodically review your screening criteria to make sure they still reflect the essence of your association's mission and goals.
* Resist the temptation to create too many screens.
* The easiest screens to set up and measure are financial. However, don't let financial criteria be your only screens. Screens need to balance all of the factors that make an association successful, including your association's mission, member needs, and market conditions. These softer screens, which are usually more qualitative and harder to measure, require a healthy dose of common business sense and experience.
* Where applicable, split the number of screens developed between revenue-generating products and services and nonrevenue-producing products and services (with some different screens for each). There will be some overlap here, which appropriately keeps you tied to your association's mission.
Barton G. Tretheway is a senior associate with Chicago-based Kuczmarski & Associates, a management consulting firm.
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|Title Annotation:||includes related article; product and service screens|
|Author:||Tretheway, Barton G.|
|Date:||Feb 1, 1993|
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