Successful businesses are those which keep coming up with new ideas - and a process for prototyping and building them into marketable products.
Bringing new products to market in a timely way is the lifeblood of a business. According to research by the Design Innovation Group of the Design Council and the Open University into 221 small and medium-sized businesses, 'around 80% of the firms whose turnover had declined (over a five-year period) operated in static or declining markets'. And as Sean Blair, design director of the Design Council, points out, it's no good being a one-hit wonder, particularly in an increasingly tight business and economic climate.
Derek Levy, marketing manager with the London Lea Valley Business Innovation Centre, agrees. 'The reason for coming up with new products is to be competitive and to move forward,' he explains. 'If you remain static, ultimately other businesses will take over.' But many smaller businesses do not have 'the hierarchy or the process to envisage an idea, prototype its development and build to product,' he says. Levy believes that developing 'a process to enable a nugget of an idea to assert itself' should be a priority, whatever the physical size or turnover of the business.
Design Council research shows that even apparently costly investment in product development can pay dividends. It found that, while the more successful organisations employed more than 5% of their staff in R&D, struggling businesses dedicated less than 5% and often relied on the MD to undertake product development.
Successful organisations have a number of things in common, Blair claims: 'First, design is articulated somewhere in their strategy. Second, they have consciously thought about how to use design and, third, they have deliberately built teams to handle product design and development.'
Building teams may mean reorganising existing resources more effectively, playing to the strengths of your staff, identifying their roles clearly, and co-ordinating the different functions involved in the whole process within a well-defined but relatively flexible timescale. 'Seek advice where necessary,' adds Levy. 'If you have a lack of knowledge or weakness, admit it.' 'Be open because, in the long run, you will get a better product.' You can get advice on structure from your professional advisers or from organisations such as the Business Innovation Centres or design counsellors from Business Links.
Once the structure is in place, you can look at individual projects.
R&D becomes essential but you should accept some redundancy in the R&D process. Not every new product will be this year's wind-up radio; many are just logical developments of an existing product. Research your market by analysing what your competitors are doing, talking with customers about what they want, establishing trends from your own best-sellers, scanning popular magazines and trade press for forthcoming needs, or talking with trade associations and professional bodies.
When you come up with an idea, says Levy, you need to ask yourself, 'is there genuinely a market for this product?' or you may be wasting your time and money. Does something like it already exist? For the UK, a trip to the on-line search facilities or researchers at the Patent Office or the British Library could be helpful. Or, for outside the UK, you could try the internet and IBM's On-line Patent Server.
If there is a market, pricing may be important. Lamp and glassmaker Clearcraft (see box) asks its employees what they would pay and then works the costing back to incorporate its own and its suppliers' profit margins. Even £1 out and it won't go further. If you do go ahead, set a realistic timetable from the outset and carry out regular reviews at each stage to iron out problems as they crop up. Don't underestimate how long things can take.
Talk to everyone from R&D to funding, prototype development, manufacture, marketing, sales and distribution, whether in-house or external providers.
If you have worked with them before, you know their strengths and weaknesses.
Factor those in. New suppliers may be overconfident. Take references.
Ensure that you achieve maximum design effectiveness.
The impact of arriving late to market can be drastic, warns Andrew Chantrill, UK managing director of 3D Systems. Delays mean 'your sales peak, plateau and fall off at the same time, but at lower levels. You lose market share, you don't sell as long and you don't get the manufacturing cost down because you are not making the number you originally envisaged.'
He recommends making full use of technology tools such as CAD and rapid concept modelling. Having a 3D model in your hands early on saves you from committing time, people or money to developing more detailed design that may be faulty. At around £1,000 per model, rapid prototyping can be cost-effective. Contact one of the bureaux through Yellow Pages or advertisements in your trade press.
There are a myriad of other considerations, however. If you have an idea, protect it through patents or registering your design, for example. The area is complicated, however, so get advice from a specialist lawyer or patent agent. 'A patented product can be more easily marketed, developed and, if appropriate, licensed for production elsewhere,' adds Levy. Equally, a technical validation from a university or trade association could enhance marketability. If you are discussing the product with outsiders such as customers or suppliers, get legal advice about confidentiality or non-disclosure agreements.
As for practical considerations, the situation will vary depending on circumstances. Do you have the capacity? Do you need new machinery? Will there be extra tooling costs? Do you need more staff? If so, what about health and safety or extra training, for example? If you do have to go outside on production or packaging, check that your existing supplier has the capacity or time. What about penalty clauses for unreasonable delays?
If you want to sell in new UK markets, Europe or worldwide, think about how and when you will roll the product out. You may want to spin off your existing core business. You may require agents or distributors and this could take time. Seek local legal advice on any contractual or employment issues as laws may differ.
Marketing should be well targeted. Do you need pictures of the product?
If so, you will need advance samples. Don't underestimate the benefits of good design as a reflection of the business' overall objectives. Tie it in with existing media.
These are just some of the things you should think about. But, as Levy concludes, 'you need to bring together everything that you will probably do on a day-to-day level at the brainstorming stage. Seek professional advice. Accept training if it will help. And don't say you haven't got time.'
CLEARCRAFT - THE LISTENING GLASSWARE COMPANY
Clearcraft started in 1990, with £500, selling off a market stall. Now, it now has a turnover of around £750,000 (and rising), works from two sites in London and Walsall and employs 11 staff. Its fuel-filled lamps and glassware have caught the eye not only of the independents but also multiples such as Boots, John Lewis and House of Fraser, which now account for about 25% of its turnover.
Its success is largely down to a constant emphasis on new product development.
It listens to its customers, says partner Mike Winterbotham, studies women's and home decor magazines and asks its employees. 'We buy basic and add value,' explains Winterbotham, which means sourcing components from Spain and Poland for new products launched at key trade shows twice a year or designed for the multiples on demand. Some designs are based on previous best-sellers.
On average, it takes three months from first idea to appearance on shelf.
Clearcraft designs the ranges, sub-contracts some of the manufacturing but finishes them itself in London. The process involves getting samples made up, filled and tested, packaged and catalogued for the trade show brochures.
As the orders come in, Clearcraft lays in enough components to see it through initial demand. Once the first batch has sold out, it gets another made up. 'That's the nervy one,' says Winterbotham. 'You don't know if it will sell at the same pace as the first. It's a bit finger in the air.
But, if we have sold enough to cover the cost of the second order, then we generally feel fairly comfortable.' Occasionally, this has caused problems for customers, however.
With easy-to-source components, Clearcraft 'has the luxury of under-ordering', says Winterbotham. But it's all 'a question of cash-flow. We try to gauge exactly what we are going to need. With the multiples, we can plan it and that takes the risk out of it. But we don't move until they say yes because of the volumes involved.'.