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The financial impact is dramatic.
1) Financial impact of higher success rates A 10% higher rate of success typically gives 0.5 million/yr more in profit per 1 million invested in new product development Higher success rates obviously have a huge impact. The importance of a highly successful product-development programme should not be underestimated, even though the potential cannot be precisely quantified. Yet a cautious calculation shows that a 10% increase in the success rate of NPD investments of 1 million/yr can be worth around 0.5 million in additional annual margin. This begs the next question: what is your company's current success rate and how much can it be improved? If your current success rate is 50%, it might be possible to improve it by 20% over a two-year period which in turn could improve your bottom line by 1 million/yr for every 1 million you invest in new products. 2) Financial impact of shorter time-to-market A 30% reduction in time-to-market can improve your company's bottom line by about 0.3 million/yr for every 1 million you invest in developing new products, provided that your success rate is 50%. Again, this statement is based on certain assumptions of a typical project. These assumptions may not fully apply to your company, yet they provide a rough idea of the typical financial potential. 3) Additional benefits from shorter time-to-market Most companies agree that reducing the time to market and completing projects on schedule have many other benefits, some of the important ones being:
Suggestion: Measure the financial impact in your company! Read more about innovation audits using ProBE® Innovation Benchmarker. |
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