Managing Value in the NPD Process (1/5)

Managing Value in the NPD Process (1/5)Are you capturing the value of your innovation? It is a question that I ask innovators over and over. Chances are they do not at all or at least not fully. In my experience in innovation management, I have seen great levels of sophistication and process orientation in the new product/service development process. Everything is in place: the deliverables are being worked on; multi-functional teams are in place; priorities are being managed; and the process works like clockwork. All is good in innovation land!

There is a however a huge piece of the innovation puzzle which is missing: value management. Value is being discussed for the most part but not reviewed and measured in detail.  Why is that happening? My research has shown that value is a very subjective term that means different things for different people. Innovators and marketers have a tendency to confuse value-based innovations with value added services or added-value product features. This issue of equivocality leads to a difficulty in the operationalization of the value construct in the new product and service development process.

There are three things that are critical to consider and integrate in the NPD process.

1)      Customer Value Proposition: Every innovation should include the description of a compelling and distinctive value proposition (DVP). It needs to clearly state what specific pains the new product and service will address and solve. This is what business model innovation experts call the “job” that the innovation is supposed to do for customers. I encourage to research the concept of customer value proposition and to study the various value proposition canvasses that are readily available to innovators.

2)      Value Drivers: Once the value proposition is defined and crystallized, it should focus on one or two critical drivers of customer value that are clearly articulated and measured. Value drivers have to be crisp, clear, concise, credible, and relevant to customers. Being relevant means that they have to adopt the language the customer use i.e. focus on the outcome of what the benefits will be when the customer selects your new product or service.

3)      Value Messages: The work is not done yet. Each value driver should be linked to one or two value messages that can be used to support the commercial launch of the new product or service. Value messages have to be written as short value story that use the customer’s vocabulary. These messages are used in marketing communication campaigns, in technical training manuals, and the selling sheets that are given to the Salesforce to promote the innovation.

If you are using a Stage-Gate® process, the DVP should be included in the business case early on the process. Value drivers are quantified in the middle of the process and will be used to set value-based prices. Value messages will be used later in the process to support the innovation launch. I recommend you add these three elements in your NPD deliverables and start experimenting with them.

Be bold! Join the value-based revolution!

Editor’s note: this is the first article in a series of five. For all the articles, click here.

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3 Responses to Managing Value in the NPD Process (1/5)

  1. Alok Asthana says:

    This is good.
    Another simple explanation of value, in terms of the purpose of the user, can be seen in video on ‘Purpose and Value’ at

  2. Pingback: Innovation Excellence | Managing Value in the N...

  3. Pingback: CEB R&D Views

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