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Going Green in Product Innovation
By Dr. Robert G. Cooper

Is your company into green product innovation? If you are, probably you are struggling a bit – there are new and different innovation issues here which add a layer of complexity on top of traditional product development. If you’re not into green innovation, maybe you should be taking a harder look at the opportunities (and the challenges) of green product development.

Recently, I gave a keynote address to at the Sustainable Chemistry Summit in Ontario, Canada¹ – a summit focusing on green chemistry, namely green products based on chemistry, and also green manufacturing processes. My talk’s theme was that just because your product is green doesn’t mean the world will beat a path to your door! You still have to follow the basic “rules of product innovation”. Too often, companies, entrepreneurs and inventors believe that because they have managed to develop a green product – typically a product that is a substitute for an existing product, but in a more environmentally-friendly way – they have a license to print money. Not so – the rules of good innovation still apply, namely:

1. Solid market insights, a strong market focus Voice-of-customer research and a strong customer or user focus must be an integral part of the development process. Frequently, green product-developers assume what the customer’s problem is, or what benefits the customer seeks, but they are dead wrong. An example:

A few years back, a major U.S. firm producing household and laundry cleaning products decided to introduce a new green line of products. The initial assumption was that green cleaning products translated into “products that were good for the environment – did not pollute rivers and lakes”.  This makes sense. Had the company proceeded with this assumption, however, they would have added yet anther colossal product failure to the junk heap. Wisely the project team did not proceed with an assumed problem, but instead conducted voice-of-customer research which revealed quite a different picture. The consumer was not so interested in cleaning up rivers and lakes, but much more concerned about keeping potentially harmful and harsh chemicals away from her children – and thus wanted a natural and safe product. In this category, “green” meant “safe for my kids”! Armed with these new consumer insights, the firm developed and launched a line of safe and natural cleaning products – environmentally friendly, but inside the house – which became a huge success.

A second voice-of-customer challenge to the green developer is the problem of “yea-saying”. When it comes to concept testing, a vital action in the idea-to-launch process, too often customer respondents will give a socially acceptable answer rather than the truth. The result is that the developer gets an artificially inflated “purchase intent” score, and makes unrealistically high sales estimates for the new green product. The U.S. automakers got stung badly back in the 50’s when consumers were asked whether they wanted “safe cars”. People answered overwhelming “yes”, yet when Ford spent millions launching safety-enhanced vehicles, consumers failed to respond. In the field of green products, consistently users claim that they are concerned about the environment, but when it comes to paying more for a green product, interest drops off markedly.

Message: Be sure to include a good dose of voice-of-customer research into your green development projects, even though the customer’s needs and wants may seem obvious at the outset. And be sure to account for the “yea-saying” inflation factor when conducting concept tests for both B2B and B2C products: Challenge respondents to ensure that their answers are reflective of behavior and not just “kind words”.

2. Front-end loading green projects
   Due diligence in the early stages of a development project pays off, which is why I urge product innovators to “front-end load your projects”. That is, do proportionately more work early on to prove the technical, market and financial feasibility of your product before charging into a full development project. This is true for regular product development, as too many project teams develop their business cases using assumptions masquerading as facts – they simply don’t do the necessary front-end homework.

The lack of robust front-end homework becomes a particular challenge in the case of green products. Often the need for green products (or green manufacturing processes) in a given product category is well-known. For example, wouldn’t it be great to have more environmentally-friendly lawn-care products – fertilizers, pesticides and weed-killers that are not harmful to our environment. You bet! Similarly, wouldn’t it be great if we could develop greener methods of extracting oil from oil-sands in northern Canada or oil-shale in the United States? Again, right on! The needs are obvious, but the technical solutions are often lacking – coming up with an effective and economic oil extraction process, or new green lawn chemicals that  work as well as the old ones – is easier said than done. Thus the impetus for moving ahead with such projects is often lab based – in these examples, a chemist doing some fundamental work, and arriving at a technology breakthrough or technical solution. These projects are often labeled “TD projects” (or technology developments), where the deliverable is not a new product, but rather the development of a new technical capability – for example, a new chemistry which then spawns perhaps multiple new product projects. Thus once the “technical proof of concept” is established, the development of specific products is now possible, and the project shifts into a more usual product development effort.

The implication of this front-end technical work often found in green projects is this: technical people are often oblivious to business issues and drivers. Thus, they charge ahead in the lab and pay lip-service to marketing and business issues – perhaps because they consider the business/marketing issues as obvious, or someone else’s job, or they are simply out of their comfort zone. And so the technical side of the project proceeds with very little business and marketing engagement, inputs and homework. Only later, when the marketing and business development folks become engaged in the project are the hard truths and realities uncovered: that the market is much smaller than anticipated; or that customers won’t pay 20% more for the product, even if it is green, or that the product’s in-use performance is below customers’ expectations, and so on.

Message: Your new green product (or manufacturing process) may entail significant technical work at the front end. Just because this is a technology-loaded project however, do not neglect the need for balanced front-end homework. Front-end load your projects and ensure that the necessary due diligence – technical, marketing and business – gets done.

3. A different version of your idea-to-launch process for technology-based projects
   If a technical breakthrough really is required for your new green product, then your usual stage-and-gate process probably won’t work. Fundamental research focused on technology is quite a different project than the traditional product development project. For one thing the technical solution (and hence development and manufacturing costs) are not known at the project’s outset, hence it’s difficult to prepare a fact-based business case before heavy spending begins. Additionally, the capabilities of the envisioned technology are not known until well into the project – what performance characteristics the new product might have – so product definition is largely speculative and thus it’s difficult to do a concept test and estimate expected sales. Simply stated, your product-based stage-gate process won’t work for technology development projects.

   But not to fear! Many firms engaged in technology development work have designed and adopted a stage-and-gate process specifically for technology projects – projects where there are many unknowns, both business and technical uncertainties, in the early stages. The system is called Stage-Gate-TD (Technology Development), and while similar in principle to the regular stage-gate system, the details – the stages, activities, deliverables, gates and criteria are quite different. This three-stage, four-gate technically-driven process works (Figure 1) and is the one your business should be using for technology development, as is often the case for new green products and manufacturing processes².

Figure 1: The Technology Development Process and How It Feeds The Normal Stage-Gate Product Development System


Message: In projects where technology developments and breakthroughs are required – for example, developing a new technical capability before the product development project can proceed – don’t rely on your usual stage-and-gate product development process. Instead consider using a new process, namely Stage-Gate-TD.

Conclusion
Product development faces huge new opportunities and challenges as consumers and B2B customers everywhere are responding to green products and processes. I interface with a number of firms globally which have capitalized on this green trend – from wind-turbines, to commercial LED lighting, to shopping mall air-conditioners. The opportunities are obviously huge, but then so are the challenges, so much so that often a revised idea-to-launch methodology – Stage-Gate Version 2.2 to handle green products or processes – is needed³. This newsletter has identified but three of the necessary changes to your idea-to-launch system; there are others!

¹ Conference hosted by the Green Centre Canada, an industry-academia centre focused on green chemistry products and manufacturing processes.

² For further information, please visit Stage-Gate International's Knowledge Community for article #25:Managing Technology Development Projects - Different Than Traditional Development Projects, which appeared in Research Technology Management Vol. 35, No.1

³ I suggest Stage-Gate Version 2.2 for green innovation. Why? Version 1.0 is the original Stage-Gate model of the 1990s. Most firms are now on their second or third generation of Stage-Gate, hence Version 2.0, with Stage-Gate Version 2.1 for “open innovation”. Thus Version 2.2 is the next iteration, specifically for green innovation. (for further information, please visit Stage-Gate International's Knowledge Community for additional articles on next generation stage-gate systems - article numbers 30, 34, 35, and 38)

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About the Author
Dr. Robert G. Cooper is one of the most influential innovation thought leaders in the business world today. He pioneered the original research that led to many groundbreaking discoveries including the Stage-Gate^® Idea-to-Launch process. Now implemented by almost 80% of North American companies, it is considered to be one of the most important discoveries in the field of innovation management. He has spent more than 30 years studying the practices and pitfalls of 3,000+ new product projects in thousands of companies and has assembled the world’s most comprehensive research on the topic. His presentations and practical consulting advice have been widely applauded by corporate and business event audiences throughout the world making him one of the most sought-after speakers.

A prolific author, he has published more than 100 academic articles and eleven books, including his latest book Winning at New Products: Creating Value Through Innovation, 4th edition. He is the recipient of numerous prestigious awards including the Crawford Fellow from the Product Development and Management Association (PDMA) and the Maurice Holland Award from the Industrial Research Institute (IRI). Dr. Cooper is a Professor of Marketing and Technology Management at the Michael G. DeGroote School of Business at McMaster University in Ontario, Canada and Distinguished Fellow at the Institute for the Study of Business Markets (ISBM) at Penn State University in Pennsylvania, USA.