Tracking New Products: A Practitioner's Guide

Abstract

Generation and development of are primary missions for most R&D organizations, and an effective product tracking system can provide some of the clearest measures of R&D results. For example, the percentage of sales due to can indicate the renewal rate of the corporation. More importantly, product measures reflect a key growth mechanism for most companies, providing important insights for improving innovation processes. Air Products has tracked product sales since 1984 and now maintains a database of hundreds of produced from 1980 to the present. We focus our data collection on the source and type of product and the sales per year. Our annual reporting of product trends and implications provides meaningful input for senior management decisions. We are able to quantify the impact of on the corporation's growth, as well as trends, product life cycles, and returns from our product investments. This article describes our most successful formats and communication tools. Defining a Product We use three criteria to define the to track: 1. A threshold sales level of $100,000/year to start the tracking period. 2. Products are new for five years. 3. product sales result from one or more of the following: * Internal development substantially due to R&D. * Acquisitions of product lines. * applications developed by R&D, especially gas applications. * Access to markets arising from significant R&D-developed process changes, especially gas production technologies. * Business and technical service product extensions that are linked to product parents, especially for chemical blends and formulations. This definition evolved during the early years of our efforts as we sought criteria that would be: * Stable over time. * Relevant to our current and envisioned businesses. * Comparable with similar companies for benchmarking. The first requirement is essential for monitoring long-term performance. The second is critical to developing company-wide commitment, and requires significant attention and communication to successfully establish the tracking process. The third requirement facilitates meaningful comparisons with academic studies and with the many companies that have publicized product sales and goals (see Table, next page). (Table omitted) The five-year life starts with the first fiscal year in which sales reach $100,000. This eliminates much of the noise from experimental that are either rapidly eliminated or modified quickly into improved versions. We no longer track these and have found little consequence to their absence. However, additional analyses of the failure rates and causes would certainly be illuminating. New products are those within the first five-year period. However, sales are tracked beyond this period to determine product growth curves and life cycles. The requirement for relevance to our businesses drove most of the modifications of the definition. Air Products is heavily involved in the production and application of gases, predominantly atmospheric gases, but gases are not invented very frequently. Therefore, the appropriate measure of renewal for some of our businesses is applications of gases. Other gas businesses are driven by price and low-cost production. If an R&D development makes a significant change to a process that permits our gas to compete in a market, then sales resulting from that development are considered to be product sales. An example of this circumstance is the process technology that allows air separation units to operate on offshore drilling platforms. Significant process R&D was required to modify the process, and the substantial operational and cost improvements opened a market in which we did not previously participate. …