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5 Keys to Effective Innovation and NewProduct Development (NPD) Planning Copyright Sopheon plc. All rights reserved worldwide.Next

5 Keys to Effective Innovation and New Product Development (NPD) Planning Copyright Sopheon plc.All rights reserved worldwide.This work is licensed under the Creative Commons Attribution Non-Commercial NoDerivatives Works 3.0 License.You may share, distribute and transmit this work;Under the following conditions:Attribution — You must attribute the work in the manner specified by the author orlicensor (but not in any way that suggests that they endorse you or your use of the work).Noncommercial — You may not use this work for commercial purposes.No Derivative Works — You may not alter, transform, or build upon this work.You may view a copy of this license at Creative Commons.This is Copyright material – you may not copy or use it except as described above. Copyright Sopheon plc. All rights reserved worldwide.2 of 15

5 Keys to Effective Innovation and New Product Development (NPD) PlanningThere are several primary management factors that makeinnovation and new product development difficult for manycompanies. Here are some of the more common ones: There’s big disconnect between what projects NPD /R&D teams work on versus current strategic businessstrategies and growth objectives Project and investment decisions are made to supportpet projects and politics, rather than using fact-baseddata to make the right decisions. Project teams work on too many projects which strainsresources and results in too few high-quality initiativescoming to market, and usually late when they do. Project teams lack prioritization and direction on whichkey strategic initiatives to work on. Short-term financial decisions whip-saw plans andresources, resulting in too few really new or majorinitiatives coming to market. Copyright Sopheon plc. All rights reserved worldwide.“Product Launches Hindered by Major Challenges”, CGT September 20113 of 15

5 Keys to Effective Innovation and New Product Development (NPD) PlanningThe well-known Ansoff Matrix depicted on this page iscommonly used to define strategic choices to achievebusiness, product and market objectives.The decisions you make here will determine the uniqueInnovation and NPD strategies for your company.Additionally, the specific characteristics and vision of yourcompany will further define your unique approach: Your markets Your products Your technology What you want to be known forOn the following pages, we’ll discuss the 5 keys to planningeffective and successful innovation, and new productdevelopment strategies for your company. Copyright Sopheon plc. All rights reserved worldwide.Ansoff, I.: Strategies for Diversification, Harvard Business Review, Vol. 354 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning1It all starts with the corporate vision of what a companywants to be known for, or what they want to be.Take a look at the sample company visions on the right. Itshould be quite clear to anyone working on innovation andnew product development at those companies, where theyshould focus their attention and which projects to work on.Now look at these actual, real-world visions and determinewhat projects you would work on if you were there: Enabling people and businesses to realize their fullpotential (Microsoft current) Maximize our customers' ability to get their work done Pragmatic disruption of the status quo We turn innovation into impact To create a better everyday life for the many peopleDoes your company have a focused, actionable vision thatyou can use as the framework for making relevant projectdecisions and achieving innovation success? Copyright Sopheon plc. All rights reserved worldwide.A personal computer in every homerunning Microsoft software (old vision)Organize the world’s information andmake it universally accessible and usefulCommitted to bringing the best personal computingexperience to students, educators, creativeprofessionals and consumers around the world throughits innovative hardware, software and Internet offerings5 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning2Research has demonstrated that best practices ininnovation planning use a strategic approach: The traditional PPM (Project & Portfolio Management)approach is bottom-up – rolling up existing projects tosee the status and how they stack up. This rearranges what’s already in processregardless of alignment with strategic objectives. The better approach is the top-down strategic approach– first focus on the business strategies and objectives,and use these to drive portfolio, project and investmentdecisions. This approach aligns your innovation and newproduct development plans with the businessstrategic objectives. You need a strategy before you execute. Following thetraditional approach may improve execution, but theresults won’t produce value or support the businessobjectives. Relevant innovation and NPD performance metricsmust be established that align with the plan. Copyright Sopheon plc. All rights reserved worldwide.6 of 15

5 Keys to Effective Innovation and New Product Development (NPD) PlanningOctober 2012: Wendy’s announcesnew branding and vision to provideinnovative products and fastcasual-level quality at QuickService Restaurant (QSR) pricing.Pretzel Bacon Cheeseburger andother innovative new productsintroduced, along with improvedcustomer experience, newrestaurant designs, and engagingadvertising and digital media.December 2013: Wendy's wasnamed Restaurant Stock of the Yearby Yahoo! Finance thanks to acombination of menu creativity, acontinuing brand transformationand rewarding shareholders.The chain intends to grow its shareof the QSR business’s premiumprice-burger category. Copyright Sopheon plc. All rights reserved worldwide.7 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning3 Innovation and new product development is a crossfunctional process. Strategies and objectives can be initiated by differentand/or multiple functional areas of the business: Marketing may drive a strategy to penetrate new oradditional market segments. Product management may drive innovation forentry in a new or different product category. R&D may drive innovation of new technology thatsupersedes or disrupts current capabilities. Project teams need to work across functions to gainagreement on direction and make long-term plans real. This way, when you are ready to make the requiredinvestment decisions, all stakeholders haveconfidence that these investments are aligned withyour future growth plans. This cross-functional line of sight must be real-time tomake decisions and adjustments dynamically. Copyright Sopheon plc. All rights reserved worldwide.8 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning4Because innovation is a widely recognized, critical requirementfor virtually all companies across all industries, metrics are animperative for success.Leaders must establish a new breed of metrics that movebeyond conventional measures and that: Create an organizational environment that supports anddrives strategic innovation. Establish critical capabilities tuned to the evolvingcompetitive business landscape. Evaluate innovation efforts to ensure both return oninvestment and support feedback loops of learning andimprovement.Remember that innovation and new productdevelopment are unique to your company –your metrics should reflect that uniqueness.(The metrics on the right are merely suggestions.) Copyright Sopheon plc. All rights reserved worldwide.Input Metrics % of capital invested in innovation activities Number of new products launched Number of new market segments penetrated Number of new capabilities (technology, skills, etc.) % of product or strategic innovation projects withassigned executive sponsors Time executives allocate to innovationOutput Metrics % of revenue/profit from products or servicesintroduced in the past X years Royalty and licensing income from IP Number of innovations that significantly advanceexisting businesses Number of new opportunities in targetedmarket/product combinations9 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning5 Innovation and NPD planning is not an annual oroccasional event. Planning should have a dynamictop-down cadence with graduated timing. Certain elements of portfolio planning will tie into yourhigher-level planning cycles. Portfolio plans are oftencreated or updated during key events in these cycles. These plans are connected to the framework andconstraints for gate and resource assignmentdecisions that are managed dynamically in real time ascircumstances evolve or change. Automation and integration is critical to havingrepeatable, real-time planning processes: If not, you’ll have cycles of significant effort everyyear and short spikes of limited value generatedbefore returning to the previous status quo. With an automated, integrated and structureddatabase approach, your effort is significantly reducedover time, while the value realized continues to buildand sustain over time. Copyright Sopheon plc. All rights reserved worldwide.10 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning1. Establishing a planning framework is key todeveloping, communicating, and buildingtransformational strategies.2. Innovation and new product development success isunique to your company, brand, product and market: Sustained and scalable innovation can only occurwith actionable line of sight. Effective plans allow for projects to be judged inmerit of a portfolio, not as a stand alone entity.3. Innovation targets should not feel bureaucratic to theteams, they should be engaging.4. Success metrics must support and drive strategicinnovation and new product development success. Copyright Sopheon plc. All rights reserved worldwide.Getting a Better Return on Your Innovation Investment, Arthur D. Little, 201211 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning A global supplier of end-to-end solutions for Enterprise Innovation Performance, providing best-in-classsoftware, domain expertise, and best practices Enable our customers to improve innovation and new product development performance to achieveexceptional long-term growth and profitability through sustainable innovation. Sopheon’s Accolade solution provides unique, fully-integrated processes for the entire innovationmanagement and new product development lifecycle: Strategic Innovation Planning Roadmapping Idea and Concept Development Process and Project Management Portfolio Management and Optimization Resource Planning Copyright Sopheon plc. All rights reserved worldwide.12 of 15

5 Keys to Effective Innovation and New Product Development (NPD) Planning Copyright Sopheon plc. All rights reserved worldwide.13 of 15

5 Keys to Effective Innovation and New Product Development (NPD) PlanningTo speak with one of our innovation specialists, pleasecall the office located nearest you: USA/Worldwide 1 952 851 7500Click hereto email us United Kingdom 44 (0) 1483 685 735 Netherlands 31 (0) 20 301 3900 Germany 49 (0) 6151 860 420Click here for the contactform on our website Copyright Sopheon plc. All rights reserved worldwide.14 of 15