Product Development Cycle: What You Need to Know  

The speed of change and disruptions in the world often creates challenges for organizations wanting to bring new, innovative, and sustainable products into the market. Learning to embrace change and rapidly adapt is one of the best ways to ensure products gain a competitive advantage. And while many business leaders hesitate when things start to get uncomfortable, some view change as an opportunity to seize.

McKinsey found that companies that invest in innovation during a crisis outperform the competition on market capitalization by 10% and upwards of 30% in post-crisis years. The Harvard Business Review says successful organizations use change as a catalyst for discovering new ways of doing business, using change-thinking as a valuable mindset instead of an inconvenient barrier.

“Companies that invest in innovation during a crisis outperform the competition on market capitalization by 10% and upwards of 30% in post-crisis years,” says McKinsey.

Product development cannot slow when change comes knocking, but it requires processes and tools that enable and encourage teams to continually evaluate priorities and projects based on market, competitor, or strategic shifts.

Achieving adaptive product development first requires a solid understanding of each phase in the process and how to build efficiency into the product development cycle. Defining each stage of the product development cycle and cultivating a solid understanding of its purpose within the entire process makes it much easier to identify areas most influenced by change and how you can adjust them to become more adaptive.

Success is achieved when an adaptive product development cycle enables quick and continuous alignment with long-term organizational goals and market needs, even when change abounds.

The product development cycle can be defined as the phases through which a product progresses from idea inception to market delivery.

While there are distinct phases in the product development cycle, product development is rarely a one-and-done sort of thing.

Product development should be ongoing, as many products can be improved based on what happens during their lifespan. Organizations must closely examine the product development cycle as an important part of optimizing a product to perform in a fluid, changing market.

Stages of a product development cycle can differ depending on the industry, but they often fall into these general categories:

Ideation and validation

In this stage, teams bring product ideas to stakeholders, keeping in mind that a new product idea or ideas to improve an existing product can come from anywhere, including the customer, stakeholders, and employees.

Ideation and validation can be complex and should always be based on data, necessitating a standardized platform capable of driving engagement and collaboration. This ensures every member of a team can gain deep, data-driven innovation insights so only the best ideas advance. This approach is the most effective way an organization can prioritize the best ideas (versus pet projects) so innovation can flourish at scale.

Planning

Once a product passes the ideation and validation stage, planning then begins.

Gartner found that 46% of product managers view themselves as responsible for managing planning, development, and launch, and 39% said their key responsibilities in this effort were to create a product strategy that informs the product roadmap.

No matter what product managers feel is their role, their objective is to establish a game plan on how the product will be brought to market regarding resource capacity, timetables, and other dependencies. Essential factors they must consider include:

• Outlining key deliverables and KPIs
• Choosing the right people and teams
• Understanding the competitive timeline
• Foresight into product positioning, and the what-if scenarios

Development (prototyping and testing)

Again, as the responsibility of a product manager, the development phase is where the rubber meets the road. It’s where all that ideation, validation, and planning prove effective or not in creating a viable prototype of the product.

Once the prototype is ready, it’s time to test theories and execution in real-world scenarios. Some examples of tests that might occur in this stage include:

• Field tests
• Market tests
• Compliance tests
• Regression tests

In each of these tests, product developers seek to gain a better understanding of where there is room for improvement and if anything has been overlooked. Teams can continue to iterate until the final design is approved and goes into production. This process can also include existing products going through a revamp.

Before moving on to the launch stage, it’s important to remember that to remain agile to inevitable change, teams should approach planning and development work in small batches, testing each iteration in the market and then reconsidering the prototype. This Agile methodology eliminates traditional, microlevel planning with comprehensive documentation in favor of iterative testing that provides a constant feedback loop.

More frequent testing and validation also ensure teams can identify issues earlier in the product development cycle, reducing costs and risk.

Launch

As exciting as the launch stage is in the product development cycle, the product is not ready for prime time until teams set market goals, conduct customer research, and design a marketing strategy. Questions that need to be answered during the launch stage often include:

• What does the most effective launch timeline look like?
• How will success be measured?
• How will this product be positioned against similar products in the market?
• What roadblocks could delay the launch?

When all boxes are checked and questions answered, the product is ready to go to market.

While this stage is the last in the cycle, it is not the end of the story. Adaptation is key. The most successful product development organizations work continually to improve their processes and their products through ongoing analysis. That’s where the concept of Continuous Improvement comes into play most heavily.

Continuous improvement

Because product development never truly ends, continuous improvement is a vital phase of any product development cycle. It is essential for:

• Identifying the effects change has on a product
• Pinpointing areas in the product development cycle that can improve product quality and longevity
• Learning what areas of the product development cycle can be optimized or improved

Product portfolio management provides structure and governance around the continuous improvement process, ensuring product teams can deliver against strategy. It streamlines analytics and reporting from every stage of the product development cycle and can provide post-product launch data that is useful in helping organizations discover how to reduce risk and drive efficiency.

Finally, product portfolio management creates a centralized, comprehensive view into:

• Resource allocation
• Budgeting
• Cross-functional teamwork

Leaders need access to real-time data to make continuous improvements to this process and to justify portfolio investments. Gartner found that 83% of research and development leaders say there is increased scrutiny of portfolio decisions by senior leaders and the board since 2020. Even so, 78% feel pressured to make faster decisions.

“Since 2020 83% of research and development leaders say there is increased scrutiny of portfolio decisions by senior leader,” says Gartner.

These facts are why one of the primary goals of Product Portfolio Management is to bring winning products to market faster, often through a gated process. But even the gated process is evolving due, in part, to challenges that have arisen in the modern product development cycle we broke down earlier.

Once the product development cycle renders a viable product that is launched into the market, the product begins a life of its own. New products may have a short or long lifecycle or, if the continuous improvement phase is followed, new and existing products may have a somewhat eternal lifecycle.

A product’s lifecycle involves four primary stages:

Introduction

This stage is when the product is introduced to the world, often with fanfare, to encourage reviews, attract influencers, and grow public relations. It’s also the time to evaluate its initial reception and success compared with set goals. How is the product priced and in what markets and to what audience? If needed, how can any of these elements be adjusted to ensure a better launch?

Deloitte found that in pharma, 70% of products that miss expectations at launch continue doing so in subsequent years, and approximately 80% of products that meet or beat expectations continue to do so afterward. Launch performance in this introduction stage is a crucial indicator of product longevity.

Growth

The product should grow market share as word spreads and more is invested in marketing and sales. This is not a time to sit back and watch, however. By constantly measuring KPIs and with an agile mindset, it’s never too late to adjust.

Changes or disruptions often have a significant impact on growth, and this is precisely why organizations need to be nimble and courageous enough to reevaluate decisions made in the product development cycle, especially during the planning and development phases. There must be room to pivot product development when the growth trajectory is less than ideal.

Maintain and mature

Even after all efforts have been exhausted, some products do not reach the Maintain and Mature stage. But those that make it have the chance to maintain market stability, mature, and become staples.

Advertising and market expenses continue at a steady-state level as variants or improvements that could help sales are considered. If the competition was fierce at launch, it will ramp up here. But just as with any change, an agile organization can adapt early because it has planned for such disruptions during what-if scenario planning in the second stage of the product development cycle.

Decline

The decline stage is the time to look more seriously at product development improvements or end-of-life programs. Either way, this stage is closely tied to continuous learning: every product has something to teach for the next time.

Asking questions like “Did we develop the product with future innovation in mind” and “Did we develop the product to ensure a long lifecycle or in a way that it can be easily recycled or repurposed” can impact future planning stages.

By cross-analyzing the development and post-launch product data with observations captured from the product’s journey, it’s easier to justify whether the product deserves innovations and improvements or to end its life. If the product is truly declining, there will be a reduction in marketing and support costs, which are often redirected to new products.

Change and disruption observed during the product development cycle and even changes that occur during a product’s life cycle, will greatly influence every next decision, iterative stage, and adaptation that is necessary to move products forward with speed and efficiency, and to ensure they are meeting demand.

• What do those changes or disruptions look like?
• What are some examples of fast-paced, global changes that disrupt the product development cycle?
• How do these changes make optimizing a product’s time to market and longevity more difficult?

Based on our research, below are three top disruptions to effective product development.

Trends towards digital transformation

As organizations shift to the cloud and digital technologies and products, both the means of production and the products themselves need to prioritize a digital experience. Consumers expect a seamless digital experience from virtually every company they interact with, increasing the pressure on organizations to transform or risk irrelevance as the competition surges.

Because of this disruption, industry experts have begun recommending a gated, more agile approach to the product development cycle. However, this agile approach doesn’t necessarily look like it did even a few years ago. The traditional linear and rigid gating process is changing. Concurrent product development – the practice of executing dependent product development cycles simultaneously – has become the standard of new product development because of the increasing importance of time-to-market.

McKinsey says process breakdowns are a common pitfall in product development, stating, “When different stakeholders engage in a myopic, sequential way, using only their own lenses – for example, when engineering comes first, followed by design and then manufacturing – the numerous handoffs create gaps in knowledge. This process leads to development blind spots, which in turn introduce unnecessary risk and inefficiencies. Often, a large amount of work is finished before other stakeholders have a chance to weigh in, causing misalignments, delays, and rework.”

Smart connectivity and the internet of things

Similar to digital transformation, smart connectivity and IoT is both an expectation and a need in a product’s lifecycle, which heavily influences various stages in the product development cycle. Once again, cross-team collaboration is necessary for every stage of the product development cycle, as is leveraging data from various sources and multiple work methodologies. Both these practices are critical to the adaptive development of a singular product to make sure it will experience continued success in the marketplace.

Environmental and sustainability demands

Customers and investors expect organizations to be more accountable to Environmental, Social, and Governance (ESG), impacting resource capacity planning. The supply chain, raw materials, and energy consumption are just some considerations. Sustainability-related data adds an extra challenge to reporting, which is critical to improving the product lifecycle on subsequent iterations or innovations.

If it were not for disruption or change, there would be no catalyst for innovation. Adapting to change must be a top priority when developing a product if organizations hope to meet market demands.

By taking a closer look at what happens in each stage of the product development cycle organizations ensure disruptions – from consumers, markets, competition, the environment, regulations, or any other factor – do not jeopardize their ability to decrease time to market with winning products that have extensive lifecycles, allowing them to gain a competitive advantage.

Adapting to change at every stage of the product development cycle – from ideation to continual improvement – is not as difficult as it may seem. With unified teams, shared data, and visualization into how changes and disruption play into processes, leaders can design a successful approach to guiding and adapting product development cycles that ensure high-value goods reach the market with speed and optimized lifecycles.

To learn how successful organizations are using disruptions as opportunities to adapt their product development cycles for better results, check out this whitepaper:

• Top 3 Disruptions to Effective Product Development: Build Resilience into Your Product Portfolio Management

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• Building Sustainability Into Your Product Development Strategy