Nov 16 2011

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What Would You Do with One Million New Orders Tomorrow?

For many companies today, the ability to deliver new and innovative products to market is the lifeblood of their success. In fact, being able to innovate and ramp production as a consistent repeatable process is the core of their business model. All one has to do to see this in action is look at companies that have leap-frogged the competition in recent years.

Apple is one company that comes to mind in this regard. Apple’s ability to create buzz, i.e. stellar demand, around new products is legendary. Apple is continually redefining new market segments and applications of their technology. There is no need for a list of the new products starting with “i” that have been launched over the past ten years to prove this point, we all know and see them every day.

Interestingly, the high-tech industry is not the only place where quickly delivering new products to market can change competitive dynamics. In the automotive industry during the largest global recession seen in generations, Audi committed in 2009 to launch eight entirely new cars over the next six years. The expectation of these new products is to help Audi, currently producing 925k units in 2009, to produce one and a half million units in 2015; roughly equaling the expected production of rival Mercedes Benz by 2015.

So what happens when things go right?
A game changing new product can have an instant impact on an organization. On the one hand is the excitement and notoriety of being the “next big thing,” but on the other, is the pressure and risk of being the “next big flop.” So what does this look like in reality?

Apple’s new iPhone 4S preorders topped one million orders on the first day of pre-sales, with expectations of shipping 25 million units in the fourth quarter. When Microsoft launched their Xbox 360 Kinect in November of 2010, they had eight million retail orders in the first 60 days. Demand spikes like this may not be common, but they are common enough for it to impact how any manufacturer should plan for a new product introduction.

For many casual observers, the New Product Introduction process probably looks like R&D with some fancy simulation software to aide in design, some marketing fluff, and then you throw in a little social media on the side to generate demand. Although this may not be that far from the truth, to be able to deliver global production on time, in volume, and at quality – where failure in any component can mean failure of the entire product launch – there are a whole cast of characters behind the scenes that are involved and must effectively coordinate and collaborate.

Take a moment now to consider the consequences of too much success on your business model, and the incredible stress and strains that it could put on your design, manufacturing and supply chain teams. Unless your organization is a finely-tuned machine capable of responding quickly to change, you might do more damage to your company than you’ll gain from the new product! If there’s any doubt in your mind, take a look at the price of Apple’s stock after the launch of their Newton handheld device versus now after the launch of the iPhone 4S.

I will come back to this concept in a future post, offering some additional insights into what preparations you might be able to do now to avoid the potential of getting yourself in a situation with simply too much success.

Permanent link to this article: http://www.apriso.com/blog/2011/11/what-would-you-do-with-one-million-new-orders-tomorrow/

1 comment

  1. Mike Bugle (Plastic Injection Moulding)

    Thanks for this post Chris, certainly makes some interesting reading.

    Many people, myself included, are hoping for the fabled big contract that will give you enough business to keep you going for years and enough money to put your kids through University, however I think we often don’t consider the demands that this will have on a small business.

    Still though, that isn’t enough to stop me for wishing for it…

    Look forward to your next post with some of the tips to avoid some of the pitfalls,

    – Michael

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