Friday, June 15, 2012
The product life cycle is unfortunate (see How Will You Face the Future? all members and What New Service Is The Right New Service? all members). Every product or service has its day – and is replaced by something new. That’s why my basement is home to a typewriter, fax machine with curly paper, a gigantic calculator, some 8-track tapes, and few other relics.
The produce life cycle also applies to health and human services. Technology changes, financing changes, and customer changes all drive the creation of something new. Which is why the strategic plans of so many organizations include an initiative to develop new services.
Most organizations in our field have limited research and development budgets – which is why I recommend a very structured process for new service line development. The cornerstones of this structured process include too essential tools:
A metrics-based ranking model to evaluate new service line ideas.
A service line feasibility analysis and development process.
Metrics-based ranking model – Most leadership teams can generate a large number of new business ideas (see Pruning The Idea Tree all members). The challenge is to objectively prioritize the opportunities in a manner that reflects organizational priorities. OPEN MINDS recommends a six-step ranking process:
Develop an itemized list of business development opportunities for consideration
Develop a list of factors or metrics to be used in evaluating new business opportunities
Develop a scoring scale for each metric
Assign weights to each metric – reflecting organizational priorities
Research and score each business opportunity, using the key metrics and weighting of metrics to rank the business opportunities
Qualitative research and discussion of each of the top-rated opportunities for final selection for formal feasibility analysis
A structured service line feasibility analysis and development process – Based on your prioritization of new service line ideas, those few top-rated opportunities will move on to the next step in the process – feasibility analysis and development. The feasibility analysis phase:
Define the new service line
Analyze market and competition for the new service line
Creates a financial feasibility analysis with pricing assumptions, revenue projections, operating expense estimates, a P&L, and capital requirements (see Stuck In Sunk Cost Thinking all members)
If the results of the feasibility analysis is “a go”, the next step is design and development. (For more on this, see A Structured Process for New Service Line Development and Maintaining (& Increasing) Your Organization’s Profitability ).
For an overview of the service line development process, take a look at my presentation from this year’s OPEN MINDS Planning and Innovation Institute, Designing New Services (& Redesigning Current Services) For A Changing Market: Tools For Engineering Your Market Success . And, if you have a new service line that you would like us to include in our weekly industry reporting, please contact us at email@example.com.
John F. Talbot, Ph.D.
Executive Vice President, OPEN MINDS
For another free resource, see: Deciding On Your Next New Service Line Investment all members
This is free for the next sixty days to all registered OPEN MINDS Circle members.