Most organizations include a revenue assumption for a product yet to be released. This means the launch of this product is critical. Get it wrong, and you’ll miss your number. SBI recently spoke with Andrew Wright, the vice president of design at Cypress Semiconductor. Andrew is an expert on product launch, and is responsible for bringing in new business from concept to profitability. He owns a global P&L for all design activity at Cypress. Andy shared his insights on how to successfully plan, and execute a new product launch.
Setting Launch Goals
At Cypress, their ASP ranges greatly. So for Andy, setting launch goals is all about forecasting volume. This means it’s also very important that he understands the initial set of target customers. “We understand the customers that our sales force has a good relationship with, the ones where we think there’s a high probability of design-in and design-win, and where we’ll convert product interest to money,” explained Andy. And beyond that, they forecast a fraction or share in the industries where they’re having and success and understand what that means for their forecast revenue streams.
Preparing the Organization for the Launch
Andy next touched on how he ensures the organization, and specifically the sales team, prepares for the launch. “We have a multi-phase launch process,” said Andy. At the early phase phases, they’re evaluating the feasibility of the market, understanding the concept, and deciding to put their R&D team on something to enable a future market or product. Equally important, they equip their sales team by generating something they call the product introduction. It’s essentially a very mature straw man used by the sales force.
Andy and his team also work to identify launch risks early on. He controls launch risk by rapidly sequential phase gating. “As we go through rest of the R&D phases, we’re deciding explicitly – should we move forward to the next phase or not, rather than allowing it to run forward ungated, “explained Andy.
We then moved on to executing the product launch. Andy first explained who owns their launch process. At Cypress they have business 13 business units, each with general managers of product lines. The function and people working for that general manager drive the direction for the launch.
When executing a product launch, Andy must also consider things like incentive plans. Does this launch require a comp plan change to motivate the sales team to sell the new product that they have heavily invested in? “We incentivize the design-in and the sale-out product in general,” said Andy. They are careful not to over rotate though and think the comp plan will truly change behavior though. Because ultimately you can have an incentive in the comp plan, but if the product isn’t compelling and there isn’t a demand for it, it might not work. What Andy is really competing for is mindshare.
He also spoke about tracking success, compared to launch expectations. “From the time we do the very first feasibility document, all the way through the end of life of the product, we’re tracking the revenue assumptions and business planning by revision in the same database structure,” he explained. At Cypress, they have every phase in the life of the product together in the same database, allowing them to easily measure success.
Tying it All Together
Andy wrapped up our conversation with three key points for product leaders to consider. First, know your customer. If you’re not closely tied to the customer base, and you launch a product on a whim, you’re not likely to be successful.
Next, you must know your capability. The best way to disappoint a customer long-term, is when you have a large, important idea, but you’re unable to deliver. Avoid this by understanding your capabilities.
And finally, Andy recommends executing with vigor. “Launch is different from all other things that R&D does, all of the other NPI process are measured and well executed in most companies, and launch is the change of direction,” he explained. You must work hard to align people quickly and get them on board to successfully execute a new product launch.