From Concept to Consumer: How to Turn Ideas Into Money

Date: Oct 30, 2008

Phil Baker, who has done product development at Polaroid, Apple, and Seiko, discusses the new rules of product development in this introduction to his book, "From Concept to Consumer: How to Turn Ideas Into Money."

The invention is often just 5% of all the factors for success.

I remember my first day at Polaroid in June 1967. I took the elevator to the third floor and then entered the secure area behind the frosted glass door with “Product Development” stenciled on it. Behind this door some of the world’s great consumer products were being invented and engineered, and I would now become a part of it. The legend of Edwin Land, Polaroid’s CEO, permeated the area. A modern-day Thomas Edison with hundreds of patents, Land had led Polaroid to become one of the great consumer product companies of all time with the invention of instant photography. I had always loved gadgets and consumer technology products, but had little idea what went on behind the scenes. Now I would have a chance to learn. It was a dream job, my first right out of graduate school.

One of the early products I worked on was Polaroid’s first low-cost plastic instant camera, which took color pictures. Called the Colorpack II, it became a huge success, selling more than 5,000 cameras a day. My contribution was small. I designed a little periscope that lets you view the distance that the lens was set to when you looked into the viewfinder.

I watched the product come off the assembly line at the rate of one camera per minute and then a few weeks later walked into Lechmere Sales, a local discount store in Cambridge, Massachusetts, and saw throngs of people scrambling to buy one the first day it went on sale. This is one of the great rewards for those who develop consumer products—to take an idea and turn it into a product that millions will buy and enjoy.

I spent 16 years at Polaroid during its high growth years when it was a star of the high technology sector. I worked in a variety of positions, including engineering, quality control, manufacturing, marketing, product management, and business development, and also managed many of Polaroid’s product development activities in Japan. Each was a new learning experience that took me down the road from concept to the consumer. I learned about concurrent engineering, the value of industrial design, the obsessions of patents, outsourcing, and designing high volume products. It was a solid foundation that has served me well.

Sadly, after 30 years of success, Polaroid was unable to react rapidly enough to the developments in digital photography. Rather than embrace it, they minimized its significance. By the time they realized its impact on their business, they were too late and declared bankruptcy in October 2001.

From that time I’ve worked on scores of products at companies with both familiar and strange names. The products include Polaroid cameras of all shapes and sizes for consumer and industry, Seiko’s Smart Label Printer, pocket electronic dictionaries and gadgets, Apple’s Newton MessagePad and PowerBook notebook computers, Proxima electronic projectors, Polycom’s conferencing products, audio products, computer accessories, hardware, toys, handheld computers, and a full-size keyboard that folded up to fit in a pocket. I’ve accumulated about 30 patents along the way, some valuable and some useless.

I’ve continued to be fascinated with every aspect of product development. In fact, my California license plate reads PROD DEV (see Figure 1.1).

Figure 1.1 My license plate

Build It and They Won’t Come

Coming up with the right idea, turning it into a product, and having it succeed in the marketplace is critical to a company’s growth and survival. A company needs to be successful at it, but there’s a lot more.

I used to believe that a product’s success was based on how good the idea was. Build it and they will come. That’s what most engineers are trained to believe (see Figure 1.2).

Figure 1.2 An engineer’s viewpoint of a product’s success

But the more products I worked on the more I realized that success comes from so many other factors. In fact, the invention is perhaps just 5% of all the factors for success. What are the others? You must get to market at just the right time with just the right product that sells for just the right price and still produces a profit. You need customers who are willing to buy. You need effective marketing and distribution that enable you to get the product into the right locations so people can see, try, and buy. Most important, you need good timing and just plain luck. If any of these links in the chain are broken, it can spell disaster.

All products begin with an idea or concept: a vision of something, a need to be solved, or an improvement to an existing device. At this stage there may be no idea of what the product will look like or how it will work. The first challenge is to take it from an amorphous idea to something that’s real. The path from this concept stage to the consumer relies on a variety of disparate activities and decisions, each of which can result in success or failure.

Think Outside, a company that I co-founded, was formed on the premise of creating a full-size keyboard that could fold up and fit in a shirt pocket. My partner and I realized that with computing devices becoming smaller and our hands staying the same size, there needed to be a comfortable way to enter text. After trying a variety of design approaches, we settled on one that became the Stowaway keyboard for which the company became known (see Figure 1.3). But when we began we had only a rough idea of what we wanted to accomplish, without a practical solution.

Figure 1.3 The Stowaway keyboard

As difficult as it was to design and develop our product, there were many unexpected surprises ahead, some of which had nothing to do with the product idea, that nearly derailed the company.

And that was true with many of the products I worked on. Presentation Technologies, a company I co-founded in mid-1980s, invented a product that created 35mm slides for presentations from a personal computer. After a difficult but successful development effort, we encountered unexpected competition from new color printers, which made color overhead transparencies. This new technology was what’s called a disruptive change, one that obliterated the 35mm presentation market.

I joined Proxima as vice president of engineering when it had only two competitors making electronic projectors that projected images from a computer onto a screen. Less than a year later there were three dozen competitors, plummeting margins from a healthy 40% to a tiny 16%. Polycom, another company I worked for, created a highly successful speakerphone for conference rooms. But the second product that I developed and managed for them, an overhead projector, fizzled. No one wanted it.

After working for and with many companies on many products, very little surprises me anymore. Rarely does a plan unfold as expected or as described in conventional books on product design and marketing.

Coming up with the clever idea may be the easiest part of all. Ideas are a dime a dozen. We all have them. “Why don’t they make...” we say to ourselves. But thinking of a product is a long way from making it and succeeding. And having worked with smart people throughout my career, I can tell you that even the experts fail. Edwin Land failed with instant movies. Dean Kamen, another brilliant inventor, failed with the Segway, the self-balancing two-wheeled motorized scooter. And Steve Jobs failed with his Next computer.

There’s no certainty that an idea will succeed. The Segway was an electrically powered vehicle that solved some of the most difficult engineering problems ever in a consumer product, including developing complex computer controlled gyros and motors to balance the two-wheeled device and keep it upright. It allowed users to lean forward, backward, or to the side to propel the vehicle forward and back and to steer. Yet the product was much too expensive, it ran into opposition from some communities who thought Segway users would run over pedestrians, and it turned out that there was little compelling need for the product. But just before it was announced, those who saw it, including corporate presidents, venture capitalists, and industry experts pronounced it so revolutionary, that it would result in new cities being built. The lessons learned are that no one can guarantee success, and even those that get it right sometimes also get it wrong at other times.

Developing successful products requires a team of people with the correct skills and the ability to work collaboratively. Some of the best-run projects have a strong project leader who manages and motivates the team. The biggest budget can’t make up for a team that works at cross-purposes. I’ve seen some team members try to sabotage products they didn’t like and others that would argue with the president for a product they believed in. People get passionate about products and don’t always agree about what to put in and what to leave out. Some quit over it. Behind every product is usually a fascinating story. Even when you see a nearly perfect product, contentious team members likely were arguing behind the scenes. The decision to seal the battery into the iPhone put many within Apple at odds with Steve Jobs. Developing products is like making sausage. You don’t always want to know what went into the product; it’s better to just enjoy it.

I’ve also learned that success is not dependent on the size of a company. Those in small companies with limited resources can effectively compete and often have an advantage over Fortune 500 companies. While large companies have more engineers, extensive test labs, big marketing budgets, lawyers, huge sales forces, and a brand name, often their teams work less efficiently and make poorer decisions.

Why? They’re attending more meetings, focusing on organizational issues, and often factoring their daily decisions on how they will affect their own careers, rather than on what’s best for the business. Employees in small companies, on the other hand, know the company’s success depends on a product’s success and rarely waste their time on peripheral issues.

New Rules

Over the last decade product development, manufacturing, and marketing have undergone sweeping changes, creating new rules. Product life cycles have gone from years to months, manufacturing resources have moved from around the corner to around the world, and distribution has moved to the Internet and to a handful of big box stores as small owner-run stores have gone out of business.

Products have become more complex. We now have not just devices, but systems and platforms, such as Apple’s iPod with its iTunes and online music store, and the Amazon Kindle, an electronic book with its own online bookstore and their Whispernet wireless network. With systems such as these you can make your purchase and be enjoying it within minutes.

Today we take an entirely new approach to how we do product development compared to a decade ago (see Figure 1.4). No longer can we afford the time to follow a sequential process, passing the product from engineering to manufacturing to marketing to sales. It’s now done concurrently, with all the disciplines working together at the outset and contributing throughout the project. Not only is it faster, but it gets us better products.

Figure 1.4 The old and new ways

In addition, companies need no longer do everything themselves, but instead use resources that didn’t exist just a few years ago. More companies focus on doing what they do best and let other companies do for them what they do best. Worldwide resources give us huge new capabilities, whether we’re a large or small company or even an individual. Developments in digital technology, the Internet, and high-speed communications allow us to use a manufacturer in Asia, a call center in India, and a designer in Europe.

Products are being designed using software that creates digital data to define every detail. This allows the engineer to send a digital file anywhere in the world in just seconds. It can go to a model maker in Taipei to create a prototype in a couple of days and to a toolmaker in China to build plastic tools used to produce the product in high volume. The same file can be fed into a machine to print out a three-dimensional model in an afternoon.

Any of a multitude of suppliers can be located in seconds on the Internet using Web sites such as Asian Sources and Alibaba. Fill out a single request form and it will be transmitted electronically to the relevant companies, who often respond within a few hours.

Advances made in the electronics industry now allow us to create products by assembling electronic building blocks like Legos. Companies with little electronics skill can quickly create sophisticated products.

Formerly, complex electro-mechanical consumer products took years to develop. Polaroid’s SX-70 camera, their first to fold small enough to fit in a jacket pocket and use film that didn’t need to be peeled apart, took more than five years to engineer.

There was little competition to be concerned about and the product would be on the market for many years to come, perhaps a decade or more.

Today the competition is much more intense, and products are revised and improved more frequently. Why? Because if you don’t do it, your competitors will, and it’s often the only way to maintain visibility in the crowded market.

Cell phone models, once lasting a year or two, are now being replaced in as little as three months. Some digital cameras and iPods are replaced or upgraded every six months.

For all these reasons we’re forced to work at a more frantic pace. There’s little time to conduct extensive market research and to go back and start over. Experience, intuition, and gut play a bigger role than ever. It’s like running at a marathon pace just to stay in place.

Asia

The United States and Europe lost their competitive edge in building high technology, high volume consumer product development decades ago, and never developed the infrastructure needed to compete. The government’s focus and investment were in defense technology while Asian companies and governments invested in consumer technology.

My first trip to Asia occurred more than 30 years ago when I was developing a slide copier at Polaroid called the Polaprinter. It was a product for industry and professionals that produced an instant color print from a 35mm slide. Polaroid, like other large companies at the time, had a serial process requiring the engineering design to be done before the manufacturing engineers would get involved. That meant a long process of design, manufacturing review, and redesign. I thought I’d be able to bring the product to market more quickly by using a small Japanese company, Sunpak, that had design and manufacturing skills for similar products.

Japan pioneered the use of teams with skills in both design and manufacturing. No passing a design back and forth, just one team to get it right the first time. Most Japanese engineers were trained in both design and manufacturing and could fulfill either role. They realized that a good design was one that also could be manufactured efficiently and it made them better at both jobs.

I didn’t go to Japan for lower cost labor but to save money by getting to market more quickly. Many studies have been conducted since and have concluded that more profits come from entering the market sooner, even with the added costs of accelerated development. In the case of the Polaprinter, the bet paid off. We were in production within a year of beginning the design, much faster than most products.

Over the past three decades there’s been a movement of technical proficiency, infrastructure, and manufacturing of consumer technology from Japan southwest to Taiwan, Singapore, Hong Kong, Korea, and China. Japan served as the example from which the other countries learned (see Figure 1.5).

Figure 1.5 Map of Asia

Japan is no longer competitive for manufacturing most consumer products, and many of the once small entrepreneurial companies have grown larger and become more bureaucratic over the years. Hong Kong developed its engineering and manufacturing skills to build technology products, but eventually shifted its priorities to focus on finance as its factories moved to China.

Currently Taiwan and Korea have some of the most technically advanced and highly educated workforces and have become homes to the most advanced notebook computer and mobile phone designers and manufacturers. But as their standard of living has risen to match ours, their labor costs have increased so that now, the manufacturing of many of their products has moved to China.

A majority of consumer technology products are currently being made in Southern China in the province of Guangdong, particularly around its capital city, Shenzhen (see Figure 1.6), near Hong Kong. Many of these factories are owned and run by their Taiwanese, Hong Kong, and other foreign owners. I’ve brought many products to be developed and manufactured to all of these countries over the past two decades but now focus mostly on China and Taiwan.

Figure 1.6 Map of Southern China

While cost was once the main reason, it’s no longer the primary one for our building products in these countries. A bigger reason is to get the product to market more quickly and with fewer hassles than doing it in the United States or in Europe. Even as labor costs rise in China, it remains the best place to go. It’s become almost a requirement to go there if you intend to compete in the consumer world. China has the resources and the infrastructure and is referred to as the manufacturer for the world for high tech consumer products.

But, as you’ll discover in the pages of this book, going to Asia is not so easy and is fraught with risks and challenges. Many companies have only horror stories to report after trying to use China for development or manufacturing.

A number of products that I’ve brought to China have run into problems. Sometimes it seems the longer I work there the less I know. But that’s because the area is expanding so rapidly. This book will take you through some of these experiences. I’ll share with you what I learned, so, perhaps, you can avoid making the same mistakes.