By Kristy Vest
Most businesses that create all of your favourite foods will ensure that they have a trickling (or rushing) flow of products “in the pipe”. This is the new products pipeline. This pipeline will have a range of products that are not crude oil, gasoline or diesel fuel. This pipeline carries oysters, pearls, white elephants, and bread and butter.
We are not talking about necklaces or National Geographic in today’s post. We are talking about the probability matrix for the success of new food products in an ever expanding and changing market. Here, white elephants are not the sacred or top choice. Here they take up a lot of room in the pipe and just create a turbulent flow.
The key to managing these products in the pipe is to create a probability matrix. The general guideline is to capitalize on pearls, avoid white elephants and balance oysters with bread and butter projects. What does this mean? The matrix is set on a scale of high or low value of success (opportunity for profits, positioning for the company in a specific market, etc.) juxtaposed to high or low probability of success. The classification of each is as follows:
“According to legend, the king of Siam gave white elephants to his troublesome underlords. These rare animals were regarded as sacred and so required lavish care and feeding, and could not be required to work. Instead, they consumed many of their masters’ resources and reduced their underlord’s ability to create mistchief in the kingdom.” 
What began as a luxurious gift, shifted to the matrix where they consume large amounts of resources but provide little in the way of returns. New product development white elephants are similar. They likely “begin life as oysters or bread and butter projects”, but in time require too many resources or result in “technical or commercial defects.” They end up being costly projects that require too many resources and produce too little innovation to be sustainable.
Oysters carry huge potential but require lots of investments, resources and often innovative technical advancement. “The potential payoff is very high but the probability of success is initially low.” These projects, as those in any category, have the potential to shift to other areas of the matrix; “In the cultured pearl business, seeded oysters have only about a 5% chance of producing a marketable pearl”. The probability may be slightly different in new product development, but the idea remains the same; only a small percentage of oysters will shift into the pearl category.
Bread and Butter:
“These projects usually focus on evolutionary improvements to current products and processes in existing business areas.” The changes required are usually modest and while not transcending or cutting edge projects, they tend to produce consistent results. They are strong, short-term profitability work horses.
Pearls provide the “greatest potential for both commercial and technical success.” They generally deal with proven technical advances and are poised for the greatest long-term competitive advantages. They have “blockbuster potential” but carry the highest likelihood to fail. Consider in nature how many oysters you must open before finding a pearl.
The new product profile will be a balance of these products as they flow through the pipeline. The product hits your grocery cart and the company has already long been stewing up the next, newest idea; “refining” it, if you will. The pipeline streams through its distribution channels and depending on how it is received in the market, it may shift and balance and settle into different regions of the matrix or fail all together and fall from the matrix completely.
While this pipeline sounds like some sort of circus ring, I may envision it the next time I reach out to grab an item on the grocery shelf and ask myself; Is this an oyster, white elephant, pearl or bread and butter?
- Matheson D, Matheson J. (1997) Creating Value through Strategic R&D: Chapter 10 http://www.roundtable.com/lib/file/Workshop/SmartOrg-Chapter10.pdf. Accessed October 18, 201
- McNamee, P. (2012) How do you hold people accountable for portfolio/project decisions when things are uncertain? From SmartOrg.com http://smartorg.com/2012/01/valuepoint/. Accessed October 18, 2014