A new survey from 3Pillar Global and the University of Maryland Robert H. Smith School of Business identifies six factors that are essential to a company’s potential to develop and innovate new software products. Surprisingly, many of these factors are considered the softer components of new product development.
“There were a lot of soft skills that showed up in the index,” reports David DeWolf, president and CEO of 3Pillar Global, a software product company. “There weren’t a lot of hard technical skills. A lot of people focus their attention on the technology, thinking that tech and innovation are synonymous in many ways.”
But, innovation, he adds, comes as a result of building a company culture that allows for collaboration, loyalty and teamwork, as well as discipline.
“We as a culture assume that innovation comes mostly from startups and, to some degree, that is true,” he says. However, though “some fabulous ideas come from the startup world, those startups may lack the discipline and execution to carry out some of their ideas.”
The six factors, identified through a statistical analysis model used by the university and called the Product Development Success Index (PDSI), are culture, feedback, communication, staffing, collaboration and time/budget. Of these, culture—the ability to attract and keep talent while providing employees with career and growth opportunities—is the most critical factor for success, according to DeWolf. Though relevant, time/budget is the least important.
What Drives Software Development?
The index, said to be the first of its kind, was based on the responses of more than 200 directors, executives and managers responsible for software product development in industries as varied as business, education, finance, technology and others. At its heart, the index is meant to help participating companies answer questions about what drives their new software product development success, as well as what might need greater emphasis.
Although results for specific companies are not available publicly, the overall average score on the 0-to-100 scale was a 73. Yet, there were “definitely some high performers that jumped out as strong,” showing that they had innovation down pat, DeWolf says.
“I think that [those] were very few and far between,” he adds. “The average score was a C. … It was surprising to see that more people didn’t have it nailed down.”
In fact, only 19 percent of queried individuals worked for companies found to be highly successful in new software product development, the PDSI results showed. These companies did things differently or better than the companies that were identified as less successful. For example, 34 percent of highly successful companies have 1,000 or more employees working on new software product development, compared to 17 percent of companies overall.
“By its very nature, innovation requires experimentation and risk taking,” DeWolf says. “I think what you see in those larger organizations is the ability to take more risks and do the things that lead to success.”
Also, highly successful companies invested an average of $161 million annually in research and development, compared with $102 million for all enterprises and $39 million for companies that were rarely successful. Additionally, 53 percent of professionals at highly successful companies thought that finding new sources of revenue for product development was more important than building existing revenue streams, while just 27 percent of professionals overall thought that way.
Finally, highly successful companies also maximized other traits: They had more increased revenue in the past three years, more customer retention, better brand reputation, and better internal efficiency compared to others, the PDSI shows.
The index reveals that companies can be more deliberate when it comes to new software product development, according to DeWolf. Instead of just “throwing a dart against the wall” and hoping for success, company leaders could be building the behaviors that focus on the business drivers for new software product development, instead of just focusing on the technology itself.
“Digital products are the key to our economy today,” he concludes. “Software is becoming so prevalent in our economy that we have to do it better.”