BS4163 Business Creativity

Innovation and the new product development processAndrew Turnbull

Outline

PDMA Product Development and Management Association

Study of New Product Development (NPD)

Identification of:Key product dimensions;Key technical costs;Target markets and potential.

Concept Development

Customer needs analysis;Market analysis;Technical analysis.

Acceptable ideas for further development work.

Screening

Market & technical assessment;Initial financial assessment;Corporate fit.

Body of acceptable ideas.Idea GenerationCustomer needs;

Technological opportunitiesin targeted markets.

Market opportunities for new products, which meet corporate objectives.

New Product Strategy

Corporate objectives;Market analysisTechno-environmental scanning;Competitor analysis.

Decision/OutputsModel StageInformation Inputs

Booz Allen & Hamilton (1968)

Adjustments as a result of take up Long term commitment.

Launch (commercialisation)Results of test marketing.

Product take up; Final adjustments to the marketing plan.

Market Testing

Market research;Finalised product;Marketing plan•Promotion•Price•Distribution.

Finalised productProduction plan;Marketing plan

Product Development

Market research;Production requirements

GO/NO GO decision;Initial marketing plan and budget;Product development plan.Business Analysis

Explicit market analysis including potential;Explicit technical feasibility analysis, including costs;Production implications;Check with corporate objectives.

Decision/OutputsModel StageInformation Inputs

Next Milestone

The State-Gate New Product Process, with Six Stages and Gates

IdeaGate 1Initialscreen

Gate 2Preliminaryassessment

Gate 3Project definition &

pre-developmentbusiness analysis

Gate 4Pre-testreview

Gate 5Pre-trialreview

Gate 6Pre-

commercialisationbusinessanalysis

Review &adjust

Preliminarymarket

appraisal

Conceptidentification

& concepttesting

Productdevelopment

Customertests ofproduct

Testmarket

Marketlaunch

Preliminarytechnicalappraisal

Technicalconcept

definition&productionpossibility

Developmentof marketing

plan

In-houseproduct

tests

Trial/testproduction

Fullproduction

Production& technicalactivities

Marketingactivities

Stage l Assessment ll Definition lll Development lV Testing V Trial Vl Commercialisation

Source: Cooper R.G., The New Product Process: A decision Guide for Management, Journal of Marketing Management, 1988,3, 238-255

Stage Gate Articles, Research, Knowledge and Working PapersStage Gate Articles, Research, Knowledge and Working PapersStage Gate Articles, Research, Knowledge and Working Papers

Cooper’s Stage Gate Model Today

• Rugby scrum approach as opposed to the relay race approach of the Booz Allen and Hamilton model.

• Stage Gate - official site - Product Development Institute

The financial impact of shorter time to market

(As cited in Shepherd & Ahmed, (2000) pg 170)

Stages

Costs and risk

No. of stages/time

High

Low

Costs

Risks

Funnel not tunnel

Successfulnew products

Managementauthoritysupporttechnical aspectscommunication

Informationgeneralmarketingexternalcommunication

Strategyorientationobjectivessynergyproduct characteristics

Peoplemultifunctionalco-ordinationproduct championcommunication

Organisational structuremechanismstyle

Processtimingpre-development activitiesdevelopment activitiesmarketing activitieslaunch activities

Source: Hart (1995) in Bruce & Biemans, Wiley; Trott (2005), Prentice Hall

Key themes from the product development literature

Efficiency and creativity

Managing the tension between the need for creativity and efficiencyManaging the tension between the need for creativity and efficiency

Source: Adapted from B. Rothwell and W. Zegveld (1985) Reindustrialisation and Technology, Longman, London.

Technology push vs. market pull

Pearson’s uncertainty map

Uncertainty about output

Uncertainty about process

High

Low

Low HighAs cited in Trott, P. (2008) Innovation Management and New Product Development. FT Prentice Hall, Harlow England

Revamps vs NPD

Characteristics of Successful Product Innovators

Old Product Development New Product Development

Strategy Top management determines explicit plans and budgets for development work

Top management sets broad objectives for organic growth

Shared values

Top management fosters understanding of the need for product evolution

Top management fosters understanding of the need for really new products

Style Top management is support -tive but does not meddle in development projects. Progress is checked regularly

Top management is intimately involved, often on a day to day basis

Structure Top management uses the existing organisation which acknowledges the need to manage updates within a matrix of responsibilities

Top management uses new organisational forms, such as business teams, to nurture important developments outside the mainstream organisation

Characteristics of Successful Product Innovators

Old Product Development New Product Development

Skills There is efficient product planning using sophisticated market analysis techniques

Techno-commercial idea generation, screening and testing in concept. Development work often based on new technology

Staff Existing line managers are used with some staff advice. When product leaders are appointed, they may be quite junior but receive a commission from top management.

An intrapreneur is allowed to select his/her own team with whom rewards are shared. Failures are viewed as a learning experience

Systems Loose-tight using simultaneous or rugby scrum approach. More tight than loose.

Loose-tight using simultaneous or rugby scrum approach. More loose than tight.

Climate, culture, teams & leadership

Product innovation & technology strategy for the business

Resources: commitment & portfolio

management

Idea-to-launch system:

stage-gate

The Performance Diamond

Business’s new product performance

Business’s new product performance

Portfolio Management

Dynamic process

It’s about getting your ducks lined up

Evaluation criteria for projects

Evaluation criteria for projects (cont.)

New Products

Improvement to existing products

Cost reductions

Project Score Rank

AlphaBetaGammaDelta

Budgets allocated according to strategic priority

Project Score Rank

AlphaBetaGammaDelta

Project Score Rank

AlphaBetaGammaDelta Projects are scored and ranked

within allocated budgets. The most promising projects are selected.

Pharmaceutical R&D by type

Source: ABPI (1993) Pharma Facts and Figures, Association of the British Pharmaceutical Industry, London.

Importance of Portfolio Management

Importance of Portfolio Management

Platform Development

VAG interfirm product platform development

Single platformMany common parts

Platform development creates the architecture for a family of products

Brand positioning

Product platforms

The organisation’sreputation for innovation

Ability to attract creative people

Organisational encouragement of creativity and

innovation

Development of innovative products

A willingness within the organisation to accept

new ideas

Motivates people within the organisation and reduces frustration

High morale and retention of creative people

Fig 3.7 Propagating a virtuous circle of innovation.

References• Chao, R. O., & Kavadias, S. (2008). A Theoretical Framework for Managing the New

Product Development Portfolio: When and How to Use Strategic Buckets. Management Science, 54(5), 907-921. Retrieved from EBSCOhost.

• Cooper, R.G.,(1988)The New Product Process: A decision Guide for Management, Journal of Marketing Management,,3, 238-255

• Cooper, R.G. (2008) Perspective: The Stage-Gate® Idea to launch Process – Update, What’s New, and NexGen Systems. Journal of Product Innovation management; 25: 213 -232

• Cooper, R, Edgett, S, & Kleinschmidt, (2001), 'Portfolio management for new product development: results of an industry practices study', R&D Management, 31, 4, p. 361, Business Source Premier, EBSCOhost, viewed 12 September 2011.

• Cooper, R, Edgett, S, & Kleinschmidt, (2007), "Winning Businesses in Product Development: The Critical Success Factors" Revisited. Research Technology Management, May/Jun, Vol. 50 Issue 3, p60-61, 2p

• Johne A. & Snelson P.(1988), Successful Product Innovation in UK and US Firms, European Journal of Marketing 24,12

• PDMA • Product Development and Management Association [accessed 29.8.11]• Pons, D. (2008) Project management for new product development. Project

Management Journal, Jun, Vol. 39 Issue 2, p82-97• Shepherd, C. & Ahmed P.K (2000). NPD frameworks: a holistic examination. European

Journal of Innovation Management V3. No 3. pp160-173.• Trott, P. (2008) Innovation Management and New Product Development. FT Prentice

Hall, Harlow England. 4th edition.