5a innovation and npd
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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.
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