New Product Developmentfrom a system-driven perspective

Nicos Komninos

Postgraduate Programme “Advanced Design: Innovation and Transdisciplinarity in Architectural Design”

24 November 2015

Innovation systemTerritorialInstitutionalCyber-physicalPlanned

Identify the systemExploit resourcesConsider competition

InnovationNew product developmentProcess innovationOrganisational innovation

Social innovation (means and ends): Climate change; poverty; violence; governance

Innovation: Systemic perspective Innovation: Systemic perspective

Company(ies) &

Organisations

Supliers

Supliers

Supliers

Supliers

Government Regional policy; Strategic

planning; Business associations; Regional

stakeholders

FinancingBanks, Business Angels,

Venture Capital, Regional Incentives, Crowdfunding

Technology and Information Intermediaries

•Technology transfer agencies; Consultancy; Tech Networks;

Patents; Standards; Market watch

Public R&D

Private R&D

Customers

Customers

Users

University R&D

Business sectors

Business clusters

Business Model Design

Stage-Gate Product Design

Contents

1. A systemic approach to innovation

2. NPD state-gate model

3. URENIO NPD S-G roadmap

4

Design for the business model Design for the business model

Business models serve important objectives: Place product design and development within a systemic perspectiveCreate value by defining a series of activities from raw materials to the final product Capture a portion of this value by establishing a competitive advantage

5

BUSINESS MODELInnovation

processIP

1 Undifferentiated: no differentiation, hard

work, but can't attract capital, cannot scale

None NA

2 Differentiated: advantages over performance,

ad hoc innovation, but hard to sustain

Ad hoc Reactive

3 Segmented: serves multiple segments, more

volume, lower costs, but still internally focused

Planned Defensive

4 Externally aware: harnesses external sources

of knowledge to complement internal capabilities

Externally supportive

Enabling asset

5 Integrated: External sources routinely utilized,

unused internal ideas flow outside , systemsintegrator of internal and external technologies

Connected Financial assets

6 Platform: Ultimate stage of open innovation,

benefits from others investments in the platform, an ecosystem is created

New business

opportunities

Strategic assets

Business models: maturity stages Business models: maturity stages

Sources: Chesbrough 2006 and 2008 http://www.slideshare.net/SiliconValleyST/business-model-innovation-by-h-chesbrough

6

BUSINESS MODELBLOCK

CHANGES ADVANTAGES

INFRASTRUCTURE (Suppliers & partners)

Crowdsourcing skills, ideas, competences over platforms and virtual networks

Increase the skill base and innovation capability of the company

OFFER(Value proposition, product design)

Turn products to smart. Use smart object-components

Turn products to hybridManage hybrid identities

Connect products to IoTReal time operation assess Tracking components

CUSTOMER(Channels and market segments)

Use other companies as distribution channels

Create collaborative marketplaces

Turn customers to producers

Increase customer base Increase customer loyalty Scale down marketing and distribution costs

FINANCE(Costs and revenue)

Leasing infrastructure and services over the cloud

Maintain data and services on the cloud

Reduce initial investments Reduce operational costs Scaling up/down hardware and services

Business models within cyber –physical systems Business models within cyber –physical systems

1. A systemic approach to innovation

2. NPD state-gate model

3. URENIO NPD S-G roadmap

http://www.stage-gate.com/resources_stage-gate.php

Stage-Gate literatureStage-Gate literature

Stage-Gate processStage-Gate process

Open Innovation Stage-Gate by R. Cooper Open Innovation Stage-Gate by R. Cooper

http://www.stage-gate.com/resources_stage-gate_openinnovation.php

S-G models and process loops S-G models and process loops

1. A systemic approach to innovation

2. NPD state-gate model

3. URENIO NPD S-G roadmap

Contains 7 Levels (stages) and 7 Assessments (gates) Three blocks: (1) concept, (2) business model, (3) detailed design

URENIO Stage-Gate roadmapURENIO Stage-Gate roadmap

Problem or

Challenge

Stage presentation

Software tools Books

Web links

Articles

Case studies

Contents of each level

NPD ROADMAP

Roadmap Levels

Level 1: Idea GenerationLevel 2: Idea ScreeningLevel 3: Concept Development & TestingLevel 4: Business AnalysisLevel 5: Product TestingLevel 6: Technical ImplementationLevel 7: Product Commercialisation

Level Description

Methods &Techniques

Level Assessment

NPD ROADMAP

Level 1: Idea Generation

Idea generation is a process in which creative thinking is used to produce a large amount of ideas for new products.

Produce as many ideas as possible

Record all ideas. Avoid criticism for other people ideas

Analyze ideas, organize groups and clusters, hierarchize, define components and dimensions

NPD ROADMAP

Level 1 MethodsMethod Techniques / process

Brainstorming(individual / group)

Affinity Diagrams (interviews, statements, groups, clusters)Osborne’s checklist (uses, modify, L, S, substitute, reverse)Software: ParaMind; Brainstorming toolbox

Competitive intelligence

Business intelligence capabilities. SoftwareCompetitive benchmarkingReverse engineering

Conjoint analysis P=Σa: Attributes; values per attribute; combination; analysis

Delphi From forecasting to info gatheringRoadmap: Coordinator; rounds of Qs; synthesis

Morphological charts

List product functions. Potential solutions per function. Chart combinations

Six thinking hats Thinking based on: white-data; red-intuition; black-negative; yellow-optimistic; green-creativity; blue-control

Triz(NPD as invetive problem)

Altshuller's theory of Inventive Problem Solving: the solution causes another problem to appear. Previous solutions. Analogous solutions. Matrix of 40 principles.

Level 1 Assessment

Assessment L1 evaluates the way and the tools used for idea generation.

According to the answers a user gives to the following questions a GO, HOLD or KILL decision is provided for further progression in the roadmap at Level 2.

Assessment factors: number of ideas; source of ideas; competitors ideas; methods used; components analysis; clustering.

Assessment of use of tools

Check that ideas were produced

Decision: Go or Run again

NPD ROADMAP

Level 2: Idea Screening

Once all viable ideas are gathered and managed, they must be further developed, examined, prioritised and evaluated so that a single product idea is selected for further development into a product concept.

This whole process is called screening and is the main problem to solve in this Level by using different tools and techniques

NPD ROADMAP

Level 2 MethodsIdea screening methodologies and tools

Qualitative research Screening ideas against strategy Screening ideas against sales & profitability min Screening ideas against key customers and buyers

Failure Mode & Effects Analysis

Identification and analysis of routes of product failure. Best for product re-design & next version

Dot Sticking Ideas selection based on voting. Limited number of votes per person. Define 5 best ideas. Round 2.

SWOT Analysis SWOT Analysis (Strengths / Weaknesses / Opportunities / Threats) per product idea

PMI Analysis (Plus / Minus / Implications)

Assessment process giving values to pros and cons variables of each idea. Sum pros and cons. Note implications

NPD ROADMAP

Level 2 Assessment

Evaluates the way the generated ideas were screened so that a single idea is produced for further development.

A GO, Hold (repeat) or KILL decision is issued for proceeding to the next level depending on the given answers to a set of questions.

Assessment factors: number of reviewers; number of methods used; identification of a single product idea; fuzzy outcome

Assessment of use of tools

Check that a singleIdea was selected

Decision

NPD ROADMAP

Level 3: Concept Development

As soon as a single product idea is selected (Levels 1 and 2), a product concept is to be developed so that a complete product takes shape.

The product should be an innovative solution. The concept development involves the evaluation of several product concepts, which are based on the same product idea.

The product concept selected should must be the best-one from many quasi-similar concepts stemming from a single product idea.

NPD ROADMAP

Level 3: Concept Development

The concept development defines the key attributes of a product idea.

Involves a first account of the environment of the new product

Definition of target market and customers

Identifications of the competition and formation of a competitive strategy

Preliminary product technical development and testing scheduling

Estimation of product development required effort

Creation of a preliminary business plan

Product Idea

ProductConcept 1

ProductConcept 2

ProductConcept 3

NPD ROADMAP

Level 3: MethodsMethods Refinement process 1: alternative concepts

Controlled Convergence (1) Identify 5-10 concepts; (2) Assessment matrix; (3) predominant concept compare all; (4) merge

Force Field Analysis (forcing agreement)

List alternative concepts as decisions to make. Per decision, define forces for change and against change. Assign values. Sum-up for and against values. https://www.mindtools.com/pages/article/newTED_06.htm

Relevancy Concepting An elitist approach. The 80 (vol.) by 20 (users) rule. Identify heavy users. Interviews. Assess concepts for heavy users only.

New Tech Commercialization

In case of new technology based products. Segmentation of users: “Innovation Acceptors” vs. “Wait and See”. Work with IA for concept assessment.

Risk Management Analysis

Per concept, identify, analyse, prioritize risks, formulate contingency plans and adapt product features

NPD ROADMAP

Method Refinement process 2: Bottom-up definition of qualities

QualityFunctional Deployment

THE HOUSE OF QUALITY1. Customer demand, variables2. Engineering design variables (measurable)3. Correlation between the design variable (++, +, -, - -)4. Correlation matrix customer / design variables

(strong, medium, low, none)5. Insights within the product development teamhttps://www.youtube.com/watch?v=tO6gmWX-cp4

KANO Diagrams Decide about critical qualities / characteristics of a product idea: 1. Interviews, product qualities2. Assess “have” / “not-have” quality behaviours with “Like”, “Must”, “Do not care”, “Can-live without”, “Dislike”3. Plot customer curves. Property mixhttps://www.youtube.com/watch?v=iuOrEIBVQX4

Level 3 Assessment

The L3 assessment looks at the way a selected product idea is turned into a product concept so that a new product is produced for further development and how this concept was evaluated.

A GO, Hold (run again) or KILL decision is issued for proceeding to the next level depending

Assessment factors: number of concepts analyzed / refined; number of customers interviewed; number of qualities added; product development team satisfaction

Assessment of use of tools

Check that a single Product concept is selected

Decision

Check that the ProductConcept is the right one

NPD ROADMAP

Level 4: Business AnalysisSince a product idea has been

chosen, the product concept has been developed, and the market seems promising, the next step is to check the financial aspects of the refined concept.

This includes the detailed scheduling and calculation of production and marketing costs, revenues, profits, cash-flow, sources of funding, stakeholders roles.

NPD ROADMAP

Level 4 Methods

NPD ROADMAP

Methodologies Tools

Scheduling Gantt ChartsCritical Path AnalysisPERT (Program Evaluation and Review Technique)

Product Life Cycle Understanding the PLCProduct features change along the PLC

Business Planning Cost-Benefit AnalysisBusiness Plan

StakeholderAnalysis

Stakeholders identificationStakeholders management

Scheduling

Gantt Charts• List of all activities• Plot duration of tasks• Scheduling• Analysis

Critical Path Analysis• Similar to Gantt• Plus reasons of delay• Re-allocate resources

PERT• Variation of CPA • Estimation shortest (S),

Probable (P), longest time (L)

• Scheduling with the formula: Task time = (S + 4P + L) / 6

Life Cycle Analysis

Business Planning

Activity description1. Overview2. Business description3. Organisational plan –

personnel - management4. Production process5. Marketing and sales

6. Financial plan

• Calculation of costs and revenues

• Cost categories• Funding schedule• Sources of funding• Target market• Price estimations• Revenue• Break-even• Profits

Stakeholder Analysis

Stakeholders identification that can affect the project1. Internal to the business2. External, business3. External, government,

associations, NGOs, users

Stakeholders management• Plan the approach• What is needed by each • Plan messages /

communication

Level 4 AssessmentA GO, Hold (run again) or KILL

decision is issued for proceeding to the next level

Criteria of assessment

1. An idea for a new product

2. A product concept that is technical feasible and financially profitable

3. An estimation of the funding required for prototyping, producing, and launching the new product into the market

4. The source(s) of funding required

5. Identification of the market(s) and strategies to launch the new product

NPD ROADMAP

Level 5: Product Testing

Product testing can occur in all levels of the NPD process. In all cases the testing process consists of three components: (1) Creation of a testing strategy (which often includes the creation of test cases), (2) Creation of a testing plan (which includes test cases and test procedures) and (3) Execution of tests.

NPD ROADMAP

Level 5 Methods

Rapid PrototypingQuick making of prototypes from CAD for testing and communication

Testing Exploratory –early phaseAssessment – preferred

single solutionComparison of

alternativesValidation – later stageISO 9000 – quality

assurance

NPD ROADMAP

Rapid prototyping

Rapid Prototyping techniques

Stereolithography (plastic prototypes)

Fused deployment modelling (plastic)

Inkjets (plastic)

Laminated object fabrication (paper)

Laser engineered net shaping (melting metal)

3D printing

NPD ROADMAP

Testing methods

Functionaltests

Alpha tests-Internal -R&D department-Engineers

End-to-endIntegration testsSystem testsPerformanceInstallation Unit testing

Customertests

Beta tests-External-Marketing department-Customers

Customer behaviourFunctionalityUsabilityComparative

Market tests

- Sales wave (free offer)- Simulated (sample choice)- Controlled (a few stores)- Test markets (a few cities)

TrialFirst purchaseAdoptionRepeat frequency

NPD ROADMAP

Level 5 Assessment

At the end of Level 5 a product prototype is build and that prototype is tested in respect to its functionality and market requirements.

The results of such tests are evaluated with respect to Business Plan assumptions and estimations.

Once again a Go or Kill recommendation is given to proceed into Level 6 of the Roadmap.

Prototype construction

Assess the prototype With respect to BP

Decision Go-Kill

NPD ROADMAP

Level 6: Technical Implementation

During the Technical Implementation stage, NPD should figure out how produce and deliver the product and provide customer support.

Based on previous testing there is need to prepare the production facilities, supplies, transportation, and distribution.

How the product is produced will influence aspects of design, price, usage, shipping, and warehousing.

NPD ROADMAP

Level 6 MethodsTechnical design and production

Design for X(Design for specific objective)

Design for manufacture (reduce costs). Design for assembly. D-f-Lifecycle. D-f-Installation. Design-f-reliability. D-f-reuse. D-f-environment. D-f-Speed.

Detailed design for manufacture

* Tolerance specs *Components requirements * Production volume * Performance criteria

Mass customisation

Lean manufacturing Just-in-TimeSupply Chain Management

Major issues in manufacturing

Bill of MaterialsMaterial Requirement Planning

Level 6 Assessment

At the end of Level 6 the selected concept and the resulting product prototype is finally produced, manufactured in large quantities.

The use of CAD/CAM techniques, production organization, supply chain management, lean manufacturing, mass production and mass customization are taken into consideration and influence the technical design of the product.

Assessment for GO, HOLD or KILL is related to technical specifications and issues coming from detailed manufacturing

Assessment of producibility

Consideration of manufacturingmethods

Decision

NPD ROADMAP

Level 7: Product Commercialisation

Includes the largest costs to date, related to

Product promotion, advertising, and placement

Product pricing

Distribution channel strategy and selection

Activation of the Marketing Plan

NPD ROADMAP

Level 7 MethodsMarketing Plan Overall strategy and marketing strategy; market

segmentation; competition; marketing mix. Marketing plan shaping product qualities

Distribution Channels

All organisations from P2C. Types: direct sales, wholesalers, agents, retailers, Web. Strategy.

Pricing Objectives: profit; sales; market share; leaderStrategies: premium; demand analysis; promotion.Methods: Competitors; cost+markup; skimming; rate

Promotion Advertising. Product placement. Selling. Sales promotion (coupons, discount, rebates). Publicity.

Elevator Speech 30’ for the product: The; For; Who; That; Unlike; Our p.

Product on a Page

Single page advert. Product specification sheet. Target. Purpose. Features. Catch phrase. Image.

Digitalmarketing

Social media marketing. Viral marketing. Attention economy. Open marketplaces.

http://www.npd-solutions.com/bok.html

NPD literatureNPD literature