new product development to spring 2007. new product development definition new product development...
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New Product Development
TO
spring 2007
New Product Developmentdefinition
New product development (NPD) is the process of bringing new products or services to market
NPD is the first stage of the product lifecycle
Illustration from the Australian Museum
New Product Development
Newness to market
New
nes
s to
com
pan
y
New is the new “new” New products are
essential to the growth of any corporation
Introduction of new products into a company’s portfolio make up 49.2% (the Best) / 25.2% (the Rest) of sales growth*
*Cooper, Winning at New Products, 2001Image from wikipedia
NPD Stage Gate Processbenefits
Creates a baseline against which all new products in development will be evaluated
Streamlines the process Expedites the process
Competitive advantage in the marketplace Speed to market enhances profitability
Gives colleagues across an organization common language and goals
New Product Development
in a consumer-packaged good setting
New Product Developmentindustry snapshot
79% of companies claim to have an NPD process or stage gate system in place but . . . Most are poorly designed Don’t include “tried and true” best practices Badly implemented
Stage gate processes are often built ad-hoc, and not through a formal, defined process review
Adam + Boike, PDMA Foundations CPAS Study Reveals New Trends (2004, PDMA study)
New Product Developmentroles + responsibilities
R+D/Legal
Mfg/Comm/Salesproject duration
% o
f F
TE
marketing and project management roles
are constant throughout the
process
marketing and project management roles
are constant throughout the
process
New Product Developmentportfolio + strategy
BCG Matrix Helps prioritize projects
within the product portfolio Illustrates long-term
portfolio strategy high-growth products in
need of funding (stars) low-growth, but high-
value products (cows)
BCG matrix product profile
NPD Stage Gatego/kill criteria
Go/kill parameters May be category/region dependent, but should be consistent
within the category/region to ensure that the same criteria is used to determine the overall portfolio
Expected profitability, sales Launch date / timing Hurdles met: test results
• e.g. stability, consumer interest, etc.
Stage Gate in a CPG Environment
note: activities in this presentation are illustrative + do not represent a single
corporation’s NPD process
NPD Stage Gate Process proposed process
ideate deliberateinvestigate
actuate validate create
evaluate
ideate
Key Activities Research product / portfolio
gaps Market trends, customer
requests, idea banks Brainstorm possible
solutions Review/assess ideas based
on: Feasibility, portfolio fit,
opportunity
Output Select 2 – 3 potential
solutions for further testing and review
Objective: Generate ideas to fulfill market gaps
ideate deliberateinvestigate
actuate validate create
evaluate
investigate
Key Activities Conduct qualitative testing
(human factors) representative per target
audience Brief manufacturing review Research
Determine competitive landscape (if any), patent issues
Output Select 1 opportunity to refine
at the next gate and conduct business case on the selected offering
Objective: harmonize voice of customer, confirm feasibility
ideate deliberateinvestigate
actuate validate create
evaluate
Key Activities Conduct quantitative testing Define sales pricing strategy Develop P+L scenarios
(create assumptions) Review manufacturing needs Identify resources + project
timing Create initial product claims Conduct focus groups (if
needed); obtain feedback to refine
deliberate
Output Pricing strategy P+L Project Plan : timelines,
resources + activities
Objective: developing the initial P+L scenarios + manufacturing strategy = business case
ideate deliberateinvestigate
actuate validate create
evaluate
create
Key Activities Purchase unit tooling, create
initial prototypes Conduct stability, user,
stress, drop, consumer acceptance, and claims validation testing
Further define production and marketing plans
Design secondary packaging + labeling
Engage + excite customers
Output Refined financial
assumptions Clarified timeline and
resource allocations Design freeze
Objective: freeze design / begin to confirm P+L assumptions
ideate deliberateinvestigate
actuate validate create
evaluate
validate
Key Activities Conduct production trials;
confirm outputs primary + secondary pkg.
Final revision of P+L Obtain initial products from
production tooling Conduct shake/ship
distribution studies Create marketing support
materials Confirm legal hurdles have
been addressed
Output Confirmed P+L Validated production
equipment Confirmed shipping
architecture and materials Developed advertising
Objective: confirm P+L, manufacturing strategy + timeline
ideate deliberateinvestigate
actuate validate create
evaluate
actuate
Key Activities Build launch + pipeline
volumes Ensure execution of
distribution plan Launch marketing support
Advertising PR
Output Day 1 Launch
Objective: launch products and promotional support
ideate deliberateinvestigate
actuate validate create
evaluate
evaluate
Key Activities Conduct lessons learned Confirm project to operations
hand-off is completed
Output Developed “best practices”
Objective: post-launch review
ideate deliberateinvestigate
actuate validate create
evaluate
NPD Stage Gate Processes
conclusions
NPD Stage GateConclusions
Implementing an NPD Stage Gate process requires time and alignment across the organization to be an effective tool
Updating the NPD Stage Gate parameters are critical to the success of the organization as the competitive landscape changes and accelerates,
Stage Gate processes + go/kill criteria should also be revisited
NPD Stage Gate process is most successful in a “core,” cross-functional team environment If not possible, structured handoffs from stage to stage are
imperative in the success of the development
NPD Stage Gate + InnovationConclusions
There is no magic bullet to developing new products “that win”: leveraging NPD Stage Gate ensures that once the idea is cultivated, the organization will
have the mechanisms to produce it Innovation is only as good as the culture
Do it, don’t just say it Failure will happen More successes = risk of failure
Innovation is a reinforcement of a value chain*
product development integral to the chain Innovation “screens” require non-traditional thinking**
non-conventional market research variable metrics (e.g. not just COGS) work outside direct “competencies”
*Booz Allen Hamilton Global Innovation 1000 / 2006**Harvard Business Review, Kanter Innovation: The Classic Traps / November 2006
project selection
product development
commercializationideation
NPD Stage Gate + Innovation Conclusions
Thank You
thank you!