New Product Development Exam 1

Why invest in NPD?

a successful new product does more for the firm than anything else. you dont want to be obsolete more revenue more marketshare high risk but often high reward

product integrity

all aspects of the product are internally consistent

product line extentions

also flankers. designed to flesh out the product line as offered to the firm's current markets

category platform

an abstract classification of the type of product partitioned according to demand

brand platform

an identity that represents a category instance

product innovation

applies to the total operation by which a new product is created and marketed and it includes innovation in all of the functional processes.

economies of scale

as a company grows and production units increase a company will have a better chance to decrease its cost.

opportunity identification

audit the firm and any environment relevant to it - find another location or venue - leverage firms strengths - identify a fast growing need and adapt your products to that need - find a new to you industry

lead users

customers associated with a significant current trend. front edge of the trend, have the best understanding of the problems faced, and expect to gain significantly from solutions to those problems

strategic goals

defending current base of products versus extending the base

obstacles to idea generation

group think targeting error complexity lack of empathy poor customer knowledge too many cooks

ease of development

how easy to develop how difficult to. do you have to buy new technology?

novelty

how new is the idea

new to the world products

really new products. inventions that create a whole new market. revolutionize existing product categories or define wholly new ones.

invention

refers to the dimension of uniqueness

unstable product specification

required performance level keeps changing

slow (To the market)

safer in the sense that the firm knows the outcome of the pioneers efforts and has time to make a more meaningful adaptation. but good market opportunity may be gone

radical innovation

makes current products obsolete. extreme, makes an impression. changes the way you do businesses. customer learning is high

new to the firm products

"me too products" products that take a firm into a category new to it, the products are not new to the world but new to the firm.

methods for generating product concepts

- gathering ready-made product ideas or sometimes concepts (employees, suppliers and distributors, competitors, investors, idea exploration firms, consultants, ad agencies, universities, governments, research labs, internet, end users) - using a managed process run by the NPD team - crowdsourcing (firms effort to obtain product related ideas from consumers through online reviews and customer blogs.. open solicitation) - open innovation and closed innovation

advantages of open innovation

- importing new ideas multiplies innovation building blocks- ideas and expertise, resulting in more total sales generated from new products - exporting ideas raises cash and improves employee retention since creative types know that good ideas will be exported not buried - exporting signals true worth of innovation - exporting clarifies core business

accelerating time to market techiques

1. have a clear PIC (doing the opportunity identification homework and having a clean product definition leads to better product design specifications and less time lost due to recycling- returning to earlier phases in the process to fix errors) 2. a third generation new products process ( permits overlapping phases or parallel processing results in more getting accomplished in a shorter span of time; streamlines evaluation tasks means that less time is wasted in evaluation) 3. portfolio management approach (minimizes the chance that the firm's human and financial resources are spread too thinly over too many projects. better project selection focuses the firm's scarce resources and uses them more efficiently) 4. a focus on quality at every phase complements the PIC (by following the adage do it right the first time the firm will avoid unnecessary recycling) 5. an empowered cross-functional team (including individuals from marketing, R&D, manufacturing, and other functional areas that work on the project from the earliest phases supports parallel processing, and eliminated over the wall product development.

reasons for a product failure

1. ready aim fire approach 2.no formal processes are used 3. not taking risks 4. both marketing and organizational factors 5. not using a product innovation charter 1. lack of customer understanding 2. underfunding the required research and development 3. beginning development without doing the required homework 4. lack of attention to quality 5. lack of senior management support 6. chasing a moving target

Voice of the Customer

VOC. should be brought out as early as possible

cross functional diversity issues

a diverse team means a wide variety of perspectives and more creative simulation but can also lead to difficulties in problem solving and information overload

incremental innovation

a series of small improvements to an existing product or product line that usually helps maintain or improve its competitive position over time

product platform

a set of systems and interfaces that form a common structure. can be thought of as a basis for all individual product projects within a family of products- saves you money, learning, and training

too many cooks

a small new product team works fine, but large companies especially are prone to internal competition for power and influence. this is not a healthy climate for a new product in the earliest phases of development.

product innovation charter

a strategy for new products. provides guidance to all functional areas involved in innovation. it defines the scope of activity for new product development, helping the product team identify what opportunities lie within the boundaries and where they should focus their efforts

content sections of PIC

background, area of focus (at least one clear technology dimension and one clear market dimension) , goals-objectives, and special guidelines (any rules of the road)

project types

balancing fundamental research, process improvement, and maintenance projects

three inputs required by the creation process

benefit, form, technology

a focus on quality at every phase complements the PIC benefit to accelerating time to market

by following the adage do it right the first time the firm will avoid unnecessary recycling

product innovation charter (More)

can be thought of as a kind of mission statement but applied at a more micro level within the firm and adapted to new product activities. it allows delegation, permits financing, and calls for personnel assignments all within agreed upon scope of activity

fuzzy gates

conditional go decision. they may go until more information is collected then they are reevaluated on that criteria

targeting error

continue to target the same segment when generating ideas. keep going back to the same simple demographic targets. great new product opportunities may be missed as a result

complexity

creative types within organizations as well as senior management often think that the more complex an idea the better it is. complexity however is a major barrier to new product adoption

potential barriers to creativity in firms

cross-functional diversity allegiance to functional areas social cohesion role of top management

improvements and revisions

current products made better

poor customer knowledge

despite the money spent on market research by the top firms, the reality is that little is understood about prospective customers. lavish research spending doesnt guarantee that it was done well

meaningfulness

does it actually help the customer? does anyone need it

have a clear PIC benefit to accelerating time to market

doing the opportunity identification homework and having a clean product definition leads to better product design specifications and less time lost due to recycling- returning to earlier phases in the process to fix errors

market familiarity

existing markets, extensions of current ones, or totally new ones. do you know the customers already

technology familiarity

existing platforms, extensions of current or totally new ones

discovery driven planning

fedex requires that managers make assumptions about the future in order to build their forecasts and targets, recognizing that these assumptions may be quite wrong

imitation or emulatino

firms often enter the market with less innovative adaptive extensions or even straight imitations. this is often the market entry strategy adapted by "quick second"

what steps serial innovators take

identify and fully understand a customer problem and then discover possible technical solutions to those problems. then oscillate between customer need and technology solution - finding a problem that is important to customers, checking potential market size and revenue stream - understanding the problem, including technology, currently available solutions, competition, and customer requirements - determining if the problem is interesting enough customers willing to pay for it and also interesting to the firm in terms of fitting with product strategy -inventing a solution to the problem and checking for customer acceptance with a prototype - ensuring that the product goes into development then gaining market acceptance for the product.

role of top management (barriers to creativity)

if senior management stresses continuous improvement the team might stick with familiar product development strategies and make only incremental changes. top management should encourage the team to be adventurous and try newer ideas. they should recognize individuality, be tolerant of mistakes, be supportive under stress

go/no go decision

in an evaluation phase whether they are permitted to continue or not

an empowered cross-funtional team benefit to accelerating time to market

including individuals from marketing, R&D, manufacturing, and other functional areas that work on the project from the earliest phases supports parallel processing, and eliminated over the wall product development.

MBTI

intuitive-sensory introvert-extrovert perceiving-judging thinking-feelings

Why study NPD

it's big business radical innovation is the most important business issue of our time accelerating innovation and business growth through innovation are the top business challenges according to some consumer preferences change

portfolio management approach benefit to accelerating time to market

minimizes the chance that the firm's human and financial resources are spread too thinly over too many projects. better project selection focuses the firm's scarce resources and uses them more efficiently

leveraged creativity

most common first to market category. tweak technology. significant but small

non corporate strategic planning

much planning vomes from heads of functions in the firm (MKT, technical, manufacturing, and finance) and from the planning of suppliers, customers and others

cost reductions

new products that simply replace existing products in a line, providing the customer similar performance but at a lower cost. may be more of a new product in terms of design or production than marketing

social cohesion

perhaps a little unexpectedly if the interpersonal ties between team members are too strong candid debate might be replaced by friendly agreement resulting in less innovative ideas

a third generation new products process benefit to accelerating time to market

permits overlapping phases or parallel processing results in more getting accomplished in a shorter span of time; streamlines evaluation tasks means that less time is wasted in evaluation

time length

pick between short term vs long term

project risks

picking between high risk vs. low risk projects

first to market

pioneering. high risk. first people to release a product. breakthrough

probe and learn

probe, experiment, and improvise and as a result may come up with a successful new to the world product

T-P-M linkage

procedure of converting technical specifications to product features and benefits to market needs

platform

product families that share similarities in design, development, or production process

product portfolio

product portfolio management helps the firm assess which new products would be the best additions to the existing product line, given both financial and strategic objectives

repositionings

products that are targeted for a new use or application. also includes products retargeted to new users or new target markets

geographical markets

size of market, how you market, cultural aspects

objectives of portfolio development

strategic alignment (mix of products reflects the PIC and new products are on strategy) assessing portfolio value (commercial value of products in pipeline is maximized) project balance (select products that balance the existing product line) number of projects (in line with resource requirements avoid underfunding)

successful new services tend to come from firms that use a ____________________ much like the new product process

systematic process

productive adaptation

taking ones own or a competitive product and improving it in some way, they improvement may be technical or non-technical. it may be useful or trivial.

applications engineering

technology changes minimally but USE is totally new.

MTBI dimensions of creative people

tend to be more intuitive, perceiving, extraverted, and thinking

which of the inputs of the creation process would you prefer first

the benefit should come first. customers are only willing to pay for products which provide benefits that they value more than the cost of the product

product protocol

the benefits the new item is to yield

scope creep

the constant changing of a products definition. keep changing who the customer is

lickety-stick

the developing team develops prototypes from dozens of different new product ideas eventually settling on a prototype that customers like

incubation period

the goal is to consider the innovation, together with the identified business opportunities and to develop from this a new business model that provides high customer value and ultimately is also profitable for the firm. business laboratory. involves customer and market interaction as well as technical development okay with failures

innovation

the overall process whereby an invention is transformed into a commercial product that can be sold profitably

form

the physical thing created or in the case of a service it is the sequence of steps by which the service will be created

new product process

the procedure that takes the new product idea through concept evaluation, product development, launch, and post launch

open innovation

the process a company employs to externally search for research innovation, new technologies, and products. use the knowledge in the external environment to improve innovation performances

need/benefit

the product has value only as it provides some benefit to the customer that the customer sees a need or desire for

moving goalposts

the product team is chasing an elusive target

lack of empathy

the same managers are also well educated high income individuals accustomed to an upscale lifestyle. they may simply not understand the typical customer they are trying to sell to

technology

the source by which the form was attained. in most cases there is one clear technology that is at the base of the innovation the one that served as the technical dimension of the focus arena. sometimes there are two

allegiance to functional areas

the team members need to have a sense of belonging and to feel they have a stake int he team's success. without this they will be loyal to their functional area not to the firm

corporate mission and strengths

top level statements that guide the firm

third generation process

used by most firms this is a flexible interpretation of the basic process which allows overlapping phases and fuzzy gates

closed innovation

using information from only internal sources (keep it in the company)

process innovation

usually applies to functions, especially the manufacturing or distribution process and every new product benefits from this type of innovation

serial innovator

usually midlevel tech employees who thing and work differently and follow their own new products process. They know how to bridge the gap between technology and market

quick second

very demanding. a firm following this strategy has to make the decision to enter the market before the innovator is successful or has even come to market. tries to capture a good second share position, perhaps making no significant improvement or just enough to improve

group think

we think we are being creative when in reality we are only coming up with ideas that our group will find acceptable. remember that we are not trying to find the conventional wisdom but truly original ideas

hallow gates

when a go decision is made but they fail to commit any resources to the project

chasing a moving target

when you keep changing what you're product is going to look like, what the benefits are

mass customization

where we offer all customers a product of their individual choice

late (to the market)

why bother. usually a price entry keyed to manufacturing skills`

why have a PIC

without a strategy it is easy to lose focus and to spend time and resources chasing the wrong opportunities. it provides direction

ready fire aim approach

you do not go through the process. you move too quickly and fail to do the proper work

how many of the required inputs of the creation process do you need

you need all three for a new product. if you just have two then you hav a feasible product concept