Class 5 NPD Process PDF

Class 5 Organizing your NPD Process IDEO Product Development The shopping card https://www.youtube.com/results?search_query=sho pping+cart How do you organize the new product development process? Development time is a big concern Time is key – throwing over the wall STAGE GATE PROCESS  S...

Class 5 Organizing your NPD Process IDEO Product Development The shopping card https://www.youtube.com/results?search_query=sho pping+cart How do you organize the new product development process? Development time is a big concern Time is key – throwing over the wall STAGE GATE PROCESS  Stage-Gate system Processes in parallel Interdisciplinary team structure Senior management is gatekeeper and commits resources “Must meet”/”should meet” criteria to pass gate Use of a two-part decision at gates: 1. project specific pass/kill decision 2. go/hold decision considering value for portfolio Initial Second Decision on Post- Pre- Post- Screen Screen Business Case Development Commercialization Implementation Review Business Analysis Review Stage Stage Stage Stage Stage 2 3 4 5 Gate 1 Gate Gate Gate Gate 1 2 3 4 5 Idea Preliminary Detailed Development Testing & Full Production Generation Investigation Investigation Validation & Market (Build Business Launch Case) Source: Cooper, 2000, Product Leadership Stage-Gate™ is a trademark of RG Cooper & Associates Consultants, Inc.  Illustrative Example STAGE GATE (1) Preliminary Investigation (1) Initial Screen Quick scooping of the project: preliminary market/ First decision to commit resources to the technical/ business assessment, patent & IP search project, Must-meet/ Should-meet criteria (2) Detailed Investigation (2) Second Screen Needs-and-wants studies, value-in-use studies, Re-evaluation of the project; additional M/S competitive analysis, concept testing, detailed criteria regarding strategy and priorities, technical assessment/ financial analysis, operations consumer, trade, technical/ financial and other estimation -> business case questions (3) Development (3) Decision on Business Case Implementation of development plan, physical Financial commitments/ performance, strategic development of product, prototype product, preliminary fit, review of Stage 2 activities, M/S criteria and customer tests deliverables (4) Testing and validation (4) Post-Development Review In-house product tests, user tests, pilot production, Focus on successful completion of tasks, check pre-test market on the progress, product and project (5) Full Production and Market Launch (5) Precommercialization Business Analysis Full implementation of production/ marketing plan Examination of Stage 4 activities, financial criteria, esp. review of operations and marketing plans, post-launch plan Source: Cooper (2000): Product Leadership. Last but not least… Termination of new product project after commercialization Disband project team Review project and product’s performance (revenues, costs, expenditures, profits, timing in comparison to planned data) Analyse variances and gaps between actual performance and projected performance and their reasons In-Process metrics/ Post-process metrics Post-auditing: assessment of project’s strengths and weaknesses Source: Cooper, 2000, Product Leadership Stage-Gate™ is a trademark of RG Cooper & Associates Consultants, Inc. How Pfizer’s Viagra almost slipped away Viagra one of the world’s most recognized brands A social icon with sales >$2bn,An unintended discovery 13 years to market, how to attract consumers without alienating them But market was small! Why spend valuable R&D money on such a small market? Stage gate process (formal NPD) BENEFITS WEAKNESSES ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Some limitations of the stage gate process “The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative” Clayton M. Christensen “The Stage-Gate system assumes that the proposed strategy is the right strategy, the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance” Clayton M. Christensen You cannot always tell if something is really feasible? Or, when? You cannot accurately predict progress Customers cannot say that they want something they do not know Customer can only provide feeback on incremental modifications, on what they do know. Iterations are needed where customers evaluate a prototype and a new cycle starts, particularly in highly turbulent enviroments. Passing gates are seen as goals → the bigger picture is lost. But how can you conduct a market/opportunity analysis if there is no market? RADICAL INNOVATIONS require a different lense 13 CLASSICAL CRITICAL SUCCESS FACTORS AND RADICAL INNOVATION Critical Studies Reason for limited validity Success Factors for radical innovations User/customer related factors Cooper (1975); Rubenstein et Existence of strong customer al.;(1976); Cooper (1979) needs Rubenstein et al. (1976) Latent, future needs are the relevant base Cooper (1975); Cooper (1979); for radical innovation Needs are urgent Parkinson (1981); Cooper/de Brentani (1991); Parry/Song No urgent need for average customers Early customer integration (1994) Kulivik (1977); Cooper (1979); Limited cognitive and motivational Parkinson (1981); prerequisites of average customers Market research related factors Maidique/Zirger (1984); Execution of early, Dougherty (1990); qualitative market research Cooper/Kleinschmidt (1990); Cooper et al. (1994) Target markets unknown; Execution of detailed Cooper (1975); Cooper (1979); quantitative market research Cooper/Kleinschmidt (1990) Cooper/Kleinschmidt (1990) Target markets may change; cannot Product related factors Kulvik (1977); estimate market need Well-defined product concept Calantone/Cooper (1981); Perillieux (1987); Cooper/Kleinschmidt (1987); High technological and market Cooper/Kleinschmidt (1990) uncertainties → not sure when or whether product works CASE GENERAL ELECTRIC: CT SCANNER CT allows new functionalities, pictures and analyses compared to conventional X-ray CONVENTIONAL MARKETING RESEARCH AND DISCONTINOUS INNOVATION: THE CASE OF CT Here the firm knew that this could make a huge difference – but customers did not see the need → they were also trained in an old paradigm. CONVENTIONAL MARKETING RESEARCH AND DISCONTINUOUS INNOVATION: THE CASE OF CT → If there is no market yet, how can we get support from the market? If it is really radical you cannot get help from customers either. Everything is uncertain. It is hard to predict anything….. → They knew that the market would develop (same for mobile phones, computers, etc.). It was only a matter of time. But early technology was still inferior.  CT GE: CT SCANNER – LEARNING FROM EXPERIMENTING 1. The first system was working despite failure of the product – but it was technically feasible; → probe 2. Based on this prototype the speed and image resolution was constantly improved; learning from experience 3. New markets were identified and applications found (later in the process) Motorolla Cell Phone 1. First cells were too heavy, inferior batteries, but attention from investors 2. But everybody knew that one day it might take off 3. But long-term strategy was there – margins are running low – need a breakthrough again! Probing and learning process (Lynn et al. 1996, also Veryzer 1998) … is an iterative process (to understand the market and find the right application. …is a process of market experimentation and successive approximation. …accepts that failure is part of a learning process. …needs to be embedded and aligned with company strategy. …needs top management support. IN CONTRAST TO STAGE-GATE, THE PROCESS IS MORE IMPORTANT THAN THE OUTCOME!