NEW PRODUCT DEVELOPMENT: CRITICAL DIMENSIONS ISSUES

1
NEW PRODUCT DEVELOPMENT CRITICAL DIMENSIONS /
ISSUES

• COST OF FAILURES
• UNCERTAINTY OF TECHNICAL SUCCESS
• UNCERTAINTY OF DEMAND
• MISSING THE BOAT AND SINKING THE BOAT

2
Typical Weaknesses in the NPD Process

• Lack of market orientation
• Poor execution
• Moving too quickly
• Not enough homework
• Lack of differentiation
• No focus, too little

3
NPD Success Factors

• 1) Product with real advantages for the user
• 2) Market orientation -- customer input
  throughout marketing plan development
  throughout good launch in the end
• 3) Multistaged, disciplined process -- good
  execution
• 4) International orientation in product
  innovation
• 5) More pre-development work, incl. sharp product
  definition
• 6) Good organization environment -
  structure/culture

4
NPD Success Factors, continued
7) Right kind of top management support -- set
the stage, clear way for launch 8) Synergy --
build on strengths, experience 9) Market
attractiveness helps -- market potential plus
favorable competitive situation 10) Resources
must be allocated 11) Speed comes from efficient
execution, not cutting corners 12) Prioritize and
Focus -- dont get spread too thin
5
Stages with Activities
Finl Bus. Analy. Production Start Mkt Launch

Prod. Dvlmt Prod. Tests -- IH Prod. Tests --
Cust. Trial Production
Detailed Mkt Stdy Bus./Fin. Analysis
Prelim. Tech Assess. Prelim. Mkt Assess.
6
Which Ones Are Not Done Often?

• Test Market / Trial Sell -- done in 22.5 of
  projects
• Detailed Market Study / Marketing Research --
  25.4
• Precommercialization Business Analysis -- 34.5

7
Which Ones Are Not Done Well?

• Initial Screening
• Preliminary Market Assessment
• Detailed Market Study -- Given highest priority
  for improvement
• All the up-front activities need to be improved!
• Plus marketing plan development, too!

8
STAGE GATES MODEL
9
Stage Gates

• Prior to passage to next stage, criteria applied
• Early stages -- criteria are less specific
• e.g. High likelihood of profitability
• Later stages -- criteria more specific
• e.g. ROI above X, pretax
• At each stage must have criteria should
  have criteria
• Plan of action for next stage

10
NPD LESSONS

• LEARN FROM CUSTOMERS -- START WITH LEAD USERS
• SPEND THE EFFORT UP FRONT
• TALK WITH CUSTOMERS ABOUT THEIR SITUATIONS
• HAVE SPECIFIC SEGMENTS IN MIND WHEN PRODUCT IS
  DESIGNED
• DO A GOOD JOB OF SCREENING
• COST CONTAINMENT
• DESIGN FOR MANUFACTURING, MARKETING, AND SELLING

11
A NPD Process Checklist

• Is a formalized process in place?
• Is progression to the next stage dependent on
  passing a pre-set list of criteria?
• Are potential customers / users consulted early /
  often throughout?
• Is a multifunctional approach used?
• This is Coopers position. When does it work
  best? When wont it work?

12
Other situations

• Radical or discontinuous innovation
• Much more fluid situation
• Difficult to manage as a project with deadlines,
  defined objectives, and performance metrics
• Vulnerable to tyranny of served market
• Keep it autonomous use appropriate metrics

13
Other situations

• Startup
• Limited resources
• Lots of uncertainty
• Iterative process shaping business strategy
  concurrently
• Role of first customer
• Marketing Business Development
• Whats a launch?

14
Differences between new venture NPD and
established company NPD

• Lack of formal screening provided by VCs
• Extended analysis and planning (good planning?)
• Importance and role of first customer
• Development customer
• Iterative process
• Marketing differences
• Business development
• Guerrilla marketing
• No real launch