Today

1
Todays Topic

• RD
• Market-focused
• Product Development

2
Course Schedule

• The Marketing Function (Lenovo)
• Sales Sales Channels (GolfLogix)
• Internet-based Marketing (HubSpot)
• RD Product Development (Guidant)
• Operations (Crocs)
• Product Launch (Emotiv)
• Final Exam on Product Launch (Invisalign)

3
Todays Agenda

• Market-focused product development
• More on product decisions (resources, objectives,
  positives-and-negatives)
• Next weeks case assignment Operations (Crocs)

4
Learnings RD

• Characteristics of market-focused new product
  development processes
• Process dimensions What? How? How well?
  (objectives, structure/discipline, execution
  quality)
• New product development best practices

5
Homework Reading

• Guidant Cardiac Rhythm
• Management Business (A)

6
Guidant CRMB in 1997

• Guidant spun-off from Eli Lilly in 1994
• Guidant is a medical device company
• CRMB is a division of Guidant
• CRMB was profitable in 1996 (see Exh. 1A, income
  statement)
• Two product lines
• - pacemakers (brady - for slow heart beat)
• - defibrillators (tachy - for fast heart beat)

7
Guidant case.contd

• CRMB is the market share leader (1) in tachy
• (hint identify the key factors in their
  success)
• CRMB is a follower (4) in brady
• Significantly revised their tachy new product
  development processes in the early/mid 90s
• Decision on new RD initiatives (additional
  investment in brady or atrial fibrillation or
  congestive heart failure?)

8
Homework Assignment

• List the dozen or more changes Guidant/CRMB made
  to its tachy product development process which
  three do you think had the greatest impact, and
  why?
• Does Guidant/CRMB have the financial resources to
  pursue new initiatives?
• What objectives (decision criteria) should CRMB
  use in making the decision on whether to invest
  more in its brady business?
• What are the positives-and-negatives of CRMB
  devoting additional resources to the brady
  business in order to improve its brady market
  position and financial performance?
• (identify at least five of each)

9
Effective Product Design and Development

• What were the product development process changes
  made by Guidant CRMB?
• Which 3 changes, in your opinion, had the
  greatest impact?

10
Dimensions of Process Change

• What? --------- objectives and
• philosophy
• How? ---------- structure and
• discipline
• How well? ---- excellent execution

11
Getting Products to Marketfrom concept to
product launch (various names/labels for
this activity)

• RD/Engineering (a misnomer)
• New product development (NPD)
• Product realization
• Product innovation
• Product commercialization
• Product development management
• etc

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Whats a New Product?
New to the company
New Product Line
Completely New
Line Extensions
Core Product Revisions
Repositionings
Product Enhancements
New to the world
13
Many new products fail

• 35 percent of all new IT products now fail
  to achieve minimum acceptable market share or
  financial return --and the failure rate is
  rising.
• VAR Business, November 1999

14
New Product Failure Rates
For every 4 projects that enter development,
only 1 makes it to the market. At launch, at
least 1 of 3 products fail despite research and
planning. An estimated 46 of all resources
allocated to product development and
commercialization by U.S. firms is spent on
products that are cancelled or fail to yield an
adequate financial return.              Source
Winning at New Products, Dr. R.G. Cooper, 2001
15
What are some reasons that a new product might
fail ?(i.e., fail to meet the market and
financial objectives set for it)
16
Some Reasons for Product Failures

• Mismatched to market needs
• Little/no competitive differentiation
• Late to market
• Too costly (price and/or COGS)
• Poor quality
• Inability to deliver to customers
• Poor service/support
• Ineffective sales/channels
• Unrealizable objectives
• Poor execution/teamwork

17
Product Development ProcessOverall Structure

• Linear (handoffs)
• Parallel/concurrent (multifunction involvement at
  all/most stages)

18
Core Product Team and Roles

• Marketing - leader, product definition, project
  management, marketing program, sales training,
  forecasts, financials
• RD - product development (milestones and dates),
  tech support for marketing/sales, transfer to
  manufacturing, support for trials/betas, product
  fixes/revisions
• Operations - manufacturing engineering,
  manufacturing (ramp), product costs and quality,
  logistics and service plan

19
Other Team MembersDepends on the Product, Market
and Company Practices

• Sales? Friendly customers?
• Finance?
• Information technology/MIS?
• Field operations (installation and service)?
• Public Relations?
• Partner companies (esp. manufacturing and/or
  sales and service)?

20
Product Development ProcessCommon Elements

• Stages/phases with gates
• Customer involvement and/or input
• Concept-through-lifecycle tenure
• Goals/measurements/rewards focused on overall
  success

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Example of NPD Stages Gates
                                                  
                                              
22
Product Development ProcessSome Best Practices

• design-to-market (customers/needs)
• design-to-cost (COGS)
• concurrent engineering
• requirements freeze
• time-driven milestones
• time-to-market or time-to-volume
• fast iteration
• cross-team communication
• team goal compensation

23
Example Traditional Milestone Planning
Features and Performance
Ready- to- Ship (time)
Team Resources
Cost and Quality
24
Why might it be important to get a product to
market sooner rather than later?
25
So maybe..Time-driven Milestones ?
Features and Performance
Ready- to- Ship (time)
Team Resources
Cost and Quality
26
Information Sources

• Product Development and Mgmt Assoc (PDMA)
  www.pdma.org
• Product Development Solutions www.npd-solutions.co
  m/bok
• New Product Dynamics www.newproductdynamics.com
• Guidant case a great example of best practices

27
Homework Assignment

• List the dozen or more changes Guidant/CRMB made
  to its tachy product development process which
  three do you think had the greatest impact, and
  why?
• Does Guidant/CRMB have the financial resources to
  pursue new initiatives?
• What objectives (decision criteria) should CRMB
  use in making the decision on whether to invest
  more in its brady business?
• What are the positives-and-negatives of CRMB
  devoting additional resources to the brady
  business in order to improve its brady market
  position and financial performance?
• (identify at least five of each)

28
More Brady?

• Market
• Technology
• Competitive
• Financial

29
Topic for Next Class

• Operations
• (Manufacturing and Logistics)
• Making and delivering products,
• with consideration of
• time-to-market, costs, responsiveness,
  outsourcing ----
• and how these things impact
• RD and Marketing

30
Readings for Next Class

• Can Marketing and Manufacturing Coexist? -- read
  to understand the 8 issues listed in the
  articles Exhibit
• Crocs Revolutionizing an Industrys Supply
  Chain-- an example of the importance of
  Operations in the success of a business

31
Assignment for Next Class

• In what ways can technical people (RD, technical
  sales, etc) assist with the resolution and/or
  minimization of the marketing-manufacturing
  issues cited in the first reading? Provide one
  thought/example for each of the 8 issues in the
  exhibit in the Coexist reading.
• What are Crocs competitive advantages? Which of
  these are related to its operations function?
• To what extent do each of these growth
  strategies leverage Crocs competitive
  advantages (a) internal manufacturing of raw
  materials used in compounding, (b) internal
  development of new products, (c) acquiring
  companies to get new products, and (d) acquiring
  companies to get new customers?