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NPD Critical Analysis 2500 words (Critical analysis (Process isn't…
NPD Critical Analysis
2500 words
Theory & concept of NPD
Concept
Processes - Idea to Launch
Requires cross-functional cooperation, distinguishing sales & marketing. "Sales - R&D cooperation has a significant, positive impact on new product success during hte stages of oncept and product development" (Ernst, 2010:88)
Cooper & Kleinschmidt found that out of 9 factors that drive NPD a high quality product process is most important followed by strategy (Kahn 2012, p.183)
Conflicts with more contemporary studies that strategy, research and commercialisation best practices are more important (Kahn 2012, p.191)
Stage gate "is a value creating business process & risk model designed to quicklky and profitably transform an organisation's best new ideas into winning new products (Edgett, 2015 p1)
research in the 1990s identified that most new idea oncepts fail to become commercially successfully without a structured process (Owens et al 2000, p1)
the NPD process in practice is a truncated one in comparison to the process models (Cooper & Kleinschmidt, 1986: 74)
Resource commitment incl Culture & Leadership
Some companies still follow a functional silo resource allocation approach to projects (Edgett 2015, p3)
Adequate spending & resources (Owens et al 2000, p5)
Strategies - Product Innovation & Technology Strategy
POrtfolio Mgmt.
Ties decisions to company strategy
eXample of pipeline management for pharma companies????
Management of Portfolios UK - are we doing the right things and are we doing them well.
Across balance of investments, risk vs return is a major decision factor as to whether to proceed (Owens et al 2000, p1)
No certainity but absorbs financial & human resources (Owens et al 2000, p2)
balance tactical & strategic decisions
do they mention external environment?
Mgrs are successful firms are more likely to clearly communicate overall strategic direction, implement aligned NPD (Rogers et al, 2004: 47)
Theorists
Cooper & Kleinschmidt
Identified three cornerstones for NPD success - Process, Strategy & Resources (Owens et al 2000, p4)
Writing in 1986 well before the dot com boom
Application
SMEs
More commonly overlook marketing related activities - see Huang et al
Limited research into impact strategy / resources Huang et al 28
Utilisation of market knowledge, industry experience, organisational strategic objectives and intuitive judgement capability were found as important factors in making NPD decisions (Yahaya & Abu-Bakar, 2007: 1137)
Large firms
Glitches occur because product development process is serial & omit face to face. More likely to be a challenge in larger organisations (Hoopes, 2001: 387)
Can act as a catalyst for change - build energy & motivation (Takeuchi & Nonaka, 1986: 137)
NPD provides a form of competition against informal competitive - differentiate from competitors, particularly in emerging markets (Mcann & Bahl, 2017: 1519)
Large companies can only grow in so many ways - growth challenge. Refer Ansoff Matrix. M&A not all it cracked up to be either. R&D one way to to it.
Role in commercialisation
What is commercialisation?
essay defines commercialisation in its broadest sense - all of the activities a business undertakes to make $$$. Process by which new products / services are introduced to market
Investopedia identifies that
commercialisation is like a funnel
Barczak & Kahn identify commercialisation as only one dimension of seven, - related to the marketing, launch and post launch management of new products that stimulate customer adoption and market diffusion (294)
Barczak & Kahn found earlier poor practices in this dimension in comparison to the other six considered - strategy, research, process, project climinate, company culture & metrics / performance mgmt.
noting that commercialisation is also identified as a specific best practice within Cooper & Kleins best practices (REF?)
Success rate of new products is typically low (stats) - process designed to drive commercial success. Refer to Proctor & Gamble quote
Between 33% & 60% of all new products that reach the market fail to generate an economic return in North Amercia (Yahaya & Abu-Bakar, 2007: 1123)
Consider that there are different types of innovation & a one size fits all approach isn't right (Paanakul et al, 2012: 735)
New product platforms, derivations of existing product platforms, incremental improvements, fundamentally new products + integration of services (Rogers et al, 2004: 45)
Gravitate to incremental inovation - research identified that most ideas were market derived end of the scale (average score of 3.66 out of 10) fr xxx companies surveyed (Cooper & Kleinschmidt, 1986: 76)
Why important?
Reinforced by key bodies
such as
Business Queensland
right pricing
right market
sufficient differentiation
right features
Enables a product portfolio approach for commercialisation
Without a stage gate process in place, organisations may not consider all of the aspects of product development i.e. profitability and/or customers
Reduce time to market (Rogers et al, 2004: 43)
Critical analysis
Innovation no longer solely happens within the boundaries of the firm (Rubera et al, 2016: 166)
New forms of organisation
REfer StratMan readings
Process isn't always a good thing
Overlapping project stages (Takeuchi & Nonaka, 1986: 140)
Importance of process flexibility - processes can be continually adjusted to meet organisational needs & desires (Kahn et al 2012, p182)
Information is not power. McCardle's 1985 research identified even though NPD PMs behave optimally they may still progress unprofitable projects and reject profitable ones (Kettunen et al 2015, p893)
Linear 'relay race' conflict with goals of maximum speed & flexibility (Takeuchi & Nonaka, 1986: 137)
Edgett identifies that process cannot be successful in isolation of other critical innovation capabilities (Edgett 2015, p5)
"The fundamental problem with the traditional approach to NPD is that information flows from department to department and forms a problematic 'over the wall' style development (Owens et al 2000, p7-8)
Radical innovation
Autonomous teams = 8% of variance for project performance
Radical innovation needs different processes and reward systems (Paanakul et al, 2012: 745)
Autonomous teams better for radical innovation rather than processes (Paanakul et al, 2012: 734)
Traditional Business Case processes prioritise incremental innovation when prioritising on a effort versus cost matrix. (reference lecture notes)
Following stage gate process isn't a competitive advantage of its itself
Loch contends that company survival depends on how individual companies respond to their environments - there isn't a singular set of best practices (Kahn et al 2012, p182
Need to understand external forces, the market itself and what competitors are doing - whether / when to launch or to abandon development (Kettunen et al 2015, p892)
in competitive markets, it may be advantageous to launch or abandon a product earlier even if have shortcomings (Kettunen et al 2015, p901)
Advantageous for NPD Managers to empowered to switch between certain & incremental innovations to risky & ground breaking ones (Kettunen et al 2015, p901).
More than 80% of companies in North America use some type of a Stage-Gate innovation model (Edgett 2015, p1)