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Innovation & New Product Development - Coggle Diagram
Innovation
&
New Product Development
Introduction
it attempts to synthesize the major issues involved in developing successful new products.
New Product Development (
NDP
)
New Product/Product Innovation was quite specific, largely confirmed physical product.
NPD process attempts to distill the essence of activities needed to complete a project; they are therefore general in their orientation and often criticised for not being applicable to individual context.
Models of Evolution
NPD process models attempt to distill the essence of activities needed to complete a project.
Models based on Activities
The Booz Allen Hamilton Model
Screening - evaluates if the previous steps were actually effective.
Feedback Loop - each output of each step will feed into the next step and might have to go back and alternate before creating the final product/market offering.
Cooper's Stage-Gate Model
It points out that models take numerous forms and have evolved in their level of prescription over the years
Stage 2 - visibility of business
Stage 4 - if testing doesn't work, we have to revert back to the previous steps.
Stage 5- when you launch a product, the company is not done with the product, but multiple updates should occur.
These comprise periods of development activity, followed by points of evaluation, where the decision to continue with the development or not.
Key Stages
Idea Generation
The output of this stage is the production of ideas that will fall within the mission of the organisation and what seeks to achieve with its NPD efforts.
It creates a pool of ideas which can be further evaluated for their sustainability as future products or services of a company
Internal Sources - are technical areas, such as
R&D
Design
Engineering
Sales
Marketing
External Sources
Distributors
Inventors
Universities
Competitors
Customers
Screening
It is an initial assessment of the extent of demand for the ideas generated and of the capability of the company.
Criteria:
Market Demand
Production by Existing Plant
Estimate Payback Period
The output of this stage is typically a bank of ideas which are suitable for further development.
Concept Development and Evaluation
The initial screening of ideas allows the development team to:
Create more clearly specified concepts.
Testing them for fit with company capability and customer expectations.
Phase 1
The idea is more fully elaborated, to include drafting of product or service features, levels of specification, materials, design...
It allows assessment of market fit, done through direct customer research.
The development team needs to assess which configurations are most compatible with current production plant, which require plant acquisition and which require new suppliers.
Phase 2
It is a more careful presentation of the concept to potential customers occurs, allowing assessment of market fit, done through direct customer research.
Business Analysis
Estimation of:
Potential Total Market
Market Share within Specific Time Span
Evaluation of Competing Products
Likely Price Bracket
Break-Even Volume
Identification of Early Adopters and Specific Market Segments.
Specification of Technical Aspects:
Production Methods and Implications
Supplier Identification and Management further R&D Required.
Investment in PPE
Justification of the project's fit with corporate strategy.
Product Development and Testing
In this stage the physical product is known as a
prototype
The prototype will be tested for its level of functional performance. It has taken a theoretical form only.
Only when the prototype is developed, can the adjustments to the design or to manufacturing specifications be drafted and implemented.
Services will be tested using beta-testing. Where potential customers have the opportunity to assess their reaction to the product in its real, rather than in its depicted form.
Test Marketing
It consits of small-scale tests with customers.
The total product appeal is evaluated among the mix of activities comprising the market launch:
Salesmanship Advertising
Sales Promotion
Distribution Incentives and Public Relations
Developers must decide whether the cost of test marketing can be justified by the additional information that will be gathered.
The delay caused by a test market to the 'real' launch of the new product to market may benefit competitors.
Test-Market simulations use basic models of consumer buying as inputs which are used to predict adoption of new product. Elements such as:
Consumer Awareness
Trial and Repeat Purchase
Collect via limited surveys or store data.
Commercialisation or Launch
It is the last stage of the NPD process, which comprises of decisions, such as when to launch the product, and where to launch it, how and to whom to launch and is it very costly.
Launch Strategy includes advertising and necessary trade promotions, and the production of materials both for the launch and for the pre-sale into distribution pipeline.
The decisions are based on information collected through the development process and will be moderate by the resources available.
Sales force and services personnel training may also need to be planned pre-launch to sell and deliver the new product/service effectively.
A Critique of the NPD Process Model
The view that no 2 firm will seek to develop products in the same way using the sample steps calls the validity of NPD process models into questions
The sequence and shape of any step-by-step of new product product being developed and its relationship with the firm's current activities.
In real situations there is no clear beginning, middle and end to NPD process,
Factors Affecting Success and Failure of New Product Development
Strategic Level Success Factors
Innovation Strategy
To be successful, theory advocates that and should be derived from the corporate strategy of the company, that sets clearly defined objectives for tis NPD endeavors.
Research shows that the best performing companies define:
The strategic arena for NPD.
NPD goals.
a long-term view of NPD
The resources to strategically allocate to portfolios of NPD project.
Technology and Marketing
Literature reflects a fusion between technology-led and market-led innovations at the strategic level.
Product Differentiation
Success-failure studies refer to new product strategies pursuing differential advantage, through
Technical Superiority
Product Quality
Product Uniqueness and Novelty
Product Attractiveness
Performance to Cost Ratio
Synergy
The relationship between the NPD and existing activities, high levels of which are seen to be less risky, because a company will have more experiences and expertise.
Risk Acceptance
Successful new product strategies account for the creation of an internal orientation or climate which accepts risk.
Top Management Influence
Top Management plays a crucial role in setting the climate for innovation by signaling the nature of the corporate innovation culture.
In some cases, it is necessary for the firm to change its philosophy on NPD, in turn causing a change in the whole culture.
Operational Level Success Factors
NPD Process Activities: Market Research
Although market research is important is can be found redundant if the customers' technical knowledge is inferior to that of the developer.
Marketing and technical activities were ranked as more important to new product projects where there was a high degree of novelty.
Information Management
Uncertainties
The optimal technological solution to a particular problem.
Which of the technological solutions will be adopted by the market.
As the ND process proceeds, new kinds of uncertainties arise (
manufacturing, delivery and specifics of the marketing mix
)
Different Types of Uncertainties
Customer -Need Uncertainty
Market-Based Uncertainty
Technological Uncertainty
Competitive Uncertainty
Resource-Based Uncertainty
Product Strategy Uncertainty
Accommodation of Third Parties and Networkd
Greater supplier, involvement, to benefit from the advantages of supplier innovation and just-in-time policies.
Inter-Relationship in Process, People and Management of NDP
Need for Interdisciplinary Input
It is important that the NPD process adopted ensures that they work well and effectively together.
There is also the need for suppliers, where changes to supply may be required or advatageous.
To combine technical and marketing expertise, a number of company functions have to be involved:
R&D
Manufacturing
Engineering
Marketing
Sales
Need to Develop Competitive Advantage
Technical and Market Information have to be both accurate and timely and must be constantly reworked in the light of changing circumstances to ensure that the product under development does have competitive advantage in the eyes of the customer.
People must deliver the appropriate expert information to inform the process.
Need for Speed in the Process
The NPD process has to be managed in such a way as it has to be quick enough to capitalize on the new product opportunity before competitors do.
To an extent as to which people work together enhances the speed of the process
Coordination and Integration
It is important for firms to have structures which allow for sharing information across disciplinary boundaries to ensure the development is fulfilling both sides of the success mandate: technological competence and market relevance.
Managing Network for NPD
The importance of inter-organisation collaboration and innovation networks is being highlighted.
Firms will have to be engaged in learning races, require the capacity to work with specialised companies in their networks so that all participants get better and faster.
Dynamic Capability
is the firm's processes that use resources to integrate, reconfigure, gain and release resources to match and even create market change, by which firms achieve new resources configurations.
consist of processes, such as alliancing. Product development by which managers combine varied skills and functional backgrounds through interfirm collaboration.
Conclusion
NPD researchers come from general management, organisation behaviour, economics, technology, operations, design, engineering and marketing management.
