Why Study New Products?
- It is big business- billions of $ annually on technical development alone.
- It accelerates innovation and business growth
The New Products Process is All About Teams
- The new product team is a cross functional team from marketing, R&D, engineering, manufacturing, production, design and other areas.
- The success of the team depend on how well the members interact. Not just an empowered team, but also effective team leadership and focus on organizational learning and knowledge transfer.
- Avoid narrow functional viewpoimts and stereotypes
What is a New Product?
- New-to-the world (really new) products: Inventions that create a whole new market (10% of new products).
- New-to-the-firm products: Products that take a firm into a category new to it (20%).
- Additions to existing product lines: line extensions and flankers that flesh out the product line in current markets (26%).
- Improvemnets and revisions to existing products: Current products made better (26%).
- Repositionings: Products that are retargeted for a new use or application. It includes retargeting to new users or new target markets (7%).
- Cost reductions: New products that provide the customer similar performnace but at a lower cost (11%).
The Strategic Elements of Product Development
• The New Products Process: A 5 phased process that takes the new product idea through concept development, evaluation, development, launch, and post-launch.
• The Product Innovation Charter : A strategy for new products that ensures that the team develops products in line with firm objectives and marketplace opportunities. Without the strategic direction provided by the Product Innovation Charter, the firm’s attempts at product development will be unfocused. The PIC helps the team identify opportunities and focus efforts. Typically, it is a document prepared by senior management designed to provide guidance to the strategic business units (SBUs) on the role of innovation.
According to an independent study:
– The more detailed and specific the PIC, the higher are the firm’s innovation rates.
– The more specific the corporate mission and senior management direction is spelled out in the PIC, the better is the performance of the firm’s new products.
The Contents of a PIC
• The Product Portfolio: A way to assess which new products would be the best ones to add to the existing line, given financial and strategic objectives. Portfolio considerations help the firm decide whether a new product opportunity adds financially and strategically to the current line and avoids spreading scarce financial and human resources too thin.
• Strategic goals (defending current base of products versus extending the base).
• Project types (fundamental research, process improvements, or maintenance projects).
• Short-term versus long-term projects.
• High-risk versus low-risk projects.
• Market familiarity (existing markets, extensions of current ones, or totally new ones).
• Technology familiarity (existing platforms, extensions of current ones, or totally new ones).
• Ease of development.
• Geographical markets (North America, Europe, Asia).