Chapter 1The New Product

Process(New Product Management)

The New Product Process

What is New Product Process?

• The next product in a company’s product line a design team goes through

product development process steps.

• A product that adopts or replaces an existing product.

• An old product package in a different way.

STRATEGIC PLANNING

-Is an organizations process of defining its strategy, or direction, and

making decisions on allocating its resources to pursue this strategy.

A successful Strategic Planning process should:

• Describe the organization's mission, vision and fundamental values

• Target potential business arenas and explore each market for emerging

threats and opportunities

• Understand the current and future priorities of targeted customer

segments

• Analyze the company's strengths and weaknesses relative to competitors

and determine which elements of the value chain the company should

make versus buy

• Identify and evaluate alternative strategies

• Develop an advantageous business model that will profitably differentiate

the company from its competitors

• Define stakeholder expectations and establish clear and compelling

objectives for the business

• Prepare programs, policies, and plans to implement the strategy

• Establish supportive organizational structures, decision processes,

information and control systems, and hiring and training systems

• Allocate resources to develop critical capabilities

• Plan for and respond to contingencies or environmental changes

• Monitor performance

Three main streams of activity feed strategic planning.

1. Ongoing marketing

2. Ongoing corporate planning

3. Special opportunity analysis

They sort into four categories:

1. Underutilized resources

2. New resources

3. External mandate

4. Internal mandate

Concept Generation

-the act by which new concepts, or ideas are created. Also the definition of the

second phase of the overall product innovation process, during which the

concepts are created sometimes called idea generation or ideation.

Pretechnical Evaluation

-sometimes called screening. It is the stage when the ideas that came from the

conception generation activity are evaluated.

Technical Development

-This is the phase during which the item acquires finite form-a tangible good or a

specific sequence of resources and activities that will perform an intangible

service.

Commercialization

-Has described that the time or that decision where the firm decides to market a

product.

-should not mean the GO in a GO/NoGo decision.

-the commercialization phase, for some products, is life in a pressure cooker.

Launch

-The debut of a product into the market. The product launch signifies the point at

which consumers first have access to a new product.

The Process Should Meet the Condition of the 13 Key Concepts Given in Chapter 2

• When a process is failing to produce, we usually find that one or more

(often several) of the key concepts have been lost.

• Another of the 13 key concepts forces managers to be aware that they are

developing three things, not just one. Making the middle stream of activity

(evaluation) mandatory automatically forces the team to deal with the

three primary causes of new product failure: need, meeting need, and

marketing.

Why do new products fail?

Inadequate budgetLacked top

management supportDidn’t involve

customer And scores of

others

No need or want

Product didn’t meet

the need net

Not well markete

d

+ +Exceptions come with exogenous

factors: competition, government,

economyMoral: Control on accomplishment,

not action

They say

They mean

• The last of the 13 key concepts, called continuous new product process

development, means that we have to measure the productivity of the

process we are using.

• Measuring performance requires preset management guidelines, usually

called metrics, so now those who develop new processes must spell out

exactly what that process is to produce, when, how much, etc. No more of

this “developing the process on the run.” unless, of course an emergency

demands it.

• Stage gates- points where a stage of activity ends and process

Example

Before technical development begins full force, we like to have assurance from

the intended end user (and that person’s or firm’s network of advisors) that what

we intend to develop will indeed meet needs they have.

• The stage gate should not be a toll gate, where everyone stops while some

authority on high is appealed to, makes some ruling, and then allows work

to resume.

• The first stage in most processes is strategic planning—opportunity

identification and evaluation, combined with a statement how that

opportunity will be used.

• The end point is a strategy, and in this book is called a product innovation

charter.

• Some people have called stage gates info-gates. Some people called them

accomplishments, or popular today, deliverables

The Process should allow the Team and Its support group substantial degrees of

freedom

Strategic Planning StageProduct Innovation charter

Concept Generation StagePool of interesting concepts

Pretechnical Evaluation StageConcepts screens well and has definition

Technical Development StageFinancial assurance

Commercialization StageSuccess

• Empowerment can loosen up the stage gates, but there are many other

ways team can be hobbled. Remember that a new products team is a

horizontal form of management. Creating new products takes us across all

function, thus risking conflict with all of the chimney’s or silos--- the

functions, such as marketing and manufacturing. Each of the function (and

not just the big ones) has its own rules or method of operation, sometimes

call paradigms. Each is apt to be headed by a power player.

The New Product Process must be flexible to changing conditions

Change can be expected in what the customers wants, how competitors might

respond and the new technologies being applied in the product.

The New Product Process must deal with especially critical points in the

development

Moments of truth

The customer and organization come into contact with one another in a manner

that gives the customer to either change an impression about the firm.

The New Product Process should integrate the team with the rest of the firm

and the rest of the world

The New Product Process should permit a smooth launch

A successful new product launch takes research, planning and a skilled and

knowledgeable marketing team.

The New Product Process should

Organizational learning is an area of knowledge within organizational theory that

studies models and theories about the way an organization learns and adapts

Implication for Aspiring New Product Managers

• Be multifunctional – have experience in more than one function

• Be risk takers – willing to do whatever is necessary to bring a product to market

• Be general manager types – more interested in managing than doing

• Be a combination of optimist, realist; aggressor and team player, leader and

follower

• Have a strong creative bent to achieve better product characteristics and to

carve out new ways of doing things

• Be comfortable in environments where chaos and confusion seem to reign. Be

able to work with depressives, euphorics, and those with no emotion at all

8 STEP PROCESS PERFECTS NEW PRODUCT DEVELOPMENT

Every entrepreneur knows that productivity is one of the key ingredients for successful

product development. One of the two key processes in Robert’s Rules of Innovation is

the NEW PRODUCT DEVELOPMENT PROCESS. A formalized, NPD process – also

referred to and best practice: the Stage Gate® Process – is a must, from simple to

sophisticated.

The New Product Development process is often referred to as The Stage-Gate

innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive

research on reasons why products succeed and why they fail.

When teams collaborate in developing new innovations, having the following eight

ingredients mixed into your team’s new product developmental repertoire will ensure

that it’s overall marketability will happen relatively quick, and accurately – making

everyone productive across the board.

Step 1: Generating

Utilizing basic internal and external SWOT analyses, as well as current marketing

trends, one can distance themselves from the competition by generating ideologies

which take affordability, ROI, and widespread distribution costs into account.

Lean, mean and scalable are the key points to keep in mind. During the NPD process,

keep the system nimble and use flexible discretion over which activities are executed.

You may want to develop multiple versions of your road map scaled to suit different

types and risk levels of projects.

Step 2: Screening The Idea

Wichita, possessing more aviation industry than most other states, is seeing many new

innovations stop with Step 2 – screening.  Do you go/no go? Set specific criteria for

ideas that should be continued or dropped. Stick to the agreed upon criteria so poor

projects can be sent back to the idea-hopper early on.

Because product development costs are being cut in areas like Wichita,

“prescreening product ideas,” means taking your Top 3 competitors’ new innovations

into account, how much market share they’re chomping up, what benefits end

consumers could expect etc.  An interesting industry fact: Aviation industrialists will

often compare growth with metals markets; therefore, when Boeing is idle, never

assume that all airplanes are grounded, per se.

Step 3: Testing The Concept

As Gaurav Akrani has said, “Concept testing is done after idea screening.” And it is

important to note, it is different from test marketing.

Aside from patent research, design due diligence, and other legalities involved with new

product development; knowing where the marketing messages will work best is often

the biggest part of testing the concept.  Does the consumer understand, need, or want

the product or service?

Step 4: Business Analytics

During the New Product Development process, build a system of metrics to monitor

progress. Include input metrics, such as average time in each stage, as well as output

metrics that measure the value of launched products, percentage of new product sales

and other figures that provide valuable feedback. It is important for an organization to be

in agreement for these criteria and metrics.

Even if an idea doesn’t turn into product, keep it in the hopper because it can prove to

be a valuable asset for future products and a basis for learning and growth.

Step 5: Beta / Marketability Tests

Arranging private tests groups, launching beta versions, and then forming test panels

after the product or products have been tested will provide you with valuable information

allowing last minute improvements and tweaks. Not to mention helping to generate a

small amount of buzz. WordPress is becoming synonymous with beta testing, and it’s

effective; Thousands of programmers contribute code, millions test it, and finally even

more download the completed end-product.

Step 6: Technicalities + Product Development

Provided the technical aspects can be perfected without alterations to post-beta

products, heading towards a smooth step 7 is imminent. According to Akrani, in this

step, “The production department will make plans to produce the product. The

marketing department will make plans to distribute the product. The finance department

will provide the finance for introducing the new product”.

As an example; In manufacturing, the process before sending technical specs to

machinery involves printing MSDS sheets, a requirement for retaining an ISO

9001 certification (the organizational structure, procedures, processes and resources

needed to implement quality management.)

In internet jargon, honing the technicalities after beta testing involves final database

preparations, estimation of server resources, and planning automated logistics. Be sure

to have your technicalities in line when moving forward.

Step 7: Commercialize

At this stage, your new product developments have gone mainstream, consumers are

purchasing your good or service, and technical support is consistently monitoring

progress.  Keeping your distribution pipelines loaded with products is an integral part of

this process too, as one prefers not to give physical (or perpetual) shelf space to

competition. Refreshing advertisements during this stage will keep your product’s name

firmly supplanted into the minds of those in the contemplation stages of purchase.

Step 8: Post Launch Review and Perfect Pricing

Review the NPD process efficiency and look for continues improvements. Most new

products are introduced with introductory pricing, in which final prices are nailed down

after consumers have ‘gotten in’.  In this final stage, you’ll gauge overall value relevant

to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new

product profits.  You continuously differentiate consumer needs as your products age,

forecast profits and improve delivery process whether physical, or digital, products are

being perpetuated.

Remember: The Process Is Loose

The entire new product development process is an ever evolving testing platform where

errors will be made, designs will get trashed, and loss could be recorded. Having your

entire team working in tight synchronicity will ensure the successful launch of goods or

services, even if reinventing your own wheel. Productivity during product development

can be achieved if, and only if, goals are clearly defined along the way and each

process has contingencies clearly outlined on paper.

Referrence: Brands, Robert. (2013) Retrived on May 27, 2013  from

http://www.innovationexcellence.com/blog/2013/05/27/8-step-process-perfects-new-

product-development/

Top 10 Reasons Why New Products and Services

Fail

Why do fewer than 10%of all new products/services produce enough return on the

company’s investment to survive past the third year?

Here’s our Top 10 list of reasons new products and services fail to achieve performance

objectives:

1. Marketers don’t do a good job of assessing the marketing climate–many factors which

impact marketing success are poorly understood; others are ignored all together.

2. All too often marketer’s select a target group based on personal judgement (e.g., “let’s go

after the heavy users!”)

3. A messaging strategy which fails to ignite excitement about the new offering.

4. Some marketers actually design a product or service to maximize “appeal,” a sure-fire

way to guarantee failure.

5. Marketers go with a pricing strategy which is not based on serious research or sound

theory.

6. The advertising campaign generates an insufficient level of new product/new service

awareness.

7. The new brand takes more share away from the parent brand than it does from

competitors.

8. Over-optimism about the marketing plan leads to a forecast that cannot be sustained in

the real world.

9. The marketing plan was not well implemented in the real-world. The gap between what

was planned and what was achieved is substantial.

10. Marketers throw in the towel too soon. They pull the new product or service believing it

and its marketing plan cannot be revived, when, in fact, there is potential for resurection.

Referrence: http://www.copernicusmarketing.com/our-thinking/blog/2011/08/17/top-10-

reasons-why-new-products-and-services-fail/

Product Fails in the Market

Business Case is Flawed – This is where we would capture things like a

product strategy that is not profitable, for example, your model

was dependent on exponential growth – so even though you had consistently

growing market share, it wasn’t enough for the product to be considered “a

success” by you.

Picked the Wrong Market – Maybe this market is about to go away, like buggy

whips or audio cassettes.  Maybe the competitors in this market are just too

good.  Maybe entering this market is too divergent from your corporate strategy

and dilutes focus and investment in your company’s other products.  Another

example would be if your team does not have the skills and resources needed

to win in a particular market.

Takes Too Long to Enter Market  – Whatever it is you’re doing to enter the

market, it took you too long.  Competitors have “out-gunned” you, your

customer’s needs have changed, etc.  This is to capture causes where even if

everything else was good, you simply didn’t move quickly enough.  At first

blush, I expect organizational problems (lack of alignment,  bureaucracy,

insufficient resources) will all land here.

Doesn’t Solve the Right Problems – This is where most product managers

focus most of their time – making sure we’re actually solving the right problems

(the ones customers are willing to pay to solve).  Problems of design – where

weintended to solve the right problem , but the proposed solution doesn’t cut it –

would not be in this branch – they would be in the “not good enough” branch.

Positioning & Sales Approach is Wrong  – For the first iteration, this is my

catch-all for marketing and sales.  All of the problems that are “your potential

customers don’t think of your product as a solution to their problems (even

though it is).”  Also the problems of “your potential customers decided not to

purchase (when they should have)” and “your potential customers have never

heard of your product.”  This is definitely an area where you can contribute

more than I can to the framework.  How would you (product marketing

managers, I’m looking at you) frame this?

Product is Not Good Enough – Execution is key here.  Not solving problems

completely (although that might move to the “right problems” branch) is an

example.  Bad design is an example – both bad user-experience and bad

architecture.  Poor execution also lands here – broken windows, sloppy

implementations, poor quality.  For this branch to work, “product” is not

just theproduct that your development team builds, but also your customer

relationships, distribution, services, etc.

Referrence: http://tynerblain.com/blog/2012/02/08/why-do-products-fail/

New Product Development Process

The New Product Development (NPD) Process, also known as Product Realization

Process (PRP), is a company's formal process for controlling and monitoring the flow of

ideas into successful product launches.  In leading organizations, this is a structured

process with the following typical objectives:

Encourage and facilitate the review of a large number of new ideas or concepts

Through rigorous analysis and decision making at specific review points, prioritize these

to a few appropriately resourced programs with the highest likelihood of market

success.

Minimize the number of products that are cancelled in the later (most expensive)

development stages or are released with unsuccessful results

Accelerate time to market and reduce break-even times for the product program

Continuous improvement of the development process The process can be visualized as

a funnel with a large number of new product ideas entering the concept stage,

narrowing to a fewer number of fully resourced product programs in subsequent stages.

Separating each stage is a gate or phase review where a decision is made to kill the

product, enter into the next stage or redirect back to a previous stage for additional

work.   A typical development process is show below:

The decision making team at the phase/stage reviews are senior executives who have

the authority for approving and staffing new programs.  Also called the Program Review

Board or Gatekeepers, this team normally consists of the lead executive in the

organization and leaders of key functional areas, including engineering, product

management and manufacturing.   Through these decisions, the Product Review Board

manages the development pipeline, authorizes new programs, sets and communicates

priorities, and allocates the necessary resources.  

Normally a champion with a new idea will schedule the initial (concept) review

with the Product Review Board. He or she will informally solicit support from others in

the organization as needed to prepare for the review.  The focus of the concept stage is

to analyze the market opportunity for the product, and to develop a preliminary financial

analysis and risk assessment.  The concept review presentation will normally include a

recommended list of cross-functional team members required to take the program

through the next stage, and an hours estimate.  The proposed team members should be

discussed with the appropriate functional managers prior to the review.  If approved at

the concept review, the next stage of the product program will be staffed and scheduled

based on the availability of these core project team members. 

Development Stages and Stage Reviews

The visual illustration above shows an example product development process with five

distinct stages.    To better understand the activities of each stage, and the focus of the

associated stage review, click on the following:

Concept Stage

The purpose of the concept stage is to rapidly evaluate a new product opportunity.  

This activity will be performed by a product champion with support from others in the

organization as needed.  The deliverable in this stage is the product concept proposal

which is presented to the Product Review Board at the concept review.

If approved at the concept review, the product program will be staffed and scheduled

based on the availability of the project core team members.  The project will then enter

the definition/business case stage. 

Development Stage

The objective of the development, or implementation, stage is to develop the product

based on the specifications and development plan approved at the Business Plan

review.  This stage encompasses the major design/development steps including

software and hardware development, tooling, packaging design and prototype building.  

Testing Stage

The objective of this stage is to complete product testing and analyze the readiness for

volume production and the market launch.  The steps in this stage include pilot

manufacturing, testing and manufacturing process validation.

Deployment (Launch) Stage

The final stage of the New Product Development Process, the Deployment or Launch

stage, includes the remaining steps required for full general release of the product.  

This stage includes ramp up to volume production, marketing and launch plan

implementation, distribution and support.  

The post launch review should take place at least three to six months following the initial

release of the product. In the post launch review, the overall product performance

should be accessed as well as the level of customer acceptance/satisfaction with the

product.   Significant product issues should be covered as well as potential product

enhancements.   Lastly, there should be a review of the process in general, and any

recommendations for corrective actions.

Referrence: Kapp, Michael. (2009) from http://www.productstrategy.net/product-

development-process/