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Story telling!!!! Story

telling

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IMPLEMENTATION – INNOVATIVE PROJECT

Dr. Nguyen Thi Hanh

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 250 Part Three Implementing Technological Innovation Strategy

design/computer-aided manufacturing. Using the available tools can greatly expedite

the new product development process and maximize the product’s fit with customer
requirements.
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Stage-Gate Processes
As discussed in a previous section, escalating commitment can lead managers to
go/kill support projects long after their expected value has turned negative, and the cost of
decision
pushing bad projects forward can be very high. To help avoid this, many managers
points
Gates established and researchers suggest implementing tough go/kill decision points in the prod-
in the develop- uct development process. The most widely known development model incorporating
ment process such go/kill points is the stage-gate process developed by Robert G. Cooper.25 The
where managers stage-gate process provides a blueprint for moving projects through different stages of
must evaluate development. Figure 11.2 shows a typical stage-gate process.
whether or not to
kill the project At each stage, a cross-functional team of people (led by a project team leader)
or allow it to undertakes parallel activities designed to drive down the risk of a development proj-
proceed. ect. At each stage of the process, the team is required to gather vital technical, market,

FIGURE 11.2
Typical Stage-Gate Process, from Idea to Launch

DISCOVERY: Idea Generation

• Process of Gate 1: Idea Screen

STAGE 1: Scoping

implementation
Brief, preliminary scoping of the project, utilizing easy-to-obtain information that enables
narrowing the list of potential projects.

Gate 2: Does idea justify more research?

STAGE 2: Build the Business Case

More detailed research (both market and technical) to build business case: product definition,
project justification, and plan for project.

Gate 3: Is the business case sound?

STAGE 3: Development
Detailed product design, development, and testing. Plans are also developed for production and launch.

Gate 4: Should project be moved to external testing?

STAGE 4: Testing & Validation

Testing of proposed new product and its production and marketing. May include production trials and trial selling.

Gate 5: Is product ready for commercial launch?

STAGE 5: Launch
Full production, marketing and selling commences.

POST-LAUNCH REVIEW
How did we do versus projects? What did we learn?

Source: R.G. Cooper, “Stage-Gate Idea to Launch System,” Wiley International Encyclopedia of Marketing: Product Innovation & Management 5, B.L. Bayus (ed.),
(West Sussex UK: Wiley, 2011).
Dr. Nguyen Thi Hanh

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sch39067_ch11_235-[Link] 250 12/16/15 12:02 PM

Lean innovation process

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NEW PRODUCT DEVELOPMENT

Dr. Nguyen Thi Hanh

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OVERVIEW
• NPD as part of innovation
• NPD for growth
• What is a new product?
• Classification of new products
• The fuzzy front end
• Different models of NPD

Dr. Nguyen Thi Hanh

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Innovation and NPD

• Developing new products is a part of innovation
• It is part of the end-game of innovation
• Where innovation becomes real and tangible
• NPD requires significant market intelligence
• Consumer research and competitor research
• It needs careful planning
• Consider new versions of video games

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New products critical for Shimano

Shimano has over 90 years of
success of developing new products.

Shimano works closely with its

consumers to develop product ideas
they want to see and use. Source: Ekaterina_Minaeva/Shutterstock

Can consumers alone provide all

your new product ideas?

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Main inputs into the decision-making process

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Ansoff matrix

Source: Adapted from Ansoff, I. (1965) Corporate Strategy, Penguin, Harmondsworth; (1968) Toward a Strategy of the Theory of the Firm, McGraw-Hill, New York.

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New product development strategies for

technology intensive firms
Short-term Long-term
How do we optimise our Which product strategies
Portfolio to achieve our should we prioritise to
performance targets achieve growth targets?

Portfolio Innovation
optimisation planning

Strategy

Execution
Process & project
Ideas & concept
management
development
How do we optimise our
Portfolio to achieve our
Should this idea become
performance targets
a project?

Source: Johnson, S.C. and Jones, C. (1957) How to organise for new products, Harvard Business Review, May–June, vol. 35, 49–62.

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A product is multi-dimensional

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Different examples of ‘newness’

Source: Johne, F.A. and Snelson, P.A. (1988) The role of marketing specialists in product development, Proceedings of the 21st Annual Conference of the Marketing Education Group,
Huddersfield, vol. 3, 176–91.

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A new product has different interpretations of

new

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Tauber’s growth matrix

Source: Tauber, E.M. (1981) Brand franchise extension: new product benefits from existing brand names, Business Horizons, vol. 24, no. 2, 36–41, with permission from Elsevier.

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Commonly presented linear NPD model

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Cash flows and new product development

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Customer roles in NPD

Source: Adapted from Nambisan, S. (2002) Designing virtual customer environments for new product development: toward a theory, Academy of Management Review, Vol. 27, No. 3, 395.

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Models of NPD
1. Departmental stage models
2. Activity stage models
3. Cross functional models & concurrent engineering
4. Decision-stage models
5. Conversion process models
6. Response models
7. Network modes
8. Outsourced models

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Over-the-wall model

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How not to design a swing

Source: Lorenz, C. (1990) The Design Dimension, Blackwell Publishing Ltd, Oxford with permission from John Wiley & Sons Ltd, permission conveyed through Copyright Clearance
Center, Inc.

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A network model of NPD

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Key points
• NPD offers organic growth for firms
• Wide range of NPD strategies
• Consider the many versions of Assassin’s Creed?
• A new product has many dimensions that can be
changed
• Different models of NPD
• Network models
• Outsourcing NPD

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MARKET RESEARCH AND ITS

INFLUENCE ON NEW PRODUCT DEVELOPMENT

Dr. Nguyen Thi Hanh

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Overview
‒What role does market research have in NPD?
‒Market research for testing new products
‒What are the limitations of market research?
‒Market research and discontinuous new products
‒Should you ignore your customers?
‒How should the use of market research in NPD be
managed?

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Market research can play a number of

key roles, including:

§ Identify new markets and products

§ Predicting success patterns & obtaining customer reviews
§ Identifying barriers to success
§ Improvements to existing products
§ Developing new features
§ Reducing risk for the organisation

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New product concept and prototype testing

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So. . . How important is market research to NPD?

Running a company on market research is like

driving looking in the rear view mirror.

(Anita Roddick, Former C.E.O Body Shop)

Why?

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The tripartite product concept

Source: Adapted from Saren, M.A.J. and Tzokas, N. (1994) Proceedings of the Annual Conference of the European Marketing Academy, Maastricht.

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Customers don’t know what is possible

• Clayton Christensen (1997) investigated why well-run
companies later failed for example, Digital, IBM, Apple and
Xerox.

• ‘Good management’ was the most powerful reason they failed to

remain market leaders (i.e., they continued to satisfy existing
customers; ignored new customers).

• Maybe the devotion to focus groups and market research has

gone too far?

• Research often viewed as a decision-making insurance policy.

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If the major role of market research is to uncover

needs (to develop & improve products), how
effective is it at doing so?

Three types of customer needs:

• Basic Needs
• Articulated Needs
• Exciting Needs
(King, 1985)

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Gaining new customers of the future

Source: Hamel, S. and Prahalad, C.K. (1994) Competing for the future, Harvard Business Review, vol. 72, no. 4, 122–8.

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Market research may lead to the

rejection of good ideas
• Market research results frequently produce negative reactions to
discontinuous new products.

• For example: the fax machine, the VCR and Dyson’s bagless
vacuum cleaner.

• Yet companies continue to seek the views of consumers on their

new product ideas; the debate is long-standing and controversial.

• To what extent is market research justified and should companies

sometimes ignore their customers?

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Technology-intensive industries may

require a different approach
• Morone’s (1993) study of successful US product innovations revealed
that discontinuous product innovations (e.g. Fax, Photocopier, TV) are
necessary (for continued long-term success), but research won’t
uncover these!

• In technology-intensive industries success is achieved through the

creation of entirely new products and businesses.

• Incremental improvements are necessary for maintaining leadership.

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Main reasons for rejection

1. Lack of imagination and foresight
2. Installed base effect:
– the massive inertial effect of an existing technology or product that
tends to preclude or severely slow the adoption of a superseding
technology or product.
– Example: Qwerty – familiar, available, adjustment, software
adjustments etc.
– radical product innovations frequently have to overcome the currently
installed technology base – usually through displacement.
3. Switching costs:
– The one-time cost to the buyer who switches to the new offering
(Porter, 1985).

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Market research new product

development dilemma:
What can firms do?
• It seems the dilemma facing companies is two fold:

1. At the policy level: to what extent should companies pursue a strategy

of providing more room for creativity and less for market research?

2. At the operational level: to what extent should Product and Brand

Managers make decisions based upon market research findings?

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To what extent should companies pursue a strategy of providing more room for
creativity and less for market research?
Policy Considerations

Issues:
• conservative product development decision making
– To what extent should NPD be driven by research, and aiming to
avoid mistakes?
• ‘short-termism’
– Focus: incremental improvements and cost cutting
• damage to a firm’s creativity
• complementary market and R&D capabilities are therefore essential

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To what extent should product and brand Managers make decisions based upon
market research findings? - Operational Considerations
• arguably the need for innovation and creativity in market research is no less than
in any other area of management.

• market research is still necessary to bring forth insights and viewpoints from
respondents.

• the difficulties lie in the selection and implementation of research methods (e.g.,
use of lickety stik, probe and learn or lead user analysis)

• in technology vacant consumer markets, the technology agenda is completely

dominated by market research findings.

• more free-thinking and creativity needs to be afforded to the R&D department?

(in all markets!?)

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Key points
• The benefits of the marketing approach have been widely articulated
and are commonly understood.

• But, as far back as the early 1970s Tauber (1974) argued that such
approaches discourage the development of major innovations.

• customers can be extremely unimaginative . . . trying to get people to

change the way they do things is the biggest obstacle facing many
companies.

• Therefore, market research needs to be used carefully.

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