Managing+new+product+development+cycles


 * Module 2**

In contemporary market the development of new product is conditioned by the increasing demand of the customers for new goods and the desire of the companies to maintain their market position in circumstances of fast growing competition. Hence if a company wants to survive it must innovate. The price for not innovating is not status quo but sharp decline, since in meantime the other companies innovate, the new products enter the market and interest of the consumers for existing products tend to decline over time. The new product is either entirely new (new to the world, new to the market), or it is just improved version of the existing one. Actually the whole innovation process may be distinguished through three main sub-processes:Fuzzy front end (idea generation and screening), New product development and Commercialization. Fuzzy Front End is characterized by experimental often chaotic research conducted by individuals or teams trying to minimize the risk and optimize the potential, uncertainty about commercialization and limited funding. Oppositely, New Product Development is realized through structured, disciplined and goal oriented cross functional team work, with a very certain outcome in regards to commercialization and with its own budget.
 * Development of new product**
 * 1) Idea Generation. Ideas for new products could be found in the scope of the firm knowledge like R&D activity, strategic market (SWOT) analysis, or out of the firm looking either in its own industry (in more precious terms in competitors portfolio), or in the other industries.
 * 2) Idea Screening. Evaluation how the idea responds to market demands, does it fit to the company strategic objectives, is it technologically feasible for manufacturing and is it profitable for eventual further commercialization.
 * 3) Concept development and testing. In this stage marketing research and feedback from the customers is necessary in order to estimate benefits from the new product and customer's perception or feeling about the product.
 * 4) Business analysis. Preliminary estimations about the price, sales volume and break-even point.
 * 5) Prototype development and marketing testing. Production of a prototype or pilot version of the product and testing of its performances in usage conditions. In order to have realistic impression about customer experience, interviews with selected group of customers and adjustment of the product if it is necessary is needed.
 * 6) Technical implementation. Conduction of final quality test, publishing of technical data, planning of the logistic and engineering operations to support launch of the new product on the market.
 * 7) Commercialization. This is final stage, when new product is launched on the market and marketing strategy has to be implemented.

Organizational culture, leadership style of the management team and the quality of the communication and collaboration between the team members are crucial factors which influence the process of new product development.

Wikipedia link: http://en.wikipedia.org/wiki/New_product_development


 * Lean in innovation (product development)**

Lean is a concept, philosophy, mindset, way of doing. In the most simple term it means getting more with less. More is referred to the added value to the customers, productivity, revenue. Less denotes saving costs by reducing waste, unnecessary activities, superfluous processes. Originally lean comes from manufacturing, invented by Japanese firms and latter accepted by the rest of the developed world. The most prominent example of a lean company is Toyota. Last years there is an attempt to introduce and implement lean in the area of innovation/new product development. PHILIPS is pioneering in that activity. Despite the well known fact that manufacturing by its nature is very different than development, lean as a concept is universal and can be applied through whole industry value chain. Lean is based on five principles, five steps that maximize customer's value and minimize waste in parallel. 1. Identify what really add value to the customers. 2. Specify the value stream through all subsequent steps and eliminate those steps which do not contribute to the value creation. 3. Make all subsequent steps tightly so the product will flow smoothly towards the customer. 4. Let customer make pull to the next activity. 5. Repeat the whole cycle again, because lean means continuous improvement until state of perfection is reached.

How would lean innovation process/lean product development look like? According to PHILIPS experts lean product development contains eight elements for continuous improvement 1.Value focus - separate value from waste 2.Platform development 3.Set based concurrent engineering 4.Reduce waste, overburden and variation 5.Establish lean culture for continuous improvement 6.Build teams of responsible experts 7.Assign integral project leaders with focus on content instead of control. 8.Visual communication

Talking about reducing the waste in innovation, one has to admit that the main waste in innovation process is the waste of knowledge. Knowledge may be lost, or not properly used due to various reasons. For instance key people leave the project, the knowledge is not properly documented and in every new project "the wheel has to be invented again." The other reason may be if too many projects are running in parallel, without cross project learning and coordination so the focus is lost. The first thing that Steve Jobs did when returned back to Apple was to kill all redundant, side projects and focus just on one. Division of the tasks between the people affect the effectiveness of the new product development as well. The best way to accelerate the development cycle and improve the quality of the projects is one person to be owner of whole task's cycle, starting from defining, executing and checking the work, and carries the responsibilities for the results. The other factor of crucial importance in lean innovation is decision making process. Making blindly decisions with lots of gut feeling and less facts and latter recognizing that it was wrong decision and going back at the beginning would not be helpful in reducing the waste of time, the waste of knowledge and increasing the focus in the development projects.

The other points numerated above like establishing the lean culture for continuous improvement or building teams of responsible experts and integral project leaders are only instruments aimed to improve the knowledge management.Lean in innovation means effective knowledge management. Developing the product, the knowledge is developed as well and if this knowledge later is not properly reused than it is a waste. Wasting knowledge a company waste competitive advantage, market position, revenue...

Referring to PHILIPS business logic again, there are three core processes behind the successful launch of the new product on the market: Idea to market ---> Market to order ---> Order to cash. Effective knowledge management speed up all three processes and automatically increase the revenue in the balance sheet.

External links: http://knowledge.wharton.upenn.edu/articlepdf/2372.pdf?CFID=183626031&CFTOKEN=62492401&jsessionid=a8304b58fe9c1b98dc296c654e36352ed22c http://mis.postech.ac.kr/class/MEIE780_AdvMIS/paper/General%20Concepts/40_How%20Open%20Innovation%20Can%20Help%20You%20Cope%20in%20Lean%20Times.pdf