Part 1 Key Concepts Flashcards
The true rate of new product failure, and why it occurs?
About 40% new products fail.
For every 100 ideas: < 70 make it through initial screening < 50 pass concept evaluation and testing A little > 30 make it through development About 30 make it through testing About 25 are commercialized 15 out of 25 (60%) are successful Success rate is lower in consumer goods (51%) and as high as 65% in healthcare
Why do products fail? Firm doesn't understand the customer Underfunds the required R&D Doesn't do required homework before beginning development Doesn't pay attention to quality Lacks senior management support Chases a moving target
Why do people resist innovation?
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What are the strategic elements of new product development?
- The New Products Process
- The Product Innovation Charter
- The Product Portfolio
The New Products Process
Phases process that takes the new product idea through concept development, evaluation, development, launch and post-launch
The Product Innovation Charter
Strategy for new products that ensures that the team develops products focused on the brand/firm’s objectives and marketplace opportunities
The Product Portfolio
Ways to assess which new products would be the best ones to add to the existing line, given financial and strategic objectives and constraints.
Steps in the Basic New Product Process
- Opportunity identification / selection
- Concept generation
- Concept / project evaluation
- Development
- Launch
Fuzzy gates
A conditional “go” so as not to slow down the process in analysis
Hollow gates
Need to be avoided. The “go” decisions is made but no financial support is provided.
3rd Generation process
Flexible interpretation of the basic process, which allows overlapping phases and fuzzy gates
Sources of Identified Opportunities
- Underutilized resource: manufacturing process, an operation, a strong franchise
- New resource: discovery of a new material with many potential uses
- External mandate: stagnant market combined with competitive threat
- Internal mandate: new products used to close long- term sales gap, senior management desires
Why do new products mate technology and market?
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Are services different from tangible products, relative to product innovation?
The creation of service products tends to mirror the systems used on goods. Strategic elements fit. New Products process needs a little refinement for services because services are individualized to the individual customer.
Are industrial products different from consumer products, relative to product innovation?
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Are radically new products different from close-to-home new products? When do we need probe-and-learn product development, and why?
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Multi-functionality, the team concept, miniaturized company within a company
Multi-functionality: all functions work together on a cross-functional team to accomplish the required tasks. The team must be involved as early as possible in the new products process.
Team concept:
Company within a company: the group of people who lead the development of a new product. Represents all of the necessary functions. Led by a group leader, team manager or a project manager. Develop and allocate budget, do financial analysis and projections, assign and implement tasks and responsibilities.
Third generation product development
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PIC: what is it composed of?
- Background: key ideas from the situation analysis; special forces such as managerial input
- Focus or area: at least one clear technology dimension and one clear market dimension that 1. fit and 2. have good potential
- Guidelines: any rules of the road, requirements imposed by the situation or by management: degree of innovativeness, order of market entry, time/quality/cost parameters
- Goals and objectives: what the project will accomplish (profit, growth, share), either short-term or longer-term and evaluation measurements
PIC: how to determine the focus?
Achieved by use of four types of strengths or leverage capabilities:
- technology
- product experience
- customer franchise
- end-user experience
PIC: Innovativeness
- First-to-market: pioneering
Leveraged creativity: first-to-market products that do not extend the state of the art; instead they tweak technology in a new way.
Application engineering: technology may not be changed at all, but the use is totally new.
- Adaptive product: taking one’s own or a competitive product and improving it in some way
Second but best: the improvement is to be major, and the follower intends to take over the market, if possible.
- Imitation or emulation:
Why is there a misc category in the section on goals and in the section on guidelines?
Some firms recognize weakness.
Product integrity: all aspects of the product are internally consistent
Product opportunities as derived from six societal trends
- Just-in-time
- Sensing customers
- The transparent self
- In search of “enoughness”
- Virtual made real
- Co-creation
Just-in-time
People like making spur of the moment decisions based on real-time information
Sensing customers
People can sense their environment better now than ever before; what might be “too much information” for some might be essential information for others.
