1. Business Objective - NPD

New Product Development the business Objective

New Product Development the business Objective

Prof. V.SeshadriNMIMSImportance of NPDIt is the lifeblood of a company. Must be a continuum with some momentumPlays a leadership role within the company. Sets the pace for the whole company.Progress is measured by NP. Even failure in NPD is a great learning exercise.Innovation as a survival skill NPD- The business Objective - Ref 1 Ch 12NPD role in the economyNPD contributes to the economy by generating revenue and profits to the company that would otherwise would not have existed.The revenue is paid out to vendors which ultimately results as earnings for personnel which is in turn spent on purchases from other companies.The profits go to fund long term investments for further growth and also as taxes for funding infrastructure projectsThis represents the economic cycle fueled by NPDNPD- The business Objective - Ref 1 Ch 13The Business ObjectiveEstablishing a strategy for NPD starts with examining the Business Objective It involves looking at the company, the marketplace and the competition to determine how the NPD activity will fit into the overall company goals and strategy.The objective is to determine the fit of the new product, the chances of success and the organizations ability and desire to carry it off.NPD- The business Objective - Ref 1 Ch 14The FitThe fit essentially depends onSelecting the right new product opportunityDoes it gel with the companys other products, present market and channel, its manufacturing and technology base ?How does the opportunity fits into the companys long term goals and agendasWhich department/group within the company should lead the development? Or should it be outside the companys existing ambit?NPD- The business Objective - Ref 1 Ch 15NPD- The business Objective - Ref 1 Ch 16

The StrategyWhat is the market strategy? one time/short term player or here to stay and grow . Is it targeted to a niche market or wide range market What is the marketing hook ? What will be the products USP? What new value it will add to the market?Strategy if the product wins in the market & Strategy if it loses.

NPD- The business Objective - Ref 1 Ch 17Benefits of the strategic planning process 1/2improves profitabilityyields a higher growth rate for the enterprisereduces wasted time, effort, materials, and resourcesprovides focus on the marketplace; customerearly buy in to the program from employeesNPD- The business Objective - Ref 1 Ch 18Benefits of the strategic planning process 2/26. fosters higher personnel commitment7. provides for a cohesive management team.8. provides the framework to understand the competition9. provides high visibility on quality from a holistic perspective10. yields greater customer satisfaction.11. provides a framework for continuous improvement.12. directs a day-to-day vision that is real and achievableNPD- The business Objective - Ref 1 Ch 19The Planning Process ( for NPD) 3 STEPSIntrospective Examination of the companys strength, weaknesses and historical perspectiveCreative Decide on what the company wants to be and its position in the marketplacePure Planning - Define the means to the end (2)NPD- The business Objective - Ref 1 Ch 110The Planning FrameworkThe strategic Plan for the new product should contain the following:Where are we now?Where are we going?How will we get there?

NPD- The business Objective - Ref 1 Ch 111Where are we now?Create a 5 year history of companys performance in detailUse a narrative to describe the companys general business healthCreate a detailed product line wise analysis Include features, benefits, trends driving forces, , costs, price, relative resource utilization, maintenance issues etc.

NPD- The business Objective - Ref 1 Ch 112Analysis of Business - factorsYEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5SalesGross marginNet profitExpensesWarrantyInventoryReturn on investmentReturn on assets employedReturn on capitalAccounts receivableCash reservesNPD- The business Objective - Ref 1 Ch 113Product line analysisPrice levelsFeature/BenefitCustomer baseTechnology baseCostMarket driving forces% of SalesContribution to profitLife Cycle StageNPD- The business Objective - Ref 1 Ch 114Product 1Product 2Product 3Where are we going?Mission statement developmentNarrative of the dreamNarrative of how the plan and reality will fit together5 year product line catalogProduct scope definitionSpecific market segmentsIndustry trendsNPD- The business Objective - Ref 1 Ch 115How will we get there?Market Segment strategy:Implementation: ( Internal or External)Investment/ReturnRequirements (Internal and External)RecommendationAction PlanNPD- The business Objective - Ref 1 Ch 116Fit ability StudyHOW MUCH OF A STRETCH IS THIS FOR SALES, ENGINEERING, AND MANUFACTURING INFRASTRUCTURE?NPD- The business Objective - Ref 1 Ch 117Radar Chart

NPD- The business Objective - Ref 1 Ch 118R&D as a vital tool for NPDR&D is the most vital element in the NPD strategy. It is the source of technology for the new product as well the source for the processes which go in to make the product.There is a unique and interesting difference between Research and Development in an organization. R establishes the lead position to establish the Intellectual property which is then handed over to D for exploiting.NPD- The business Objective - Ref 1 Ch 119DIFFERENTIATING RESEARCH AND DEVELOPMENTThe two disciplines are diverse and separateRESEARCH GATHERS AND EXERCISES TECHNOLOGIES AND PROCESSESDEVELOPMENT ORGANIZES AND APPLIES THESE TECHNOLOGIES AND PROCESSES TO A SPECIFIC ENDthe two must function as a relay race, with research establishing the lead position and handing off the intellectual property and know-how to the development people to apply and create new productsNPD- The business Objective - Ref 1 Ch 120DIFFERENTIATING RESEARCH AND DEVELOPMENTDevelopment must have a manufacturing focus: bills of material, specifications, consistency, traceability, costs, performance, and testability.Research is more focused on performance, core technology development, technological capabilities, and eventual cost curves.

NPD- The business Objective - Ref 1 Ch 121DIFFERENTIATING RESEARCH AND DEVELOPMENTRESEARCH SPENDS MONEY AND CONTRIBUTES INTELLECTUAL PROPERTY AS AN ASSET ON A FUTURE BALANCE SHEETDEVELOPMENT CONTRIBUTES AND MAKES MONEY THROUGH PRODUCT SALESDEVELOPMENT IS MUCH MORE MEASUREABLERESEARCH EXPENSES AND GOALS SHOULD BE TIED TO OPERATIONAL GOALS NPD- The business Objective - Ref 1 Ch 122

Research and DevelopmentTypes of research and developmentIncremental, Radical, and Fundamental.These need different levels of R & D

Incremental = low R & Low DRadical = High R & High DFundamental= High R & No D

NPD- The business Objective - Ref 1 Ch 124THE Model for DevelopmentNPD- The business Objective - Ref 1 Ch 125Development GroupOther operational inputsMarketingCore technologyNew Marketable ProductsNPD- The business Objective - Ref 1 Ch 126Model for R&DCooperative agreementsUniversityOther SourcesCorporate ResearchDevelopment1Development 2Development1Research Sequence ANPD- The business Objective - Ref 1 Ch 127Goals & ObjectivesStrategyResearchOperationsProfitDevelopmentResearch Sequence BNPD- The business Objective - Ref 1 Ch 128Product ConceptNeeds DefinitionFeasibility ProductionizingIndustrializationCommercializeCore DevelopmentResearchResearchLeverageEach new product development effort should leverage vertically and horizontally within the organizationsuccessive development programs can be thought of as developing concentric rings around a base of core technologyEach activity then pushes the outer envelope in terms of technology, purchasing, sales and marketing, and manufacturing systems.NPD- The business Objective - Ref 1 Ch 129Radar Chart

NPD- The business Objective - Ref 1 Ch 130LeverageAs new opportunities are evaluated, the leveragability of the product within the organization for the successive programs needs to be addressed Each product generates growth for the company, starts out small, and builds momentum in the marketplace. As the company then structures the programs in succession (and does this for several product lines), the revenue and profits grow exponentially.NPD- The business Objective - Ref 1 Ch 131LeverageThis philosophy will allow the organization to recover from a single failure easier than other strategic philosophiesConsequently, this will better the companys chance of success in a fast-paced, changing marketplace.NPD- The business Objective - Ref 1 Ch 132ContinuityContinuity is important in NPD. It is as important as the development itself. The momentum gained by uninterrupted development results in a geometric progression of rewardsConversely, the developers nightmare is a management structure that issues on again/off again orders and constantly changes priority on projectsEach program and action must be deliberate and have a payoff. There can be no voids in the continuum because this wastes time and dollars; hence the pursuit is as important as the initial attack on a market opportunity.NPD- The business Objective - Ref 1 Ch 133FLOW The Agile Way

TAKE AND EXECUTE MANAGEABLE CHUNKS OF DEVELOPMENT. GET GREAT AT EXECUTING SMALL, INCREMENTAL IMPROVEMENTS VERSUS LARGE PROGRAMS THAT ARE LONG AND FROUGHT WITH UNCERTAINTY. SMOOTH THE PROGRESS AND MAKE IT MEASURABLE AND PREDICTABLENPD- The business Objective - Ref 1 Ch 134KEY TO SUCCESS- THE AGILE WAYSMALL, INCREMENTAL, DEFINABLE, MEASURABLE, PREDICTABLE, FAST, AND RELENTLESSNPD- The business Objective - Ref 1 Ch 135SYMBIOSISAn operational perspective should govern the members of the team to work for the projectShould one of the members falter, there is enough strength and cognizance such that the other members fill in the void without affecting the performance. The program manager should take the time to build this into the temperament of the development groupNPD- The business Objective - Ref 1 Ch 136SINGULARITY VERSUS PLURALITYA NEW PRODUCT SHOULD FIT INTO A CONTINUUM OF NEW PRODUCTS: A FAMILY SUPPORTED BY A STRATEGYPRODUCT DEVELOPMENT SHOULD NOT BE AN ISLAND, TOO EASY TO KNOCK OFF BY COMPETITORSTHE FAMILY OF PRODUCTS RETAINS MOMENTUM AND THEREFORE STRENGTHCombine efforts to serve a strategic goal or use a single effort to serve related, multiple goalsNPD- The business Objective - Ref 1 Ch 137MARKET INVESTIGATION- in a new product development program.PRIMARY - surveys, interviews, and demonstrations.SECONDARY - Trade shows, Trade literature search, Articles, News pieces, Observation of trends, Financial reports, Textbooks, Patent search, Lost sales reports, InternetINTERVIEWINGSURVEYS AND CUSTOMER FEEDBACK

NPD- The business Objective - Ref 1 Ch 138MARKET INVESTIGATION- in a new product development program.EXTRACTING THE OPPORTUNITY WITHIN THE COMPLAINTENGAGING THE CUSTOMERNPD- The business Objective - Ref 1 Ch 139DEFINING THE MARKETPLACEWHO IS THE CUSTOMER?DEMOGRAPHICSCOLLECTION OF USERS, OEMS RESELLERS, AGENTS, SIMILAR APPLICATIONS, ETC.WHAT ARE THE CUSTOMER ALTERNATIVES VERSUS YOUR SOLUTION?HOW IS YOUR COMPETITIVE ADVANTAGE EMBODIED IN THE PRODUCT?NPD- The business Objective - Ref 1 Ch 140IMPERATIVES FOR SUCCESS IN NPD PROCESSClear objectives A cross-functional team approach Upper management support Customer-supplier involvement Robust design and product A structured process methodology Economic justificationNPD- The business Objective - Ref 1 Ch 141List of potential projects for Pan Europa Foods S.A.Expand Truck Fleet New PlantExpanded PlantArtificial SweetenersAutomation and Conveyor SystemEffluent Treatment Program (which has no NPV)Eastward ExpansionSouthward ExpansionSnack Foods Inventory Control System

NPD- The business Objective - Ref 1 Ch 143