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Technology Management & NPD
New service development(NPD) - completeprocess of bringing a new service to market
NPD & technology management - significant in
obtaining firms' competitive advantage
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NEW Service
New-to-the-World services(10%)
New service Lines/Functions/Applications(20%)
Additions to Existing service Lines(26%)
Improvements and Revisions of Existing
services(26%) Repositioning(7%)
Cost Reductions(11%)
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Clear strategic direction
NPD strategy must:
Fit with company strategy
Fit with company skills and capabilities
Fit with company ethos/style
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Danger of new services NOT fitting
strategy/capability/style
NPD is risky enough anyway, why make it riskier?
Opportunity cost is high : resources are finite
Existing customers may be alienated
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Sources of New services
External
Sourcing
CollaborativeVenture
Internal
Development
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SWOT Analysis
SWOT
Strengths Weaknesses Opportunities Threats
Internal External
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New-service Development Process
Idea Generation
Idea Screening
ConceptDevelopment
& Testing
BusinessAnalysis
PrototypeDevelopment
Test Marketing
Commercialization
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New-service Development Approaches
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How is it Done?
Market facts& ideas
Technicalfacts &ideas
Phase I
ConceptGeneration
Phase II
Business
PropositionDevelopment
Phase III
Launch
Preparation
Launch/Rollout
Gather ideas
Conductdemandresearch
Developproject briefs
>>>>>>>>>
Activities Build total
proposition
Determine,test, refinecomponents(packaging,name, etc)->>>>>>>
Organise
logistics
Preparemarketingcampaign
Brief salesforce
ITERATIVE
Launch marketing
campaign
Distribute service
Monitor progress
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Phase 1: Concept Generalisation
Cross functional inputs required:
fusion of ideas from R&D, marketing,logistics
open sharing of ideas
formal and informal interdisciplinary
forum
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Phase 2: Business PropositionDevelopmentChange from concept to sound business
propositions:
Prototyping
Market research
Test marketing
Pre-serviceion engineering and costing New service business plan/proposal
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Phase 3: Launch Preparation
Close multifunctional approach required:
Establish marketing mix (4Ps)
Packaging development
Market testing
service refinement
Sourcing serviceion engineering
Begin manufacture
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Launch Put marketing mix (4 Ps) into
practice
Monitor progress Log successes and failures
Redeploy team thoughtfully
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New service Development Stages
Motorola 4 stagesservice DefinitionContract DevelopmentDevelopment through manufacturing start-upProgram wrap-up
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New service Development Stages
Kodak- 6 stagesCustomer mission/visionTechnical demonstration
Technical operation/feasibilityCapability demonstrationservice/process designAcceptance and serviceion
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New service Development Stages
Xerox - 7 stagesPre-conceptConcept
DesignDemonstrationserviceionLaunchMaintenance
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New service Development Stages
GenericGet an idea
Prove it worksDevelop and test itScale it upLaunch it
Monitor things
Keepiteratin
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Approximate Costs of NPD: %
Industrial ChemicalsConsumer Goods
100100
5779
13
28
2
16
3
2
Stage
OpportunityIdentification
Design
Testing
Launch
Total
100% = $12.6m $4.7m
Source:McKinsey analysis
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NPD & Technology
Extensive use of technology (eg CAD/CAM)
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Organisational Options for NPD
As part of R&D As part of marketing Within its own department
Throughout the organisation
Via NPD committee Via new service task-force Small permanent staff Matrix organisation Entrepreneurial division Alliances
Common options
Less frequently used options
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Rugby Approach vs Baton Appro
Baton
Phase 1 2 3 4 5 6
Rugby 1
Rugby 2
Phase 1 2 3 4 5 6
Phase 1 2 3 4 5 6
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Pros and Cons of Rugby vs Baton App
Direct benefits
Indirect benefits
Direct problems
Indirect problems
Faster developmentIncreased flexibility
Shared responsibility andcooperationLasting understanding of others
agendasDiversified skillsWider problem solvingcapabilities
Resentment of otherdepartments (?)
Erosion of specialist skills(?)
Communication throughoutlarge teamMaintaining cohesionHeightening tension
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R&D and Manufacturing Working
Together-Example
IBM Dot Matrix Printer
Needed cheap effective
printer Small team of R&D and
manufacturing
Mandate: work together to
simplify service with tightdeadline
Result:
150 parts down to 60
Developed in half normal time
Very reliable service
Became market leader in 5 months
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CAUSES OF NEW service FAILURE
Failure in Market Research Findings
Overestimated Demand and Size of Market
Design Failure
Positioning Problem
Ineffective Communication/Promotion
High Development Cost/ Price Pressure from Competitors
Poor Timing
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CAUSES OF NEW service SUCCESS
Technological Superiority
Easy of Market Entry
Competitive Advantage
Size and Speed in Market growth
Identifying Needs/Wants and Good Timing
Effective Promotion/Communication Uniqueness of the Concept/service
Marketing and Managerial Synergy/Team Effort
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CHALLENGES IN NEW service
DEVELOPMENT Shortage in New service Ideas
Fragmented Markets
Social and Governmental Constraints
High Development Cost
Shortage of Cash/Capital
Faster Development Time Shorter service Life Cycle
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EFFECTIVE ORGANIZATIONAL
ARRANGEMENTS Top Management:
R&D Budget.
Organization for New-service Development: service managers
New service Managers
New service Committee
New service Departments: R&D.
New service Venture Team
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service Design Parameters