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Tech innovation s11_npi

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process of new product development – the strategic, technology and operational phases.

process of new product development – the strategic, technology and operational phases.

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    Tech innovation s11_npi Tech innovation s11_npi Presentation Transcript

    • Technology and InnovationManagement:S11New Product IntroductionRaj C Thiagarajan, PhDToSIBM SIII MBA Students ATOA Scientific Technologies Engineering Simulation For Innovation
    • Customers lined up outside of Apples flagship Fifth Avenue store in New York to purchase iPad 2 tablets on Saturday. Image from http://www.computerworld.com/s/article/9214618/iPad_2_shortages_continue_relief_1_2_months_awayATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 2
    • Hundreds of women wait in line on a cold December morning in 1945 to buy nylon stockings at a New York City store. Picture from : http://www.chm.bris.ac.uk/motm/nylon/nylonv.htmATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 3
    • Technology in New Products• New products Introduction (NPI)• NPI Process• Stages of the product life cycle.• Cases• Product life cycle strategies ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 4
    • NPI• Any new product or service that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.• It includes physical objects, services, technology, organizations, ideas and people.• Development of original products or Services, product improvements, Process improvements, product modifications, and new brands through the firm’s own Research and development efforts ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 5
    • NPI Pipeline• NPI Team• Toll/ stage gate process• Idea Funnel• Value Chain, Benefit• Strategy, Timing• Product Development Cycle ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 6
    • NPI• Products• Platform/ Family ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 7
    • NPI Team Marketing Manager Advertising Production• A Agency Collaborative cross functional Engineering Finance Team NPI Team• Develop and launch a Research and Marketing successful Development Research product Promotions Sales ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 8
    • NPI is an Integrated Process Customer Experience• Customer Experience – Better experience, benefit• Production Cost Time to Production – Low product cost market Innovation Cost• Development cost – Low development cost• Time to market – Shorter time Developm ent cost• Innovation – DNA for NPI ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 9
    • End to End product development Source? ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 10
    • @NPI Design Changes Cost Part 1X @ Sub assembly 10 X• Cost of fixing = Stages X @ Final Assembly 100 X Times @ Dealer 1000 X• Cost of Design changes @ increases exponentially with Customer 10000 X product development cycle. HIGH• 80% of the product cost is Activity, Influence Index, Design change Cost determined or committed at the concept design stage• Management influence reduces over time NPI Activity Low Product Concept Final Pilot Mass Planning Design Design Production production ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 11
    • Development & Commercialization NPI • Product Strategy Performance ManufacturabilityQuality and Cost NPI Pilot Testing & Mass Commercial DESIGN production Verification Production ization Service, Life Environmental • Market Strategy ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 12
    • Value Chain• Set of activities that create Value• Through products or services to customer• Industrial, Customer Value chain ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 13
    • Customer Benefit Chain• The Benefit Chain – How Values leads to Needs ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 14
    • Stage-Gate Process• Cooper Stage-Gate Process’s ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 15
    • NPI Funnel Idea Launch & Feasibility Prototype Rollout Concept Product Commercialization Initial refinement optimization Production & marketing and and prototype Distribution technical creation concepts Post Launch Launch Review Proposal Contract Charter KEY = Decision = Deliverables ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 16
    • Toll Gates:• Major milestones• Decision making process – allow passage for potential success projects – Sacrifices potential failure Projects – Continue working on the project, moving it along to the next stage in the funnel; or – Stop working on the project, shelving it or canceling it; or – Hold and Get additional information and reconsider the project for passage through the same gate once that information becomes available ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 17
    • The Key ? Answered By Each Phase Portfolio Review Phase Review 1 Phase Phase Phase Review 2 Review 3 Review 4 E E Idea N Phase 1: Phase 2: Phase 3: Phase 4: X Current T Concept Post I ProductGenerati E Feasibility Development T Support R Investigation Release on •Does the idea fit •Does the product •What is the •Has the product •Is the product roughly with our make sense from product spec? been fully verified meeting safety, strategy and marketing, •Can we develop it and validated? efficacy and resource technical & within budget and •Have production business targets availability? financial schedule? objectives been in the market? perspectives? •Can we produce it met? If yes, then at the required If yes, then concept document cost & volume? If yes, then closeout approved If yes, then full manufacturing approved & sub-team concept If yes, then approved & handoff to allocated approved prototype & sub-team product support & full team approved allocated allocated & full team allocated Source:? ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 18
    • NPI Case Study: Microsoft• $50 billion in profits over 27 years• Early NPI relied heavily on copying the competition• $4.2 billion annually invested in R & D• Innovation is critical to Microsoft’s future success• Much of R & D efforts are Internet related• Many new products and services are in development to counter Google and Open source ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 19
    • Product Life-Cycle• Five Stages – Product Development, Introduction, Growth, Maturity, Decline – Exceptions • Fads • Styles • Fashions ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 20
    • PLC Symptoms and StrategyStage 1:Introduction 2:Growth 3:Maturity 4:DeclineSales Low Rapidly rising Sales peak DecliningCustomer cost High Average Low cost Low costProfits Negative Rising High DecliningTarget Innovators Early adopters Middle majority Laggardscompetition Little Growing begins to decline DecliningProduct Offer a basic product Offer product extensions Diversify brand and Phase out weak items modelsPrice Use cost-plus basis Penetration pricing Set to match or beat rivals Cut priceDistribution Build selective Build intensive Build more intensive Selective, phase out distribution distribution distribution unprofitable outletsAdvertising Build awareness among Build awareness and Stress brand differences Reduce to level needed early adopters interest in the mass and benefits to retain hard-core marketSales promo Heavy expenditures to Reduce expenditures to Increase to encourage Reduce to minimal level create trial take advantage of brand switching consumer demand ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 21
    • Product-Process Matrix Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 22
    • NPI and Strategy Innovation and Technology strategy• Effective NPI pipelines must be embedded in a Phase I Phase II Phase III Launch broader strategic context New Product Development support system ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 23
    • Global NPI Strategic Options• EXTENSION STRATEGY – – Same approach as home market• ADAPTATION STRATEGY - – Makes changes to fit new market requirements• INVENTION STRATEGY - – Entirely new approach is developed for the new market• STANDARDIZATON – – Same product, all markets• GLOBAL PRODUCTS – Only some aspects of the product is standardized ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 24
    • Product Strategy BenefitsProduct Strategy BenefitsEXTENSION Cost effective, Allows for greater economies of scale, Rarely used for consumer type, Used mainly for industrial typeADAPTATION Product formulations are changed, Entails R&D expenses, economies of scale benefit is lowINVENTION Usually redesigning of an original product at a lower level of complexity, Recognizes the socio-cultural and economic differences, Leads to more purchases due to reinventionSTANDARDIZATON Easier management and control , Homogeneity of markets, Cultural insensitivity, Made in Image. Economies of Scale.GLOBAL Economies of Scale in, Production,PRODUCTS Marketing/communications, R&D ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 25
    • NPI Timing• Market-entry timing is critical. A company may be faced with the challenge of trying to enter a market with a new product and learns that a competitor is nearing the end of its development work.• You/Firm can have 3 Choices – First entry – Parallel entry – Late entry ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 26
    • NPI Timing• First Entry: – First mover advantages of locking up key distributors and customers – Product leader reputation – Product can acquire a flawed image.• Parallel Entry – Coincide with the competitor’s entry. – The market may be receptive• Late Entry: – launch after the competitor has entered. – The competitor pickups the cost of educating the market. – Product faults can be avoided – Additional features can be included by the late entrant. ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 27
    • Development & Commercialization • Product Strategy Performance ManufacturabilityQuality and Cost NPI Pilot Testing & Mass Commercial DESIGN production Verification Production ization Service, Life Environmental • Market Strategy ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 28