Innovation Practices, Metrics,     and Performance                     Kenneth B. Kahn, Ph.D.  Professor of Marketing and ...
JPIM 2006JPIM 2012            BUSINESS HORIZONS            2012                © 2012 Kenneth B. Kahn, Ph.D.
Innovation/NPD DimensionsProposed Dimensions   Dimensions Sorted by WeightCommercialization     StrategyCompany Culture   ...
STRATEGYBest Practice                                      Poor PracticeClearly defined and organizationally visible      ...
COMMERCIALIZATIONBest Practice                                Poor PracticeThe launch team is cross-functional in       Ma...
PROCESSBest Practice                               Poor PracticeA common NPD process cuts across            Criteria for e...
PROJECT CLIMATEBest Practice                             Poor PracticeCross-functional teams underlie the       No identif...
RESEARCHBest Practice                           Poor PracticeConcept, product, and market testing is Customer or user is u...
COMPANY CULTUREBest Practice                        Poor PracticeTop management supports the NPD      NPD is not a managem...
METRICS AND PERFORMANCE MEASUREMENTBest Practice         Poor Practice                      No standard criteria for evalu...
Study Conclusions There is evidence verifying the 2006 framework. We can distinguish between poor and best practices on ...
Metrics and Performance     Measurement                   © 2012 Kenneth B. Kahn, Ph.D.
Five-Stage Idea-to-Launch Stage-Gate® System for Major Product Development Projects                   Idea Screen      2nd...
NPD Evaluation StreamDevelopment Activity   Evaluation Task                    Evaluation TechniquesStrategic Planning    ...
Example: Measuring Product Success     1st Generation   2nd Generation        Derivative
The Launch Control Protocol: An Example Potential Problem      Tracking                Contingency Plan Customers are not ...
Marketing Control Considerations  Type of Control      Purpose of Control         ApproachesAnnual Plan Control Is the bus...
Considerations for NPD Metrics and     Performance Measurement         Issue                           Question       Defi...
Performance Measurement    • Efficiency (cost, time, resources)    • Effectiveness (objectives/goal attainment)    • Adapt...
© 2011 Kenneth B. Kahn, Ph.D.
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Innovation Practices, Metrics and Performance by Kenneth Kahn Ph.D of VCU's da Vinci Center for Innovation

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New Product Development (NPD) practitioners are keen to benchmark NPD practices because identifying practices which are able to more efficiently and/or effectively deliver a new product or service could mean the difference between success and failure. To help in identifying such practices Dr. Kahn will present findings pertaining to what practitioners find to be poor and best NPD practices. Among the different practices presented particular focus will be put on metrics and performance measurement. Thoughts on how to frame metrics and performance measurement during innovation will be introduced. The presentation will conclude with guidelines for manifesting better performance through practices and metrics, incorporating actual project experiences from VCU’s da Vinci Center for Innovation.

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Innovation Practices, Metrics and Performance by Kenneth Kahn Ph.D of VCU's da Vinci Center for Innovation

  1. 1. Innovation Practices, Metrics, and Performance Kenneth B. Kahn, Ph.D. Professor of Marketing and Director, da Vinci Center for Innovation Virginia Commonwealth University Richmond, Virginia kbkahn@vcu.edu © 2012 Kenneth B. Kahn, Ph.D.
  2. 2. JPIM 2006JPIM 2012 BUSINESS HORIZONS 2012 © 2012 Kenneth B. Kahn, Ph.D.
  3. 3. Innovation/NPD DimensionsProposed Dimensions Dimensions Sorted by WeightCommercialization StrategyCompany Culture CommercializationMetrics ProcessProcess Project ClimateProject Climate ResearchResearch Company CultureStrategy Metrics © 2012 Kenneth B. Kahn, Ph.D.
  4. 4. STRATEGYBest Practice Poor PracticeClearly defined and organizationally visible Most NPD projects fit with mission, but someNPD goals pet projects that do not fit mission existThe organization views NPD as a long-term No NPD goalsstrategy The organization views NPD only as a short-Mission and strategic plan help define strategic term tactical initiativearenas for new opportunities Unclear NPD goalsNPD goals are clearly aligned with organizationmission and strategic plan A variety of NPD projects are supported with little or no regard for mix appropriatenessNPD projects and programs are reviewed on aregular basis No concern over types of NPD projects being developedOpportunity identification is ongoing and canredirect the strategic plan in real time to No prioritization of NPD projectsrespond to market forces and new technologies No process for undertaking portfolio mgmt.There is a ranking or prioritization of projects NPD projects may or may not be aligned withThere is keen consideration for balancing the organization’s mission or strategic plannumber of projects and available resources Pet projects are prevalent All trade-offs among NPD projects are made informally with no set criteria © 2012 Kenneth B. Kahn, Ph.D.
  5. 5. COMMERCIALIZATIONBest Practice Poor PracticeThe launch team is cross-functional in Marketing budget decisions cannature dramatically change up to the point of launchA project postmortem meeting is held afterthe new product is launchedLogistics and marketing work closelytogether on new product launchCustomer service and support are part ofthe launch teamA standard protocol for planning a launchexists within the companyCross-functional teams make decisionsconcerning manufacturing, logistics,marketing, and sales © 2012 Kenneth B. Kahn, Ph.D.
  6. 6. PROCESSBest Practice Poor PracticeA common NPD process cuts across Criteria for evaluating NPD projects areorganizational groups not definedGo/no-go criteria are clear and Limited documentation on the NPDpredefined for each review gate process existsThe NPD process is flexible and Minimal testing (concept, product,adaptable to meet the needs, size, and market) performedrisk of individual projects No NPD process existsThe NPD process is visible and well There is no discipline in using thedocumented organization’s NPD processAn IT infrastructure with appropriate There is no NPD process owner or NPDhardware, software, and technical process championsupport is available to all NPD personnel Not all NPD personnel have access to theA clear NPD process exists same IT tools (software, hardware) Projects are not reviewed at completion The NPD process can be circumvented without management approval © 2012 Kenneth B. Kahn, Ph.D.
  7. 7. PROJECT CLIMATEBest Practice Poor PracticeCross-functional teams underlie the No identifiable NPD groupNPD process No project leaderEach project has a clearly identifiableproject leader NPD personnel are involved in too many projectsNPD activities between functionalareas are coordinated through formaland informal communication © 2012 Kenneth B. Kahn, Ph.D.
  8. 8. RESEARCHBest Practice Poor PracticeConcept, product, and market testing is Customer or user is uninvolved in NPDconsistently undertaken and expected processwith all NPD projects Little if any market research isCustomer or user is an integral part of undertakenthe NPD process No real evaluation of testing (concept,Results of testing (concept, product, product, market) results is undertakenmarket) are formally evaluated No market studies are undertaken to understand marketplace © 2012 Kenneth B. Kahn, Ph.D.
  9. 9. COMPANY CULTUREBest Practice Poor PracticeTop management supports the NPD NPD is not a management priorityprocess All NPD ideas come from within theThe company actively works with companycustomers to develop new solutions Management is primarily focused on operational efficiency and cost savings © 2012 Kenneth B. Kahn, Ph.D.
  10. 10. METRICS AND PERFORMANCE MEASUREMENTBest Practice Poor Practice No standard criteria for evaluating NPD projects exist No standard criteria for evaluating the overall NPD effort exist One person does all NPD project evaluations Projects are never killed © 2012 Kenneth B. Kahn, Ph.D.
  11. 11. Study Conclusions There is evidence verifying the 2006 framework. We can distinguish between poor and best practices on most dimensions. There is slightly more consensus on what constitutes poor practice rather than best practice. Not all, but many characteristics appear common across countries suggesting global NPD best/poor practices. Metrics is an area in need of further examination. © 2012 Kenneth B. Kahn, Ph.D.
  12. 12. Metrics and Performance Measurement © 2012 Kenneth B. Kahn, Ph.D.
  13. 13. Five-Stage Idea-to-Launch Stage-Gate® System for Major Product Development Projects Idea Screen 2nd Screen Go to Go to Test Go to Launch Post Launch Development Review Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 PLR Discovery: Stage 2: Build Stage 1: Stage 3: Stage 4: Stage 5: Ideas Business Scoping Development Testing & Launch Generation Case - Validation The Customer or User For Less Complex and Smaller Development Projects, Use an Abbreviated Version: 2-3 GatesSource: Robert Cooper, Chapter 1, PDMA Handbook 3rd Edition, forthcoming 2012
  14. 14. NPD Evaluation StreamDevelopment Activity Evaluation Task Evaluation TechniquesStrategic Planning Direction: Opportunity Identification,(Pre-Process) Where should we look? Market descriptionsIdeas Generation Initial Review: Product Innovation Charter, Is the idea worth consideration? Experience and Judgment, Preliminary Market Analyses, Concept TestingScoping Full Screen: Checklists, Scoring ModelsBusiness Case Should we develop it?Development Progress Reports: Protocol checks, PrototypeTesting & Validation Have we developed it successfully? Tests, Product Use Tests If not, should we continue to try?Launch Market Testing: Pseudo Sale, Controlled How should we market it? Sales, Rollout Post-Mortem Review © 2012 Kenneth B. Kahn, Ph.D.
  15. 15. Example: Measuring Product Success 1st Generation 2nd Generation Derivative
  16. 16. The Launch Control Protocol: An Example Potential Problem Tracking Contingency Plan Customers are not Use POS reports. Install point-of- making trial Minimum 100 purchase displays. purchases of the new purchases monthly product as expected. per retail outlet are expected. Competitor may have Difficult to track, but Offer 2 for 1 program. similar new product. conduct surveys with Consider bundling retailers and final new product with consumers. other products. © 2012 Kenneth B. Kahn, Ph.D.
  17. 17. Marketing Control Considerations Type of Control Purpose of Control ApproachesAnnual Plan Control Is the business plan − Financial Analysis being achieved? − ScorecardEfficiency Control How efficient are our − Cost Analysis business expenditures?Profitability Control Is the company making − Profitability money? AnalysisStrategic Control Are we doing the right − Marketing Audit thing(s)? − NPD Audit © 2012 Kenneth B. Kahn, Ph.D.
  18. 18. Considerations for NPD Metrics and Performance Measurement Issue Question Definition What is the objective/goal? Operationalization How can/should this be measured? Intelligence Which data, information, and knowledge? Level Where should the measurement occur? “What gets measured, gets rewarded, andRewards and Recognition what gets rewarded gets done.” © 2012 Kenneth B. Kahn, Ph.D.
  19. 19. Performance Measurement • Efficiency (cost, time, resources) • Effectiveness (objectives/goal attainment) • Adaptiveness (ability to change/shift)Potential managerial paradox: as the market becomesincreasingly vulnerable to performance competition, a solefocus to reduce costs diminishes the organization’s ability torespond to this kind of competition. Thus, cost efficiencycan be the enemy of product innovation, and vice versa. © 2012 Kenneth B. Kahn, Ph.D.
  20. 20. © 2011 Kenneth B. Kahn, Ph.D.

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