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  • Management of Technology (OM476) Managing the NPD Process March 1, 2006 S. Fisher
  • Agenda
    • 30,000 new consumer products are introduced annually, and over 90% of them fail (Christensen, Cook and Hall, 2005, HBR)
    • What’s wrong with the new product development (NPD) process? What are the challenges? How can firms improve?
    • Mid-semester feedback
  • In-class writing
    • List at least two stakeholder groups who have input on NPD in the auto industry.
    • What can each of these stakeholders offer to the NPD process?
  • Auto industry: Innovation sources Source : Center for Automotive Research (March 2005). Automotive Product Design and Development Delphi. Retrieved from http://www.cargroup.org/documents/ProductDesignandDevelopmentDelphi.pdf
  • NPD Process
    • Three primary objectives
      • Maximizing fit with customer requirements
      • Minimizing development cycle time
      • Controlling development costs
    • How important is each of these to the firm’s ability to make money on the new technology?
      • How much can we sell?
      • At what cost to the firm?
  • Maximizing customer fit
    • Involving customers in NPD
    • Getting feedback on failed products
      • First Palm product, the Zoomer, failed. Turned out that customers wanted connectivity with their computers, leading to synchronization .
    • Observation
    • Beta testing
      • Google
      • But are lead users representative of later user groups?
  • Minimizing development cycle time
    • Related to first mover advantages
    • Product life cycles generally becoming shorter
    • Shorter cycles allow a company to
      • Respond to consumer needs/desires, competitor designs
      • Correct mistakes
    • Downsides of short cycle time?
  • Development cycle time
  • Development costs
    • Break-even analysis
    • Example - Honda Today
    • For Option 3 (increase both bore and stroke), how many cars would you have to sell in order to recoup the R&D costs?
      • Per car profit = 25,600 yen
      • 1.5 billion yen additional investment
      • Need to sell 59,000 additional cars
      • In 1987, sold 100,660 Todays
  • Sequential vs. parallel
    • Benefits of partly parallel process? Potential drawbacks?
    • Outsourcing of development
    • Another approach to the same goal: using cross-functional teams – will discuss more in Chapter 12
  • Involving the supply chain
    • Firm’s supply chain managers
      • How hard will it be to get the needed components at the right time?
      • Assemble in-house or use modular delivery?
      • Logistical and cost implications of absorbing warranty costs, reverse supply chain
    • Suppliers
      • Tapping into knowledge base for ideas on products or production process
      • Can help with overall cost savings
  • Product Design and Development for Auto Interiors
  • Product Design and Development for Body/Chassis/Suspension
  • Project champions
    • Commonly used, but impact on project success is debatable
      • Appears unrelated to success in the marketplace
      • Does appear to enhance odds of finishing the project – is this a good thing?
  • For next class
    • Finish reading chapter 11 (pages 224-236)
      • NPD tools, measuring performance
      • Will also discuss technology acceptance model
    • On Wed. March 8
      • Eli Lilly case
      • Team 5 presenting
      • Team 1 review/questions
      • All others – exec summary
  • Mid-semester feedback
    • Anonymous
    • What do you like about the class so far? What should we keep doing?
    • How can we improve the class for the remainder of the semester?