1) The document discusses seven principles of lean, rapid, and profitable new product development (NPD), as outlined in research by Dr. Robert Cooper and Dr. Scott Edgett. 2) The principles include being customer focused, front-end loading with market research, iterative ("spiral") development with customer feedback, using cross-functional teams, establishing NPD metrics and accountability, maximizing productivity, and using a stage-gate innovation system. 3) Following these principles can help increase NPD success rates and productivity, which are often low due to factors like lack of customer input, unclear project scope, and functional silos within organizations.

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A.T.E. Enterprises Private Limited (Business Unit: HMX)
V2.2 Jul 2019
Basic Principles of Product Development
Experiences in HVAC and other B2B products
Kalpesh Karnik,
1 November 2019
Technozion 2019, NIT, Warangal

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Contents
HVAC in industry
Importance of new product development and innovation
Root causes of NPD failure*
NPD productivity*
A.T.E. and HMX
Seven principles of lean, rapid, and profitable NPD*
* ‘Lean, Rapid, and Profitable New Product Development’ by Dr Robert G Cooper, who has studied 3000 NPD projects
over 30 years, and Dr Scott J Edgett, who has 20 years research and observation of best practices in NPD

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A.T.E. at a glance
8
business
areas
9
group
companies
6
core
technologies
11
locations
50+
renowned
principals
500+
world-class
products
5000+
happy
customers

4. 4
Our core technologies
Textile
Spinning
Print Control
and Vision
Systems
Heat
Exchange
Internet of
Things
Static & Ink
Control
Wastewater
Management

5. 5
Business Unit: HMX (cooling)
Unique, energy-efficient,
and eco-friendly products
for space and process
cooling
Over 60 million
CFM installed
and more than
12 million sq. ft.
of area cooled
worldwide!
 Established in 1998
 Designs and manufactures unique, energy efficient, and
eco-friendly cooling solutions based on Indirect Evaporative
Cooling (IEC)
 Unique, patented technology with patents granted in India,
US, Australia
 Manufacturing unit spread over 30,000 square feet in
Bangalore, India
 Installations in 9 countries worldwide
Products
Evaporative air cooling
Treated fresh air systems
Hybrid air-conditioning
Industries served
Automobile & auto ancillaries
Commercial buildings
E-commerce and fulfillment centres
Engineering
Food and beverages
FMCG
Footwear and moulding
Pharmaceuticals
Print and packaging

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HVAC
product/solu
tion
Application
• Comfort
• Process
Costs
(capex and
opex)
Customer
Buyer
User
Operator
HVAC in industry
Heating, Ventilation and Air
Conditioning
• In most Indian conditions it is
about cooling and ventilation
• In most applications it is about
human comfort
At its CORE, it is about
productivity and health!

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Importance of
product development and innovation

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INNOVATION
Research & Development
Fundamental
Research
Applied
Research
Product
Development
Markets, Business, Expense
Academics,
Institutions
Companies and
Organisations

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Growth
And
SUCCESS!
Profitability
Innovation
ability
Top performing
companies have
5 times more
effective NPD
than poor
performers
30% of company
sales in the
preceding 3 years is
the result of NPD*
Importance of new product development (NPD) in industry
* ‘Lean, Rapid, and Profitable New Product Development’ by Dr Robert G Cooper and Dr Scott J Edgett

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Only 1 in 7 concepts becomes a winner
44% NPD projects fail to achieve the profit
targets
28% of businesses do not measure NPD
productivity
Development and innovation is a challenge
BUT!

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One of the most obvious ways to develop a more economical
or price competitive product is through cost cutting. However,
cost-cutting can only be used to an extent
Acquisitions are a fast method to acquire technology, but they
are not cheap and the ‘hoped for’ innovation may not happen
Thus: INNOVATE OR DIE!
Management’s dilemma: faster and better vs. cheaper

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Root causes of NPD failure
Me-too product
No-front end homework
Lack of customer inputs
Project scope creep
Functional silos and no real project team (no cross functional team or CFT)
Far too many projects – no focus
Lack of competencies

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Usually companies do not report NPD productivity as a business metric
NPD productivity is usually low because of the reasons of NPD failure
Measuring NPD productivity
Industry Best Average Worst
Consumer goods 80 14 5
Utilities 10 5 3
NPD productivity* = New product sales as % of sales
R&D spending as % of sales
*Usually a 5-year moving average

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Seven principles of lean, rapid, and profitable NPD

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Productivity = Profit achieved
Cost and time to do project
Can ‘lean’ approach be applied to NPD?
Lean approach will try to reduce the denominator which can be damaging
Only emphasis on cost and time reduction may lead to shift towards small, low risk,
easy to do projects.
Fail to generate significant profit that has gain in productivity.

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Can ‘lean’ approach be applied to NPD?
Product development is:
 much more variable and uncertain
 project based and not in continuous flow
 less repetitive and less predictable, unlike manufacturing
 difficult to plan
 creative and abstract thinking required to deal with uncertain and incomplete
information

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Principles of NPD
Principle 1: Customer focused
Principle 2: Front-end loading (homework)
Principle 3: Spiral development (iterate)
Principle 4: Holistic approach (CFT)
Principle 5: Metrics, accountability, and continuous improvement
Principle 6: Maximising productivity
Principle 7: Stage-gate innovation system (break it down)

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Voice of customer (VOC) is not voice of salesperson
NPD team should have face-to-face meetings
Design the product based on inputs from the customer, not on what you think it should be
Important decisions to be based on VOC
Constant customer interaction
Broaden base of customers
Principle 1: Customer focused
‘Marketing is too important to be left to marketing people!
Dr Robert G Cooper; Dr Scott J Edgett

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WHO IS A
CUSTOMER?
Customer, customer’s
customer, till the level
of user
Solving customer’s
problem is CRITICAL
FOR SUCCESS
Principle 1: Customer focused
Air conditioning solutions are
for whom?
Developers? Contractors? Facility
owners? Occupants?
Are all occupants the same?
IT office/shop-floor/packed
classroom
What about the operator?
Residence – end user is operator
Industry – Utility staff (skilled)
Shops – unskilled staff/watchman!!!

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Small and medium
commercial spaces
Non-technical operators
Single phase power
Multi-speed
Price sensitive
For example:
HVAC product
serving a different
market:
Principle 1: Customer focused
Improved cooling over
direct evaporative
systems, 4-5°C lower
Lower humidity levels,
option of sensible cooling
also (indirect only)
40% lower operating costs
than ACs
100% fresh air!
Technology offering
of 2-stage, Indirect
Direct Evaporative
cooling (IDEC):
Technology available, but
what about the product?

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Existing product
for industry
Redesigned
product for small
commercial
spaces
Principle 1: Customer focused
Three
phase Single
phase
Electrical
terminals Easy
Connectors
PLC Simple
controller
Industrial
panel No panel

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Preliminary market assessment
Technical assessment – challenges, probable solutions,
development route, risk, IP situation, outside technology
required, alliances required
Source of supply assessment
Market research
Concept testing – present to customer
‘Value to customer’ assessment
Business and financial analysis
Principle 2: Front-end loading (homework)
Product definition
High level
specs
Project scope
Target market
Product
concept
Positioning
(including
price target)
Value
proposition
Benefits to be
delivered
Features,
attributes,
requirements

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Rigid and linear PD is wrong
Black box development
After initial inputs, development team doesn’t interact with
the customer for feedback during the intermediate stages of
development
Time is utilised and product is launched
BUT ‘Not quite what we had in mind’
Principle 3: Spiral development (iterate)
After winning $10,000 as the runner-up in the MIT
$100K pitch competition in 2007, co-founders Sorin
Grama and Sam White decided it was time to visit
their target market, Grama says.
“The reality was a lot different than what we had put
in our business plan,” Grama (pictured above, left)
says. “So different, in fact, that nobody wanted this
contraption we were building”—a system that would
harness the sun’s energy to produce hot water and
electricity. “We realized we were just another classic
case of a solution looking for a problem to solve.” *
Promethean Power
Systems
• Rapid milk chilling
without a diesel
generator for village
farmers
* https://xconomy.com/boston/2016/07/11/promethean-founder-returns-from-india-with-lessons-for-entrepreneurs/
Today Promethean is a promising enterprise
with over 1200 installations

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Things have changed in recent times!
New product launched by competition, thus
change in landscape
Get something in front of customer early
without spending much
Iterate based on feedback
Principle 3: Spiral development (iterate)
IN 4 MONTHS !
Metal exchanger
Plastic exchanger
Exchanger in a
chassis
Chassis around
the exchanger
Converter industry
(print and packaging)
Heat recovery from
solvent-laden air at
60°C
Payback target of 12-18
months and
cross-contamination
resolved by 3rd iteration

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Principles of NPD
Talents of people from different functions are important for success
True CFT is required; the CFT must include members from marketing, engineering,
R&D, sales, operations, finance, and purchase
CFT reduces cycle time – silos cause delay
Principle 4: Holistic approach with cross functional teams or CFT
Popular metrics: revenue, profits, customer satisfaction, market share, on time
performance, time to market, performance to budget
Principle 5: Metrics, accountability, and continuous improvement
Do the right projects for maximising productivity – while principles 1-5 focus on
‘doing the projects right’, the focus of Principle 6 is on ‘doing the right project’.
Principle 6: Maximising productivity
Break the development into a series of manageable and simple stages with
increasing resource requirements. Activities are conducted in parallel within each
stage via CFTs.
Principle 7: Stage-gate innovation system (break it down)

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Successful product development requires individuals to have not just a multitude of technical
competencies but also the ability to think like entrepreneurs. One needs to work with, understand,
and sometimes practice, cross functional domains like sales, marketing, finance, and operations.
Starting with the highest level of customer focus and front-end homework, the product development
efforts should result in satisfied customers and growth of the organisation in a reasonable time.
To conclude…

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THANK YOU