final_3

THE UNIVERSITY OF QUEENSLAND
Bachelor of Engineering Thesis
Development of an Interactive Framework for New Product
Development
Student Name: Kristian JUEL
Course Code: MECH4501
Supervisor: Michael Heitzmann
Submission Date: 3 June 2016
A thesis submitted in partial fulﬁlment of the requirements of the
Bachelor of Engineering Degree in Mechanical Engineering
UQ Engineering
Faculty of Engineering, Architecture and Information Technology

Kristian Juel
43 Gosford Street
Mt Gravatt
Qld 4122
3 June 2016
Professor David Mee
Head
School of Mechanical and Mining Engineering
The University of Queensland
Qld 4072
Dear Sir,
I hereby submit my Thesis titled ”Development of an Interactive Framework for New
Product Development” for consideration as partial fulﬁlment of the Bachelor of Engi-
neering degree.
All the work contained within this Thesis is my original work except where otherwise
acknowledged.
I understand that this thesis may be made publicly available and reproduced by The
University of Queensland unless a limited term embargo on publication has been
negotiated with a sponsor.
Yours sincerely
Kristian Juel
Student ID: 42180809
2

A B S T R A C T
New Product Development is a crucial activity for the modern firm, and success in the
pursuit of new products is tied strongly to company success. Indeed, it is commonly
argued that innovation and the development of new products is essential for the
survival of companies in the twenty-first century. In spite of this, many companies
struggle to develop new products that accurately and efficiently meet the needs of
the market and the company. This has implications for the long-term profitability of
companies; improvement in NPD is, for many companies, essential.
This thesis focuses on the development of an interactive approach towards man-
aging New Product Development, which aims to increase success in the pursuit of
new products. Internal success in New Product Development is typically conceived
of as a function of a number of key variables - for example, the company’s product in-
novation and technology strategy and the climate, culture, teams and leadership of the
company. Another crucial factor is the company’s idea-to-launch process. The idea-
to-launch process is a conceptualisation of the path towards product launch, which
provides a framework within which product development can be managed. Various
authors have put forward different idea-to-launch processes, which typically include
a mixture of stages, gates and iterative loops. The suitability of a general process to
a specific company and product vary, and many authors have identified that there is
a need for an adaptive way of structuring the NPD process. This thesis aims to put
forward another model for structuring the New Product Development, which draws
on existing research and primary research.
To guide the development of the model, seven companies were examined as case
studies. These companies were deliberately selected to represent a broad swathe of
industries, sizes and focuses. The selected companies represent industries including
composite design and manufacturing, machine design and manufacturing, food man-
ufacturing and a business involved in the sale of clothing. This was seen as essential
due to the necessity of putting forward a model that fits a variety of businesses.
The case studies showed that companies generally have a good idea of the process
that must be followed to achieve New Product Development success. It also revealed
i

that companies have generally modified existing models for New Product Develop-
ment to address their specific situation. This includes, for example, structuring the
development process to include necessary third-parties and embracing iteration at spe-
cific points in the process. It also includes making key decision-making points more
or less strict depending on the risk that the next stage in development represents.
The secondary and primary research conducted in this thesis revealed a need
for a risk-based approach to New Product Development. The strengths of such an
approach is that it, firstly, is relevant to the pursuit of New Product Development -
which can be conceptualised as a risk-minimisation exercise for the company. Sec-
ondly, risk management is already a part of most development processes - as such
the proposed approach is easily implemented by companies. Finally, the approach is
compatible with the ISO9001 Quality Assurance framework, which many companies
have an interest in gaining certification for.
The model uses the ISO31000 Risk Management framework to propose a struc-
tured process. The model enables the New Product Development practitioner to
engage with the risks involved in a specific New Product Development, and make
specific modifications to minimise severe risks. These recommendations are based on
secondary and primary research. In putting forward these recommendations, it does
not dismiss the role of other factors in decreasing risks and increasing the likelihood
of success - however, the model is intentionally limited to factors concerned with the
development process. The model provides an opportunity for companies who have
failed in the pursuit of New Product Development - or those that want to improve -
with a means of reflecting on and modifying their development process to increase
the likelihood of success.
ii

C O N T E N T S
introduction ix
1 Goals, objectives and scope . . . . . . . . . . . . . . . . . . . . . . . . . . x
2 Thesis structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
1 literature review 1
1.1 What is a product? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 What is a new product? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 What is New Product Development? . . . . . . . . . . . . . . . . . . . . . 7
1.3.1 What is Research and Development? . . . . . . . . . . . . . . . . . 7
1.4 What drives New Product Development and Innovation in Businesses? 9
1.4.1 The entrepreneurship paradigm: the role of individuals . . . . . 9
1.4.2 The Technology-Economic Paradigm: Research and Develop-
ment, and New Product Development . . . . . . . . . . . . . . . . 10
1.4.3 The strategic innovation paradigm . . . . . . . . . . . . . . . . . . 11
1.4.4 Discussion of Sundbo’s three paradigms of innovation . . . . . . 11
1.5 Why is there a need for New Product Development in businesses? . . . 13
1.6 How much interest and investment is there in New Product Development? 14
1.6.1 Management interest in NPD . . . . . . . . . . . . . . . . . . . . . 14
1.6.2 Spending on Research and Development and NPD . . . . . . . . 14
1.6.3 Business Research and Development investment between differ-
ent industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.7 What contributes to company success in New Product Development? . 19
1.7.1 The innovation diamond . . . . . . . . . . . . . . . . . . . . . . . . 19
1.8 What constitutes success in NPD? . . . . . . . . . . . . . . . . . . . . . . 22
1.8.1 Dimensions and indicators of success . . . . . . . . . . . . . . . . 23
1.9 What are some popular idea-to-launch strategies? . . . . . . . . . . . . . 26
1.9.1 Staged processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.9.2 NexGen Stage-Gate . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1.9.3 Spiral development models . . . . . . . . . . . . . . . . . . . . . . 30
1.9.4 Design-to-budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.9.5 Time-to-market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1.9.6 Evolutionary prototyping . . . . . . . . . . . . . . . . . . . . . . . 33
1.10 An adaptive NPD process? . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
1.10.1 Interpretive NPD processes: Mafﬁn (1998) . . . . . . . . . . . . . 35
iii

CONTENTS
1.10.2 Unger and Eppinger’s risk-based framework . . . . . . . . . . . . 36
1.10.3 Meisner et al adaptive New Product Development process . . . . 37
1.10.4 Tailoring Concurrent Engineering for small businesses: Skalak
et al. (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
1.11 Preliminary research questions . . . . . . . . . . . . . . . . . . . . . . . . 41
2 research methodology 43
2.1 Selection and Justification for the Research Methodology . . . . . . . . . 44
2.1.1 Purpose of research . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.1.2 Justification for the interpretivist paradigm . . . . . . . . . . . . . 45
2.1.3 Justification of qualitative methodology . . . . . . . . . . . . . . . 47
2.1.4 Justification of case study method . . . . . . . . . . . . . . . . . . 48
2.2 Sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.2.1 Definition of target population . . . . . . . . . . . . . . . . . . . . 49
2.2.2 Sampling method and frame . . . . . . . . . . . . . . . . . . . . . 49
2.2.3 Sample size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.2.4 Sampling issues and complications . . . . . . . . . . . . . . . . . . 51
2.3 Data collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.3.1 Justification for the use of semi-structured in-depth interviews . 53
2.3.2 Interview instrument . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.3.3 Pilot study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.3.4 Chain of evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.3.5 Case study transcripts, documentation and storage . . . . . . . . 55
2.4 Data analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
2.5 Criteria for judging the quality of case study research design . . . . . . 58
2.6 Limitations of case study method . . . . . . . . . . . . . . . . . . . . . . . 59
2.7 Ethical and Privacy considerations . . . . . . . . . . . . . . . . . . . . . . 61
3 case study discussion 63
3.1 Company observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.1.1 Company A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.1.2 Company B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.1.3 Company C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
3.1.4 Company D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.1.5 Company E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.1.6 Company F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
3.2 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
3.2.1 What are the most important business goals and how does the
business seek to achieve them? . . . . . . . . . . . . . . . . . . . . 82
3.2.2 How is New Product Development success defined? . . . . . . . 83
iv

CONTENTS
3.2.3 How is New Product Development managed within the company? 85
3.2.4 How is New Product Development a structured exercise within
the company? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
3.2.5 Does the business make a conscious effort to learn from success
and failure in New Product Development? . . . . . . . . . . . . . 89
4 an interactive new product development structure? 90
4.1 General risk management approach: ISO 31000 . . . . . . . . . . . . . . . 93
4.2 New Product Development risk management: A method for NPD pro-
cess design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
4.2.1 Establishing the context . . . . . . . . . . . . . . . . . . . . . . . . 95
4.2.2 Risk assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
4.2.3 Risk treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
4.3 Strengths, weaknesses and limitations of model . . . . . . . . . . . . . . 106
5 conclusion and summary 107
6 appendices 115
.1 Appendices 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
.2 Appendices 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
v

L I S T O F F I G U R E S
Figure 1 Thesis structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Figure 2 Thesis progression - 1/4 . . . . . . . . . . . . . . . . . . . . . . . 1
Figure 3 Adapted from (Annacchino, 2007, p.17) . . . . . . . . . . . . . . 4
Figure 4 Adapted from (Annacchino, 2007, p.17) . . . . . . . . . . . . . . 4
Figure 5 Survey results from (Cooper and Edgett, 2005, p.5): Importance
of a range of levers to increase proﬁtability and growth. . . . . . 14
Figure 6 Spending on Research and Development as a percentage of
GDP for selected countries (OECD, 2015a). . . . . . . . . . . . . 15
Figure 7 Business Enterprise expenditure on Research and Development
as a percentage of GDP for selected countries (OECD, 2015b). . 16
Figure 8 Proportion of Business Enterprise Expenditure on Research and
Development in total Research and Development spend for se-
lected countrie OECD (2015a,b) . . . . . . . . . . . . . . . . . . . 16
Figure 9 Distribution between spending on Industry and Services in Busi-
ness Enterprise expenditure on Research and Development for
selected countries (OECD, 2015c). . . . . . . . . . . . . . . . . . . 17
Figure 10 Proportion of Business Enterprise expenditure on Research and
Development spent on high- and low-tech manufacturing (OECD,
2015d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 11 The innovation diamond (Cooper and Edgett, 2005). . . . . . . . 19
Figure 12 Success dimensions over Product Life Cycle for aerospace com-
panies from Moatari Kazerouni et al. (2011) . . . . . . . . . . . . 24
Figure 13 Cooper’s original Stage-Gate model (Cooper and Edgett, 2005,
p.134). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 14 An illustration of NexGen Stage-Gate from Cooper and Edgett
(2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Figure 15 The spiral development process (Darian et al., 2009, p.390). . . . 31
Figure 16 Xerox’s spiral development process (Unger and Eppinger, 2011,
p.692). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Figure 17 Unger and Eppinger’s (2011) NPD process matrix. . . . . . . . . 37
Figure 18 Most common reasons for NPD process deviation, adapted from
Meisner and Blessing (2006). . . . . . . . . . . . . . . . . . . . . . 38
vi

LIST OF FIGURES
Figure 19 Meisner et al’s adaptive process (Meisner and Blessing, 2006, p.5). 38
Figure 20 Project assessment (Skalak et al., 1997, p.319). . . . . . . . . . . . 39
Figure 21 Project assessment plot (Skalak et al., 1997, p.321). . . . . . . . . 40
Figure 23 The data analysis process Miles (1979). . . . . . . . . . . . . . . . 56
Figure 25 Company A’s New Product Development structure. . . . . . . . 66
Figure 26 Company B’s New Product Development process. . . . . . . . . 69
Figure 27 Company C’s New Product Development process. . . . . . . . . 72
Figure 28 Company E’s New Product Development process. . . . . . . . . 77
Figure 29 Company F’s New Product Development process. . . . . . . . . 80
Figure 30 Company C’s new product development process. . . . . . . . . 86
Figure 31 Company E’s new product development process. . . . . . . . . . 87
Figure 32 Company B’s New Product Development process. . . . . . . . . 87
Figure 33 Company A’s New Product Development structure. . . . . . . . 88
Figure 35 General process for risk assessment from Standards Australia
(2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 36 ISO31000 risk assessment matrix (Standards Australia, 2009) . . 98
Figure 37 Appendices 2: Interview format . . . . . . . . . . . . . . . . . . . 119
vii

A C R O N Y M S
AS Australian Standard
BERN Business Enterprise expenditure on Research and Development
CiC Commercial-in-Conﬁdence
GDP Gross Domestic Product
GFC Global Financial Crisis
GERD Government Expenditure on Research and Development
HERD Higher Education expenditure on Research and Development
ISO International Standardisation Organisation
NPD New Product Development
NZS New Zealand Standard
OECD Organisation for Economic Cooperation and Development
R&D Research and Development
RBP Resource Based Perspective
SOP Standard Operating Procedure
SCA Sustainable Competitive Advantage
viii

I N T R O D U C T I O N
Despite being well aware of the need to innovate - resulting in a correspondingly
large investment - businesses do not generally do well in New Product Development
(NPD). This thesis aims to develop an interactive framework for NPD that encourages
businesses to improve their performance.
New products constitute a significant portion of the profit of companies in the
modern business environment: in 2011, products launched within three years rep-
resented 27.3 percent of all sales (Kahn, 2013, p.3). In contrast, products launched
within five years of 1980 held a 15 percent market share - new products are becoming
more important to the modern business (Gruenwald, 1985, p.18).
The rising significance of new products, however, has uncovered a split in modern
businesses between those that succeed in their development, and those that do not.
Self-judged success by the top innovators is generally around 80 percent; for the worst
innovators it is below 40 percent (Cooper and Edgett, 2005, p.5). In other indicators
of NPD success - lateness, percent of profit from new products and number of new
products that meet profit guidelines - there is also a significant variation between
businesses. Some businesses have succeeded within the new, innovation-prioritising,
business environment while most businesses have not.
Literature generally identifies that many less-successful businesses have not prop-
erly implemented strategies for NPD. These include, for example, incorporating inno-
vation into the overall strategy of the company by making sure the new product fits
within the existing lineup and having clear view of future products to be developed. It
also includes factors such as internal company organisation; much research suggests
that companies are best served with cross-functional teams, for example, rather than
splitting the company up into traditional departments. Finally, many authors have
identified the lack of a defined idea-to-launch process for the selection and develop-
ment of NPD projects as a major obstacle to increasing success rates (Cooper, 2014;
Annacchino, 2007, p.13).
ix

1 goals, objectives and scope
Idea-to-launch processes are a management strategy that seeks to move new prod-
ucts through a structured process from the moment of conception to the launch. Many
use a number of gates where the project is assessed by management with pre-set cri-
teria and a decision made on whether the project should continue, be changed or be
put on ice. Research suggests that these processes should vary between companies
and speciﬁc products depending on such variables as company structure, product
type, product scale, product focus, market conditions and so on. However, authors
have traditionally promoted rigid frameworks that give the false impression of non-
adaptability. Various authors have suggested approaches towards creating an adap-
tive approach for companies to design their own NPD process; this thesis aims to
contribute to these efforts.
1 goals, objectives and scope
The intention of this thesis is to put forward an interactive model for New Product
Development which can help businesses improve their NPD process. In doing so, it
does not discount other factors that affect NPD success - and these will be examined
as well - however, the focus will be on assembling an adaptive idea-to-launch model.
The objectives associated with carrying out this task are:
1. To gain an understanding of the context within which NPD operates;
2. To understand how NPD happens in practice, and;
3. To propose a model for NPD based on secondary and primary research, which:
a) Is applicable to a broad range of business and product scenarios, and;
b) Increase the likelihood of developing successful products.
To this end, this thesis will pursue two distinct avenues of information:
1. A thorough review of existing literature of NPD and innovation in a broad sense
and idea-to-launch processes particularly, and;
2. A number of case studies based upon the literature review to build practical and
primary knowledge into the proposed model.
x

2 thesis structure
2 thesis structure
Figure 1: Thesis structure.
To address the aims and objectives outlined above, the following proceeds through
a series of logical steps. Firstly, a literature review will be undertaken to establish
the framework for the further work. This will involve defining the most important
concepts pertinent to the work, and examining statistics relevant to the topic. Further-
more, it will begin to examine how NPD is typically conceived of, and how companies
approach the challenge of managing it. Finally, it will examine various existing ap-
proaches to the challenge of creating an adaptive framework for NPD with the aim
of establishing what work has already been done and what the limitations of existing
work is.
The literature review sets the context for the development of a strategy to gain pri-
mary information on how NPD is approached by companies in practice. The second
chapter establishes the framework through which this will be achieved, with a view
to outlining and justifying the methodology behind the conduct of the case studies.
The third chapter of the thesis outlines the results obtained from the primary
research. This includes examining the approach of each of the companies in turn, and
reflecting on trends in NPD practice between businesses. This information will also be
compared with themes identified in the literature review, with a view to identifying
how practical NPD can be conceptualised within a theoretical framework.
xi

2 thesis structure
Finally, this thesis will outline a model for NPD which draws on the information
generated through the secondary and primary research. This also includes a critical
reﬂection on the model’s strengths and weaknesses.
xii

1
L I T E R AT U R E R E V I E W
Figure 2: Thesis progression - 1/4
This literature review of New Product Development will aim to answer the following
questions:
1. What is a product?
2. What is a new product?
3. What is New Product Development?
4. What drives New Product Development and Innovation in businesses?
5. What is the relationship between New Product Development and Research and Develop-
ment?
1

literature review
6. Why is there a need for New Product Development in businesses?
7. How much interest and investment is there in New Product Development?
8. What contributes to success in New Product Development?
9. How successful are companies in New Product Development?
10. What are some popular idea-to-launch strategies?
11. What are some approaches to adaptive idea-to-launch strategies?
2

1.1 what is a product?
In this thesis, “product” is used to describe something offered by a company for sale
to customers, be it tangible or intangible. In this general sense, it acknowledges that
products, services and ideas are deeply intertwined and should not be separated;
products, from first principles, should aim satisfy the needs of the costumer and for
this purpose all three aspects are relevant (Annacchino, 2007). The arrival of mobile
technologies makes this point clearly: when one purchases an Apple iPhone, the price
includes the phone, but also warranties and a commitment for future support, service
and supply of resources. Conversely, services such as tertiary education requires
a range of products - venues, teaching resources and online portals, for example -
developed for the explicit purpose of providing the service. To consider products
simply as tangibles or intangible is consequently not accurate: their development
requires attention to be paid to products, services, ideas and human value.
For the purposes of this thesis, products and services are therefore not exclusion-
ary in their relationship. However, some businesses are primarily concerned with
the manufacture of goods while some are concerned with the provision of services.
Consequently, it makes sense to discuss service-oriented and manufacturing-oriented
models of production. A service-oriented model ”is characterised by a smaller invest-
ment in capital equipment, a smaller investment in each revenue cycle, and a gener-
ally faster revenue cycle; as such, they generally generate incremental profits from
incremental investment with low fixed costs” (Annacchino, 2007, p.1). Conversely,
manufacturing-oriented models of NPD rely on levers through which a significant
investment can result in a larger initial return through the lifecycle of a product. The
difference between a service- and manufacturing oriented model is best illustrated via
figure 1 and 2.
3

Figure 3: Adapted from (Annacchino, 2007, p.17)
Figure 4: Adapted from (Annacchino, 2007, p.17)
As the illustrations show, the fundamental difference between the two models, in
financial terms, is the level of risk the company will be exposed to over the course
of the product lifecycle. While a service-oriented model assumes only a small initial
investment in the first year, a company relying on manufacturing must risk a period
where profits cannot be made due to the need to recoup significant initial investments.
This is because a service-oriented model primarily relies on the provision of human
value, while a manufacturing-oriented model supplies goods (Dutt and Ros, 2008).
In economic analyses, industry and services are generally separated for com-
parison in order to examine the quality of economic outputs. The Organisation
for Economic Cooperation and Development (OECD) acknowledges the ”increasing
bundling of services with products” (OECD, 2000, p.3), but defines services as those
4

business activities ”not directly associated with the manufacture of goods, mining or
agriculture . . . typically involving the provision of . . . labour, advice, managerial
skill, entertainment, training, intermediation and the like” (OECD, 2000, p.7). Indus-
try, meanwhile, is deﬁned as manufacturing, mining, and the provision of electricity,
gas and water (OECD, 2002).
Broadly speaking, new products are bought by three kinds of consumers:
1. Households: households or families buying products. Examples include, food,
furniture, vehicles, electronic appliances and so on.
2. Commercial customers: These are consumers who will use the product in com-
mercial activities to manufacture products for wider consumption or provide
services. Examples include ofﬁce furniture, factory machinery, hospital equip-
ment and so on.
3. Governments: Governments purchase products to fund itself, provide services
to the general population and meet responsibilities. Examples include taxation
systems, military equipment, uniforms and so on.
5

1.2 what is a new product?
1.2 what is a new product?
New products represent an investment by an entity into taking advantage of a per-
ceived market opportunity. They constitute a willingness on behalf of the company
to risk the use of funds for the development of a product in the expectation that this
product will make a profit at a later stage that exceeds the amount spent developing
it. Though new products are often thought of as genuinely new introductions to the
market, it is more useful to consider a new product as any of the following (adapted
from Mena and Stevens, 2010, p.97). Note that the examples provided mostly rep-
resent manufacturing-oriented products; however, services can be categorised within
the six types as well.
1. ‘Me-too products’: a product that replicates characteristics of existing successful
products on the market. An example is supermarket ‘home-brand’ products or
the provision of a service already offered elsewhere.
2. Line extensions: variations of a well-known product, making small changes in
manufacturing processes or marketing strategy to increase market share and
product positioning. An example is variations of common breakfast cereals.
3. Product repositions: changing marketing strategies to respond to current customer
demands. An example is the repositioning of many high-sugar breakfast cereals
towards an emphasis on fibre and variety, or the relaunch of a new service using
a different name to target a certain group.
4. New form/formulations for existing products: changing the form or formulation of
existing products to more adequately meet customer demands, reduce costs or
respond to changes in legislation or supply situations. An example is the effort
of food companies to reduce the salt in their recipes as a result of higher health
awareness amongst customers.
5. Evolutionary innovative products: substantial changes to an existing product that
add value or functionality. An example is the failed introduction of ‘New Coke’
to replace the old Coca-Cola formulation in 1985.
6. Radically innovative products: products never seen before that seek to exploit a
gap in the market. These are typically the most expensive to develop, but are
also associated with high levels of profit if successful. An example is Nestle’s
Nespresso coffee system (adapted from Mena and Stevens, 2010, p.97).
6

1.3 what is new product development?
New Product Development is the complete set of activities associated with bringing
a new product to the market. It comprises interdisciplinary activities within fields as
diverse as management, accounting, law, marketing, logistics, human resource man-
agement, scientific research, design, testing and production: each of the above are
vital components in bringing a successful product to market.
As a result of its imbeddedness, NPD is commonly a multi-departmental activity;
while many companies have a designated product development manager or depart-
ment, it should be understood that NPD is an activity that engages a long list of
actors. The department most closely associated with the development, however, is
the Research and Development (R&D) department. The relationship between R&D
and NPD is an intimate one, but also one that is rarely completely articulated. Con-
sequently, the two are often used almost interchangeably. Indeed the two are intrin-
sically tied together; basic research and experimentation often leads to ideas, tools
and techniques that can be commercialised as new products. Additionally, spending
on R&D is often used as an indirect measure of NPD activity (Such as within OECD
analyses). However, an accurate understanding of NPD must be attuned to the re-
lationship between the two fields in business and to the idea that R&D is but one
paradigm of innovation operating in New Product Development (Cooper and Edgett,
2005; Barczak et al., 2009; Ernst, 2002; Kahn, 2013).
1.3.1 What is Research and Development?
What is R&D? Traditionally, R&D activities have been perceived as a continuum of
activities proceeding from basic research through applied research and terminating
at advanced development (OECD, 1963). This conceptualisation helps to understand
how R&D and NPD are linked.
In basic research, studies are undertaken primarily ”to acquire new knowledge
without a view to its application” (Hall, 1988, p.2). In layman’s terms, it represents the
seeking of ’knowledge for knowledge’s sake’; basic researchers do not aim to develop
tools to be applied, they merely seek to gain a better understanding of phenomena.
Nonetheless, basic research has contributed significantly to increases in d significantly
to breakthroughs many commercially successful products are based on basic research
7

breakthroughs. For example, the Human Genome Project started in 1990 as an open-
source attempt to better understand the nature of human DNA has spawned the
multi-billion dollar American biotechnology industry (Lunshof, 2010).
Applied research is the application of knowledge acquired as basic research to-
wards solving a problem; the OECD (1963) defines it as “original investigation under-
taken in order to acquire new knowledge . . . directed primarily towards a specific
practical aim or objective” (p.23). Consequently, applied research is more strongly
tied to the commercial activities of businesses than is basic research; the outputs of
applied research often have direct commercial applications. An example of applied
research is the development by Alan Turing of theoretical computer science, which
led to the development of the personal computer.
Finally, experimental development is defined by the OECD as:
“. . . systematic work, drawing on existing knowledge gained from re-
search and/or practical experience, which is directed to producing new
materials, products or devices, to installing new processes, systems and
services, or to improving substantially those already produced or installed”
(OECD, 1963, p.35).
As such, experimental development seeks to prototype existing forms of knowl-
edge into substantial products to be further developed for commercial applications.
Kevlar is a good example of this process at work: DuPont developed Kevlar as a
chemical polymer in the 1960s as part of applied research project. Later, it was spun
into the tough fibre used widely today as part of an experimental development project
(Pearce, 2014).
8

1.4 what drives new product development and innovation in businesses?
1.4 what drives new product development and innovation in busi-
nesses?
Businesses seek to use new products to increase their Sustainable Competitive Advan-
tage (SCA) over competitors and deliver increased earnings, market share and other
benefits to the shareholders in the long term (Jensen, 2009). This section discusses
how innovation can be theorised in three distinct ways according to Sundbo (1995).
Firstly, the entrepreneurship paradigm discusses the role of individuals within inno-
vation and the development of new products. The second paradigm, concerning the
technology-economic nexus, focuses on the role of technological development in creat-
ing innovation within businesses. Finally, the strategic paradigm appears as a hybrid
of the two former paradigms and presents a wide view of internal and external inno-
vation. From the onset it should be noted that these paradigms are not meant to be
mutually exclusive; to varying extents, they are all factors in how companies innovate.
However, a good understanding of them is conductive to the view of innovation that
is used in this thesis.
1.4.1 The entrepreneurship paradigm: the role of individuals
The entrepreneur paradigm was dominant around the start of the twentieth century
and represents the first attempt to codify innovation and NPD success. This paradigm
viewed success as arising primarily from individual inventors with the personal qual-
ities required to make tough decisions and products viable. In this period, innovation
and invention were virtually synonymous and innovators such as Henry Ford had a
significant amount of prestige. In later years, the entrepreneurial individual became
understood, not as much in terms of inventiveness, but in terms of a desire for in-
dependence and practical action (Sundbo, 1995, p.401). Under this perception, the
entrepreneur became someone who overturns the conventional norms and creates a
new way of conducting business that upsets the status quo in a process of creative
destruction.
As discussed in the next section, the entrepreneurial paradigm lost some signif-
icance from around 1930. However, it saw a resurgence in attention paid to it by
scholars seeking an alternative route to economic growth in the 1970s. In later years,
entrepreneurship has extended to consider that innovation is not necessarily tied to
it; entrepreneurship can also be associated with copying and remarketing existing
9

concepts. Especially due to the rise of software as a product, the proﬁle of the en-
trepreneur has also changed from someone upsetting the status quo to someone who
sees unexploited possibilities in existing structures and is willing to invest to exploit
these possibilities. The entrepreneurial character has also moved away from being
concerned with the independent individual towards being one characterised by in-
dividuals or groups operating in an entrepreneurial fashion within an organisation;
in such a way, company employees developing new products may be conceived as
entrepreneurs. Additionally, venture organisations within larger businesses may be
viewed as entrepreneurial. The entrepreneurial paradigm views innovation as the
process through with an enterprising individual or group brings new products and
processes into reality, and has come to symbolise a wider range of activities over time
(Sundbo, 1995; Fuglsang, 2008, p.115).
1.4.2 The Technology-Economic Paradigm: Research and Development, and New Product
Development
The technology-economic paradigm postulates technological developments as the
main drivers of innovation and NPD. It was particularly dominant in the interwar
years and the 1950s as businesses became increasingly organised and capable of large-
scale organisation as a result of the experiences gained in the war years. During these
years, with the rise of the professional engineer, technology and its development was
particularly central to the conception of innovation, and spawned the institutionalisa-
tion of Research and Development (R&D) departments part of the product develop-
ment landscape (Sundbo, 1995; Shapiro and Taylor, 2013; Ernst, 2002).
Sundbo argues that the technology-economic paradigm represented ‘push inno-
vation’ early on; that is, technology developed in the R&D departments of companies
dictated the products brought to market. This is otherwise known as an ‘inside-out’
view of innovation, a perspective in which there is limited attention paid to external
factors such as market conditions (Jensen, 2009, p23). In the 1980s companies began
to move away from the view that innovation necessarily occurred in their R&D de-
partments, and instead made NPD an activity that involved most of the organisation
(Sundbo, 1995, p.405). As ﬁgure 7 (in section 1.6.2) shows, the peak in R&D spending
around 1982 is indicative of this shift. The move away from a strict inside-out focus
entailed an increased level of market focus for many businesses – the ‘pull’ factor of
customer needs and wants has come to play a greater role in the technology-economic
paradigm (Jensen, 2009; Kahn, 2013; Annacchino, 2007).
10

1.4.3 The strategic innovation paradigm
The strategic innovation paradigm introduces a “broad, market-oriented view of the
development of the firm” (Sundbo, 1995, p.403). This paradigm emphasises the im-
portance of management in dictating the direction of the company and laying down
the strategy for the rest of the organisation to follow; innovation comes from the top.
However, other actors within organisations also play a crucial role – Sundbo does not
dismiss the role that the R&D, marketing or production departments play in innova-
tion. These groups within the company are tasked with carrying out the strategy of
the top management, but also communicate interactively with the management to de-
fine what the strategy should be and how the company should work. Innovation, in
this case, takes on a broader definition encompassing both the technology-economic
and entrepreneurial paradigm: it becomes “a new combination of a firm’s resources –
whether technological, entrepreneurial or other – as the means of achieving competi-
tive advantage”.
The practical implication of the paradigm is the view that innovation can be
both internal and external. Innovation can be technological, social or organisational
and encompasses a diverse range of activities within a company – for example, new
products, new processes, new organisational structures or new marketing strategies.
Each of these contributes to a higher SCA and should be considered innovations. In
the words of Sundbo, “the crucial element for the development of the enterprise is
its (or in practice its managers’) ability to see new possibilities in the market, then to
introduce innovations within the firm that can exploit these possibilities by utilising
the firm’s specific resources” (Sundbo, 1995, p.404).
1.4.4 Discussion of Sundbo’s three paradigms of innovation
Each of the three paradigms differ in the degree to which their perspective is inside-
out (”resource base follows market position”) or outside-in (”market position follows
resource base”) (Jensen, 2009, p.12). It is incorrect to say any of the perspectives
purely represent a particular position. SCA is maximised if, firstly, the company
makes an ideal compromise between push and pull factors in its strategy and internal
organisation, and, secondly, if resource-use within the organisation is optimal.
11

This thesis focuses on the secondary part of this formula; that is, it emphasises
the role of a so-called Resource Based Perspective (RBP, sometimes referred to as the
Resource Based View - RBV) in explaining success of a businesses in NPD. It is im-
portant for businesses to combine the lessons of each of the three paradigms into an
effective internal structure that differentiates them from other, competing organisa-
tions and opens up a SCA. While the external environment and market conditions
are important to a ﬁrm, a RBP allows the examination of a company’s internal struc-
ture in isolation in order to judge how effective the company is and how it can be
optimised (Sundbo and Toivonen, 2011; Robinson, 2008, p.44-46).
12

1.5 why is there a need for new product development in businesses?
1.5 why is there a need for new product development in businesses?
New products are essential for businesses to remain competitive in a changing and
evolving market. Their development is also crucial if a company is to take advantage
of technological advancements or market changes to increase their market share; a
company that gambles on past successes is almost certain to be eclipsed by competi-
tors and suffer a reduction in future sales (Cooper and Edgett, 2005; Kahn, 2013). One
example of a company failing to innovate is Kodak, the American photographic com-
pany that invented the digital camera in 1975. At the time, however, Kodak executives
judged that the company should focus on its core business of photographic films. As
a result, Kodak was ill-prepared for digital photography’s take-over of the market in
the late 1990s and early 2000s and was forced, unsuccessfully, to play catch-up to those
companies (Nikon, Canon, Apple and others) that embraced the new technology and
were not afraid to make their existing products. Kodak ultimately paid the price for
having the technological means of being a pioneer in the market, but choosing to bet
on existing products, and filed for bankruptcy in 2012 (Cohan, 2011).
At the other end of the spectrum, there is much evidence to support the hypoth-
esis that corporate welbeing correlates with innovative practices. According to Little
(2005), the top 25 percent of innovative companies have ”12 times as much profitability
in New Product Development” (p. 12) as the bottom 25 percent; this can be translated
into sales of $US 39 per dollar spent on Research and Development (RD), compared to
$US 3.30 for the bottom 25 percent of companies. Others have found that companies
with strong RD strategies enabling innovative product development are 73 percent
more profitable than those that do not (Singh, 2008, p.83). Empirical studies have also
found a significant positive correlation between relationship innovation and growth;
improvements in innovative capacity have been demonstrated to impact positively on
market value. Cameron et al. (2014) found that Hewlett-Packard’s increase in innova-
tion between that act positively on market value: that an increase in that an increase
in innovative capacity by one standard deviation between 2000 and 2006 potentially
added as much as $US 12.7 billion to its market value (p. 109). Data thus supports
the hypothesis that innovation in new products is tied to growth.
13

1.6 how much interest and investment is there in new product development?
1.6 how much interest and investment is there in new product de-
velopment?
1.6.1 Management interest in NPD
Executives consistently value innovation and the development of new products as one
of their highest priorities. In 2013, “growth through new products and services” was
cited as the primary strategic objective of leading CEOs in a survey carried out by
IBM (Mugge and Markham, 2013, p.35). Executives also consistently value innovation
above other tools used to increase profitability and growth (see figure 7).
Figure 5: Survey results from (Cooper and Edgett, 2005, p.5): Importance of a range
of levers to increase profitability and growth.
1.6.2 Spending on Research and Development and NPD
The OECD publishes a wide range of data on R&D spending across different countries
and industries within countries (OECD, 1963, 2015a). Since defining spending on
NPD within businesses is difficult, macro spending on R&D is typically used as a
simple substitute measure to gauge spending on innovation in countries. A subset
of the R&D data is known by the acronym BERN – Business enterprise Expenditure
on Research and Development – and is normally used to gauge business interest in
innovation. This section will first discuss trends in R&D spending in OECD countries.
14

It will then break down the data and assess business activity in R&D using the BERN
dataset. Finally we will discuss other measures of NPD intensity.
Since 2003, spending on R&D in OECD countries has increased by an average of
0.02 percent a year – the only exception to this being a slight decline in 2009 as the
GFC hit. Spending on R&D has since recovered to increase at a similar rate post-2009
to what it did between 2003 and 2008, which is above the long-term trend. Between
1989 and 1994 spending on R&D decreased signiﬁcantly.
Figure 6: Spending on Research and Development as a percentage of GDP for selected
countries (OECD, 2015a).
Note that the R&D ﬁgure here is composed of:
• Business Enterprise expenditure on Research and Development (BERD)
• Higher Education and basic Research and Development (HERD) (OECD, 2015b)
Spending on R&D in OECD countries increased from 2.14 percent in 2000 to 2.36
percent in 2013. Israel has seen the biggest increase in R&D spending in the last 20
years, rising from the OECD average to 4.5 percent of GDP in 2005. Between 2000
and 2013, the biggest increases in spending have been from China (up 130 percent)
and South Korea (up 90 percent). Of all the countries sampled, only two reduced
their R&D spending: Iceland (-30 percent) and the United Kingdom (-7 percent) since
2000. It is noteworthy that a few countries – Australia, Singapore and Luxembourg
15

– cut back on R&D spending from 2008 onwards. In this period, Australia’s R&D
expenditure as a proportion of GDP has decreased by 5 percent (OECD, 2015a,b).
Figure 7: Business Enterprise expenditure on Research and Development as a percent-
age of GDP for selected countries (OECD, 2015b).
Figure 8: Proportion of Business Enterprise Expenditure on Research and Develop-
ment in total Research and Development spend for selected countrie OECD
(2015a,b)
16

BERD as a fraction of GDP has decreased over the past 30 years, as figure 9
shows. However; the inrease across OECD countries is on average less than total
R&D spending (figure 10). Exceptions include china (with a 13 percent increase in
the proportion of BERD) and Australia (with a 13 percent increase between 1984 and
2008 - but a decrease since then). Figure 10 reveals a variance in how R&D is funded
between countries. Over the period 2000-2013, average BERD has consistently fluctu-
ated around 32 percent of total R&D spending. Between countries, BERD for the last
five years has ranged from 82 percent for Israel to 58 percent for Australia. As such,
the R&D of some countries are dominated by private investment in R&D while others,
such as Australia, is funded to a higher degree by the government.
1.6.3 Business Research and Development investment between different industries
Figure 9: Distribution between spending on Industry and Services in Business En-
terprise expenditure on Research and Development for selected countries
(OECD, 2015c).
Different countries have a different mix of private investment into R&D between in-
dustry and services. Countries with strong investment into the services sector include
Australia, Israel, New Zealand and Russia; conversely, countries with more invest-
ment into manufacturing are China, Germany, Japan and South Korea. The difference
between 2005 and the latest measurement year (2011 in most cases) is less than or be-
17

low 5 percent with the exception of New Zealand (where the service sector increased
from 40.5 percent to 48 percent of BERD). Note that ﬁgure 11 does not indicate the to-
tal spending (as a proportion of GDP) on each sector, merely the distribution between
each and the change between 2005 and the latest measurement year.
Figure 10: Proportion of Business Enterprise expenditure on Research and Develop-
ment spent on high- and low-tech manufacturing (OECD, 2015d).
Figure 12 shows whether the emphasis of the manufacturing industry is on high-
or low-tech industries, and the relative size of each. The ratio between R&D invest-
ments in high- and low-tech industries varies signiﬁcantly between countries; while
Australia’s low-tech investment is nearly 300 percent of the investment in high-tech
industries, the OECD average is 125 percent. For countries such as the UK, South
Korea and the US investment in high-tech industries is relatively higher (60, 55 and
33 percent respectively). In terms of gross investment into medium- to low-tech in-
dustries, Germany has the highest investment in medium- to low-tech at 61.3 percent
of BERD and South Korea has the highest investment in high-tech manufacturing at
53.3 percent.
18

1.7 what contributes to company success in new product development?
1.7 what contributes to company success in new product develop-
ment?
This section will discuss, within a Resource-Based Perspective, the contributing factors
typically identiﬁed that increase success in NPD.
1.7.1 The innovation diamond
The innovation diamond is a pictorial representation to illustrate the four components
to success in NPD.
Figure 11: The innovation diamond (Cooper and Edgett, 2005).
The innovation diamond is a RBP that emphasises a broad view of innovation
within an organisation, encompasses a range of processes. In this ways, it allows
us to segment up different activities within an organisation that contribute to NPD
success and examine each in turn.
Product Innovation and Technology strategy
19

Cooper and Edgett (2005) argues that successful companies have a strategy in
place that deals with long-term product innovation and is management-driven. The
five areas that authors identify of particular importance here are:
1. Clearly defined product innovation goals and objectives: The business should clearly
articulate long-term goals such as ”deciding what percentage of the business’s
sales, profits, or growth will come from new products over the next three or five
years” (Kahn, 2013, p.19).
2. The role of product innovation in achieving overall business goals: The product inno-
vation and business goals should be clearly linked with a role towards defining
the role of product development in achieving key goals.
3. Strategic areas defined: The management should focus the product innovation
endeavour towards areas that are rich in opportunities.
4. strategic buckets employed: Cooper and Edgett (2010) argue that businesses should
invest particular resources (funds or personnel) towards different strategic areas
and product types to ensure the correct mix between projects is achieved.
5. Product roadmap in place: The managagement should actively consider the ’plan
of attack’ over the long term to ensure that new products take the business to
where it wants to be in a set number of years. Attention should also be paid to
putting in place milestones to reach certain goals of the organisation over many
product cycles.
((Kahn, 2013, p.19-20), (Cooper and Edgett, 2005, p.20-25),Cooper and Edgett (2010))
Climate, culture, teams and leadership
A range of studies have suggested that the internal climate of the company has
a significant impact on the success of NPD. Elements of this include, for example,
company culture, structure and leadership style. Teams that work better together
produce better work.
Resources: Commitment and portfolio management
Businesses must make difficult choices about which products should be part of
their portfolio, and which should not. Equally, management should decide which
projects are allowed to be further developed into products. According to Kahn, many
20

businesses ”suffer from too many projects, often the wrong projects and not enough
resources to mount an effective or timely effort for each” (Kahn, 2013, p.20).
Tough decisions must be made throughout the NPD process to choose the right
projects to develop. This act has two motivations to it. Firstly, the ’natural selection’
ensures that the projects that are invested in are those that will likely be successful
for the company if the right criteria is applied. Secondly, it is designed to ensure that
products ﬁt within the overall strategy of the company, as discussed earlier in this
section. Regardless of the motivation, the decision to go or not to go ahead with a
project is typically done at pre-scheduled gates, which are further discussed later in
this point and in greater detail in section 3.1.9 on idea-to-launch processes.
Idea-to-launch system
An idea-to-launch system is a strategy to structure the development of a new
product. Rather than rely on an unstructured approach, authors such as Cooper and
Edgett (2005) and Kahn (2013) have found that success in NPD is directly correlated to
the level to which the process is structured. This thesis focuses directly on the effect of
idea-to-launch processes and the way businesses implement them, which is the focus
of the primary research. We will examine idea-to-launch processes in greater detail in
section 2.10 and 2.11.
21

1.8 what constitutes success in npd?
Success in NPD activities is basically defined by the cumulative performance in three
areas: speed, quality and cost. A common slogan by those involved in NPD is “faster,
better, cheaper – pick two”; a focus on speed and cost often generates sub-optimal
products, a focus on speed and quality results in high costs and a focus on quality
and cost means that the product is very unlikely to be launched on time, if at all
(Kahn, 2013).
Speed is important in NPD because the time-to-market is essential for three rea-
sons. Firstly, speed increases the competitive advantage over a competitor. This is
particularly true if there is a race to redefine an industry and set the industry bench-
mark; in cases such as the development of smart phones or electric car technologies,
speed of development is an integral part of the success of a product. Secondly, speed
also decreases the expenditure on a project. Many development costs are correlated
to time – wages, rent and so on – and bringing a product to market sooner can result
in a significant reduction in expenditure. Finally, speed is important in product devel-
opment because market situations can change rapidly; the assumptions underpinning
a project may not be valid if the time-to-market is too long.
A “better” product is one that more effectively meets the demand of the end-user.
Better products are better executed, carry a larger profit margin for the company, are
in-line with the company strategy and product line-up - and ultimately maximise
company profits. The design of better products, however, often implies both time and
expenditure extensions and therefore a compromise must often be made that means
the product is sub-optimal in execution.
A cheaper product development strategy carries obvious benefits for a company:
It reduces the strain of the development period, decreases the amount of product is
needed to be sold before it generates a profit for the company and allows the com-
pany more room to compete with other companies on price. When thinking about
expenditure on product development, businesses must consider and make a choice
between short- and long-term profitability. As argued above, a product can be devel-
oped cheaply, with the implication that the execution is poorer or the time-to-market
may be longer. This serves short-term economic health well, but impacts negatively in
the longer term. Conversely, bringing a good product to market in a short period of
time requires significant expenditure to be devoted to the development process; this
hurts the short-term profitability, but in the long term the business should be better
22

off. Striking a balance between speed, quality and cost is therefore an integral part of
the management process in NPD and a significant hurdle for those involved in NPD
(Cooper and Edgett, 2005).
1.8.1 Dimensions and indicators of success
In more practical terms, various authors have argued for ”multidimensional” (Hart,
1993) approach to measuring success in new product development. That is, success
can be divided into a number of categories within which speed, quality and cost can
be analysed using a range of metrics. In a large empirical study, Griffin and Page
(1993) presents 56 metrics that can be divided into four different dimensions. These
are: (1) product performance, (2) revenue, (3) market share and (4) process manage-
ment performance. Griffin and Page’s metrics are included in full in appendices 1.
It should be emphasised that this is intended to be a comprehensive list; Griffin and
Page acknowledge that not all of these metrics are necessarily relevant to the individ-
ual business. This is supported by Moatari Kazerouni et al. (2011), who, in a study of
individual companies, see a selective adoption of the metrics.
In examining the use of metrics by companies, Moatari Kazerouni et al. (2011)
notes that chosen indicators of New Product Development success varies (1) between
industries (the authors examine the aerospace industry in depth) and (2) between
different stages of the Product Life Cycle (PLC). The authors argue that ”product and
process management are the more important indicators of success in the early PLC
phases with revenue and market share indicators being important during late phases”
(p 101). This is illustrated in fig. ?.
23

Figure 12: Success dimensions over Product Life Cycle for aerospace companies from
Moatari Kazerouni et al. (2011)
As the plot shows, the metrics that Moatari Kazerouni argue describe product
performance and process management performance are relatively more important than
revenue and market share for the product development stage of the PLC. The success
indicators for these relevant dimensions are presented in table 1.
The metrics presented as process management performance are relatively easy for a
company to assess during and post-development, albeit in a largely subjective manner.
They provide a solid foundation with which to reﬂect on the success of the develop-
ment process and capture the essential areas that deﬁne success in the particular NPD
project.
24

Product
Performance
Customer acceptance
Customer satisfaction level
Customer retention rate
Purchase intent prior to introduction
Customer count
Relative sales level
Purchase repeat rate
Importance of the product to the retailer
Return rate from the field of customers
Sales force acceptance
Purchase trial rate
Product sales rate in test market
Met sales volume goal
Percentage of sales exported
Length of product life after purchase
Variance of sales from plan
Deliver customer needs
Uniqueness of the new product
level of innovation achieved
Technical performance of product
Met quality guidelines
Degree of product differentiation
Process
Management
Performance
Ease of automation
Development efficiency
Ease of manufacture
Launched on time
Development project process versus milestones
Speed to market
Management’s subjective assessment of success
Ability to accrue political support within the
firm
Team satisfaction
Risk of product failure
Risk of project failure
Table 1: Critical metrics of success in New Product Development (Griffin and Page,
1993)
25

1.9 what are some popular idea-to-launch strategies?
The aim of using an idea-to-launch process is to structure NPD in order to manage
the development of a new product and make sure it addresses key criteria. In general,
idea-to-launch processes are conceived of as risk management strategies in that they
impose controls on the level of investment in a product by putting in place criteria
that must be met before development can proceed.
In general, the basic components of an idea-to-launch process are:
1. Phase or stage: a period in time where speciﬁc tasks must be carried out under
the responsibility of particular individuals.
2. Gates or go/no go points: The transition between stages where the product develop-
ment progress must be assessed and decisions made on whether to (1) proceed
to the next stage, (2) revise the product or (2) pause the product development
process.
3. Iteration loops: Points at which the process returns to a previous step as a result
of a gate decision. This may be necessary for testing purposes.
Idea-to-launch strategies typically differ with the emphasis placed on gate criteria
in the development process, the degree to which iteration is encouraged or planned,
and to what extent individual tasks are thought of as critical stages.
1.9.1 Staged processes
Staged processes involve following a linear series of steps (stages) through which a
business must traverse to develop a new product from idea to launch. Between each
of the stages, the product must pass through gates at which a decision is made about
whether or not to continue with the development process. In this manner, the risk in
NPD is managed by ensuring that poor products do not take up much time or budget.
The most well known staged system is Cooper’s Stage-Gate; indeed, this has be-
come almost synonymous with the staged approach. A schematic of his approach is
shown below:
26

Figure 13: Cooper’s original Stage-Gate model (Cooper and Edgett, 2005, p.134).
In the original Stage-Gate approach Cooper prescribes that each stage “consists of
a set of concurrent, cross-functional, proven and prescribed activities to be undertaken
as part of a cross functional team” (Cooper and Edgett, 2005, p.135). At the end of
each stage, required deliverables are clearly laid out. An overview of each stage is as
follows:
Discovery: The ideation stage, which involves prework designed to discover and
uncover opportunities and generate ideas. Multiple sources of ideas should be ac-
cessed, with a focus on the customer.
Stage 1 – scoping: a quick investigation and sculpting of the project. This first and
inexpensive homework stage has the objective of determining the project’s technical
and marketplace merits. Stage 1 involves desk research or detective work – little or
no primary research is done here. Prescribed activities include preliminary market,
technical and business assessments.
Stage 2 – build the business case: The detailed homework and up-front investigation
work. This second homework stage includes actions such as detailed market analy-
sis, user needs and want studies to build in the VoC (Voice of Consumer), competitive
benchmarking, concept testing, detailed technical assessment, source of supply assess-
ment, and a detailed financial and business analysis. This results in a business case-
a defined product, a business justification and a detailed plan of action for the next
stages.
27

Stage 3 – development: the actual design and development of the new product.
Stage 3 witnesses the implementation of the development plan and the physical de-
velopment of the product. Lab tests, in-house tests or alpha tests ensure that the
product meets the requirements under controlled conditions. The deliverable at the
end of stage 3 is an in-house-tested (alpha-tested) prototype of the product, partially
tested with the customer.
Stage 4 – testing and validation: the verification and validation of the proposed
new product, its marketing and production. This stage tests and validates the entire
viability of the project: the product itself via consumer tests, beta tests, or field trials;
the operations process via trial or limited production runs or operational trials; cus-
tomer acceptance by way of a test market, simulated test market, or trial sell; and the
financial justification required prior to launch.
Stage 5 – launch: full commercialisation of the product – the beginning of full
operations and commercial launch and selling. The postlaunch plan – monitoring
and fixing – is implemented, along with early elements of the life cycle plan (new
variants and releases; continuous improvements).
(Cooper and Edgett, 2005, p134-142)
Cooper argues that approaches such as his represent Standard Operating Procedure
(SOP) approaches to the NPD process. That is, the linear stage-gate approach as pre-
sented above suggests a standardised set of actions and deliverables for each stage.
Staged processes are typically characterised by “few iterations and rigid reviews, and
tend to freeze specifications early on” (Unger and Eppinger, 2011, p.688). They require
that specifications do not change once they are agreed upon. This helps in many sit-
uations – such as incremental developments – by “providing stability, creating sharp
product definitions, avoiding scope creep and reducing the need for midstream correc-
tions” (Unger and Eppinger, 2011, p.690). These processes are therefore particularly
suitable for products existing in markets that are not highly dynamic, have high qual-
ity standards and use established technologies. It is also a useful system for managing
product updates, since the requirements are already well understood Mccarthy et al.
(2006) Ernst (2002). There is strong evidence that the adoption of linear models like
Stage-Gate increases success (see eg. Nijssen and Lieshout (1995) Ettlie and Elsenbach
(2007).
The weakness of staged approaches is that, while evidence suggests their adop-
tion increases success, they also increase the expenditure and, in many cases, time-to-
28

market. Becker (2006) and Lenfle and Loch (2010) argue that SOP approaches such as
Stage-gate are too linear, too rigid and too planned to handle dynamism and highly
innovative products. They also encourage behaviour that is too controlling and dis-
miss the simultaneous conduct of activities (Simms, 2012, p. 43). Becker (2006) argues
that the approach of stage-gate is good, but that most of the issues arise from faulty
implementation of the system. This has led to the development of a number of other
NPD processes by Cooper, other academics and firms themselves.
1.9.2 NexGen Stage-Gate
New approaches to NPD emphasise adaptability and flexibility more than the tra-
ditional stage-gate process. Cooper himself has proposed a new stage-gate system
that attempts to build a more flexible framework within the existing staged approach
(Cooper and Edgett, 2005, p.140). In the NexGen Stage-Gate system, Cooper makes
the following modifications to stage-gate:
1. Scalability: the company can reduce the scope of stage-gate depending on the
size of the project to alleviate the shortfalls of the traditional Stage Gate process
– cost and time.
2. Emphasis on the front-end of NPD: this refers to particular attention being paid
to the initial technical and business assessments of a proposed project
3. The outlining of best-practices throughout the development timeline, as illus-
trated in the figure. For example Cooper recommends spiral development;
“build-test-feedback-and-revise” feedback loops throughout the process to con-
tinually adapt to changes in the market.
29

Figure 14: An illustration of NexGen Stage-Gate from Cooper and Edgett (2005).
Figure 15 illustrates how Cooper has attempted to build flexibility into the ex-
isting framework. For complex tasks, he proposes the use of the full, 5-gate
process; smaller, faster, tasks may be best completed with the smaller 2-gate
process.
1.9.3 Spiral development models
The spiral NPD process seeks to completely revise the linear process by building flex-
ibility and iteration into the system. The spiral process includes ”a series of planned
iterations that span several phases of development” (Darian et al., 2009, p.386). Spiral
processes build upon NPD innovations by the software industry, which aim to reduce
expensive software revisions. Proponents of a spiral development process argue that
they are more flexible, tend to improve on-time delivery and budget performance,
and is more responsive to changes in market conditions. Spiral processes are also
known as concurrent engineering.A schematic of the process is shown below.
30

Figure 15: The spiral development process (Darian et al., 2009, p.390).
Note the components to this process:
• The five different phases correspond approximately to those of Stage-Gate
• The cumulative cost increases for (a) the number of iterations and (b) the relative
development of the product towards release
• Reviews are placed after every Integration and test stage
Various authors have highlighted issues and disadvantages with the spiral pro-
cess. Unger (2003) and Yao et al. (2002) argue that it is a management-intensive model
of development since the number of gates is effectively doubled every iteration, com-
pared to a staged process. Continuous assessment of where the product must be im-
proved through the next iteration cycle are also required. This is expensive and also
reduces the number of projects that can simultaneously be developed. Secondly, it is
arguably unsuitable for the development of large systems since the lack of locked-in
specifications early on could lead to miscommunication, delays and fragmentation in
the intra-team dynamics. Finally, Oriogun (2000) have argued that the spiral process
is likely overkill for smaller projects and businesses would be better suited adopting a
simple staged process. However, it can also be argued that a spiral development pro-
cess with no looping is in fact a staged process; consequently some have argued that
this criticism is merely indicative of the flexibility of the staged process (?Gadegaard,
2010).
31

To illustrate the flexibility of the spiral development process, Unger and Eppinger
(2011) have analysed the development process of Xerox in their development of printer
software:
Figure 16: Xerox’s spiral development process (Unger and Eppinger, 2011, p.692).
Note the differences between this empirically-observed process and the theoreti-
cal model presented above:
• The process iterates through only the planning and concept design twice before
system-level design is conducted.
• The process cycles through planning, concept design system-level design, de-
tailed design and integration and test three times.
• The final iterative step is refinement through detailed design, and integration
and test through to the release of the product.
1.9.4 Design-to-budget
Staged and spiral development represent two polarising approaches to the NPD pro-
cess. Between them, we can identify a number of distinct variants that are worth
discussing. The design-to-budget approach focuses on achieving the highest qual-
ity product within budgetary constraints that bound the project. This is particularly
32

useful for smaller companies for which going over-budget is particularly high risk.
Design-to-budget approaches typically set specifications early in the development pro-
cess, but merge the detailed design and testing phases into one iterative step so that
a functional product can be quickly and efficiently produced. Development iterations
effectively stop when either the product is deemed complete or the development bud-
get is reached, at which a decision must be made about whether it should be launched
as-is or whether further funding should be sought to complete it (Chatel et al., 2012;
Unger and Eppinger, 2011).
The obvious advantage of design-to-budget approaches is that the product de-
velopment expenditure is tightly controlled. Conversely, the approach can result in
sub-optimal technical solutions and a design that does not meet the expectations set
out early on because the funds allocated to its development did not suffice (Unger
and Eppinger, 2011, p.405).
1.9.5 Time-to-market
Like design-to-budget, a bounded time-to-market approach provides additional con-
trolability; management can ensure the product is launched on time. While other
development processes should also use deadlines as an indicator of success, this ap-
proach makes this a requirement. This is especially useful for seasonal products and
products in highly competitive environments. Like design-to-budget, the approach
has inherent weaknesses in terms of shifting attention away from quality of products
towards achieving a certain launch date (Unger and Eppinger, 2011; Cohen et al.,
1996).
1.9.6 Evolutionary prototyping
Evolutionary prototyping is useful for designs that are relatively simple and have a
short production, or are revolutionary in nature. In some instances, the initial steps
of product development - planning and concept design - are overlooked completely
and a new product instead developed and presented to management for assessment.
In the event that the management finds it of business interest, the development then
proceeds through the refinement of product specifications and iterative design.
33

The advantage of an evolutionary approach to product development is that it is
a process that inherently promotes innovative behavior. By downplaying the signifi-
cance of initial economic assessments and planning, those involved in NPD are free
to put forward suggestions for future products that may not have made it through the
initial stages. Evolutionary prototyping can also be extremely useful in cases where
initial specifications are unclear and experimentation would be beneficial. On the
other hand, the approach encourages more waste in terms of time and resources since
the production of prototypes is more expensive than the development of product con-
cepts in the initial parts of the staged or spiral processes. Like the spiral process, it
also requires significant management attention (Unger and Eppinger, 2011).
34

1.10 an adaptive npd process?
Each of the idea-to-launch processes described in section 4.1.9 are widely used with
great success in industry. The stage-gate approach continues to be very widely ap-
plied in technical companies with a strong focus on quality. The spiral development
process dominates for companies specialising in software development. Both design-
to-budget and time-to-market approaches are used with great success by smaller com-
panies and those operating in very competitive environments. Finally, evolutionary
prototyping has been a staple of NPD in the food industry for many years, and is
emerging as a useful technique in other industries due to the increasing accessibility
of additive manufacturing.
This thesis aims to design a framework within which a the development process
can be optimised to fit the needs of a company or product. In the interest of achieving
this, this section will examine approaches towards adaptive idea-to-launch processes
and the selection of an appropriate strategy depending on the specific situation. So
far only a few authors have contributed to this field; an overview of each approach is
presented below.
1.10.1 Interpretive NPD processes: Maffin (1998)
Maffin (1998) argues that there has not been widespread use of structured develop-
ment processes in industry because the actual design process is incompatible with the
abstract framework:
Rather than proceed from an abstract analysis and problem formulation
to the articulation of solution concepts, engineering design in practice fre-
quently relies on the use of existing design concepts to anticipate possible
solutions in which conjecture and problem specification proceed side-by-
side rather than in sequence.
(Maffin, 1998, p.316)
Businesses do not adopt the best-practice guidelines suggested by various authors
for two reasons. Firstly, Maffin identifies that many design practitioners are not aware
of the frameworks available to help them structure development. Secondly, however,
35

he argues that the practical process is often a reasonable reflection of the context in
which a product is developed. He argues that design processes must be designed so
that they are interpretive rather than prescriptive in order to increase their adoption
in business contexts and that ”it is inappropriate to prescribe generic approaches
for companies” (Maffin, 1998, p 320). In essence, Maffin does not propose a new
NPD process, but rather for more interaction with the process from management and
practitioners of NPD.
1.10.2 Unger and Eppinger’s risk-based framework
Unger and Eppinger (2011) proposed a framework for businesses to analyse their
exposure to risk and select an appropriate NPD process based on this assessment.
They identified four different types of risk:
1. Market risk: This avenue of risk arises from the company’s position in a highly
competitive environment; the developed product must compete with many other
products
2. Schedule risk: Risk arising from a ’race to launch’ between a number of different
companies; to be late means risking to be seen as a follower rather than trend-
setter
3. Budget risk: Risk arising from over-expenditure during the development process
4. Technical risk: Risk arising from the potential for the product to perform sub-
optimally. This is a particular concern for large-scale engineering products
where a failure may risk human life.
Unger and Eppinger argue that risk-assessment should form a back-bone of the
NPD process design and that iterations, feedback and reviews at various points can
address specific risks. For example, market feedback throughout the design process
can help reduce the market risk. The budgetary performance of the process can also
be controlled through specific performance reviews.
The authors argue that institutional learning must be a crucial part of the exercise;
companies should address risks from a perspective that is informed by past successes
and failures. Uncertainty and their potential to affect the project’s success should also
be evaluated.
36

Unger and Eppinger do not explicitly argue that the domination of a particular
form of risk dictates the specific NPD process to be used; rather, they go deeper and
argue that businesses should plan out the number of iterations and reviews through-
out the process. In this manner, the selected NPD process is on one point on the
continuum between staged and spiral processes. To illustrate this point, the authors
provide the following matrix to illustrate where a particular NPD process fits in terms
of iteration- and review intensity.
Figure 17: Unger and Eppinger’s (2011) NPD process matrix.
1.10.3 Meisner et al adaptive New Product Development process
Meisner has been involved in a number of studies examining adaptation in product
development processes. In Meisner and Blessing (2006) the five most common reasons
for companies to deviate from a pre-set process were found to be:
37

Figure 18: Most common reasons for NPD process deviation, adapted from Meisner
and Blessing (2006).
Meisner argues that ”adaptation of design methodologies to the context in which
they are actually applied is seen as a necessity in order to enhance the acceptance of
methodologies and to widen their application” (Meisner and Blessing, 2006, p.5). That
is, adaptation of the NPD process to the specific context is important both in order
to (1) facilitate a better product directly and (2) in and of itself, to create order in a
business. The authors argue that the contexts may vary across short-, medium- and
long-terms and that the product development process should therefore be adapted in
multiple steps and considering the long-term context first. Factors affecting the pro-
cess across these timeframes can be grouped into seven different categories: society,
market, company, design task, resources, the team and the individual. Adaption takes
place as indicated in figure 20.
Figure 19: Meisner et al’s adaptive process (Meisner and Blessing, 2006, p.5).
38

While Meisner’s approach does not offer specific advice on adapting processes,
it is nevertheless a useful way of contextualising the process based on internal and
external factors.
1.10.4 Tailoring Concurrent Engineering for small businesses: Skalak et al. (1997)
Skalak et al. (1997) focuses on the implementation of a concurrent engineering model
within small manufacturing companies, and argues that tailoring is necessary for it to
be successfully used. The authors suggest a process through which this can be com-
pleted involving decision-makers from design, manufacturing, resource management
and management, and goes into greater details than has traditionall been the case
when NPD strategies are discussed.
1. Project assessment
First the project is scaled using the criteria figure 21 to establish the core chal-
lenges - where an ’A’ level is the most complex or has the shortest design cycle
time, for example. Note that the levels of each of the criteria depend both on the
product in isolation and in relation to other products in a company’s portfolio.
Figure 20: Project assessment (Skalak et al., 1997, p.319).
Afterwards, the results are plotted on the diagram depicted in figure 22, which
establishes how demanding the project will be. The closer the product is to the
center, the easier it will be to complete (most incremental development projects
would be here).
39

Figure 21: Project assessment plot (Skalak et al., 1997, p.321).
2. Deciding on the Product Development Stages
Based on the information gathered in the first step and intra-group consultation,
the group can now make a range of decisions on the design process, including
decisions on: design standardisation and specifications, design cycle time, pro-
cess complexity, cost, priority and so on. This yields a NPD strategy that has
been actively considered and adapted to the specific circumstances surrounding
a specific product.
The approach of Skalak et al. (1997) is unique in that the authors propose a full pro-
cess (rather than just a framework) through which to apply new product development.
However, it presupposes that concurrent engineering is the best framework for devel-
opment to take place within.
40

1.11 preliminary research questions
The literature review has revealed a number of approaches to developing an adaptive
model for businesses to use to fine-tune their NPD processes. The purpose of the case
studies is to further investigate the processes surrounding NPD in businesses and to
examine the strengths and weaknesses of the pre-existing models. To accomplish this,
this section outlines a number of research questions which will form the basis for the
interview conduct.
These questions have been developed with a view to gaining an insight into the
business’s approach to NPD and eventually establishing a novel framework for NPD
based on the interviews and the literature review.
1. How does the business perceive their own New Product Development success?
The aim of asking this question is to establish general attitudes toward NPD
within the business. If the interview subject is in general optimistic about the
trajectory of the company and this is reflected in NPD success then it is likely
that the company has deliberately adopted policies conductive to internal NPD
success.
2. What are the most important business goals and how does the business seek to achieve
them?
The aim of this question is to establish what the goals of the business are. This
is important to establish in order to be able to reflect on the approach of the
business towards NPD when analysis of the research takes place.
3. What does the business see as the most important factors affecting company success?
Following on from the last question, this questions asks the subject to reflect on
the priorities of the business, and the place that New Product Development has
within the organisation.
4. How is New Product Development managed within the company?
This question asks the subject to reflect on the management of NPD and to
expose the structure within which development presently occurs. This is im-
portant in order to establish to what extent NPD is a top-down or bottom-up
process and how trade-off between control and innovation is managed. Within
41

this question, it is also important to establish how people involved in NPD are
linked within the company and to what extent NPD teams are diverse in terms
of background.
5. Is New Product Development a structured exercise within the company?
The aim of this question is to ask what the current process for NPD is and how
the business transitions from an idea to a launchable product.
6. Does the business make a conscious effort to learn from success and failure in New
Product Development?
This question is important to ask because, based on he the literature review, a
core tenet of a successful NPD programme is the ability of an organisation to
engage in institutional learning and organically improve its processes.
42

2
R E S E A R C H M E T H O D O L O G Y
The second chapter of this thesis examined existing research on the art of New Prod-
uct Development, it’s economic relevance and how businesses approach it. It also
provided an overview of existing frameworks designed to address the need for an
adaptive framework for New Product Development. The chapter concluded with a
number of research questions, which will form the basis for a primary analysis of
business practices.
This chapter outlines and justiﬁes the approach adopted towards conducting the
primary research. It’s objective is to give an overview of the method chosen with a
view to justifying and putting information gathered from the survey into perspective.
43

2.1 selection and justification for the research methodology
This section justifies the choice of research type and design used in the thesis.
2.1.1 Purpose of research
Survey research can typically be divided into three categories depending on the ex-
tent to which knowledge is known about a subject. These are: causal/explanatory,
descriptive and exploratory (Churchill, 1999).
Causal and explanatory research primarily seeks to identify the relationship be-
tween cause-and-effect. According to Suman Sen (2011) such research is “suitable
when the research problem is already well documented . . . and the discovered causal-
ity is useful to understand and predict outcomes of the investigated problem” (p. 72).
Descriptive research aims to describe the nature of phenomena and to answer cru-
cial questions about an issue. They typically collect information from afar and aim to
observe (rather than experiment) with the targeted environment. Descriptive studies
can be split into (1) cross-sectional and (2) longitudinal studies. Cross-sectional stud-
ies involve a one-time investigation of phenomena while longitudinal studies follow
an issue over time and aims to describe change (Suman Sen, 2011; Cohen et al., 1996).
Finally, exploratory studies are commonly used to investigate a hypothetical idea.
Most often, they do not aim to provide concrete solutions to an issue; rather, they
seek to gain a better understanding of a problem. “Exploratory research tends to
tackle new problems on which little or no previous research has been done” (Brown,
2006, p.43).
For this thesis, there is a comprehensive pre-existing array of sources that discuss
NPD and its application. These typically fall into two categories. The first one dis-
cusses the tools that successful companies use to create products highly successful
new products. The second one focuses on the proper way to approach new prod-
uct development; or, rather, research into the NPD process. Only a small portion of
sources explicitly examine the process by which how companies can approach NPD in
a way that is specifically suited to their individual characteristics. This thesis will em-
ploy a descriptive framework to investigate how different companies approach NPD
44

in their own unique way and to investigate how other companies may improve in
their approach.
2.1.2 Justification for the interpretivist paradigm
A paradigm is a belief system used as a means of establishing a set of practices to be
used in research. It is important to identify the research paradigm to be used because
it guides the epistemological basis (that is, the view of the world) that the researcher
will anchor the research within.
Various authors have proposed different groupings of paradigms that describe
fundamental epistemological foundations. These range in from the two paradigms of
positivism and interpretivism proposed by Easterby et al. (1991) to the six paradigms
proposed by Jennings (2001); positivism, interpretive social science, critical theory,
feminism, the post-modernism and chaos theory. While the paradigms proposed by
Jennings are of wide relevance – critical theory, for example, has a lot to say about
the relationship between society and industry, for example – this thesis will primar-
ily concern itself with a discussion between positivist and intrepretivist paradigms.
Suman Sen (2011), Robinson (2008) and Bryman (1998) provide good overviews of
the difference between the two approaches for research purposes, the basic points of
which are shown in table 1.
Positivist methods view the world through a prism where all relevant informa-
tion can be quantified and analysed statistically, and place emphasis on identifying
causality links. They are also concerned primarily with the testing of theory. Con-
versely, a intrepretivist paradigm seeks to identify social trends and construct theory;
it seeks to explore phenomena and explain its character, not to explain the how’s and
why’s of its occurrence.
A thesis on NPD could be oriented towards positivist or intrepretivist approaches.
On one hand, the success of companies in NPD is relatively easily defined and can
be measured quantifiably. Indices such as net profit, spending on R&D and basic
research, size of development departments number of products launched provide
adequate gauges of NPD success and enables macro analysis of it across time, space
and industries.
On the other hand, in a study investigating the application on NPD within busi-
nesses, it is not always appropriate to rely on quantifiable measures and positivist
45

Positivism Interpretivist
Research position
Causal and
deductive theory;
world is objective
Exploratory, theory
building, inductive,
analytical; world is
socially constructed
and subjective
Direction of
research
inquiry
Measurement and
analysis of causal,
generalizable
relationships
Ideographic
knowledge
development based
on constructed
social experiences
such as human
values, ideas,
perceptions and
values
Research
Strategies
Experiment,
surveys
Case studies,
surveys etc.
Methodology
Outcome- and
veriﬁcation-focused
Process- and
discovery-oriented
Causality Cause-and-effect
Causal tendencies,
constructivism
Interview
questions
Mainly closed;
limited probing
Open; probing
Judgement of
research
quality
External validity
and reliability
critical
Construct validity is
important
Sample size
Large Small
Data collection Structured
Semi- or
un-structured
Interaction of
interviewer
and
phenomenon
Independent and
value-free; one way;
distant
Mutually
interactive;
value-laden; close
and biased
46

Perspective of
respondent
Varies according to
question
Extensive
Type of data
gathered
Replicable; discrete
elements; statistical
Information rich
and deep; contex-
tual; non-statistical;
somewhat subjec-
tive reality
Table 2: Research approach: Positivism versus interpretism(Suman Sen, 2011, p.74),
(Robinson, 2008) and (Bryman, 1998, p.91), (Creswell, 1994, p.5), (Easterby
et al., 1991, p.27))
approaches; case studies of a small number of companies are arguably far more in-
sightful. Information on the actual NPD process is often deeply contextual and is
based on the constructed reality within a particular organisation and industry. Due
to the focus on discovering what makes some companies uniquely successful in NPD,
it is also important to adopt a situation-specific and only semi-structured approach
to gathering information. The focus is only to a limited extent on identifying repli-
cable factors in NPD success. While the success of a company in NPD is directly
quantifiably, an interpretivist research perspective is therefore far more appropriate
for analysing the reasons for success.
2.1.3 Justification of qualitative methodology
Qualitative research “seeks to describe, decode and translate phenomena in terms of
meaning rather than frequency” (Suman Sen, 2011, p.75). It allows the researcher to
gather data beyond that which is directly quantifiable and conduct a deep engagement
with issues in order to build theory (rather than test it). As a consequence, qualitative
research is often associated with an intrepretivist perspective.
Ticehurst and Veal (2000) and Suman Sen (2011) define the advantages of qualita-
tive research is as follows:
1. It enables the researcher to understand the personal experiences of individuals
47

2. It emphasises people’s individual understandings and can be used for a range
of studies
3. It allows the researcher to experience issues from the perspective of the partici-
pant
4. It can use a combination of techniques (including new, innovative, methods) to
give a broad understanding of the phenomena being studied
(Ticehurst and Veal, 2000, p.95) and (Suman Sen, 2011, p.77)
This study requires the interpretation of a broad range of data that is often unique
to the particular company. As such, a qualitative approach is appropriate for the
collection and analysis of data.
2.1.4 Justification of case study method
One of the central aims of this thesis is to examine how NPD processes vary between
companies and industries more or less successful with new products. In this context,
multiple case studies are necessary to comprehensively understand the position of
each company and to investigate their individual NPD process. Multiple studies are
necessary in order to assess how processes change between companies and to make
the conclusions of the study more compelling; in the context of the research issue,
interviewing a single company successful in NPD is insufficient. This has also been
the preferred method used by other authors in this field such as Jensen (2009) and
Gadegaard (2010).
48

2.2 sampling
2.2 sampling
2.2.1 Definition of target population
The target population of this study is companies involved in industrial NPD across a
wide range of disciplines and company sizes. Information on the population can be
obtained by publicly available sources such as company websites, other studies and
by engagement with stakeholders in the organisation.
2.2.2 Sampling method and frame
Qualitative studies aim to select cases that enhance understanding of a phenomenon
(Flyvbjerg, 2006, p225). In contrast to quantitative (statistical) studies, the focus is
therefore not on representativeness or random sampling, but on cases that appeal to
the research question. As such, case studies typically employ non-probability sam-
pling. Table 2 summarises a range of such sampling techniques:
The selection of an appropriate sampling method (or combination of methods)
has consequences for the representativeness of the information gathered. In respect
to this study, the aim was to investigate the nature of NPD across a range of industries.
As such, an arrangement whereby a number of businesses within a certain industry
were represented was seen as insightful. This would enable comparison between busi-
nesses. On the other hand, such an arrangement would detract from the study’s aim
to investigate the broadest range of businesses available in order to propose meth-
ods of process design that are universally applicable due to sample size limitations.
As a compromise, the sampling method should seek to include a number of compa-
nies from within a specific industry whilst keeping the range of industries large and
diverse.
Access to companies is a significant limiter to the choice of cases. Since partic-
ipation in the study is voluntary, the researcher will rely on first- or second-hand
personal contacts within an organisation to gain access. This means that company
selection will be largely directed by the relationships of the researcher himself. As a
consequence of these limitations, the sampling process was largely guided by a purpo-
sive approach that identified companies within certain industries and sought to fill a
quota of at least two companies per industry. Special attention was paid to purposely
49

2.2 sampling
Type of sample Principle
Haphazard
Get cases in a manner that is convenient
Quota
Get a pre-set number of cases in each of
several predetermined categories that
will reﬂect the diversity of the
population using haphazard methods
Snowball
Get cases using referrals from one or a
few cases, and the referrals from those
cases, and so forth
Deviant case Get cases that substantially deviate from
the dominant pattern
Theoretical
Get cases that will help reveal features
that are theoretically import about a
particular setting/topic
Purposive Get all possible cases that ﬁt a particular
criteria, using various methods
Sequential Get cases until there is no additional
information or new characteristics
(Suman Sen, 2011, p.81) and (Neuman, 2006, p.220).
Table 3
50

2.2 sampling
select a number of companies with significant success in NPD or which had, more
importantly, greatly improve in NPD performance over a short period.
2.2.3 Sample size
While an ideal number of cases can be set for quantitative studies, there is no ideal
number of cases for a qualitative study. Sample sizing is largely a game of compro-
mise whereby the desire to survey a large number of companies must be balanced
against time- and resource constraints, and how in-depth the investigation should be.
“[Sample size] depends on what you want to know, the purpose of the
inquiry, what’s at stake, what will be useful, what will have credibility, and
what can be done with the available time and resources”
(Patton, 1990, p.184).
Generally, authors discussing qualitative research suggest that the number of sources
should increase until “theoretical saturation is achieved” (Eisenhardt, 1989, p.545). For
most authors, this corresponds to between 4 and (at maximum) 15 different sources.
Most scholars agree at more that 15 case studies lead to oversaturation and often
correlate with a lack of analytical rigour (Eisenhardt, 1989; Barrios and Kenntoft, 2008).
As a consequence, a sample size of around 10 and 12 companies within between 4 and
5 different industries seems appropriate for this study. The next subsection below
discusses issues with sampling in practice in the context of this thesis.
2.2.4 Sampling issues and complications
Access to companies proved to be a significant limiter to the selection and number of
cases that could be investigated in this thesis. Since participation in the study was
voluntary, first- or second-hand personal contacts within an organisation were pre-
dominantly used to gain access. As a consequence of this limitations, the sampling
process was largely guided by a purposive approach that identified companies within
certain industries and sought to fill a quota of at least two companies per industry.
Special attention was paid to purposely select a number of companies with signifi-
51

2.2 sampling
cant success in NPD or which had, more importantly, greatly improvement in NPD
performance over a short period.
52

2.3 data collection
2.3 data collection
2.3.1 Justification for the use of semi-structured in-depth interviews
In qualitative research, most (if not all) of the data is gathered through interviews.
According to Merriam (1998) interviews are necessary when the researcher cannot
directly observe behaviour – in this case, the attitude of the individual and the repre-
sented company towards NPD (p. 71). As such, the interview is appropriate to collect
information in the context of this thesis. To complement this source of information,
effort should also be put into obtaining and analysing publicly available information
on the company
As has briefly been mentioned above, there are three basic interview formats.
These are: structured interviews, semi-structured and unstructured interviews. Struc-
tured interviews are appropriate in cases where the research uses a quantitative ap-
proach; it uses standardised questions that are especially well-suited to assess causal-
ity and are often less labour-intensive than the two other interview formats (meaning
more interviews can be conducted). Semi-structured interviews require the develop-
ment of standardised questions that, however, are often more open than are structured
interview questions. Additionally, semi-structured interview formats leave scope for
the research to ask probing questions to clarify or exploit avenues of information that
open during the interview. Finally, unstructured interviews operate without a time
frame or pre-created set of questions and are especially appropriate in cases where
the sample population is wide and the case studies have been selected with little at-
tention to the characteristics of the individual case Bryman (1998); Suman Sen (2011);
Creswell (1994).
In the case of this study, a semi-structured interview program seems to be the
best fit for a number of reasons. Firstly, the study aims to establish the attitudes of
individual companies towards NPD; a standardised set of relatively closed interview
questions with no capacity for probing would not be able to extract the maximum
amount of useful information out of the participant. In addition, a structured inter-
view format would inhibit the capacity to engage in-depth with a unique component
of a company’s process during the interview. Conversely, an unstructured interview
format would inhibit information gathering because all aspects of the research agenda
might not be addressed; systemisation is required to adequately cover all areas of the
research and to enable comparison.
53

2.3 data collection
2.3.2 Interview instrument
The semi-structured interview should be constructed around a framework which aims
to answer and comment upon the relevant research questions outlined in section
4.1.11. In this context, the structure should proceed in a linear and smooth man-
ner from one interview question to the next with one or more questions addressing
each research question. Scope should remain for the interviewer to, firstly, lead the
interview down an alternative avenue if this is seen as interesting and, secondly, ask
questions in reflection of those outlined in the plan in appendices 2.
2.3.3 Pilot study
In studies such as these, the use of a pilot study (or a number of these) is a common
practice. This refines the data collection process and helps the interviewer calibrate his
approach to the task Yin (2009). Ideally, this thesis would use at least one pilot study
to refine the data collection method. However, availability of research subjects has
been identified as a weakness and therefore it is not realistic to have a defined pilot
subject, and not use this information. After the first interview, the data collection
method will be reflected upon and changed if necessary.
2.3.4 Chain of evidence
Cross-referencing from the procedures to the resulting evidence is important to ensure
the reliability, objectivity and validity of research Yin (2009). The researcher should
ensure that there is a clear chain of evidence from the research problem to the case
study transcripts and data storage (Suman Sen, 2011, p.90). In doing so, the case for
conclusions drawn from the research is strengthened.
The chain of evidence is from (1) the research problem, (2) the research question,
(3) the case study protocol, (4) the interview instrument and (5) Case study transcripts
and storage (Suman Sen, 2011, p.90).
54

2.3 data collection
2.3.5 Case study transcripts, documentation and storage
Ideally, the case studies should be recorded, transcribed and veriﬁed by the interview
subject for consistency and accuracy. However, this is not always possible. Especially
in cases such as this research, which is subject to sensitive business information, in-
terview subjects sometimes do not wish to be recorded. In cases such as these, the
interviewer must take running notes of the conversation.
Whether in the form of transcripts or notes, interview information should be
stores securely and archived upon completion of the research. The information should
be treated conﬁdential-in-nature and not shared by the researcher with anyone save
for, if necessary, the research supervisor.
55

2.4 data analysis
2.4 data analysis
The data analysis stage is the most critical part of the case study. Herein, conclusions
and discussion questions will be drawn from the information provided by partici-
pants. The analysis stage for qualitative studies such as this is highly variable and
relies in large part upon the judgement of the researcher (Neuman, 2006). Miles
(1979) describes a rough three-step process for interpreting data, which is useful for
orgaisational purposes:
Figure 23: The data analysis process Miles (1979).
Within the last two steps in particular, methods vary widely from research-to-
research and even from case-to-case. This is both a benefit and a risk to be noted:
on one hand, this allows complex conclusions to be drawn on an individual basis
between case studies. On the other hand, the lack of a clearly defined method risks
inadvertent subjectivity, conclusions drawn from expectations and the creation of cer-
tainty when there is none Flyvbjerg (2006). To alleviate these concerns, the researcher
should, firstly, seek to thoroughly justify conclusions using a variety of arguments to
substantiate claims and, secondly, acknowledge the shortcomings of the research in
terms of scope and the consequent variability in conclusions. The researcher should
also acknowledge the paradigm of thought from which the problem has been ap-
proached – as has already been done.
In the analysis of the companies examined here, each of the companies should
be examined individually. This is done with a view to establishing aspects of their
unique situation and to justify subsequent conclusion-forming. Within the bounds
that can be justified, the author should seek to interpret and classify the product
development process of each company. The conduct of this corresponds to section
4.1.
This will then form the basis for conclusion-forming, the goal of which is to
establish trends in the conduct of companies involved in NPD. The claims herein
can be justified with reference to (1) the primary evidence gathered by the interview
and (2) secondary evidence as examined by the literacy review. The approach to
56

2.4 data analysis
conclusion-forming should be cautionary and clearly state counter-hypotheses and
uncertainties. The conduct of this corresponds to the Discussion in section 4.2.
57

2.5 criteria for judging the quality of case study research design
2.5 criteria for judging the quality of case study research design
The quality of a case study is judged by the extent of its validity and reliability and
how and to what extent it can be seen as a rigorous theory-building exercise (Suman
Sen, 2011; Yin, 2009, p.91). To maximise the quality of the case study, the researcher
should apply tests for “construct validity, internal validity, external validity and reli-
ability” (Suman Sen, 2011, p.91). Construct validity refers to the ability of the study
method to examine what is measured. Internal validity refers to the extent to which
one can establish causality from studies; as such, it is a particular concern for causal
studies. In this study, it is important to remember that the specific idea-to-launch
process is but one of the factors affecting NPD success and that a simple causal link
can likely not be drawn.
External validity concerns the extent to which the findings of a study can be
generalised. This is limited by a small sample size, but the study should be able to
make some generalisations about best practices for a wider range of businesses than
is examined here. Finally, reliability ”refers to how consistently a technique measures
concepts so that other researchers get the same results [upon replication]” (Suman Sen,
2011, p.108). In the context of this study, reliability can be ensured by (1) ensuring that
all methods are documented, (2) thoroughly justifying decisions and arguments and
(3) ensuring that the analysis reflects the views of the participants via post-interview
reflection and consultation (Suman Sen, 2011; ?).
58

2.6 limitations of case study method
Case studies are recognised as legitimate means of researching business strategies, but
have a range of limitations compared to other forms of study. Limitations generally
fall into three categories:
1. Lack of rigour and potential for bias
Some authors have argued that case studies contain a verification bias that
tends to confirm the author’s own preconceived notions (Flyvbjerg, 2006, p.17).
George and Bennett (2004) argues that case studies do not apply scientific meth-
ods towards producing rigorous pieces of research, and therefore should be
viewed with scepticism. Verification bias is an issue in all types of research, but
is perhaps a bigger concern for case studies. To alleviate this concern, this re-
search plan has actively taken steps to increase the objectivity of data analysis
as discussed above.
2. Lack of ability to make generalisations
The drawback of the specificity and in-depth analysis possible through case stud-
ies is the argument that generalisations cannot be made from a small number
of studies. This is a valid criticism in many situations because the case studies
may not be representative of the complexities within broader system (Flyvbjerg,
2006, p.8). In the context of this thesis and its intrepretivist perspective, however,
it is less of an issue because the study acknowledges the diversity in approaches
to NPD - indeed this is the crux of the study; that it is approached differently
depending on circumstances - and works within an approach that there is no
generalised approach to NPD; it needs to be an interactive and interpretive ap-
proach.
An additional issue specific to this study concerns the extent to which the views
of an individual working for a larger institution are an accurate reflection of
the actual processes. That is, can the view of the individual be generalised to
represent the view of the company? To address this issue, there are two options:
Firstly, the author may wish to interview a number of individuals within a com-
pany to create a more balanced picture. This, however, would reduce the total
number of companies that can be examined due to time constraints. Secondly,
the researcher can account for individual bias by constantly reflecting on in
when analysing and drawing conclusions. This puts pressure on the researcher
59

to refrain from verification bias and to check that views of the individual match
facts that can be established from elsewhere.
3. Logistical and organisational complexity
Case studies are difficult to conduct because they involve the voluntary contri-
bution of a large number of independent individuals (Suman Sen, 2011, p.121).
As such, they require more resources and must abide by a systematic approach
in order to work effectively. These difficulties are acknowledged in this work
and due attention has been paid to its effect on the project timeline.
60

2.7 ethical and privacy considerations
In all research involving humans attention must be paid to ethical considerations.
For case studies, the researcher has a range of obligations towards both the act of
producing an academic piece of work and the research subjects.
In terms of academic obligations, the researcher must at all times seek to avoid
plagiarism and produce work that adequately covers and justifies all arguments. The
researcher must also be committed to not misrepresenting views of individuals, mis-
leading people and companies, coercing people to participate and protecting the
rights of participants to confidentiality and non-participation.
The author has also read and adopted policies that satisfy the Australian Code for
the Responsible Conduct of Research (NHMRC, 1999) in order to avoid research miscon-
duct. These included putting in place structures to protect the privacy of individuals
and the traceability of data. Additionally, the researcher has a responsibility to seek
guidance on the research from the thesis supervisor or other academic staff and to
acknowledge the contributions of others fairly. All of these points have been incorpo-
rated into the case study plan already presented.
In terms of obligations to the study participants, the author recognises the sensi-
tivity that is likely to be had towards sharing information that is not normally publi-
cised. As a reflection of this, the decision was made from the beginning to withhold
the identity of the interviewees and their company from submission. This was done,
likely, at the cost of some specificity in terms of the analysis possible with the data
but is important given the nature of the study participants. In the initial contacting of
interviewees the following was also made clear:
1. Participation is voluntary
2. All information will be treated as commercial-in-confidence. The interviewee
has the right not to answer questions and to withhold certain information from
publication.
3. Views expressed will be seen as the opinion of the individual rather than the
organisation unless otherwise stated.
61

4. All interview data will be accessible to the researcher only. The interviewee is
free to request a copy of any notes produced by the researcher relating to the
interview.
5. The individual and the company will not be identiﬁed in public work, nor to
other study participants.
6. The researcher will make available a draft copy of the public work on the 23rd
May 2016 for review. The ﬁnal study is to be submitted on the 3rd June 2016.
62

3
C A S E S T U D Y D I S C U S S I O N
Chapter 3 outlined the general methodology towards gathering primary information
on NPD in businesses. It addressed such issues as the dominant paradigm of thought,
justiﬁed the use of case studies and the use of interviews, and sampling.
This chapter outlines the results of this research approach, and examines each
studied company in turn. The focus of the ﬁrst section is on generating an under-
standing of the unique circumstances facing each company and how they approach
NPD. The second section seeks to discuss the discuss the companies from the context
of the research questions. The focus here is on establishing to what extent conclusions
can be drawn that can be used to construct an interactive framework for NPD.
63

3.1 company observations
As per the longitudinal sampling method outlined in section 3.2, the ideal list of
companies examined for this thesis should represent a diverse range of product types,
industries and business sizes. The companies chosen were strategically chosen to
satisfy this criteria to the extent this was possible - access to company constituted a
signiﬁcant practical barrier, both to the character of company recruited and to the total
number. As a result, the companies examined here represent a range of industries
with exclusions of note. For example, no software or IT companies were examined.
The following section discusses each of the companies investigated in turn, with
a view to understanding both the context and conduct of NPD. Where appropriate, an
idea-to-launch process based on the interview information is put forward to demon-
strate how the company approaches NPD.
64

3.1.1 Company A
Company A is a medium-sized manufacturer of high quality food products selling
to service industries (hotels), retail businesses and direct to the customer. The com-
pany is well-established, but has grown significantly since a change of ownership in
the early 2000s. The owner is heavily involved in product development within the
business and was interviewed for this thesis.
The company’s NPD approach is generally pragmatic and is a reflection of the
business’ place in the marketplace as a relatively small player. Investment is driven
by an acknowledgements of the business’ relative strengths and weaknesses in this
context:
”We can’t compete with the major manufacturers on price, so we have to
come up with innovation ... we have [good ingredients], but to compete
we have to offer something different”
The company sees its strength as being a commitment to quality in general and
a different attitude towards developing new products made possible, in part, due to
the company’s small size relative to competitors. In developing new products, the
company is eager to work with customers to rapidly develop a product that suits
a particular market need. This stands in contrast to the dominant approach in the
food industry (as argued by the interviewee, but also by other third-parties asked for
input), which is to develop products internally and sell the products on to customers
without asking for their input through the process. The strength of company A’s
approach is that the product is developed specifically for the end customer with their
input throughout the process.
An example of the success of this attitude towards NPD is a product introduced
shortly after the ownership change, which has now become a core product in the port-
folio. After identifying a market need in discussions with potential customers, the
business developed a concept that would significantly reduce labour time associated
with the preparation of meals in hotels with little additional product expenditure.
This initial concept was then presented to customers, after which specific improve-
ments were identified and implemented. Eventually, the finished product was costed
and launched, and it is now the subject of Intellectual Property protection.
In developing this product, the company was subject to a high degree of risk.
Firstly, the company at this point was still relatively small and did not have the
65

equipment necessary to produce the product at scale. The production of the product
required the purchase of additional industrial machinery, which the company did by
absorbing another business who had an appropriate solution. Though this investment
was larger than what the machine itself would have cost, the product was embedded
within the wider strategy for business development.
Secondly, after development was commenced, it was discovered through a po-
tential customer that a larger competitor was working on a similar product, and had
been for some time. The company minimised risks by developing the product rapidly
and with significant effort, in line with the company’s development philosophy.
Company A does not have a defined development process, but NPD neverthe-
less proceeds roughly as indicated by figure 26. Fundamentally, the process is best
described as a hybrid between a spiral development model and evolutionary prototyp-
ing. The company places a high degree of emphasis on creating a product and then
reflecting on it, to the extent that key business analysis and costing is primarily per-
formed at the end of the developmental iteration. This is not to say that the company
develops the product and then assesses its business case: before the first development
iteration, the company engages in a comprehensive business review to establish its
capability to produce the product. If the company deems itself not able to proceed
with a product due to a capability shortfall it seeks to address this shortcoming to the
level where the risk associated with a new product are no longer extreme. Particularly
in the early days of the business expansion (discussed above), the business case had
to be carefully considered and planned in order for the potential gain to balance the
risk. Later, as the company has acquired more resources and funds, severe risks for
the company have diminished. Market and business analyses are still performed, but
many new products do not require the same level of initial investment, given that the
company has more capabilities now.
Figure 25: Company A’s New Product Development structure.
To summarise:
66

1. Idea conception:
The company generates a product concept based on discussions with prospec-
tive and existing customers.
2. Concept prototyping and assessment:
In this step, the company generates a crude ﬁrst product prototype and assesses
this internally and with potential customers.
3. Initial business assessment:
In this step, the company assesses the business possibilities and investment re-
quirements associated with the prospective product.
4. Concept design:
A basic concept design is now generated which takes into account the lessons
learnt from the two previous stages.
5. Development:
The technical development of the product now proceeds, which takes into ac-
count the considerations that must be made to mass-manufacture the product.
6. Product assessment:
The prototyped product is tested and the potential customer is asked to provide
input. Concurrently, the company assesses the potential for the product to make
a proﬁt and makes a decision on whether to generate a new product concept or
proceed to the product’s launch.
7. Launch
67

3.1.2 Company B
Company B is a small engineering design, consulting and manufacturing firm that
provides expertise in composite structures. It liaises directly with firms to deliver
solutions to problems. The company has a strong practical focus, and is capable of
handling the development of a product from design, through tooling production and
prototyping. The company employs a small team of engineers, the head of which was
interviewed for this study.
The company sees its small size and manufacturing capability as strengths and
this was continually stressed throughout the interview in terms of providing an
”adaptable” and ”agile” approach to new product development. This was primar-
ily meant to indicate that the company is capable of adapting to the needs of a project
and to proactively engage with a client to develop a product. Due to its manufactur-
ing ability, the company can address three core types of projects - a ”solution” project,
a ”service” project and a ”product” oriented project.
1. Solution: If a client approaches Company B seeking a solution to problem, the
company can develop a solution, manufacture it and deliver it to the client as a
finished product.
2. Service: The company may also produce and prototype a design for the client
that they themselves can manufacture.
3. Product: Finally, the company can develop a design that is jointly developed into
manufacture together with the client using their resources.
As company B is primarily a firm that partners with companies who are seeking
to develop a new product, the company does not directly engage in idea conception
from first principles. Other companies approach the company in order to make use of
their expertise as they have judged that it is better value to outsource complex design
and manufacturing to a more qualified partner. In this regard company B is very
similar to company E.
In reflection of the company’s ”agile” approach to NPD, the interview subject was
hesitant to rigidly define the new product development process within the company
as it varies between projects. However, in broad terms, the product development
process of the company can be conceptualised as follows:
68

Figure 26: Company B’s New Product Development process.
1. Specification generation:
Assuming perfect information, the company and the client liaise to establish the
desired specifications for the product, and translate this into technical specifica-
tions and aims for the design. This will then enable the company to generate
a quote and schedule based on this information. More often, the information
is less than perfect and the company needs to undertake preliminary feasibility
and design work to lock in specifications, which is undertaken in stage 2.
Gate 1: At gate 1, company B and the client decide whether to proceed to gener-
ate a more comprehensive set of specifications and an initial design.
2. Preliminary modelling and design:
Based on the information gathered in stage 1, the company generates a prelimi-
nary concept and precise set of specifications for the product.
Gate 2: The company and the client must now decide that the specifications and
initial design meet the needs of the product, or reassess the specifications.
Loop 1: The company now returns to stage 1 and liaises with the client to estab-
lish how well the preliminary design meets the desired specifications. Stage 2 is
then repeated to iterate the set of specifications
3. Detailed design:
The company now develops a comprehensive digital design for the product,
including the design and specification of tooling required for the production of
the product.
69

Gate 3: Before the design can proceed to the next stage, the company and client
must establish that the design is of a sufficiently high quality that the resulting
prototype will be of high quality.
4. Manufacturing of tooling:
The company is capable of producing the majority of tooling required for prod-
ucts in-house, but also outsources a minority to third parties.
5. Prototyping and testing:
The company now produces prototypes of the product in-house and subjects
them to testing.
Gate 4: After the prototype has been tested and assessed, the company and client
must liaise to agree that the product satisfied the desired specifications of the
product.
Loop 2: If improvements to the product are needed, company A must now return
to the detailed design stage and develop a new prototype that addresses any
deficiencies.
6. Post-development:
At this point, the process may proceed in one of three different ways:
a) In-house manufacturing: If the project is a ”solution”, the company now pro-
ceeds to manufacture the product and deliver it to the client as a finished
solution ready to be incorporated into a product.
b) Technology transfer: If company provides a development ”service” to the
client, the company now engages in technology transfer to the client so
that they can proceed to manufacture it themselves.
c) Production: If the client has engaged Company B to develop a product ready
for sale, the client and the company now proceed to jointly manufacture the
product and market it.
70

3.1.3 Company C
Company C is a large design and manufacturing corporation represented world-wide
by daughter companies on all continents. The company manufactures a range of in-
dustrial machinery for businesses involved in the production of a variety of products.
The analysis of company C in this thesis involved the interview of (1) the local en-
gineering manager and (2) a product manager at the company’s manufacturing and
design base.
The company sees its strategic advantage as a commitment to producing higher
quality solutions than the competition - it is a premium player in the marketplace.
Within the product development process the creation of a quality product is therefore
a central goal. Time-to-market is less important given that the industry is not subject
to strong market dynamics that could reduce the relevance of the product at launch
relative to conception.
The company’s core product dominates the market to the extent that the com-
pany does not see much potential for growth here. As such, the company’s approach
to growth now emphasises the development of complete ’solutions’ where the com-
pany can provide customers with machines for much of the production line, and
also consumables associated with it. Consequently the company has diversified its
product development efforts outside of the core product type.
The company’s products are explicitly designed to address a range of potential
applications and users. This is achieved by building modularity into all products
so that they can be individually configured for the application in question. There
is generally significant variation in the way the products are used, and products are
also designed to be re-configured if necessary. Additionally, the company emphasises
compatibility between its products in line with the strategic approach outlined above.
The company has implemented a defined product development process which
aims to objectively understand the market for a prospective product and lock in spec-
ifications early on. The process employed by the company is similar in character to
a Stage-Gate process, but the company has implemented a range of processes that
increase its usability.
71

Figure 27: Company C’s New Product Development process.
To expand:
1. Idea conception:
Within this first stage of the process, the central aim of the organisation is to
objectively understand the market needs and how well the company currently
addresses these needs. Information and requests from daughter companies, cus-
tomers and other stakeholders are analysed and the company derives a product
concept that satisfies these requests while also ensuring that the market is deep
enough, the the new product different enough, for the development to be worth-
while.
2. Generation of requirements:
After the initial concept is generated the process asks for the generation of a
requirements list. This constitutes a more concrete definition of the desired ma-
chine functions and specifications and also comprises an additional structured
market analysis beyond what was completed in step 1. At this point the product
manager hands over the project to the technical development team.
3. Generation of technical development requirements:
Based on the requirements generated in step 2, the technical developmet team
develop a preliminary design for the product and generate a list of technical
requirements.
4. Development of design and first prototype:
A detailed design is developed and manufactured by the technical development
team, which includes the specifications required of the design.
5. Review and test of prototype:
The first prototype is tested in an industrial setting and evaluated by the devel-
opment team. If possible, it is installed at a customer on a trial basis to evaluate
its performance as part of a production line.
72

6. Revision and pre-launch supply of product to customers:
After the design has reached a level of quality where it can be installed at sites
with good reliability, the product is released for pre-launch sale to selected com-
panies as part of an agreement to refine the product on an ongoing basis during
use. During this period, any issues that occur are addressed and the design
modified.
7. Serialisation and launch of product:
The product is finally serialised and added to the company’s portfolio for wider
sale to other businesses.
Institutionally, the company has been structured to ensure compatibility with
this process. Within the first two stages of the development process, the development
team - primarily the product managers at this point - have direct and easy access
to management to aid in decision-making. At the technical development stage, the
product manager hands off responsibility for the project to business units that are
responsible for the product category in question. This concentrates experience with
development of a particular product category and was cited by those interviewed as
a definite improvement on the previous structure, within which people were moved
from one product to the other across categories.
73

3.1.4 Company D
Company D is a small designer and b2b reseller of clothing, which outsources pro-
duction to an overseas company. The company has a strong foothold in its original
market, and recently spread to a second country where it is expanding. The company
is focused on the production of small-batch custom printed clothing for customers,
which is based on core designs that are developed jointly between the factory and the
company. A sales representative of the company was interviewed for this thesis.
The company has had significant success in the market, but it is recognised inter-
nally that product innovation is needed to keep up with competitors. The company
has engaged in significant service innovation by providing new ways for businesses
to sell clothing to customers, which streamlines the approach. However, innovation in
the core clothing product has experienced some difficulties. There are two core issues
at the root of this.
Firstly, the company and its management are relatively comfortable in its mar-
ket position in the origin market. In this smaller market, there is less emphasis on
innovation and product development, and the company has done well by focusing
on distribution and penetration. In the new market, the dynamics are somewhat dif-
ferent - there is more emphasis on quality products and product development, and
there is more competition in the market. As such, the company is in the process of
a change in strategy which fits the demands of the larger market and will maintain
its position in the original market. The company has encountered some challenges in
transitioning towards this approach in terms of internal processes.
Secondly, the company has a complex relationship with the manufacturer, who
is located in China. Company A relies on the manufacturing partner to produce pro-
totypes, which means that the inertia for NPD is transferred from the company to
the manufacturer during development: company D dictates general requirements fea-
tures of the new product and the manufacturer designs and manufacturers it. This
complicates the process greatly. The manufacturer currently makes clothing for a
range of other companies, many of which are significantly larger than company D.
This means that the company is often marginalised in the operation of the manufac-
turing plant and in the priority given to the production of new prototypes. Company
D does also not have any local representation in China - and cannot afford regular
trips to the factory - which has implications for communications between the two par-
74

ties. These factors all contribute to a long lead time between the company asking for
a prototype, and obtaining it, of more than 4 weeks.
The impact of these challenges on NPD within the company is best illustrated by
means of an example: The company recently identified the need to develop a new line
of clothing to keep up with key competitors. Development was commenced by man-
agement, who asked the manufacturer to produce a sample. Unfortunately the needs
of the new product were not sufficiently defined prior to this, and the first samples
did not address the key needs. The management then submitted a second request to
the manufacturer, which took the issues from the first prototype into account. How-
ever, the second prototype was also inconsistent with the needs of the company. At
this point, the remainder of the company got involved and the company engaged in
a deeper reflection of the needs of the new product. The company also ensured that
the prototype would be manufactured in sizes suitable for in-house testing. As a re-
sult of this, the third and subsequent prototypes were improvements and the product
was eventually launched. Due to the initial issues, however, the launch was several
months late and over budget.
The company has since learnt from this experience, and individuals outside man-
agement have now become more actively involved in NPD. In the future the company
will engage in a more comprehensive in-house test of prototypes and the company
is now committed to be open internally about NPD activities. However, NPD is still
not conceived of as a structured process and it would be inaccurate to represent it as
such.
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3.1.5 Company E
Interview subject E is the proprietor of a small engineering design company develop-
ing composite designs for companies. As the company is small and relatively new
to the market (less than six months), it is more relevant in this section to talk about
NPD in the context of the proprietor’s experience and attitude, rather than that of the
company.
The proprietor has been involved in the development of composite components
for a number of years, beginning with university and postgraduate work. During
this time, he developed a technical concept for a new composite product that would
address a need in the market, but also posed challenges in terms of design, manu-
facturing and scalability. As part of postgraduate work, a design and manufacturing
process was developed and, after the completion of his PhD, he set up a company to
fund further development. This company was funded by savings and private invest-
ments, and formed the basis for the product development going forward.
Development at this point proceeded as a joint project between the new company
and a university, which was made possible via a government program. Under the
program, the company was responsible for all material and equipment cost, while
the university supplied human resources and know-how. This enabled the start-up to
reduce development costs significantly. As development progressed, the need arose to
raise more capital and investors were brought on to finance the project going forward,
and the company eventually ceased working with the university.
After several years of development, the product eventually reached a point where
it had reached the initial goals, and had undergone significant testing. At this point, it
was seen as a standalone product in the market and provided a technical solution that
no other company could match. The manufacturing process was also refined to the
point that the relatively complex part could be produced in high numbers at a consis-
tently high quality using automated techniques. However, the company did not have
the ability to produce the product and had no manufacturing partner. This was a con-
scious decision, but proved to be a significant challenge: while potential customers
were positive about the product, they were not prepared to invest in manufacturing.
The company had developed the product with the long-term goal of manufacturing it
itself; however investors expected customers to commit to helping develop the prod-
uct into manufacturing. This did not happen, and eventually the company closed
down and the founder moved on.
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The reasons for the failure of the company to translate the product’s technical
success into a market solution are complex, and depend to a significant extent on
financing and timing. Development was commenced immediately before the Global
Financial Crisis (GFC), and the company consequently suffered from a lack of enthu-
siasm from potential investors. Those investors that did get involved in the company
did so under the unrealistic and unfounded expectation that the development process
would rapidly proceed to a finished product - while the business plan and reality
dictated otherwise. The company also found itself in a tight position in terms of
the investment required to bring the project forward: the relatively low cost involved
with technical development alone was at odds with the high amounts typically in-
vested by mutual funds and big investment groups. As a result of these issues, the
company was focused on bringing a technical solution to the market and could not
use resources to diversify activities, or on preparing for in-house manufacturing.
The proprietor has applied the lessons learnt to the new company, which is explic-
itly focused on providing technical designs to clients rather than developing a design
that can be sold to customers. It is also aiming to diversify its activities to make it
more robust - something that was desired, but not allowed, in the first company. This
was due to the project operating within the university sector. The company is built
around a more risk-averse model, which asks clients to commit to the company and
its expertise: the risk is managed better than in the previous company. While the
company is new and has not completed a product development process to-date, it is
working with several customers to develop solutions. Internally, the company concep-
tualises product development in a manner which is largely consistent with Stage-Gate,
but with some modifications. These are a reflection of the realities of the industry and
of the practical experience in new product development.
Figure 28: Company E’s New Product Development process.
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Note that the company places a high emphasis on gates where the company
and the client must agree, and contractual commitments must reflect this agreement.
Consequently the gates are marked on the process schematic above.
To summarise:
1. Review of needs and setting of specifications:
At this point, the company and the client discuss the needs of the new products
and what the criteria for technical success are. According to the engineer, this
is often ”foggy” in terms of specificity: the company needs to do significant
translating to arrive at a desired specification and initial design that addresses
the needs.
Gate 1: At this gate, the company and the client agree on the specifications and
for the company to proceed with the technical development.
2. Technical development:
The company now generates a comprehensive product and manufacturing de-
sign and employs computational tools to digitally test and refine outputs.
Gate 2: At the second gate, the company ensures that the design is as refined as
is possible at this early stage of the product development process. The company
acknowledges that some things need practical testing to be refined, but also
that this increases the cost and time associated with a a development process
significantly. The company and the client also must agree to proceed to the next
stage of the product development process, at which point the required level of
investment by the client increases significantly.
3. Manufacturing of tooling:
The company now outsources the manufacturing of tooling required to manu-
facture a prototype of the product. This represents something of a compromise
by the company: on one hand, outsourcing this step enables the company to
focus more on the design; on the other hand, this leaves the company open to
collaborators not performing to the standard of the company. The company ad-
dresses these challenges by ensuring that third-party suppliers have access to
detailed plans for the tooling and by choosing manufacturers close to the base.
Gate 3: Before the company proceeds to manufacture a prototype, the tooling
must be at a level where the first prototype will be of a high level of quality.
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Loop 1: If there is an issue with the interface between the technical design and the
tooling, the company revises the technical design and re-manufactures or mod-
ifies the tooling. This process is expensive and does not result in a significant
knowledge increase - ideally the company would produce and test a prototype
before revision the design, but often this loop is necessary.
4. Prototyping:
The company now outsources the production of the prototyping using tooling
developed in the last step. Note that this step is not followed by a gate as such:
the prototype must be tested to ensure that it meets the specifications and goals.
5. Testing:
The prototype now undergoes a long range of tests to gauge how well it meets
the goals of the project. These are extensive in nature and aim to stress the
component to and beyond normal usage - the product can typically not be tested
and revised once released.
gate 4: The company now liaises with the client to establish how well the product
performs, and a decision is made whether to iterate the technical development,
tooling, prototype and testing stages to reflect the shortcomings of the design.
loop 2: If the design needs revision, the company returns to the technical devel-
opment and proceeds from there to arrive at an improved product.
6. Technology transfer:
Once the design is perfected and thoroughly tested, the hand-over to the client
occurs. This involves adapting the process to be used on the client’s own manu-
facturing equipment and assisting the client in producing the product.
This process is a reflection of the realities of the product that the company spe-
cialises in: tooling to manufacture the product is expensive, and ideally the company
would proceed linearly from specification through to knowledge transfer without any
iterations. However, this is not always possible and often the company will need to
revise the design through testing around five times before the product reaches an ac-
ceptable level. This is not a failing of the technical development phase, but rather a
reflection of the need to prototype.
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3.1.6 Company F
Company F is a large engineering design, manufacturing and distribution company,
which produces large installations for use in infrastructure projects. For the purposes
of this study, a senior systems engineer was interviewed.
The company is an established player in the marketplace and has distribution
centers and representation in many countries. Its products are also sold in relatively
high quantities. The company operates in a market that is relatively competitive,
with cheaper alternatives having become available recently. To respond to this, the
company has sought to reinforce its place as a manufacturer of quality products. The
company has conciously not sought to compete with cheaper alternatives on price, as
this is not its competitive advantage.
The company’s products are large in scale and the development time is typically
long - in the order or two to three years. Each development project also constitutes a
large investment by the company. As such, new products must address a need in the
market that is not addressed by the existing portfolio, and new product concepts are
largely market-driven.
Internally, the company is structured around three business units, which are re-
sponsible for assessing market requirements and ordering new products from the
product development and R&D departments. On a whole-company level, develop-
ment is conceived of as a linear process as shown in figure 31.
Figure 29: Company F’s New Product Development process.
To expand:
1. Definition of concept:
The first two stages of the process are the responsibility of the business units
responsible for the given product. Within this first stage of the process, the basic
concept is defined and market research takes place to establish its potential to
the company.
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2. Feasibility of concept:
After the concept has been defined and researched, the business units now dis-
cuss the technical feasibility with the engineering and R&D departments. Ap-
propriate changes are made to the concept and these changes reflected in market
analyses.
3. Generation of general requirements:
The business unit and the technical department now agree on the general pa-
rameters for the design, and the design is handed over to the technical and R&D
departments.
4. Pre-series testing and optimisation:
The first product of the technical development process is now tested internally
and changes made as appropriate.
5. Zero-series release and optimisation:
The zero-series (pre-serialisation) product is now released to companies and
feedback from practical installations incorporated into the design. Where possi-
ble, design changes are implemented in the zero-series installation.
6. Series launch:
The production version of the product is now handed over to the business units
for distribution, and the product is incorporated into the company’s portfolio.
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3.2 discussion
3.2 discussion
This section will be set up in sections corresponding to each of the research questions
outlined previously.
3.2.1 What are the most important business goals and how does the business seek to achieve
them?
First and foremost, the primary business goal of all companies examined is to balance
the books and make a sustainable profit. The degree to which this central goal drives
NPD varies between businesses, however. Larger businesses tend to be more strategic
in their approach and view being ahead in NPD as a goal in and of itself. This
is driven by the expectation that new products will form the foundation for future
growth. This is particularly apparent in the approach of Company B and F, but also
to some extent in Company - which is transitioning from a small company to a larger
one.
Conversely, the small companies examined herein are necessarily committed to
emphasising financial stability explicitly in their goal-setting. Activities of the com-
panies are either driven or limited by a need to make a profit over the short term.
This is particularly well exemplified by Company D, whose NPD strategy is severely
constrained by financial realities. There is therefore evidence of a large capacity gap
between larger and smaller companies in the way NPD is pursued, and indeed can
be pursued within the business context.
Returning to the role of strategy in larger firms, Company C and F make a strate-
gic evaluation of the place of the product in the marketplace and the company’s
portfolio at the beginning of product development. The company must establish that
the product satisfies a need by a customer, and that there is broad enough appeal that
the investment is worthwhile. Secondly, the company must also established that the
marketplace is not already served by an existing product in its portfolio. Given that
the company produces customisable industrial equipment, this is an important aspect
to consider.
Company A is driven by a strong company identity and a developing strategic
focus. In the case of the food manufacturer, new products must meet the company’s
competitive emphasis on high quality while satisfying the demands of both retailers
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3.2 discussion
and the end customer. Practically, there is a high internal emphasis on ensuring that
the equipment necessary to manufacture the product is either already on hand or that
new equipment can be used for other purposes. In terms of strategy in New Product
Development, the company aims to use its small size and emphasis on quality to fill
a gap in the market for products that larger manufacturers cannot properly address.
The company’s strategy is based on practical realities, but is nevertheless driven by
long-term vision and the company is committed in investing for longer term growth.
3.2.2 How is New Product Development success defined?
In this section, the product success factors for each of the companies will be discussed.
Success factors are defined as the most important factors affecting product success
post-development, based on interview comments and information from secondary
sources.
Success factors
Company A Minimisation of production costs
Market needs addressed
Compatibility with company’s competitive advantage
Compatibility with growth strategy
Company A sees its differentiating factor as a commitment to quality and an
approach that prioritises the needs of the market. Regardless, the company must also
aim to be competitive with larger competitors and as such unit cost is a significant
factor that affects to what extent a new product is deemed successful.
Success factors
Company B Quality of solution
Development cost
Development time
Exposure
Company B provides providing an engineering service to companies that have
outsourced development. Thus, the success of the company as a partner is largely a
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3.2 discussion
function of the quality of the solution, development cost and development time. The
emphasis on each of these depend on the product and the client. An added aim of the
company is to work on projects that expose its capabilities to other potential clients.
Success factors
Company C Strategic compatibility
Quality of solution
Addresses market needs
Development cost
Company C emphasises the compatibility of the product with the existing portfo-
lio and its strategic approach in judging NPD success. New products must fit clearly
within the product portfolio and target a specific customer, and should also strengthen
the company’s ability to deliver industrial ’solutions’. Given that quality is seen as the
company’s competitive advantage, this is also a strong indicator of product success.
Success factors
Company D Development cost
Development time
Addresses market needs
For company D, development cost and development time are key indicators of
product development success. The product is a highly seasonal item, and if the devel-
opment time is longer than anticipated this can significantly affect its success. Simi-
larly, the company cannot afford to invest significantly in NPD, and any cost overruns
are risky.
Success factors
Company E Quality of solution
Development cost
Development time
Exposure
Company E is very similar in character to company B. As such, the two companies
share the same success factors.
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3.2 discussion
Success factors
Company F Strategic compatibility
Quality of solution
Flexibility of product
Development cost
The success factors prioritised by company F are similar in character to company
C, which is a ocmpany of similar size and character. There is a high emphasis on the
product fitting within the overall strategy of the company, but company F is different
in that the flexibility of the product is also a high priority. The product must be able to
be fitted in a variety of locations and the design must properly take this into account.
3.2.3 How is New Product Development managed within the company?
In smaller companies, there is generally a high degree of management involvement
in NPD. Within companies A, B, D and E there is direct involvement at the highest
management level throughout the development process - including technical develop-
ment. This is reflective of the fact these companies have fewer resources than larger
companies. Additionally, management is less occupied with high-level management
issues and have the space to be directly involved in New Product Development.
Within larger organisations (company C and F), New Product Development is a
heavily delegated activity and there is less management involvement. In company C’s
development process, product managers act as a link between business units respon-
sible for specific types of products, and management. Through product managers,
management has a higher degree of involvement during the initial stages of NPD,
and in the concluding stages. This is a reflection of the need to ensure that the prod-
uct specifications are established with a view to strategic and market considerations.
As the product development process transitions into technical development, the prod-
uct manager hands over responsibility for the project to the technical department, at
which point management involvement is reduced. At the conclusion of the technical
development process, management involvement is again required to establish that the
product is ready for launch.
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3.2 discussion
Company A is arguably useful to examine the transition between a state of high
to low management involvement in NPD. Though the company is considered small
in the context of the industry, it is nonetheless not a small business and the degree
to which management is preoccupied with other issues is increasing. However, man-
agement remains heavily involved in practical product development and holds much
of the expertise. In the near future, the company will likely need to develop inter-
nal structures that separate product development and management, with a view to
ensuring that management resources are efficiently used.
3.2.4 How is New Product Development a structured exercise within the company?
Of the five interviews conducted, only two subjects (companies C and E) actively
thought of NPD as a structured process. In the other three, NPD can be conceptu-
alised as a structured process to varying extents. Only in company D is there no
evidence of a structured internal process for handing New Product Development.
Figure 30: Company C’s new product development process.
Company C has a linear approach to NPD that borrows significant elements from
Stage-Gate. The model prioritises the early setting of specifications, which aligns
with the claim made by Cooper and Edgett (2010) that this must be the case for
technically challenging products. The model is adapted to document and account
for the handing-over of responsibilities for the project between different stake-holders.
For example, the generation of technical design requirements is a defined step where
the product manager and the technical development team collaborate to establish the
desired parameters of the design. This is done to ensure that general requirements
are accurately translated into specifications. The company has adapted the process
to reflect it ability to trial pre-release products in an industrial setting, and this is a
defined step in the process before the product is launched.
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3.2 discussion
Figure 31: Company E’s new product development process.
Company E also has a structured process that accounts for practical circum-
stances. The company prioritises the role of gates as points where the company and
the client must agree to proceed with development, or where the quality of the prod-
uct is assessed. Possible iterative loops are also actively identified where a decision
must be taken whether to proceed to the next stage or to improve the design, which
reflects the practice of the company.
The company has deliberately limited its scope to provide design expertise only
- it outsources the production of tooling and prototypes. The development process
reflects practical considerations and potential difficulties resulting from this choice.
Potential difficulties in transferring a design to a third-party manufacturer of tooling is
accounted for by, firstly, ensuring that the design is as developed as is possible before
tooling is ordered (gate 2) and, secondly, ensuring that tooling meets specifications
(gate 3).
Figure 32: Company B’s New Product Development process.
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3.2 discussion
This approach can be compared to that of company B, which is in many way sim-
ilar in character. The defining difference is company B’s manufacturing ability, which
is reflected in the product development process as interpreted through interviews and
examination of secondary sources. Due to the lower cost associated with putting a
design into production, company B has the ability to make prototypes earlier in the
design phase and the initial design does not necessarily have to be as high quality
as that of company E before the manufacture of prototypes can take place. Other
differences between companies E and B include the emphasis placed by company B
on conducting preliminary modelling of products to flesh out technical specifications
and communicate this with the client, and the degree to which product development
stages can overlap.
Figure 33: Company A’s New Product Development structure.
The product development process of company A is different to the other compa-
nies examined, but it makes logical sense considering the company’s characteristics.
Company A has, and makes use of, the ability to produce product samples relatively
early on in the development process and this is a defining feature of its process. The
expense associated with the production of prototypes is primarily manifested in terms
of downtime cost associated with producing non-retail goods, but the unit price is not
otherwise significantly higher than if the product were in large-scale production. This
enables the company to marginalise the role of business analysis until later in the
development process and would arguably result in a more rapid and responsive de-
velopment process.
Overall, the development processes of each of the companies are similar - with
the exception of company A. Each development process is characterised by a number
of steps leading up to launch, and these are mostly in line with what is suggested by
the Stage-Gate approach. Where the models vary is in:
1. The commitment to iteration versus linearity
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3.2 discussion
2. The level of emphasis placed on gates as crucial decision-making points
3. The Level of commitment to testing
3.2.5 Does the business make a conscious effort to learn from success and failure in
New Product Development?
In general, businesses are well aware of what factors have to be right to produce
a good product. There is also significant evidence that businesses have put
in place structures that work particularly well for their context. For example,
company E places an emphasis on the transfer of knowledge between itself and
suppliers, to the extent that this is a defined step in the product development
process.
Reflection on the success of a NPD project post-launch appears to take place as
a largely unstructured activity. None of the companies indicated an active effort
to address issues in the process after development has taken place - yet, as indi-
cated above, this does not seem to mean that companies do not take lessons into
account. Thus it appears that process change is a relatively instinctive action,
especially in larger companies where there is excess capacity. In smaller compa-
nies (especially company D) there is not much scope for process innovation due
to a capability shortfall.
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4
A N I N T E R A C T I V E N E W P R O D U C T D E V E L O P M E N T
S T R U C T U R E ?
The objective of this thesis is to generate an adaptive NPD process based on (1)
the literature review of Chapter 2 and (2) the primary information gained as a
result of the case studies discussed in Chapter 4. In this section, the aim is to
present and justify this model, and to discuss its strengths and limitations.
Companies invariably engage in some sort of risk and opportunity analysis be-
fore commencing a project. This may be an explicit step that is documented as
the project is handled by various department, or an unstructured process where
management establish how the project can beneﬁt the company and what risks
are involved with going ahead. Risk management is typically performed early
in the development process and, to a lesser extent, as part of gate decisions.
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an interactive new product development structure?
This chapter will outline an approach to designing an NPD process that is based
around a risk management approach. This approach - also favoured by Unger
and Eppinger (2011) - is strong because:
4.a) It is highly relevant:
In many ways, risk management is central to the idea of implementing
a NPD process. The objectives of going through a process is to reduce
uncertainties in the process of developing new products and to make sure
that products are at an appropriate level before investment is increased. It
is therefore logical that a strategy to develop an adaptive framework for
NPD should follow a risk management approach.
b) Fitting into tasks that most companies already engage in:
Companies invariably engage in some sort of risk and opportunity analysis
before commencing a project. Quality, method and scope vary, but risk
management is always a feature of thinking about new products. This
may take the form of an explicit step that draws on inputs from the whole
company, or of an unstructured process where risk is identified and dealt
with as events happen. Regardless, risk management should definitely be
performed at the beginning of a project, which is also an appropriate time
to consider the development process.
c) Compatibility with the ISO9001:2008 quality assurance framework:
ISO9001:2008 sets out ”the need to systematize and formalize a large num-
ber of corporate processes within a set of procedures, and to document
such implementation” (Tari et al., 2012, p. 298). In this context, structur-
ing NPD process design through risk assessment is compatible with the
standard. Gaining ISO9001 certification (through third-party certifies) is
generally thought of as beneficial to companies, and in some cases it is
a de-facto requirement (Tari et al. (2012), p 300 and Gadegaard (2010), p
51). For example,.company A is currently in the process of gaining ISO9001
compliance in order to document its processes to clients.
This chapter will proceed through:
a) An overview of ISO31000:2009: Risk Management - principles and guidelines
(section 4.1);
b) New Product Development risk management:a method for NPD process
design (section 4.2), and;
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an interactive new product development structure?
c) A discussion of the model’s strengths, weaknesses and limitations (section
4.3).
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4.1 general risk management approach: iso 31000
AS/NZS ISO 31000:2009 provides a structure and guidance for general-purpose
risk management. The standard can be adapted for a range of assessment pur-
poses, including for the purpose of identifying risks in a new project from a
diversity of sources. The process proposed by the Standard is illustrated by the
figure below, where the three priorities of risk assessment are risk identification,
risk analysis and risk evaluation (Standards Australia, 2009). Note that the sections
in this report corresponding to each analysis step is also indicated.
Figure 35: General process for risk assessment from Standards Australia (2009).
In the Standard, risk is defined as ”the effect of uncertainty on objectives” (Stan-
dards Australia, 2009, p.ii). That is, risks arise from the unavailability of perfect
information that can cause deviations from the preset plan, with positive or neg-
ative consequences. The standard proposes a three-step process within which
93

the risks involved in a project are identified and then analysed in a structured
process. This process emphasises:
a) Establishing the context: Firstly, the context within which the risk assessment
takes place is established. The aims and objectives of the process must be
laid out and criteria set for what will be within the scope of the analysis -
and what constitutes unacceptable risk.
b) Risk assessment:
i. Risk identification: Secondly, the risks relevant to the context are identi-
fied and characterised.
ii. Risk analysis: Thirdly, the risks are analysed by means of a likelihood-
consequence matrix (see figure 39).
iii. Risk evaluation: The risks are now evaluated and prioritised in terms of
their severity.
c) Risk treatment: Appropriate measures are taken to alleviate severe risks and
the risk assessment is redone to reflect these changes until the level of risk
becomes acceptable.
We will now proceed to discuss each of these aspects in the context of developing
an adaptive framework for NPD.
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4.2 new product development risk management: a method for npd process design
4.2 new product development risk management: a method for
npd process design
This section will use the ISO31000 methodology to discuss and develop a risk
management strategy for New Product Development that prioritises process de-
sign. As far as is possible, the notes here are general in nature and should be
applicable to most businesses.
It should be noted that this process is designed around providing recommenda-
tions to companies about how to manage the process of New Product Develop-
ment - it does not provide a specific process as an output. This decision was
driven by an acknowledgement that idea-to-launch processes are fundamentally
similar. Regardless of the process being conceived of as a linear or spiral pro-
cess, they flow through a number of defined steps from idea to launch. Where
the two models differ is the use of iteration - linear models discourage it, while
spiral processes encourage it. This approach provides businesses with a number
of recommendations that aim to manage the risk through the manner in which
states, gates and iterations are used as the interviews demonstrate this is where
differences are made.
4.2.1 Establishing the context
ISO31000 stipulates that ”by establishing the context, the organization articulates
its objectives, defines the external and internal parameters to be taken into ac-
count when managing risk, and sets the scope and risk criteria for the remaining
process” (Standards Australia, 2009, p. 15).
4.2.1.1 External context
A company developing a new product operates in an external climate within
which the company must seek to achieve objectives. Key contexts to be consid-
ered here include (Standards Australia, 2009, p. 15):
a) The market
b) Regulatory framework
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c) Economic
d) Social and cultural
e) Political
f) External stakeholders
i. Customers
ii. Suppliers
iii. Development partners
iv. Manufacturing partners
The emphasis given to each of these contexts will vary between companies and
products.
4.2.1.2 Internal context
The internal context is ”the internal environment in which the organization seeks
to achieve its objectives” (Standards Australia, 2009, p.16). This is important to
acknowledge and consider because the project takes place within the context
of the strategic objectives of the organisation and its capabilities. Key contexts
include, but are not limited to:
a) Roles and responsibilities
b) Resource and knowledge capabilities
c) Company culture
d) Policies and objectives
e) Decision making processes
f) Relations between internal stakeholders
Once again, the importance of each context will vary between companies and
products. It should be recognised that the objective of the NPD process risk
96

management strategy is to optimise the internal context to be conductive to
NPD success and thus reduce the risk involved in pursuing NPD.
4.2.1.3 Establishing the context of the risk management process
ISO31000 states that ”the objectives, strategies, scope and parameters of the ac-
tivities of the organization, or those parts of the organization where the risk
management process is being applied, should be established” (Standards Aus-
tralia, 2009, p.17). Below are a series of general notes that apply to this risk
management strategy.
a) Goals and objectives:
The goals associated with the development of a NPD process that fits the
company and product profile are:
i. Minimise risk associated with New Product Development;
ii. Encourage the launch of successful products, and;
iii. Structure the company in a way that is conductive to product innova-
tion.
The objectives associated with the risk assessment is:
a) Develop a structured NPD process based on risk management principles
and the context, and;
b) Develop a process based around clear decision-making points.
5. Definition of responsibilities:
The responsibility for the development of the NPD process should be with com-
pany management, but should involve the whole company or at least manage-
ment of relevant departments.
6. Defining the scope:
Inclusions:
a) The (re)definition of the product development process;
b) The setting of requirements at specific points in the development process;
97

c) The declaration of likely iteration loops, and;
d) Criteria for what constitutes a launchable product
Exclusions:
a) Change in company structure;
b) Change in company culture;
c) Change in company investment into NPD, and;
d) Change in strategic orientation of company, including portfolio manage-
ment.
It should be noted that the fact these aspects are out of scope of this risk assess-
ment is because this report has primarily been concerned with the risk assess-
ment process - the other issues ar out of the scope of this thesis, but not of NPD
in businesses.
The process should be relevant to the development of products with similar char-
acteristics. The risk management strategy should acknowledge that the process
will likely need to be rethought in the case that a product with a different risk
proﬁle is developed.
4.2.1.4 Deﬁning risk criteria
Figure 36: ISO31000 risk assessment matrix (Standards Australia, 2009)
98

Defining the risk criteria is important in order to establish what constitutes a severe
risk and which risks need to be managed. Sensible risks also need to be defined. The
definition of unacceptable or sensible risks will vary depending on the company and
product context. Generally speaking, the level of risk should be qualified using a
consequence-likelihood matrix as examined figure 39. Based on this, a typical criteria
for unacceptable OH&s risk would be any risk level from medium and up. In the
context of New Product Development, it is likely that this would have to be modified
to correspond to a high risk level as NPD is inherently a risky endeavour with many
unknowns that cannot be controlled.
99

4.2.2 Risk assessment
After the context has been established, a risk assessment must be performed to (1)
identify risks, (2) analyse risks and (3) evaluate the risk.
While the context for risk assessment is likely to be broadly similar between differ-
ent companies, the individual risks involved with NPD will differ between companies.
It is not appropriate to propose a defined set of risks that can be involved in the devel-
opment of a particular product; to use this process, companies must complete a risk
assessment based on their own circumstances. The following is a broad overview of
what is required in process of risk assessment.
4.2.2.1 Risk identification
ISO31000 stipulates that the goal of risk identification is to ”...generate a comprehen-
sive list of risks based on those events that might create, enhance, prevent, degrade,
accelerate or delay the achievement of objectives ... it is also important to identify the
risks associated with not pursuing an opportunity” (Standards Australia, 2009, p. 25).
The identification should also include assessing who controls the risk; something that
is particularly important here.
4.2.2.2 Risk analysis
At this point, the risk must be analysed and a deeper understanding of its character
developed. According to the standard:
”Risk analysis involves consideration of the causes and sources of risk,
their positive and negative consequences, and the likelihood that those
consequences can occur. Factors that affect consequences and likelihood
should be identified. Risk is analyzed by determining consequences and
their likelihood, and other attributes of the risk. An event can have mul-
tiple consequences and can affect multiple objectives. Existing controls
and their effectiveness and efficiency should also be taken into account.”
(Standards Australia, 2009, p. 26)
100

Consequences and likelihood is typically addressed using a matrix as shown in
figure 39, which outputs a severity level based on the two inputs. As noted in the
standard, the risk management work should identify the nature of this risk and, im-
portantly the relationships between risks. This is particularly relevant in the context of
NPD risk assessment - the risk of a product not functioning as intended, for example,
is related to the risk of the product running over cost or not selling at the anticipated
rate.
4.2.2.3 Risk evaluation
The final part of the risk assessment process is risk evaluation. By evaluating the risk,
the standard stipulates that companies must establish which risks need treatment
based on the criteria for risk assessment and the outputs of the risk analysis. In
the context of NPD process design, risks that pose a risk to the company’s future
or the product’s success must be defined as unacceptable and should be tagged for
treatment.
101

4.2.3 Risk treatment
The risk treatment is the output of the risk management process and it is here that the
NPD process must address the issues identified through risk assessment. The risks
assessed as severe must be addressed explicitly in this section. The organisation has
the following options (Flaus, 2013, p.64):
1. Treat the risk
2. Terminate the risk
3. Transfer or share the risk
4. Tolerate the risk
All of the treatment options should:
”[Compare] the costs and difficulties of implementing different possibili-
ties with regard to the obtained advantages, taking account of legal and
regulatory obligations, and other requirements, such as social responsibil-
ity. The ISO31000 standard indicates that decisions must also take account
of risks for which treatment cannot be justified from an economic stand-
point, as in the case of major risks that are very unlikely to occur.” (Flaus,
2013, p.67)
Central to this risk management methodology is the provision of a number of
strategies that may be adopted to alleviate NPD risks. These are listed below. Note
that the advice is as specific as is possible in this context. A proper application of
this method should consider the recommendations in the particular context, bearing
in mind what the standard states about what needs to be taken into account (above).
From the research undertaken in this thesis, we can make a range of general
recommendations to companies exposed to particular risks. It should be noted that
these risks are often interrelated.
1. If the company is exposed to a high degree of technical risk - that is, the product is
technically challenging - there should be a priority on:
102

• Linearising the product development process: since iterations are typically ex-
pensive, there should be as few as possible (see company C, company E,
company F, Cooper (2014), p. 24 and Barczak et al. (2009), p. 19).
• Early setting of specifications: Since the priority of the development process
is on technical issues, specifications should preferably be set early so that
there is sufficient time to develop a technically good product (see company
C, company E, company F, Cooper (2014), Barczak et al. (2009), p.19 and
Bhuiyan (2011), p. 752).
• Rigid gates: the product should satisfy strict criteria before it can proceed
to the next stage of development. This is both due to the high cost of
developing the product further, and the need to minimise iteration in the
development process (See company E, Cooper (2014), Barczak et al. (2009),
p.22).
2. If the company is exposed to a high degree of technical uncertainty - defined
as testing being a requirement of the product - in developing products, there
should be an emphasis on:
• Identify and plan for iteration: Though a product requiring iteration is also
likely to be technically challenging (and a linearised process therefore more
appropriate), likely places of process departure should be identified and
planned for (see company E)
• Identify and address specific uncertainties in each iteration cycle: The aims and
objectives for ach iteration cycle should be clearly defined: each test should
address a defined set of uncertainties and aim to bring the product to a
higher level of development (see company E, Unger and Eppinger (2011))
3. If the company is exposed to a high economic risk - defined as the cost of the
product’s developing posing a risk to the company’s viability - in developing
products, there should be an emphasis on:
• Early financial risk and capability assessment: The company should undertake
a thorough initial assessment of the gap between its capabilities and what
is required to produce a successful product. If the financial risk cannot be
treated by changing how the product is developed, the company should
consider putting development of the product on ice and gearing the com-
103

pany strategy towards becoming financially capable of developing the prod-
uct (see company A).
• Early setting of specifications: To avoid re-work, specifications should be es-
tablished early in the development process. This tends to minimise devel-
opment costs (see Cooper (2014), Barczak et al. (2009), p.23).
4. If the company is exposed to a high degree of market risk - defined as market
volatility and a high degree of competition - the emphasis should be on:
• Encouraging iteration: To take into account changing market conditions, the
development process should continually reassess its aims and objectives,
with a view towards adaptation. Each iteration should produce a more
highly developed product until it reaches a point where launching it is
reasonable (see Unger and Eppinger (2011), Ettlie and Elsenbach (2007), p.
29, Simms (2012), p. 82)
• Increase management involvement: Since decisions on the trajectory of the
project must be continually made, more management involvement is re-
quired (see Unger and Eppinger (2011), Cooper (2014)).
5. If the company is exposed to a high degree of control risk - defined as the com-
pany not having good control over its development process due to outsourcing
- the emphasis should be on:
• Encourage iteration: To the extent that it is possible within financial and
scheduling constraints, iteration should be encouraged (see company E,
Unger and Eppinger (2011)).
• Generating a comprehensive list of requirements: If the project requirements
need to be communicated to a wide range of stakeholders, the project needs
to be comprehensive at an early stage (see company C and Cooper (2014))
• Putting in place procedures to enable rapid and accurate feedback to third-parties:
Throughout the development process, communication between the devel-
oping companies and relevant companies need to be regular and clearly
defined in purpose. Third-party stakeholders also need to be involved in
gate decisions (see company E, Bhuiyan (2011), p. 753, Meisner and Bless-
ing (2006))
104

6. If the company is exposed to a high degree of schedule risk - defined as a high
risk that the project will be launched late - the emphasis should be on:
• Early setting of specifications: specifications should preferably be set early so
that time is used for development rather than discovery (see Unger and
Eppinger (2011), p. 398).
• The embedding of scheduling into gate criteria: Scheduling should be given
more priority at gate decisions than is otherwise the case (see Cooper
(2014))
7. If the company is exposed to a high degree of regulatory risk - defined as being
highly sensitive to government regulations and standards - the emphasis should
be on:
• Establishing regulatory needs as part of the specification-setting process: Regu-
latory needs should be defined as part of the specifications list, and be
embedded into the early feasibility analysis for the project (company A).
• Embedding regulatory requirements in gate assessments: Criteria documenting
that the product is on track for regulatory compliance should be incorpo-
rated into gate decisions (see Cooper (2014))
105

4.3 strengths, weaknesses and limitations of model
4.3 strengths, weaknesses and limitations of model
The risk management procedure and relevant treatment methods outlined in section
5.1 provide a means of systematically assessing the risks associated with a new prod-
uct development process, and general advice designed to alleviate these risks. If used
correctly and in accordance with the advice given by ISO31000, this framework has the
potential to guide companies to a more efficient and likely more successful approach
to NPD.
A weakness of the model is the extent to which it is prescriptive and outputs a
clear development process. Process change is driven by the ability of companies and
NPD practitioners to analyse the context within which NPD takes place, and the risks
involved. They must then make a judgement as to what actions to take to alleviate
these issues. In this way, the model addresses the key criteria that the model should
be applicable to a wide range of businesses and contexts - on the other hand, it does
not provide a defined process like Unger and Eppinger (2011).
Another weakness of the method is that it arguably does not address all issues
relating to NPD success - however, this was beyond the scope of the work. Changing
the NPD process is only one way of strengthening a company’s performance in NPD.
As discussed in section 2.7, other factors influencing NPD success may be just as
important. To recap, these factors are:
1. The product innovation and technology strategy for the company
2. Resources: commitment and portfolio management
3. Climate, culture, teams and leadership
The case studies reinforced the importance of these key areas to NPD, and de-
pending on the circumstances they may be more relevant than changing the NPD
process. A core weakness of the model presented is therefore that its inability to
account for other means of improving NPD success. However, each of them could
conceivably be analysed from a risk management perspective similar to what is pro-
posed here, and embedded into the development framework. This is an interesting
avenue for future work to be conducted.
106

5
C O N C L U S I O N A N D S U M M A RY
The intention of this work was to establish an interactive model for companies to use
to improve their New Product Development process. The objectives associated with
the pursuit of this task, as established in the introduction, were:
1. To gain an understanding of the context within which NPD operates;
2. To understand how NPD happens in practice, and;
3. To propose a model for NPD based on secondary and primary research
Chapter 1 of this thesis considered what NPD is, the context within which NPD
operates, and how the task of deﬁning the NPD process has been approached by
other authors. NPD is tremendously important to the modern business and spending
associated with the development of new products represent an average of 2.5% of
the GNP of developed economies. Involvement in and success with NPD is generally
seen to correlate strongly with business success and businesses consistently prioritise
it. However, many businesses do not succeed in NPD goals.
NPD success is generally conceived of as a function of four key factors. These
are:
1. Product innovation and technology strategy
2. Climate culture and leadership
3. Portfolio management
4. Idea-to-launch system
107

conclusion and summary
The literature review deliberately limited discussion of these factors to the final
one; that of the idea-to-launch process. At the end of the literature review, various ap-
proaches towards the conception of this process were presented. The chapter rounded
off with the examination of existing approaches toward creating an interactive frame-
work for implementing an idea-to-launch process.
Chapter 2 of the thesis presents an overview of the approach used towards exam-
ining how NPD occurs in practice. This includes outlining and justifying the decision
to interview stakeholders within each company, sample sizing, data analysis and other
factors relating to the collection of primary information.
Chapter 3 discusses the results of the case studies conducted. In all, seven com-
panies were examined - with between one and two persons interviewed within each
company. The data generally reinforced the view of literature that many modern busi-
nesses highly prioritise NPD. It also demonstrated a number of differences between
businesses in the way that NPD is approached. Without fault, bigger companies have
a recognised NPD system in place which can clearly conceptualise the stages that a
product passes through to launch. Smaller businesses generally have a less defined
process for NPD. In one case, NPD is not conceived of as process at all. Within compa-
nies using a defined process, there was a big spread in how the process was conceived
of.
Chapter 5 discusses a risk management approach towards defining a product
development process. The strengths of such an approach is that it (1) is highly rel-
evant to the high-risk exercise of NPD, (2) fits within tasks already done by many
companies and (3) is compatible with the ISO9001 Quality Assurance Framework. The
approach draws on information gained through the literature review and primary re-
sources to propose ways that businesses can reduce specific risks in NPD through the
implementation of specific modifications to the development process.
108

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6
A P P E N D I C E S
.1 appendices 1
115

.1 appendices 1
Product
Performance
Customer acceptance
Customer satisfaction level
Customer retention rate
Purchase intent prior to introduction
Customer count
Relative sales level
Purchase repeat rate
Importance of the product to the retailer
Return rate from the field of customers
Sales force acceptance
Purchase trial rate
Product sales rate in test market
Met sales volume goal
Percentage of sales exported
Length of product life after purchase
Variance of sales from plan
Deliver customer needs
Uniqueness of the new product
level of innovation achieved
Technical performance of product
Met quality guidelines
Degree of product differentiation
Revenue Met revenue goals
Revenue growth
Met minimum revenue level at year 1
Break-even time
Attain margin goal
Attain profitability goals
Relative profits
Return factor
Internal rate of return or return on investment
Meets actual product cost goals
Cost of developing the product
Product yield rate through manufacturing process
Disposal cost
Price elasticity of demand
Price/value as measured by the consumer
Continued next
page 116

.1 appendices 1
Market share Market position
Met market share goals
Competitive reaction
Sustainable Competitive Advantage
Impact on sales of other products
Number of outlets
Taken off market
Process
Management
Performance
Ease of automation in manufacturing
Development efficiency
Ease of manufacture
Launched on time
Development project process versus milestones
Speed to market
Management’s subjective assessment of success
Ability to accrue political support within the firm
Team satisfaction
Risk of product failure
Risk of project failure
Table 4: Appendices 1: Indicators of success in New Product Development from Grif-
fin and Page (1993).
117

.2 appendices 2
.2 appendices 2
Figure 37: Appendices 2: Interview format
119

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