Tech innovation s11_npi

Technology and Innovation
Management:
S11
New Product Introduction
Raj C Thiagarajan, PhD
To
SIBM SIII MBA Students

ATOA Scientific Technologies
Engineering Simulation For Innovation

Customers lined up outside of Apple's flagship Fifth Avenue store in New York to purchase iPad 2 tablets on Saturday.
Image from http://www.computerworld.com/s/article/9214618/iPad_2_shortages_continue_relief_1_2_months_away

ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 2

Hundreds of women wait in line on a cold December morning in 1945
to buy nylon stockings at a New York City store.
Picture from : http://www.chm.bris.ac.uk/motm/nylon/nylonv.htm


Technology in New Products
• New products Introduction (NPI)

• NPI Process

• Stages of the product life cycle.

• Cases

• Product life cycle strategies


NPI
• Any new product or service that can be offered to a
market for attention, acquisition, use or consumption
that might satisfy a want or need.

• It includes physical objects, services, technology,
organizations, ideas and people.

• Development of original products or Services, product
improvements, Process improvements, product
modifications, and new brands through the firm’s own
Research and development efforts


NPI Pipeline
• NPI Team

• Toll/ stage gate process

• Idea Funnel

• Value Chain, Benefit

• Strategy, Timing

• Product Development Cycle


NPI
• Products

• Platform/
Family


NPI Team Marketing
Manager

Advertising
Production
• A Agency

Collaborative
cross
functional
Engineering Finance
Team NPI
Team
• Develop and
launch a
Research and Marketing
successful Development Research
product

Promotions Sales


NPI is an Integrated Process
Customer
Experience

• Customer Experience
– Better experience, benefit
• Production Cost
Time to Production
– Low product cost market
Innovation
Cost
• Development cost
– Low development cost
• Time to market
– Shorter time Developm
ent cost
• Innovation
– DNA for NPI


End to End product development

Source?


@

NPI Design Changes Cost Part
1X
@
Sub assembly
10 X

• Cost of fixing = Stages X @
Final Assembly 100 X
Times
@
Dealer
1000 X
• Cost of Design changes @

increases exponentially with Customer
10000 X
product development cycle.
HIGH

• 80% of the product cost is
Activity, Influence Index,
Design change Cost
determined or committed at
the concept design stage

• Management influence
reduces over time NPI Activity
Low
Product Concept Final Pilot Mass
Planning Design Design Production production


Development & Commercialization
NPI
• Product Strategy

Performance

Manufacturability

Quality and Cost NPI Pilot Testing & Mass Commercial
DESIGN production Verification Production ization

Service, Life

Environmental

• Market Strategy


Value Chain
• Set of activities that create Value
• Through products or services to customer
• Industrial, Customer Value chain


Customer Benefit Chain
• The Benefit Chain – How Values leads to Needs


Stage-Gate Process
• Cooper Stage-Gate Process’s


NPI Funnel

Idea Launch &
Feasibility Prototype
Rollout
Concept Product Commercialization
Initial refinement optimization Production &
marketing and and prototype Distribution
technical creation
concepts
Post
Launch
Launch Review
Proposal
Contract
Charter

KEY
= Decision

= Deliverables


Toll Gates:
• Major milestones

• Decision making process
– allow passage for potential success projects
– Sacrifices potential failure Projects
– Continue working on the project, moving it along to the next
stage in the funnel; or
– Stop working on the project, shelving it or canceling it; or
– Hold and Get additional information and reconsider the project
for passage through the same gate once that information
becomes available


The Key ? Answered By Each Phase
Portfolio
Review Phase
Review 1 Phase
Phase Phase
Review 2
Review 3 Review 4

E E
Idea N Phase 1:
Phase 2: Phase 3: Phase 4: X Current
T Concept Post I Product
Generati E Feasibility Development T Support
R Investigation Release
on

•Does the idea fit •Does the product •What is the •Has the product •Is the product
roughly with our make sense from product spec? been fully verified meeting safety,
strategy and marketing, •Can we develop it and validated? efficacy and
resource technical & within budget and •Have production business targets
availability? financial schedule? objectives been in the market?
perspectives? •Can we produce it met?
If yes, then at the required If yes, then
concept document cost & volume? If yes, then closeout
approved If yes, then full manufacturing approved
& sub-team concept If yes, then approved & handoff to
allocated approved prototype & sub-team product support
& full team approved allocated
allocated & full team
allocated

Source:?


NPI Case Study: Microsoft
• $50 billion in profits over 27 years
• Early NPI relied heavily on copying the competition
• $4.2 billion annually invested in R & D
• Innovation is critical to Microsoft’s future success
• Much of R & D efforts are Internet related
• Many new products and services are in development to
counter Google and Open source


Product Life-Cycle
• Five Stages
– Product Development,
Introduction, Growth, Maturity,
Decline
– Exceptions
• Fads
• Styles
• Fashions


PLC Symptoms and Strategy

Stage 1:Introduction 2:Growth 3:Maturity 4:Decline
Sales Low Rapidly rising Sales peak Declining

Customer cost High Average Low cost Low cost
Profits Negative Rising High Declining
Target Innovators Early adopters Middle majority Laggards
competition Little Growing begins to decline Declining
Product Offer a basic product Offer product extensions Diversify brand and Phase out weak items
models
Price Use cost-plus basis Penetration pricing Set to match or beat rivals Cut price

Distribution Build selective Build intensive Build more intensive Selective, phase out
distribution distribution distribution unprofitable outlets

Advertising Build awareness among Build awareness and Stress brand differences Reduce to level needed
early adopters interest in the mass and benefits to retain hard-core
market
Sales promo Heavy expenditures to Reduce expenditures to Increase to encourage Reduce to minimal level
create trial take advantage of brand switching
consumer demand


Product-Process Matrix

Source: Adapted from Robert Hayes and Steven
Wheelwright, Restoring the Competitive Edge: Competing
Through Manufacturing (New York: John Wiley & Sons,
1984), p. 209


NPI and Strategy

Innovation and Technology strategy

• Effective NPI
pipelines must be
embedded in a Phase I Phase II Phase III Launch
broader strategic
context

New Product Development support system


Global NPI Strategic Options
• EXTENSION STRATEGY –
– Same approach as home market
• ADAPTATION STRATEGY -
– Makes changes to fit new market requirements
• INVENTION STRATEGY -
– Entirely new approach is developed for the new market
• STANDARDIZATON –
– Same product, all markets
• GLOBAL PRODUCTS
– Only some aspects of the product is standardized


Product Strategy Benefits
Product Strategy Benefits
EXTENSION Cost effective, Allows for greater economies of scale, Rarely
used for consumer type, Used mainly for industrial type
ADAPTATION Product formulations are changed, Entails R&D expenses,
economies of scale benefit is low
INVENTION Usually redesigning of an original product at a lower level of
complexity, Recognizes the socio-cultural and economic
differences, Leads to more purchases due to reinvention
STANDARDIZATON Easier management and control , Homogeneity of markets,
Cultural insensitivity, Made in Image. Economies of Scale.

GLOBAL Economies of Scale in, Production,
PRODUCTS Marketing/communications, R&D


NPI Timing
• Market-entry timing is critical. A company may be faced
with the challenge of trying to enter a market with a new
product and learns that a competitor is nearing the end
of its development work.

• You/Firm can have 3 Choices
– First entry
– Parallel entry
– Late entry


NPI Timing
• First Entry:
– First mover advantages of locking up key distributors and customers
– Product leader reputation
– Product can acquire a flawed image.

• Parallel Entry
– Coincide with the competitor’s entry.
– The market may be receptive

• Late Entry:
– launch after the competitor has entered.
– The competitor pickups the cost of educating the market.
– Product faults can be avoided
– Additional features can be included by the late entrant.

Development & Commercialization
• Product Strategy

Performance

Manufacturability

Quality and Cost NPI Pilot Testing & Mass Commercial
DESIGN production Verification Production ization

Service, Life

Environmental

• Market Strategy


Tech innovation s11_npi

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