organizational

structures and
processes used to
oversee new-product
development

An organizational structure defines

how activities such as
task allocation ,
coordination
and supervision are
directed towards
the achievement of
organizational aims

Many companies use customer-driven

engineering to develop new products,
incorporating customer preferences in the
final design

Some rely on

internal
changes to
develop more
successful new
products.

Budgeting for New-Product Development

Mostly 3 strategies are followed

finance as many projects as possible,
hoping to achieve a few winners.

spend what the competition spends.

decide how many successful new

products they need and work backward to
estimate the required investment

Stage

Number
of Ideas

Pass
Ratio

Cost
per Idea

Total Cost

1. Idea Screening

64

1:4

$1,000

$64,000

2. Concept Testing

16

1:2

20,000

320,000

3. Product Development

1:2

200,000

1,600,000

4. Test Marketing

1:2

500,000

2,000,000

5. National Launch

1:2

5,000,000

10,000,000
$13,984,000

anizing New-Product
Development

CROSS-FUNCTIONAL
TEAMS

relieved from other duties and given a

budget , time frame and a informal
workplace

STAGE-GATE SYSTEMS
Divide the innovation process into stages , with a
gate at the end of each

The project leader , working with a cross-functional

team, must bring a set of known deliverables to
each gate before the project can pass to the next
stage.