05 02 NPD Process Notes

Product Designa nd Development Management New Product Development
NEW PRODUCT DEVELOPMENT
1.0 INTRODUCTION
Innovation creates the future by directly creating the material means and conditions of
human existence. This not only applies to the near future but also lays the foundations
upon which the more distant future will be based. Technological innovations and their
related socio-economic and political implications have totally dominated and shaped
our world since the industrial revolution. The same also applies throughout the human
history but at a slower pace. This is qualified by the fact that history itself is classified
by the types of means and materials which we have used to advance the conditions of
our lives. However, the pace of scientific and technological innovation has been
gathering an increasing pace since the industrial revolution, and has been globalising
competition between states and companies. The advances in materials, production
processes and communications have added new dimensions to the quality and
magnitude of competition.
In the years since World War II, competition between companies has passed through
various phases where cost and then quality played a major role in providing the
competitive edge for the companies that could efficiently and reliably provide good
quality products at a reasonable price for a given market segment. Prior to that, the
world markets were based on availability where demand exceeded the supply of
commodities, industrial products and consumer goods. The capability to produce was
the dominant factor and the industrialised countries, their companies and individuals
enjoyed a competition free domination of the markets. However, in the world of over
production, competition for the available and tomorrow's markets has become more
expansive and intensive.
The design and development and introduction of new products to satisfy customers
has come to play a critical role in the success or failure of companies and
communities. The most influential stage during this cycle is now correctly recognised
to be the design stage. Thus the process of managing this crucial activity of
recognising the customer needs and wants, conceptualising them, materialising those
concepts into concrete designs of products and processes in a way that they can
economically and reliably be produced and introduced to the market at the right time,
is the most critical activity of modern industrial activity.
This is the subject of the Competitive Design Management.
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2.0 THE DRIVING FORCES OF NEW INDUSTRIAL

COMPETITION
The ever increasing domestic and global competition, changing customer needs and
technology, have truncated the product life cycles. This has forced organisations to
consistently develop and introduce new products to sustain corporate growth [1].
The three major driving forces behind the new industrial competition are characterised
by Wheelwright and Clark as[2]:
1- Intense International Competition, where more and more competitors are capable
of competing at a world class level providing a more intense and rigorous competitive
environment.
2- Fragmented, and demanding markets, where customers have grown more
sophisticated, demanding not only the highest standards but also products that satisfy
a diverse range that provide particular solutions to their expectations in a easy to use
form.
3- Diverse and rapidly changing technologies, which with the increasing depth and
breadth of scientific achievements, has created new options and varieties of possible
solutions to the demanding customers. Furthermore, the new technologies are capable
of transforming the nature of products and processes as well as the character of
competition and businesses themselves.
3.0. TIME TO MARKET

The current character of competition has reduced the life cycle of both consumer and
industrial products as more advanced products with higher performance quickly
replace the older ones. This has added the dimension of time as a crucial factor in the
introduction of products to the markets.
"Time to market" is the common phrase used to describe the time elapsed between
product definition and product availability. Time to market is minimised by adopting
an effective time compressed product development process in an organisation. To
quote Aoike, senior managing director and general manager of the R&D division at
JVC "Our speed wasn't fast enough (for introducing 80-MB hard disk) because when
we finished (80 MB hard disk), another manufacturer announced a 100 MB
product..."[3]. Mckinsey & Co. consultants conducted a study which showed that a
product that is six months late will miss out on one third of the potential profit over
the product's lifetime. The details of their results are illustrated in the slide showing
the Benefits of Time & New Product Introduction.
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By embracing the philosophies of effective product development a company can bring

out products faster than its competitors. Stalk [4] claims that the success of the
Japanese over the Western competition is due to this fact.
Months
Time 6 5 4 3 2 1
• Late arrival to market reduces

gross profit potential by 33% 25% 18% 12% 7% 3%
• Improving time to market

improves profit by 11.9% 9.3% 7.3% 5.7% 4.3% 3.1%
Early arrival to market
• For revenues $25 million, annual

• gross profit increases by $400K $350K $300K $250K $200K $150K
• For revenues of $100 million, annual

gross profit increases by $1600K $1400K $1200K $1000K $800K $600K
Figure 1. Effects ofEffect

TimeofonTime on Product
Product Profitability
Profitability. Source [3]
Some of the distinct advantages of time to market are as follows:
 increased product revenue [5]
 reduced development cost [6, 7]
 improved product performance [5]
 increased predictability of development results [5]
 greater ability to attract high quality design and development professionals.
 Product differentiation ( E.g. Sony Walkman)
 opening of new markets and attracting new customers.
 Premium price for the product [6, 7]
 Market and technology less likely to change before the product launch[6, 7]
 Resource saving of 30% to 35% for electronics industry [5, 8].
The effective development result in enhancing the company performance in terms of
higher growth and profitability as illustrated in figure 2, below [9].
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Strategic Advantages
Preem pting competitors
Setting s tandards
Initial Monopoly
Nam e recognition
Company performance
EFFECTIVE PRODUCT - Growth

DEVELOPMENT - Profitability
Operational advantage
- Lower cos t
-Skill / capability
developm ent
-Potential econom ies
- Brand im age
Figure 2. Results of Effective Product Development. Source [9]

An organisation can enhance its performance by gaining operational and strategic
advantage.
The strategic advantage arises from effective product development because of
 Preempting competitors,
 Setting standards (e.g.: Microsoft is a standard operating system for a PC),
 Initial monopoly in the market segment
 Name recognition (E.g.: Sony Walkman)
The operational advantage is gained because of
 Reduced cost of development (effective development eliminates inefficiencies
caused by improper communication).
 The skills of the people involved are enhanced.
 The companies brand image improves which motivates people.
The reductions in cycle time for development can be obtained by applying the various
techniques blended to suit a particular organisation's needs. It is not possible to
suggest a global solution for making the development process effective for all
companies.
4.0 PRODUCT LIFE CYCLE

New products have a characteristic pattern to their sales volume and profit margin
curve as shown in figure 3. Booz Allen and Hamilton[10] have proposed five different
stages that a product can pass through during its life. The five stages are
a) Introduction
b) Growth
c) Maturity
d) Saturation
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e) Decline
Volume/
Profit sales
volume profit New product
Margins profit
INTRODUCTION GROWTH MATURITY SATURATION DECLINE
Time * Not to scale
Fig 3. Product life cycle. Source :[10]

4.1. Introduction stage
This phase is referred to as the Incubation phase by some. This is the period of
greatest uncertainty and many products fail to survive this initial, "post-natal" danger
zone. As in some physical systems products which do not survive at the first attempt
may reappear later when the conditions for their survival are more favourable or when
the technology advancements improve the performance. Miniature Televisions and
Swing wing aircraft's are good examples. The profit margin in this phase are low
because the expenses of promoting and manufacturing and producing the product are
high.
4.2. Growth stage

In this phase the incentives of greater cost effectiveness, improved performance, or
simple fashion combines to stimulate demand. The demand often outstrips supply.
The profit margins also increase because, the promotional and manufacturing
expenses are spread over increased volume. It is important to notice that the profit
margins attain the peak in this stage [10].
4.3. Maturity stage

As more competitors enter the market the sales volume continue to rise at a constant
rate. The profits tend to take a negative trend as shown in figure 3. This is because the
product sales is more influenced by its cost, which in turn warrants a reduced price of
the manufacturer. The product is said to have entered a commodity market [10].
4.4. Saturation stage
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Here the rate of demand is almost constant. The market at this stage is chiefly one of
replacement, due to deterioration of existing products or substitution of one group of
customers by another. The demand is nearly constant and starts to decline with time in
this phase. The competition is mainly focused on price. This again explains for the
declining nature of the profit margins [10].
4.5. Decline stage

As the product approaches the end of its life, demand for the product declines because
the product is substituted by another product. The product is said to have reached the
end of the life cycle at the end of this stage [10].
4.6. Significance of product life cycle

Though fig 3 represents the possible stages that a product can undergo during its life,
the shape, the number of stages and the time period spent in each stage varies for
different products. The product life cycle is influenced by factors like type of industry,
type of competitors, quality, price, introduction time, customer requirements etc. The
product life cycle is also influenced by the technological advancements. As a
generality, the closer the company is to consumer goods and the market, the shorter is
the cycle of its product. Conversely, the closer the product or the company is to basic
industry or producers goods, the longer the cycle [10].
The product life cycle (PLC) of a product need not be constant over time, the
typewriter industry is a good example to illustrate the change in product life cycle
time over the years, Mechanical typewriters had a life cycle of 30 years,
Electromechanical typewriters had a life cycle of 10 years, While the electronic
typewriters have quickly been replaced by word processors with the advent of
personal computers.[11].
Studies[12] in the field of household appliance showed that the average introductory
stage shrunk from 12.5 years to 2 years and average growth rate shrunk from 33.8
years to 6.8 years, the PLC for analytical instruments reduced from 10 years to 4
years, it is also estimated that the product life cycle of video games is about 9 months.
4.7. Effect on Strategy

A primary economic conclusion after analysing the product life cycle is that sooner or
later every product is substituted by another or else it is degenerated into profitless
price competition. Further, as mentioned earlier, the introduction of new product or
product differentiation can change the sales volume and hence the profit margins.
Throughout history, the secret of business has focused on the principle of adopting
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right business at the right time. This necessitates the need for new product planning to
sustain and increase the profit of the organisation. [10]
The shape of sales curve has been the basis for the formulation of marketing strategy.
More important is the formulation of product strategy. The out of phase relation
between the sales curve and profit curve highlights the need for formulating the
product strategy based on the profit curve. As seen from fig 3, it is advantageous to
introduce a new product just after the existing product has completed the growth
phase.
5.0 TECHNOLOGICAL LIFE CYCLE

It is generally recognised that the marketing of high technology products differ
significantly from the marketing of traditional products. Industrial sales can be traced
by the concept of Technological Life Cycle (TLC)[13]. To draw a comparison, the
PLC is governed by three distinct forces namely fashion, technology and the benefits
sought by the market place. The same three forces are involved to some extent in
industrial markets. However, in industrial markets the influence of fashion is limited.
The impact and advancement of technology can be the driving force for the industrial
products. The evolution of a technology through the market place or a Technological
Life cycle (TLC), can be divided into six basic phases [13]
1. Cutting edge
2. State of art
3. Advanced
4. Mainstream
5. Mature
6. Decline
High technology products in the industrial markets are influenced and depend on the
underlying technology for the competitive advantage. This aspect is true for even low
technology, well established products.
5.1 Cutting Edge

The cutting edge phase of the TLC is characterised by technology advancement that is
ahead of the most sophisticated applications in the market place. They involve more
of research than development. The researches can be classified as
a) Pure research
b) Applied research
c) Product research
5.1.1 Pure Research
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This is aimed at seeking or expanding knowledge, to find new circuits or other

phenomenon which do not exist. The market potential of these are exploited after the
completion of the research. The firms involved in this type of research tend to
measure the effectiveness based on the number of patents granted as a result of the
research. However, the real test for pure research is to develop patents which can be
transformed into the profit generating applications. Pure research occurs in the cutting
edge phase of the TLC.
5.1.2 Applied Research

This is aimed at solving an existing market need by adapting or applying the existing
technologies. The applied nature of the research goals may often yield hybrid
technologies that do not pass through the cutting edge phase of technological
development.[13]
5.1.3 Product Research

This is directed towards the ongoing continuous improvement of the existing
technologies. This form of research is carried out at all the stages of the TLC. These
help in extending the TLC and defends the existing technology from newer
technology[13].
The firms in the cutting edge develop technology with a specific application in mind.
The success for the technology is determined by the possibility of finding additional
applications. The marketing efforts in the cutting edge phase tend to be misdirected
because the potential applications of the technology is not apparent. The applications
emerging from the Cutting Edge firms tend to have low reliability and are test
marketed. When errors is not permissible (e.g. Space Shuttle), the progress is very
slow.
The successful firms, which succeed in marketing products, tend to market them to
State Of The Art (SOTA) firms. These SOTA firms use the cutting edge technology to
either integrate to their product offerings or use them to discover new markets. When
the research focus shifts towards solving customer problems and responding to market
needs, the TLC enters the SOTA phase.
5.2 State Of The Art (SOTA)

As described earlier, the firms in this phase specialise in adapting developed cutting
technologies to market needs. Marketing plays a relatively minor role in the SOTA
stage of the TLC because the markets tend to be small and sophisticated. The product
is sold by the distinct attributes rather than the user benefits. The customers tend to be
sophisticated and capable of using the new technology attributes.
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The transition from the SOTA stage to the advanced stage of the TLC is characterised
by a rapid increase in market size and the emergence of substantial profits (figure 4).
This transition away from the SOTA represents the end of high tech phases of TLC.
At this stage the firm is no longer technologically different from its competitors.
The death of these high technology stages (cutting edge and SOTA) is often traumatic
to the firm whose self image is intensively high technology. Market shake out, Market
share fluctuation, and market segmentation are among other factors that effect the
rapid and drastic changes between SOTA and advanced phases of the TLC.
5.3 Advanced stage

The characteristics of the advanced stage are discussed under two main sub headings
they are
a) Advanced stage and market shake out
b) Effect of experience curve
Industry profitability
Number of firms
cutting State of Adv anced Mainstream Mature Decline

edge the art
Fig 4. TLC Stage Effects on Industry Population and Profits. Source:[13, 14]
5.3.1 Advanced stage and market shake out

As the firm moves from the SOTA stage with limited competition and sophisticated
customer base, it needs to develop the expertise in marketing the product or sell the
products to the firms specialising in marketing these products. As indicated earlier, in
the cutting edge and SOTA phases the products are sold to customers based on the
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technological attributes. The skills needed to develop the product may be sufficient to
market the products. In the advanced phase the emergence of large market, less
sophisticated and demanding customer requirements which are generally aimed at
bottom line benefits (profits), warrant the firm to modify its competitive marketing
strategy. This is because the firm approaches a position in the TLC where the
marketing efforts are more necessary than the technical efforts. The technical efforts
and marketing efforts at various stages of TLC is represented in figure 5.
One of the option for a firm entering advanced phase from SOTA phase is to re-
orientate itself as a market oriented firm. The case of APPLE COMPUTERS
highlights this aspect. Stephen Jobs, one of the two engineers who founded the
company and was responsible for its early growth and success was replaced by John
Scully, an experienced consumer marketing manager from Pepsico. This changed
reflected the different needs Apple faced as it entered the advanced phase of the TLC.
It is often observed that the potential market for the advanced stage are overstated.
This results from the focusing on the "newness" of the technologies and widely
proclaiming the revolutionary impact they will have on the market.
100
Marketing
Relative Efforts
effort
Allocation
Engineering
Efforts
0 cutting State of advanced Mainstream mature Decline

edge the art
STAGES OF TECHNOLOGY
Fig 5. Marketing- Engineering Balance at the different stages of TLC Source [13, 14]
5.3.2 Experience - curve effects on the advanced phase of TLC

Firms which develop a technology try to maintain a high price for the technology,
while reducing production costs over the years. This reduction is possible due the
experience gathered during the production. The reduction of production cost can result
in substantial gross margins which are used to invest in future technologies. The firms
that lead on the experience curve have a natural advantage and it is difficult for the
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competitor to catch up, unless the competitor can move into market share leadership
position. Thus, even with head on competition the firm with lowest marginal cost can
flood the market with a price above the cost but below the cost of their competitors.
Thus the market leader earns profit while removing competition. This aspect makes
market segmentation (or niche strategies) critical to firms who cannot compete on
price.
All the above factors like managerial transition, market overestimation, and
experience curve pricing lead to a market "Shake out". Eventually, market growth
fails to meet expectations or new entrants into the industry erode the market share
among market leaders. Either case can trigger a market shake out. Two distinct
approaches can be adopted by firms.
The first of these is the participation of the firm in "Price Wars" (i.e., price reduction
to solve the marketing problems). As prices rapidly fall, only those firms with the
lowest marginal cost survive. The industry as a whole loses money enduring the price
war. The firms which survive, gain large market shares for long run profitability.
Participation in such price wars can be disadvantageous for the fear of running out of
money before the competitor. The other disadvantage is that caused by the
deterioration in product quality which is generally accompanied by such price
reductions. This could also erode the company image in a longer term. The price war
may also train customers to be price sensitive and expect prices to fall over time. The
market place of personal computer highlights case.
The alternate approach for a firm is to segment the market and pursue niche strategy to
survive the shakeout and to gain competitive edge.
5.4 Main stream

At this stage, the market is fully developed. The focus is shifted from product
development and application research into production research. Mainstream TLC
products have achieved Standardisation sought by the customers and firms strategic
focus shift towards low cost production. Success in this stage is largely determined by
the capability of the firm to produce the product most efficiently and effectively. In
pursuit of mainstream phase production advantages, the firm may choose a capital
intensive strategy using SOTA productive technologies to provide low cost, high
quality output with capital demands which provide entry barrier. Alternatively, the
firm may pursue a labour intensive production strategy which may result in moving
production facilities to a cost effective place.
5.5 Mature Stage
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The mature technological stage of the TLC is characterised by the lack of strategic
production advantages. Competition shifts to customer service as price stabilise and
product approaches undifferentiated "commodity" status. Producers compete to
establish any point of difference that could help market the product. At this point the
firm's technology becomes a platform on which other technologies will be based. At
the same time the firm's product, while technologically mature, may still face
significant growth opportunities as market applications increase. Thus the
technologically mature product may not yet have reached maturity in the PLC.
5.6 Decline stage

In this stage of the TLC, other technologies displace the declined technology. The firm
survives only by pricing itself substantially below the newer technology. New capital
cannot be attracted or profitably invested. However, fully depreciated older equipment
can allow the firm to remain price competitive.
Most marketing variables change across the various stages of TLC. All technologies
generally move through all the stages of the TLC. Some life cycles are truncated
abruptly because of the advent of new technologies which are direct substitute. The
replacement of mechanical adding machines by calculator is an example of such
change.
5.7 Importance of TLC
New high technology firms can decide on the focus based on the TLC. The company
can either follow the technology through its life cycle by adapting to the needs of each
stage as it occurs or the company can specialise in one particular stage of technology
and continually develop new products to replace those that progress to later stages of
the TLC. The firm that decides to follow the former of the strategy, should evaluate its
capabilities at each stage and grow with the product. The firm that adopts the latter
strategy should make a critical decision of switching to newer technology at the right
time. TLC helps to evaluate the potential impact of new technologies as they develop
and provides a mechanism for product segmentation for short term market planners. It
also helps the long term planners by acting as a tool and a road map for strategic
planning [13]
6.0 NEW PRODUCT TYPES

Traditionally technology and markets were used to identify new products. Technology
is used in the product or process to gain competitive advantage, while markets are the
customers to whom the product is sold. These two features are inseparable. For
example, an invention is not a new product until it is produced and distributed in a
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form that customers need. Hence, based on markets and technology, there are varying
degrees of newness in each of the two dimensions as shown in figure 6.
In the technological dimension, the requirements may range from no new technical
knowledge, machinery or plant, to an entirely new spectrum of technical and
production knowledge. The marketing requirements also range from no change in
customers, selling or channels of distribution to a need for developing new customers,
a new sales force, and new distribution channels.
Increasing technical requirements
No Improved New
Technical change Technology Technology
No
M Market
a
r Change
k
e
t
i
n Expanded
g Product
Market Improved
line
n Products
e extension
e
d
s
New
Market
Market Diversification
Extension
Fig 6. Product characteristics - Degrees of Newness. Source [10]

While a number of different dimensions could be used to classify development
projects, the most useful is proposed by Wheelwright and Clark[2], reflecting the
combined degree of product and process changes required. Distinguishing types of
projects is important not only because it clarifies management's thinking about
planning, staffing, and guiding of individual projects, but also it aids in developing an
aggregate project plan shown in Figure 7.
d Research Extent of Product Change

and
Advanced New Core Next Addition Derivatives
Development Products Generation to Product and
CoreProducts Family Enhancements
Extent of Process Change
c Radical
New Core Processes
Breakthroughs
b Next Generation
Next Generation Processes or Platform
Single Department Upgrade a

Enhancements
Hybrids, and
Tuning/Incremental Changes
Deriv ativ es
e Alliance or
Partnered
Proj ects
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Fig. 7. Types of Development Projects. Source [2]

This classification proposes four internal primary types of development shown as, a
through to d, and a fifth type involving external alliance or partnered type. These are
briefly treated below:
6.1 Enhancement, Derivative and Hybrid Projects

These are aimed at refinement and improvement of selected performance dimensions
to better meet the specific needs of the market segments, ranging from cost reduced
versions of existing products to add-ons or enhancements to existing products and
processes.
6.2 Platform / Generational Projects

These represent new "system" solutions for customers, involving significant changes
to products or processes or perhaps both. They provide a base for a family of product
and/or processes. Platform projects create products that embed the architecture for a
generation of products and require substantially more resources and planning the
enhancement types.
6.3 Breakthrough or Radical Projects

These projects establish new core products and processes, creating a whole new
product category for the business to spearhead entry into a new business. Although
these types of projects are mostly product orientated, significant process development
is likely to be critical to the success of the product.
6.4 R&D/ Advanced Development Projects

These projects lie outside the boundaries of introduction of immediately viable
projects. Here the focus is on the creation of knowledge as a precursor to commercial
development. Most Western firms, generally conduct advanced development using a
separate set of people and equipment.
6.5 Alliance or Partnered Projects

Although any of the above types of projects may be conducted in alliance or
partnership, it is useful for many companies to consider this type of projects in
preparing an aggregate plan. Here, instead of using the organisations own resources
alone, the partner company may provide a critical set of expertise while reducing the
level of financial risk where resources are shared.
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7.0 DEVELOPMENT STRATEGY FRAMEWORK

As mentioned above, developing a single project is not sufficient for gaining
competitive advantage, and products must continuously be developed and marketed to
satisfy an overall strategy of market position of an organisation. Many firms do not
have an integrated and clear approach to their product development. This very
common approach is depicted in figure 8.
Technology
Assessment Technology
Strategy
and
Forecasting
Project
Management &
Execution
Market
Assessment Product/Market
and Strategy
Forecasting
Figure 8. Traditional Development Strategy. Source [2]

Here the two critical elements of a strategy (a plan for technology and a plan for
product market position) are only loosely connected in individual projects. The major
shortcomings of this approach are:
1- Failure to link individual projects to key technology and market strategies
2- Extra burden on individual projects to address policy, and organisational issues.
3- Failure to rapidly execute individual projects [2]
Firms that have superior development capabilities possess an integrated and
comprehensive development strategy which addresses four main issues.
1- Generation, definition and selection of a set of development projects that provide a
basis for technology and market position strategies.
2- Integration of and co-ordination functional and technical tasks.
3- Managing development efforts so that they converge to achieve business needs.
4- Creating and improving capabilities that will provide competitive advantage.[2]
This is illustrated in the funnelling of activities as shown in figure 9, with the addition
of two pre-project focal points of developing clear goals and objectives for all projects
and an aggregate project plan.
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Technology Strategy
Technology
Assessment
and
Forecasting
Dev elopment Proj ect Post Project
Aggregate
Goals & Management & Learning
Proj ect Plan
Obj ectiv es Execution and
Improvement
Market
Assessment
and
Forecasting
Product/Market
Strategy
Figure 9. Integrated Development Strategy
7.1 DEVELOPMENT FUNNELS

The aim of product development is to take ideas from concept to reality by converging
to a specific products that meet market needs in an economical, manufacturable from.
The main objective of the effective product development is to design, develop and
manufacture the right product and supply it to the right customer at the right time.
Hence the process of effective product development addresses issues of building the
product according to the customer needs and more importantly focuses on the issue of
carrying out the process in minimum time.
The overall development process starts with a broad range of ideas and inputs,
gradually refines and selects from among these, providing a handful of formal projects
that can be rapidly developed, completed and introduced to the market. This notion
may be depicted by a "development funnel". In its simplest form, this provides a
graphic structure for a holistic approach to product development.
As illustrated in figure 10, the funnel starts with a wide mouth where the various ideas
enter which are subsequently investigated and screened for selection. However, only a
fraction of these ideas become part of a full fledged development projects. Those that
do, are examined carefully before entering the narrow neck of the funnel, where
significant resources are expended in transforming them into commercial products.
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Shipping
Investigations Development Products
Fig. 10. The Development Funnel. Source [2]
The nature of the funnel is defined by the way in which an organisation generates,
screens, reviews, and converges on the contents of a development project as it moves
from idea to design, prototype, production, and to the final customer.
In effect, the development funnel clarifies and sets the formal methods and channels
by which an organisation takes the critical decisions, including the criteria for decision
making, that an organisation needs to rapidly develop products and introduce them to
the market place.
In practice development funnels are not smooth and the inputs / outputs of each stage
are more convoluted than depicted in the diagram. But clarifying these, provides a
basis to improve on a given situation and it is very useful for an organisation to model
its own funnel with respect to various activities that are to be completed at various
stages of product development.
Wheelwright and Clark generalise two different models of funnel which are dominant
in the reality as illustrated in figure 11(a) and 11(b).
Screen1 Screen2 Screen3
A) Model 1: R&D Driven Survival of the Fittest. B) Model 2: A Few Big Bets.
Fig. 11. Dominant Models of Development Funnel Source [2]
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7.1.1 Model 1: Survival of the fittest

This is common in large technology-intensive organisations, primarily relying on
R&D groups to generate ideas for technology and a few products and processes. The
charge is to be creative, innovative and create as many ideas as possible. The
characteristics of this model are:
1- Abundance of ideas
2- Early screens are technical
3- Later screens emphasis manufacturing feasibility and economics and commercial
4- Ideas compete for resources, successful ideas pick-up draw on others
The weaknesses of this model are:
1- Very expensive / Lack of customer focus / High failure risk
2- Projects become pet projects and are difficult to kill
3- The development process is generally very complex.
7.1.2 Model 2: A few Big Bets

Model 1 is generally a large firm model and smaller companies have no such
resources. For smaller companies the ideal model has involved taking an idea, in
advanced development stage, and backing it all the way to product introduction. The
characteristics of a few big bets model are:
1- Consideration of a fairly large number of ideas
2- Rapidly converging and screening which combines the ideas into a single project
3- Aimed at a particular set of market needs.
The problems encountered here are:
1- One or two projects running with high stakes
2- Very difficult to change course and disband a project.
3- As these are very rapid projects, engineering and manufacturing feasibility may be
problematic.
There are other types of funnels but the above mentioned are very common amongst a
large variety of firms, each with its own advantages and weaknesses.
7.2 Problems in product development

The process of effective product development is developed logically by looking at the
common problems faced by traditional product development approaches.
The general causes which effect in poor product development is illustrated in figure
12. The causes for poor product development (as illustrated in figure 12) are mainly
due to:
 Mismatch between functions
 Moving target
Page 18
 Delays in the process of development

 Unexpected technical problems
 Inadequate product distinctiveness.
Various contributing factors to each of the above are also summarised in figure 12.
Delays Moving target Mismatch between functions

Pursuing
unstable Poor communication
Unresolved policy
issues technology
Poor organisation
Inadequate resources Market changes structure
Inadequate knowledge
Too many projects Changes in of the capabilities
requirement
of other functions
POOR PRODUCT
DEVELOPMENT
Inadequate focus Not unique
Long lead time
Overestimating
technical Low entry barriers
capabilities for competitors
Technical problems Inadequate product distinctiveness
Fig. 12. Cause and effect diagram for poor product development
7.3 Model of effective development
The model of effective product development is illustrated in figure 13. The model
consists of three distinct stages they are illustrated as the front the middle and the rear
in figure 13.
The objective of the "front end" is to provide a vision to the organisation. The vision
is provided by arriving at the strategy for the organisation. All the functional strategies
are derived from the business strategy of the organisation. The business strategy is
formulated after a detailed SWOT (Strength, Weakness, Opportunity, Threat) analysis
of the business.
The model of effective product development addresses the following issues [15]
a) Priority for the company - Strategy
b) Process & organisation for development - Other front end activities
c) Approach for development - Middle phase or the development phase.
d) Results - Rear end of the model
Typically functional strategy can be classified as Engineering strategy, Manufacturing
strategy and Marketing strategy. The important step after the evolution of the strategy
for the organisation is the integration of the strategies to the product development
initiatives. The final step in the front end process is the planning and organising for
product development.
Page 19
FRONT MIDDLE REAR

Objective Objective Objective
Strategy (Vision) Move from idea to product Manufacture and despatch
* Engineering strategy * Product specification

* Manufacturing strategy * Manufacturing related activities
* Marketing strategy * Prototype test cycle * Launch planning
* Integration with development * Tracking the launch
for development * Product release
* Performance measurement
* Planning and organising
Fig 13: Model of effective product development
The middle stage of the effective development process is aimed at converting

potential ideas into products and handing over the developed product to the
manufacturing and sales. The steps involved in this process, include the formulation
of the product specification, build-test-build cycle for developing and testing the
product, and ensuring that the product is handed over to manufacturing.
The final stage is the rear end, this stage is also critical because the success of any new
product in an organisation depends on how well the manufacturing can accommodate
the changes which accompany the new product. Hence the manufacturing activities
and the production systems of an organisation are critical for new product
introduction. The launch planning and tracking of launch are also carried out in this
section.
8.0 MODELS OF PRODUCT DEVELOPMENT

Various models for product development have been proposed and practised in the
industry. The models of product development can be broadly classified as:
a) First generation process

b) Concurrent engineering approach.
c) New venture units and Skunk works
d) Stage gate process
e) Third generation process
8.1 First generation process

The first generation scheme for product development was developed by NASA in the
1960s. It was called Phased Project Planning (PPP) by NASA. It is often referred to as
Phased Review Process. This was an elaborate and detailed scheme for working with
contractors and suppliers on the various space projects. The US military also adopted
Page 20
the approach for developing weapons with its suppliers. Thus a number of
organisations ended up using PPP process.
The Phased Review Process broke development into discrete phases. There were
review points at the end of each phase. The tasks in the next phase was taken up only
after successfully completing the previous phase. Funding was also linked to the
completion. Thus it was more of a measurement and control methodology to ensure
that the project was proceeding as it should.
History has given mixed reviews to this PPP process. The system did bring discipline
to an otherwise chaotic, ad hoc activity. It reduced technical risk and ensured
completion of task. Some units of Hewlett Packard still use a modified version of this
Phased Review Process[16]. On the other hand PPP process was cumbersome because
of the laborious "check off" of numerous tasks at each point. It was also slow and
projects could be held up in a queue for management review or could be put on a
"hold" at the review point awaiting the completion of one behind the schedule task.
The scope was narrow as it addressed the issue of development rather than focusing
on the entire process from idea to launch. The process was usually engineering driven.
This also created barriers for communication which is of paramount importance in a
new product development. As this was developed at NASA with the objective of
dealing with technical risk, it was not effective in dealing with the business risk faced
by organisations who adopted this technique.
To draw an analogy, this process can be compared to the organisation which have
specialised process layouts. Here a group of machines with similar characteristics are
grouped together (for Example, a milling centre consists of number of milling
machines and a drilling centre consists of number of drilling machines). The material
travels from one centre to another and is inspected after each operation. In the PPP
process the information or idea travelled from one department to another.
The above discussions does not suggest that PPP is an inefficient process, it only
represents that the PPP process cannot be applied directly for the development of
products which are largely influenced by the uncertain market conditions. As cited by
Cooper [16] "..generation of managers and engineers did manage to put a man on the
moon in less than a decade using the system (PPP)- a feat that we have yet to repeat..".
A number of authors [12] suggest the use of faster phased approach. The approach
aims at promoting integration between different departments. For example, functional
members can be brought physically close and encouraged to communicate openly and
co-operate closely. More control over product development can be delegated to
project teams and decisions at the end of each phase can be given priority.
8.2 Concurrent engineering
Page 21
Over the last few decades many success factors have been uncovered like the factors
that separate successful projects and firms from less successful ones, practices that
result in shorter time to market etc. [12]. These findings suggested the cross functional
project team approach for an effective product development.
Concurrent engineering or simultaneous engineering is an approach in which each
function is represented in the project team. Functional representative are closely
integrated into project teams. These teams are given broad and ambitious goals and
delegated considerable control over product development [12]. Such a process has
been started at the Hewlett Packard's computer peripherals factory at Bristol (UK)
which manufacturers proprietary products for its own systems [17].
Multi-functional team members are physically close and share information about
market needs, technical feasibility, product costs, manufacturing capabilities, etc.
These teams work closely with customers, watch competitors and involve suppliers
early in product development. Team members also agree on specific plans, schedules
and design specification as a group [12].
Many companies have successfully implemented concurrent approach to effectively
develop products. For example AT&T used concurrent approach to cut development
time for their cordless phone in half while lowering cost and increasing quality[12].
Since product development team approach require people from different function to
work together intensely, it is important to balance team members skills and
personalities. The people need to be technically sound and broad enough to recognise
the other functions [18, 3]. This approach increases risk by reducing confidence in the
quality of information as both design of product and manufacture take place
simultaneously, and requires flatter organisations with devolved responsibility. The
concurrent approach may not be suitable for all product development situations. [12].
It is suggested that superiority of one approach over the other depends on the needs of
the product development situation. To draw an analogy, it is effective to use faster
phased approach in situations that resemble a relay race but it is advantageous to use a
concurrent approach for situations that resemble rugby or football. The faster phased
approach appears to be more appropriate for situations that do not call for a structure
capable of processing many concurrent product solutions. This appears to be true in
the case of minor product change that requires very few inter functional solutions.
This also appears to be true in the case of radical product innovations (breakthrough
innovations), where the emphasis is on upstream solutions. On the other hand the
concurrent approach appears more appropriate for situations that call for a structure
capable of processing many concurrent product solutions. This is often true in the case
of incremental product innovations and process innovations. If a faster phased
approach is used it may result in so many overlooked functional requirements [12].
Page 22
HIGH
USE
CONCURRENT
APPROACH
Organisational
needs for
concurrent
product
development
USE FASTER PHASED APPROACH

LOW
Minor Incremental Breakthrough

product product product
change innovation innovation
Degree of product Innovation
Fig. 14. Concurrent Vs Faster Phased Approach. Source [12]
From the above, it can be summarised that the faster phased approach is more
appropriate for low and high levels of product innovations, while concurrent approach
is more appropriate for moderate levels of product innovation. This is illustrated in
figure 14.
8.3 New venture units and Skunk works

Many large, diversified firms just do not seem to get new product launched. Many
senior managers spend time identifying new product opportunities, market risks and
resource requirements but they fail to realise the organisational factors that contribute
to the new product success. These organisations are organised to run large, mature,
cost efficient business but not innovative and growth oriented ones [12].
To over come the problem new venture units and Skunk works were introduced. New
venture units and Skunk works are another approach to organising for faster product
development. In its most basic form, a new venture unit is simply a separate division
or specially incorporated company created specifically for new product/ new business
ideas and initiatives. There have been notable success for some organisations who
adopted this philosophy like Boeing (757), IBM (personal computers), Xerox (non
xerography products) and Allied chemicals (various "orphan" products)[19].
In this approach the project members are isolated from the rest of the organisation and
are given broad and ambitious goals with considerable control over product
development. The idea is to create an environment for product development having a
strong project - team structure, for example the Motorola's "Project Bandit" team
which developed the pager had the right mix of people who could contribute to the
product design, process design and support system. They came up with a new "pager"
in just eighteen months [2]. The advantages being reduce time to develop product,
Page 23
reduced cost, improved quality. The disadvantages of this approach is the isolation of
the team members from the rest of the organisation may increase cost by duplicating
resources, may create integration problems for members of the project team returning
to the parent organisation and may reduce co-operation between these units and the
rest of the organisation [12]. The other risk is that of overlooking few vital steps in the
process of faster development and lack of experience [6]
8.4 Stage gate process

As described by Cooper [20], it is both a conceptual and operational model for
moving a new product from idea to launch. It can be conceived as a blue print for
managing new product process to improve effectiveness and efficiency. It is
conceptually simple but the intricacies, design and product introduction stages of stage
gate approaches are quite complex.
The product development is considered as a process. Hence process management
technologies are applied here. To draw an analogy, the quality of the final product can
be ensured by subdividing the whole process into manageable subsets. Checks are
applied at the end of each sub process for conformance. Each of these sub process is
called a stage and the conformance audit points are called the gate in the stage-gate
process.
In a product development scenario the development activity is divided into a
predetermined set of stages, composed of a group of prescribed, related and often
parallel activities. For example, the validation stage might entail a list of mandatory or
optional activities such as in- house prototype tests, field tests with customers, pilot or
trial production and test marketing.
Usually stage gate systems involve from four to seven stages and gates, depending on
the organisation and the nature of the development activity. A typical system is shown
in figure 15 Each stage is usually more expensive than the preceding stage.
Concurrently, information is refined at each stage and hence risk is progressively
managed.
The entrance to each stage is a gate, and these gates control the process after each
stage. Each gate is characterised by a set of deliverables or inputs, a set of exit criteria,
and an output. The inputs are the deliverables that the project leader must bring to the
gate. The exit criteria are used for judging the project. The outputs are the decisions at
the gate, typically a Go/Kill/Hold/Recycle decision, and the approval of an action plan
for the next stage. The inputs, and exit criteria vary from gate to gate. These gates are
manned by senior managers who act as "gate keepers". This gate keeping group is
multi-disciplinary and multi-functional and the members have the authority to approve
the resources needed by the project.
Page 24
Business case
Prelimenary preparation
Assessment
Idea Gate Stage Gate Stage Gate

1 1 2 2 3
Initial Second Decision on

screen screen business case
Production & Development

launch Testing
Review
Stage Gate Stage Gate Stage
5 5 4 4 3
Pre-commercialisation Post development

business analysis review
Fig. 15. Stage gate system Source[20]

The stage gate process requires certain changes in the organisation. The project team
should be constituted which is cross functional and multi-disciplinary. The project
leader must understand the deliverables at each of the gates in the stage gate system. A
second organisation change is the involvement of senior managers to act as gate
keepers. Gates manned by senior management are not only essential for the stage gate
system but also essential to build top management involvement and commitment in
the product development.
The results of implementing this process to new products have been positive. One
study of leading firms, including IBM, 3M, Northern Telecom and others looked at 21
divisions that had adopted stage - gate system. The specific improvements were as
follows [16],
 Much better cross functional teamwork.
 Less recycling and rework.
 Earlier detection of failures - they are either killed or steps are taken to avert
disaster.
 Better launch - marketing planning is integral to most firms new product process.
 Shorter elapsed time due to better management, more multi-functional inputs,
sharper market and product definition and less recycle.
No scheme is perfect, the problems lie not in the system but in the implementation of
the system. Implementation deficiencies aside, no system designed to improve product
innovation is without its inherent weakness. Some of the weakness highlighted by
Cooper [16] are,
 Project must wait at each gate until all tasks have been completed.
 Overlapping of stages is not possible, for example, in some cases it is desirable to
launch and start production before the testing and validation is completed. This is
not facilitated by the system.
Page 25
 Projects must go through all stages and all gates, irrespective of the risk involved
in the product development. This is time consuming and undesirable.
 The system does not lead to project priority and focus. This does not address the
issues of resource allocation.
 Some new product processes are spelled out in far too much detail. For example
IBM's "red book" new product scheme spells out every minute detail in eleven leaf
binders compared to Polaroid's user friendly and manageable document. The
problems with the detailed manual is that they are rarely read and the system is
never totally understood and may never get universally accepted and implemented.
The second deficiency is that detailed procedures get followed blindly. The need
for thinking does not exist.
 Some new product process tend to be bureaucratic.
8.5 Third generation stage gate process

The third generation process (as named by Cooper [16]) is aimed at reducing the
deficiencies of the stage gate process. The emphasis is on efficiency and more
effective allocation of resources. The schematic of such a process is shown in figure
16.
The third generation process has four fundamental "F's" [16],
Fluidity - it is fluid and adaptable, with overlapping and fluid stage gates.
Fuzzy gates - it features conditional GO decisions (rather than the absolute ones),
which are dependent on the situation.
Focused - it builds in priority for methods that focus on the entire portfolio of projects
(rather than one project at a time) and focuses resources on the best of them.
Flexible - it is not a rigid stage and gate system but distinguishes between projects.
Each project has its own routing through the process.
Stage 1 Stage 2 Stage 3 Stage 4
.. etc
Idea
prelim Test and
investigation Business case Development
validate
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5
Fig. 16. Third generation stage gate process. Source [16]

8.5.1 Fluid and adaptable
The process is designed to have overlap between the various stages. For example, the
long lead time components or facility will be planned in advance. The overlapping of
stages must be carefully crafted in this process. The deviations from the norm should
Page 26
be made consciously at the gates and with full recognition of the risks involved. For
example, the ordering of production facility before testing the product involves risk
and the decision must be made with utmost care. It is often logical to cut down the
long lead time activities to match the lead time of the other activities even before
formulating a stage gate system.
8.5.2 Fuzzy gates

The fuzzy gates are indicative of the reality of the product development process. For
example, the senior management may not have the right information to decide on the
future course of the project. In this case the subsequent stages of product development
are affected. To overcome this a conditional "Go" can be given to those critical
projects. This enables the project to move ahead without loss of time. It also puts
pressure on the development team to fulfil the missing task if any.
8.5.3 Focused
At each gate the project is not only judged against the standard set of criteria but also
with the other projects in the pipe line and against company historic norms. This is
done to review the resource allocation across the different projects. Additionally, the
real time versus calendar time resource commitment decisions will be directly
addressed. This results in better priority and sharper focus.
8.5.4 Flexibility
In the third generation stage gate process all gates need not be necessary. For example
in Procter and Gamble (P&G) the teams decide on the stages and gates necessary for a
particular project [16]. It is recommended for a new organisation to follow rigid rules
and gates during the initial stages until they gain experience in the full system. As
professionalism develops, they can move towards a flexible process. [16].
The third generation process too has some disadvantages. The third generation process
introduces much more freedom to the project teams. Freedom and discretion is closely
followed by risk of making mistakes. Given the fact that project teams are more
familiar with the details and intricacies than any other group, senior managers must
increasingly rely on the team for reasoned arguments and recommendations. Because
the process is delicate, sophisticated and sensitive, an experienced and professional
management approach is necessary.
9.0 Organisational structure

It is clear that numerous skills and expertise are required for a development processes,
if it is to be successful in providing quality products, for the right price, at a time when
Page 27
required by the customer. Historically these skills have been amassed in the domain of
functional specialist, working in separate departments. Development projects
necessarily pass through various phases and a clear understanding of the problems
encountered at each phase, is of utmost importance at the early stages of
conceptualisation and design for an effective development process. One way of
bringing the blend of the required expertise together, is to form a project team
consisting of various necessary skills and knowledge.
One of the advantages of a project team is that a group (team) can produce ideas in
larger quantity and quality than those produced by the average individual[21]. Recent
studies [22] (1993) indicate that over 76% of the companies use multi-disciplinary
teams to develop products (study was carried out to encompass wide range of
companies).
With the ever increasing awareness of cross functional teams, the structure of the team
has been focused in numerous studies. Fujimoto [23] highlights that project activities
can be organised in four dominant structures (as illustrated in figure 16), they are
a) Functional team structure
b) Light weight team structure
c) Heavy weight team structure
d) Autonomous team structure
Page 28
A) FUNCTIONAL TEAM STRUCTURE B) LIGHT WEIGHT TEAM STRUCTURE
Functional
FM FM Manager FM FM FM
(FM)
ENG MFG MKG ENG MFG MKG
Working Project Liaison (L)

level Manager Area of
(PM) strong PM
Influence
C) HEAVY WEIGHT TEAM STRUCTURE D) AUTONOMOUS TEAM STRUCTURE
FM FM FM FM FM FM
Market
ENG MFG MKG ENG MFG MKG
C
o
n
c
e
L L L p Market
t
C
PM o
n
c
e
PM
L L L p
t
Fig. 17. Types of development teams. Source [23]
9.1 Functional team structure

a) Organisation
The people are grouped by functional experience and each reporting to a specialised
sub function manager and a senior functional manager. In general, within each
engineering discipline, specific engineers specialise in various aspects of the
development process. In this structure the project passes sequentially through the
different functions. The work of the people within the functions is to co-ordinate ideas
through a set of detailed specifications. The specifications are agreed by all functions
at the beginning of the project.
b) Strengths
 The managers who control the resources also control the performance of the
project tasks. Thus the manager is entrusted with authority and responsibility.
 Career paths are functional in nature and this arrangement ensures that work
done on the project is judged, evaluated and rewarded by the same functional
manager who make decisions about career paths.
Page 29
 The reporting structure is straight forward and there is no scope of confusion

regarding the tasks to be performed by the individuals within the function.
 This structure helps in building expertise within the function, for example, a
designer may be an expert in Power supply design and he/she has the opportunity
to enhance his/her knowledge in this field by working on similar projects.
c) Weakness
 Individual contributions are judged independent of the project success, this may
restrain group working and may lead to inadequate focus on project completion.
 This type of structure is not effective if the project requires extensive
involvement of down stream functions, for example, Mould design is largely
influenced by the part design, hence any change in part design will affect the
mould.
 The management of project is difficult because of problems associated with
tracking the project over time. The delays at the interface between two functions
can also be difficult to identify and manage.
9.2 Light weight team structure

a) Organisation
The organisation resembles the functional approach because the individuals assigned
to the project team reside in functional areas. Each function, however, identifies a
liaison person to represent the function for the project. These liaison representatives
from the individual function work with the project manager. The project manager is
"light weight" because he is generally a middle or junior level person with
considerable expertise on the project but with limited status or influence in the
organisation. The project manager is responsible for co-ordinating the project progress
but has very little or no influence on the allocation of resources for the project.
b) Strengths
The strengths of this structure is similar to the strengths of the functional arrangement.
Another important advantage of this structure is the existence of a project co-ordinator
(project manager) who ensures that the project is carried out as planned and expedites
the project when necessary. Thus improved communication at the interfaces of the
different function and overall project co-ordination are some of the strengths of this
structure.
c) Weakness
The weakness of the functional structure are prevalent in this structure also except for
the reduction in delays at the interfaces. Another weakness of this approach is caused
Page 30
by the inadequate authority given to the project manager. The inadequate authority can
often lead to lack of ownership and motivation on the part of project manager.
9.3 Heavy weight team structure
a) Organisation
In contrast to the light weight project manager, the heavy weight project manager has
authority to control the resources and are generally senior managers in the
organisation having relevant expertise in the development activities. The core group
of people are generally located together in one place. The short term assessment is
carried out by the project leader, while in a longer term the career development is
planned and monitored by the respective functional managers because the individuals
are not assigned to a project team on a permanent basis. The team consists of few
specialists and more people with general skills in problem solving. The high
performance work teams "HPWT" introduced by Compaq computers is a good
example of such a team structure, studies indicate that Compaq's HPWT took just 39
days to develop a working prototype of mother board[24].
b) Strengths
 One of the most cited advantage of the heavy weight team is related to the
aspects of ownership and commitment of the team members to the project. These
aspects help in adhering to the schedule.
 The interfaces between functions are reduced or even eliminated to a large
extent, thus the problems associated with delays in the interface between
function is reduced. The reduced delays helps in developing the product in a
shorter period of time.
c) Weakness
 The lack of in-depth knowledge of the team members in their respective fields
may be disadvantageous.
 The introduction of the new product to the manufacturing can also be a difficult
task.
 The role of representatives from the functional groups after the development is
difficult to predict.
9.4 Autonomous team structure

a) Organisation
The individuals from the different functional areas are formally attached to the project
team. The members are located in one place and are headed by a project manager. The
project manager manages the resources and the members of the team are totally
responsible (short term and long term) to the project manager. Typically these project
Page 31
teams formulate their own organisational practices and procedures. These are also
referred to as new venture units [19].
b) Strengths
 The primary strength lies in the focus created by the formation of such team. The
project team is totally responsible for delays and are given enough authority.
They are also accountable for the results. These three factors fosters a strong
sense of ownership.
c) Weakness
 These teams can expand the bounds of the project definition and tackle redesign
of the entire product instead of looking for opportunities to utilise existing
design.
 As in the heavy weight team the process of introducing new projects in
manufacturing is a difficult task.
9.5 Choice of the organisation structure

The choice of the development structure is dependant on numerous factors like the
company strategy, the competition, the product etc. Hence the real challenge for a firm
is to make sure that it adopts a structure of development that is appropriate for its
environment, its strategy, and possess flexibility to change from one structure to
another depending on needs. To highlight the case of Motorola (Electronic
components manufacturer), before 1980 the company had a functional approach to
development, during 1980 the company realised that next generation of platform
projects were the key to long term success and this also forced them to adopt a heavy
weight team structure.
The choice of the project team structure can also be influenced by the growth of the
organisation. In general start up organisation focus their entire organisation on a single
development project. This strategy resembles the autonomous team structure. As the
organisation grows the organisation shifts from the autonomous structure to a heavy
weight structure this is followed by a shift to light weight structure and finally ends up
as a functional structure.
Projects that possess incremental changes and where the requirements are fixed,
functional approach may be well suited. While organisations were projects involve
cross functional integration a light weight structure is suitable. An organisation
pursuing new platform products can adopt heavy weight team structure. An
organisation in pursuit of new business units can adopt an autonomous team structure.
The organisation may also depend on strategic decisions of the company, for example,
at Epson, groups that cut across hierarchy are often employed in order to mobilise
Page 32
corporate power. In Epson, there are number of groups in charge of the same model's
circuitry, casing, operating system, and language. There are few conflicts over
specification, costs and deadlines. The Epson's strategy aids such a process and tends
to nurture such conflicts in order to achieve the objectives. The EP101 dot-matrix
printer is one of the successful outcomes of these conflicting teams. Some companies
like Fuji Xerox developed the FX 3500 by adopting a sequential stage approach or
PPP approach (referred to as 'Sashimi approach' by Fuji). The PPP approach was
however modified and tailor made to suit their conditions [21].
10.0 SUMMARY
Understanding the individual components of the product development process is of
utmost importance, but the way they in which they interact with each other and work
as a whole is even more important and they way they are organised and managed is
what provide a competitive advantage to an organisation.
Today's competitive environment demand a customer focused technology and market
/product strategy that allows a firm to continually and systematically introduce
products to the market. This requires clear goals and objective which then have to be
crystallised in an aggregate product and process plan, which have to be executed with
great efficiency to produce high quality goods for customers when they require them.
A company has to assess its position to set clear goals and objectives; effectively
generate the ideas and concepts; put in place means and criteria by which it screens
these ideas and selects appropriate ones to its development strategy; and execute them
efficiently with respect to cost, and time, producing high quality products that satisfy
the intended customers. Furthermore an organisation must be able to learn from itself
and the outside world to continually respond to the required changes that are
necessitated by changes in customer demands and technological progress.
This necessitates a company to adopt organisational forms and structures that are
appropriate to the current and planed development requirements.
11.0 REFERENCES
1- Gupta, A. K, and Wilemon, D. L., Accelerating the development of technology
based new products, California Management Review, Page 24-44, Winter 1990.
2- Wheelwright, S. C., and Clark, K.B., Revolutionizing Product Development,
Quantum Leaps in Speed, Efficiency, and Quality, The Free Press, 1992.
3- Perry, T. S., Teamwork plus technology cuts development time, IEEE Spectrum,
Page 61 - 67, October 1990.
4- Stalk, G. Jr., Time the next source of competitive advantage, Harvard Business
Review, Page 41 - 51, Aug. 1988.
Page 33
5- Whiting, R., Product development as a process, Electronic business, June 17, Page
30 -36, Year 1991.
6- Rosneau, M. D. Jr. , From experience: Faster new product development, The
Journal of Product Innovation Management, Vol.5, Page 150-153, Year 1988.
7- Billie J O Zirger, B. J. O., and Maidique, M. A., A model of new product
development: an empirical test, Management Science, Vol.36, Page 867-883, No 7,
July 1990.
8- Griffin, A., Metrics for measuring product development cycle time, The Journal of
Product Innovation Management, Vol. 10, Page 112-125, Year 1993.
9- Shaker A Zahra, S. A., and Ellor, D., Accelerating new product development and
successful market introduction, SAM Advanced Management Journal, Page 9-15,
Winter 1993
10- Booz Allen & Hamilton, Management of new products, Booz.Allen & Hamilton
Inc., USA, 1968.
11- Millson, M. R., Raj, S. P., and Wilemon, D., A survey of major approaches for
accelerating new product development, The Journal of Product Innovation
Management, Vol.9, Page 53-69, Year 1992.
12- Cordeo, R., Managing for speed to avoid product obsolescence: A study of
techniques, The Journal of Product Innovation Management, Vol.8, Page 283 - 294,
Year 1991.
13- Popper, E., and Buskirk, B. D., Technology life cycles in industrial markets,
Industrial Marketing Management; Vol. 21, Page 23- 31, Year 1992.
14- Stalk, G. Jr. and Hout, T. M., Competing against time - How time based
competition is shaping global markets, Free Press 1990.
15-Kennard K B, From experience: Japanese product development process; The
Journal of Product Innovation Management, Vol.8, Page 184-188, Year 1991.
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Page 35

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Product Designa nd Development Management New Product Development

NEW PRODUCT DEVELOPMENT

This is the subject of the Competitive Design Management.

2.0 THE DRIVING FORCES OF NEW INDUSTRIAL

3.0. TIME TO MARKET

By embracing the philosophies of effective product development a company can bring

• Late arrival to market reduces

• Improving time to market

Early arrival to market

• For revenues $25 million, annual

• For revenues of $100 million, annual

Figure 1. Effects ofEffect

EFFECTIVE PRODUCT - Growth

Figure 2. Results of Effective Product Development. Source [9]

4.0 PRODUCT LIFE CYCLE

INTRODUCTION GROWTH MATURITY SATURATION DECLINE

Time * Not to scale

Fig 3. Product life cycle. Source :[10]

4.2. Growth stage

4.3. Maturity stage

4.4. Saturation stage

4.5. Decline stage

4.6. Significance of product life cycle

4.7. Effect on Strategy

5.0 TECHNOLOGICAL LIFE CYCLE

5.1 Cutting Edge

5.1.1 Pure Research

This is aimed at seeking or expanding knowledge, to find new circuits or other

5.1.2 Applied Research

5.1.3 Product Research

5.2 State Of The Art (SOTA)

5.3 Advanced stage

a) Advanced stage and market shake out

b) Effect of experience curve

cutting State of Adv anced Mainstream Mature Decline

5.3.1 Advanced stage and market shake out

0 cutting State of advanced Mainstream mature Decline

5.3.2 Experience - curve effects on the advanced phase of TLC

5.4 Main stream

5.5 Mature Stage

5.6 Decline stage

6.0 NEW PRODUCT TYPES

Fig 6. Product characteristics - Degrees of Newness. Source [10]

d Research Extent of Product Change

Single Department Upgrade a

Fig. 7. Types of Development Projects. Source [2]

6.1 Enhancement, Derivative and Hybrid Projects

6.2 Platform / Generational Projects

6.3 Breakthrough or Radical Projects

6.4 R&D/ Advanced Development Projects

6.5 Alliance or Partnered Projects

7.0 DEVELOPMENT STRATEGY FRAMEWORK

Figure 8. Traditional Development Strategy. Source [2]

Figure 9. Integrated Development Strategy

7.1 DEVELOPMENT FUNNELS

Fig. 10. The Development Funnel. Source [2]

Screen1 Screen2 Screen3

Fig. 11. Dominant Models of Development Funnel Source [2]

7.1.1 Model 1: Survival of the fittest

7.1.2 Model 2: A few Big Bets

7.2 Problems in product development

 Delays in the process of development

Delays Moving target Mismatch between functions

Long lead time