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New Product Development. Some products…. What is product development all about?. “ Product development is the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of the product”
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What is product development all about? “Product development is the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of the product” Ulrich & Eppinger, 2002
Market issues… “Rather than compete with the super jumbo (a 550-seat cruiser by Airbus), Boeing has decided to concentrate on a smaller, faster ‘sonic cruiser’. So the petty snipping of old has been replaced by a genuine battle of philosophies: on one side is size, on the other speed” The Economist, July 2001
Technical issues… … “advance fuel cell-vehicles, could have a profound effect on vehicle manufacturing - perhaps setting the stage for the reinvention of the automobile business. One of the biggest hurdles is the development of safe and effective on-board hydrogen storage.” L. D. Burns Vice President of R&D, General Motors
Resource issues… “AstraZeneca has to rein in some of its most promising drug candidates because of lack of resources to develop them simultaneously” Claes Wilhelmsson Head of R&D, AstraZeneca
Product quality How good is the product? Product cost What is the capital equipment cost and unit production cost? Development time How quickly did the team complete the effort? Development cost How much did the firm have to spend to develop the product? Development capability Are the team and firm better able to develop other products? Characteristics of Successful Product Development
Trade-offs Lightweight vs costly Dynamics Technologies, customer tastes, competition change environment Details Screws vs snap fits on enclosure of computer Time pressure Decisions made quickly and without complete information Economics Large investment – will it pay off? Organizational realities Team composition, empowerment, functional allegiance, resources Challenges of Product Development
Product Development Strategy Task: Define a well-defined product development process and propose a product development organization that will allow your company to compete effectively over the next decade. • Is there a standard development process that will work for every company? • What milestones will be used to divide the overall product development process into phases? • What role do experts from different functional areas play in the development process? • Should the development organization be divided into groups corresponding to projects or to development functions?
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Ulrich and Eppinger 2004 Product Development Process Generate mission statement (target market, business goals, key assumptions and constraints) Example Mission: “design a better hand-held roofing nailer” Assumptions: The nailer will use nails (as opposed to adhesives, screws, etc.) The nailer will be compatible with nail magazines on existing tools The nailer will nail through roofing singles into wood The nailer will be handheld.
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Ulrich and Eppinger 2004 Product Development Process Identify needs of target market; Select several product concepts for further development and testing Example Needs of target market: The nailer inserts nails in rapid succession. The nailer is lightweight. The nailer has no noticeable nailing delay after starting tool. Product concepts: Rotary motor with spring and single impact Rotary motor with spring and multiple impacts Linear motor with a moving mass and single impact
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Ulrich and Eppinger 2004 Product Development Process Define product architecture Decompose product into subsystems and components Define final assembly scheme
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Ulrich and Eppinger 2004 Product Development Process Complete specification of geometry, materials and tolerances of all parts List of standard parts to be purchased Detailed drawings Process plans for fabrication and assembly
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Product Development Process Building of alpha- and beta- prototypes alpha: same material and geometry - does it work? - does it satisfy customer needs? beta: parts supplied by production process - tested internally and by customers - tested for performance and reliability
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Finally… LAUNCH!! Product Development Process Small volume production to train workforce and work out any remaining problems.
Variations to Product Development Process • Market pull products • Market opportunity to technology, e.g. sporting goods, furniture • Uses generic process • Technology push products • Technology to market opportunity, e.g. teflon, gore-tex • Concept development takes technology as given • Platform products • Built around existing platform, e.g. consumer electronics, printers • Concept development assumes proven technology platform • Process intensive products • Product constrained by production process, e.g. semiconductors, chemicals • Product and process developed from start • Quick build products • Rapid modeling and prototyping, e.g. software, cell phones • Many design-build-test cycles • Complex systems • System includes many subsystems and components, e.g. airplanes, jet engines • System and subsystems developed by many teams working in parallel
Plot development cost against the other rows and see if there is any correlation. Why or why not? Cost and Duration of NPD Projects
What drives product development costs? development cost # parts
What drives product development costs? development cost Internal team size x duration
What drives product development costs? development cost Total team size x duration
What drives product development costs? Design Changes over Time
A method to translate customer requirements into engineering specifications Aims to get design, engineering and production people involved early on in the process Quality Function Deployment
Marketing Mediates interactions between firm and customers Identifies product opportunities Defines market segments Identifies customer needs Oversees launch and promotion of product Design Lead role in defining physical form of product to best meet customer needs Includes engineering design and industrial design Manufacturing and supply chain Designs and operates the supply chain in order to produce the product from procurement to distribution Who is Involved in Product Development?
How should the product development team operate? Organizational challenges
Project-Based Organization Marketing Engineering Operations Project 1 Project Manager Project Managers have more power “Heavy Weight” Project Manager Project Manager Project 2
Functional-Based Organization Marketing manager Engineering Operations manager Project 1 Project 1 Project 1 Project 2 Project 2 Project 2 Project 3 Project 3 Project 4 Functional managers have more power
Matrix Organization Marketing manager R&D manager Engineering Project Manager Project 1 Project 2 Project Manager
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up Planning Final Word… Product development is a process and it can be managed!!
