Agenda for Day One 1.Welcome and Introduction : 2. Why are you here? 3. Discuss course outline 4.Introduction to Innovation, New Product Development, Design Thinking and the Lean Approach

Why study New Product Development?

Background to Innovation and New Product Development : Why study New Product Development? It is big business – billions of dollars annually on technical development alone. The challenge of creating radical innovation (totally new product categories) is viewed by business consultant Gary Hamel as “the most important business issue of our time.” Accelerating innovation and business growth through innovation are the top business challenges according to the Industrial Research Institute.

Background to Innovation and New Product Development : Why study New Product Development? Innovation and new product development are crucial for the growth Several new products and services are launched yearly in both developed economies and emerging markets Most new products and services do not meet business objectives and fail to satisfy consumer needs People given assignment to get new products into the market or operations Developing expertise and competence to manage new product development and launch is critical

Course Objectives This course seeks to build relevant skills of students and enable them to transfer marketing knowledge and design thinking principles as well as some aspects of the lean approach to new product management. Specifically the course should enable students: To understand the new product development principles, concepts and tools as well as the different approaches/processes of managing new product development To learn how to integrate the customer and consumers into new product design To apply the new product development process and its related tools and concepts to case examples and by conceiving your own new product or service and crafting a launch plan.

Learning Outcomes Explain core terms, concepts, principles, and tools in new product development and innovation Apply relevant new product development concepts, tools and approaches in managing different types of new products and to real case examples. Lead a team to conceive, design, and prepare relevant documents such as the launch plan and successfully navigate the various stages of new product development process up to launch.

How does learning occur? “ There are two contrasting views as to what constitutes learning. There are academic teachers who think of learning as reproducing knowledge and others who think of learning as a process in which understanding is constructed by the student with the assistance of the teacher” Among academics in the field of education, this is called the instructivist and constructivist divide. (McNaught, 2014)

How does learning occur? ".... In contrast, the constructivist approach focuses on learning through posing problems, exploring possible answers, and developing products and presentations. The emphasis in teaching lies in the use of alternative learning and assessment methods such as exploration of open-end questions and scenarios, doing research and developing products, building up student portfolios, working together in teams, using performance checklists and having tests with open- ended questions. `’(McNaught, 2014)

Ashesi University COURSE TITLE : NEW PRODUCT DEVELOPMENT SEMESTER : SECOND, 2015/2016 MODULE 1: What is your understanding of Innovation, New Product Development, Design Thinking and the Lean Approach? Lecturer: Ebow Spio

Learning Objectives Explain innovation and new product development Appreciate the importance of innovation and new products to enterprises and other organizations Appreciate the causes of failure of new product launches Reflect on the characteristics of successful new products Identify the stages involved in new product development Explain Design Thinking and the Lean approach

Definition of Innovation & New Product Development Definition of Innovation “ A process through which economic or social value is extracted from knowledge through the generation, development of ideas to produce new or improved products, processes and services.” The Conference Board of Canada “ The Successful exploitation of new ideas” The Dept. of Trade and Industry, UK. “ Change that creates a new dimension of performance.” Peter Drucker “ Is about creating new or transforming existing ideas, products or processes to create value for customers and enterprises. To create value means satisfying consumer needs and generating revenues and profits for enterprises” Spio’s take on Innovation

Definition of Innovation & New Product Development “ The set of activities beginning with the perception of a market opportunity and ending in the production, sale and delivery of a product.” Ulrich and Eppinger (2004:2) “ The effective organization and management of activities that enable an organization to bring successful products to market, with short development times and lower costs.” Wheelwright and Clark (1992) “New product development consists of the activities of the firm that lead to a stream of new or changed product market offerings over time. This includes the generation of opportunities, their selection and transformation into artifacts (manufactured products) and activities (services) offered to customers, and the institutionalization of improvements in the NDP activities themselves.” Loch and Kavadias (2008)

Definition of Innovation & New Product Development Two ways to obtain new products Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product. New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.

Definition of New Product New-to-the-world (really-new) products (10% of new products): Inventions that create a whole new market. Ex.: Sony Walkman, iPhone; iPad New-to-the-firm products (20%): Products that take a firm into a category new to it. Ex.: P&G brand shampoo or coffee, Hallmark gift items, AT&T Universal credit card, Canon laser printer. Additions to existing product lines (26%): Line extensions and flankers that flesh out the product line in current markets. Ex.: Tide Liquid, Bud Light, Apple’s iMac, Sunlight Washing Powder Improvements and revisions to existing products (26%): Current products made better. Ex.: Unilever’s continuing improvements to Pepsodent Toothpaste, New Models of car Repositionings (7%): Products that are retargeted for a new use or application. Also includes retargeting to new users or new target markets. Ex.: Arm & Hammer baking soda sold as a refrigerator deodorant; Aspirin repositioned as a safeguard against heart attacks; Omo Cost reductions (11%): New products that provide the customer similar performance but at a lower cost. May be more of a “new product” in terms of design or production. 1-14

Importance of Innovation and New Products Key source of growth for the firm New solutions and variety to customers or consumers. Determinant for improved competitiveness Improved Quality Creation of new markets Improved processes Improved Market Share Reduced damage to the environment

Drivers of Innovation and New Products External Competition Lower Costs New Entrants Market Drivers: Demand, Economic Forces, Social Changes, Demographics Internal Improving profitability Improving Return on Investment Improve cash flow Improve Quality

Characteristics of Successful New Products Unique superior product Better at meeting market needs Clearly segmented market Adds incremental revenue and profit for both the category and the brand Enhance the manufacturer’s and the retailer’s competitive position in the market

New Product Success Requirements 1.An appropriate organizational environment and top management support 2.Use of a disciplined new product development process 3.Dedicated development teams plus the willingness and ability to partner and outsource 1.Product development activities that start with and flow from business unit strategy 2.Understanding the external environment and identifying market opportunities that fit core competencies 3.Identification and specification of what is driving the consumer and what the consumer wants 4.Processes and techniques for keeping the pipeline filled with a wide variety of product ideas

New Product Success Requirements 8. Clear and focused product definition early in the process before development work begins 9. A superior and differentiated product and package 10. Use of research to measure reaction to the product and all elements of the program throughout the development process 11. Use of category management philosophy to align manufacturer and retailer focus on the consumer 12. Plan and resource the market launch early in the game 13. A well-executed launch 14. Build tough Go/kill decision points into your process 15. Ability to adapt, grow, and improve as market and competitive conditions evolve 16. Build an international orientation into your new-product process Source : John B Lord 2000 & Robert Cooper

Leo Burnett‘s 15 Principles to Guide New Product Success. (1) Distinguish your product from competition in a consumer-relevant way (2) Capitalize on key corporate competencies and brand strengths (3) Develop and market products to people‘s needs and habits (4) Market to long-term trends, not fads (5) Don‘t ignore research, but don‘t be paralyzed by it (6) Make sure your timing is right (7) Be a marketing leader, not a distant follower (8) Offer a real value to consumers (9) Determine a product‘s short- and long-term sales potential (10) Gain legitimacy and momentum for the brand (11) Give the trade as good a deal as the consumer (12) Clearly define, understand, and talk to your target (13) Develop and communicate a distinctive and appealing brand character…and stick to it (14) Spend competitively and efficiently, behind a relevant proposition (15) Make sure the consumer is satisfied…and stays that way Source: The Leo Burnett Company New Product Planning Group presented a paper at the 1995 Prepared Foods Annual New Products Conference

Challenges and Reasons for Failure of New Products Overestimation of market size Poor design Incorrect positioning Wrong timing Priced too high Ineffective promotion Management influence High development costs Competition Lack of sound marketing information or research

How New Product Development is Different from other courses? Teamwork Strong creative contribution Travel on unmarked road Dealing with people under pressure Dealing with product innovation Accidental or serendipity “ You cannot learn how to develop a new product concept by reading without attribute analysis or gap analysis. You must do them.” (Crawford and Di Benedetto, 2011)

The Strategic Elements of Product Development The New Products Process –A phased process that takes the new product idea through concept development, evaluation, development, launch, and post-launch. The Product Innovation Charter –A strategy for new products that ensures that the team develops products in line with firm objectives and marketplace opportunities. The Product Portfolio –A way to assess which new products would be the best ones to add to the existing line, given financial and strategic objectives. 1-23

The Basic New Product Process Phase 1: Opportunity Identification/Selection Phase 2: Concept Generation Phase 3: Concept/Project Evaluation Phase 4: Development Phase 5: Launch 1-24

Tutorials Research a successful innovation/new product. - Describe the product or service - State the characteristics of the success e.g. market share, revenue, growth rate, speed of adoption etc. versus target - Give reasons for the success Research an innovation/new product that failed - Describe the product or service - State the characteristics of the failure e.g. market share, revenue, growth rate, speed of adoption etc. versus target - Give reasons for the failure

What is Design Thinking?

The Lean Approach