KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT 2UZB614 Lecture-1 KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT 2UZB614 Mamurjon Rahimov and Farhod Karimov Academic year 2015-2016

New product development

New product development 1.Introduction 2.Product strategy 3.Classification of new products 4.Some explanations for high failure rates 5.Macro problems associated with NPD 6.Organisational activities involved in NPD 7.Summary & recap

Innovation Management •If innovation declines so does market share •Eg: Lada •Innovation now will set up company for future years because it takes time. •Cost cutting option vs generating new products •NPD is a subset of the innovation process •NPD is about converting business opportunities to tangible products.

External consideration •Macro factors •Competition •External R&D •Suppliers and input prices •Market needs •Distribution systems •Strategic alliances •Shorter life-cycle of products

NPD Impacts NPD impacts on different parts of the organization in different ways •Production management: manufacturing issues •Marketing: understand and meet needs •Finance: costs and profitability •Design and engineering: technical issues

Competing demands within •Return on capital employed •Profit and market share •Design, innovativeness and technological supremacy •Must fit into overall strategic direction

What to consider? •Who is responsible for setting future direction? •Watch for opportunities •Watch what competitors are doing •Market planning teams can play a significant role, e.g. In the shoe market a competitors may be about to launch an improved product. Project teams could be setup to look at new designs, better fastenings, lower production costs.

Macro view of new product development

Key themes from the product development literature

Ansoff’s directional policy matrix

A product is multi-dimensional

Change a dimension and you have a new product

New packaging of DENA juice

What is ‘newness’? •Changing the performance capabilities of the product (new improved washing detergent) •Changed features and quality •Changes to the ‘augmented product’ •Changed image (e.g. green image) •Changed price •Newness is relative

Newness is temporary… A firm may call its product new for only a limited time. Six months is the limit according to the Federal Trade Commission (FTC).

Classification of new products •New to the world products •First of a kind •Create a new market •Significant development in technology •Use of existing technology in a different way - Sony walkman - 3M post-it

Classification of new products •"New to the firm" products –Opportunity to enter established market –E.g. Nokia and Motorola were followed by many others in the mobile phone market •Product line additions •Product improvements (revisions) •Repositionings (e.g. J&J Baby Oil)

Some explanations for high failure rates •Market too small •Poor match for company •Not new or different •Poor positioning or misunderstanding of customer needs •Inadequate support from channel •Competitive response •Changes in consumer taste •Changes in wider environment •Insufficient return on investment •Internal organisational problems

Macro considerations in new product development •Shortage of important new product ideas •Fragmented markets •Social and governmental constraints •Costliness of the new product development process •Capital shortage •Shortened time span to completion •Shorter life spans for successful products

Organisational activities involved in NPD •Generation of new product concepts •Idea screening •Concept testing •Prototype development •Test marketing •National marketing

Functional-based NPD„over-the wall‟ model

‘Over-the-wall’ model •Each department would carry out their task and then pass the project to the next department •Can hinder progress and will require reworking •Control of project is passed on •Communication likely to be a problem •Coordination a big problem

Activity-stage model •Focuses on the project as a whole •Moves from functional orientation to project orientation •Based on project teams •Easy to identify who is responsible •Stage-gate process –introduces management approval to proceed. This can prematurely stop progress.

Simultaneous NPD

NPD as a network of interactions

Innovation management framework

mamurjon@gmail.com

Recommended Reading Essential Reading Recommended Reading Trott, P. (2012) Innovation Management & New Product Development. FT Prentice Hall. Recommended Reading Davis, S.M. & Moe, K. (1997). Bringing innovation to life. Journal of Consumer Marketing, 14 (5), 338-361. Kao, S-C., Wu, S-H. & Su, P-H. (2011). Which mode is better for knowledge creation? Management Decision, 49 (7), 1037-1060. Mitchell, R. & Boyle, B. (2010). Knowledge creation measurement methods. Journal of Knowledge Management, 14 (1), 62-87. Witell, L., Kristensson, P., Gustafsson, A. & Löfgren, M. (2011). Idea generation: customer co-creation versus traditional market research techniques. Journal of Service Management, 22 (2), 140-159. Yelkur, R. & Herbig, P. (1996). Global markets and the new product development process. Journal of Product and Brand Management, 5 (6), 38-47. KNOWLEDGE, INNOVATION & NEW PRODUCT DEVELOPMENT