New Product & Services NYU Spring 2007 Professor – David Goldsmith Amit Wellner

Why do we need NPDP? “With a poorly defined product and project, R&D engineering and design people waste considerable time seeking definition, often recycling back several times as the project parameters change” (R. Cooper, “Winning at new Products”). “Quality of execution of the predevelopment steps is closely tied to product financial performance. Successful products have about 75% more person days devoted to the predevelopment activities than do failures” (R. Cooper, “Winning at new Products”)

Mission, Vision, Goal Define: Vision, Mission, and Goal of the company

NP&S full cycle Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation Idea screen G2 Raise Capital G3 Product & Market redness G4G5 Financial Review Mission Vision Goal Support and Measures (S6) G6 End of life

Idea Generating Objective: –Gather ideas form various sources Activity: –Idea bank website –Rewards for selected ideas –Awareness campaign –Brain storming Members: –Cross company employees Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation Generation G2 G3G4G5

Idea screening criteria – Gate 1 Objective: –Filter ideas generated periodically Activity: –Ideas fit the mission, vision and goal –Rate and select ideas based on business value –Set time frame Members: –Innovation group –Strategic group Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Market Research Stage 1 Objective: –Market research Activity: –Build a team –Assessment: market, technical, and financial –If new proposition formulates – revert them to Idea Generation Stage Members: –Target Innovation group comprised of: project leader, marketing, business development, technology architecture Market Research (S1 Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Gate 2 Objective: –Defining the market margins assess profitability –Market projection Activity: –Filters: Technology, Legal & Marketing –Risk assessment Members: –Strategic group –Risk analysis –Legal –Chief technology Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Business Proposal – Stage 2 Objective: –Intense research and business case/ scenario Activity: –Build a business case –Deep market analyst –Competitive analysis –If new proposition formulates – revert them to Idea Generation Stage Members: –Target Innovation group Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Raise Capital – Definition Gate 3 Objective: Assess risks and benefits of investment Activity: 1.Determine whether the idea remains commercially viable after planning 2.Create a demo (if possible) 3.Get the money – critical phase Members: –Strategic group –Senior management Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3 G4G5

What would happen if… 1.Hotmail - acquired by Microsoft (MSFT) in 1998 for about $400 millionMSFT 2.Skype - acquired by eBay (EBAY) in September 2005 for $2.6 billionEBAY 3.MySimon - acquired by CNET (CNET) in 1999 for $700 millionCNET 4.Lycos - acquired by Terra Networks for $4.6 billion in Netscape - acquired by AOL (TWX) in 1998 for $4.2 billionTWX 6.GeoCities - acquired by Yahoo! (YHOO) in 1999 for $3.56 billionYHOO 7.Excite - acquired in 1999 for $6.7 billion ($394 per user!) 8.AOL - merged with TimeWarner in Broadcast.com - acquired by Yahoo! in 1999 for $5 billion ($710 per user )

Development & Marketing Stage 3 Objective: –Develop the product Activity: –R&D - Start developing the product –Marketing Find potential client. Partners Set pricing –Legal Write patent Contract – with partners Members: –Product development team: Product manager, Marketing manager and Product technology manager –Legal department Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Product & Market redness - Gate 4 Objective: –Is the product consist with the definition at Gate 3? Activity: –Check: Product Market Financial state Members: –Strategic group Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Testing - Stage 4 Objective: –Test and validate the project –Prepare for launch Activity: –Test product: error fixing in development –Customer endorsement –Test market (Trial sell) –Financial analysis –Develop the operation plan and the market launch plan Members: –QA team –Sale & marketing Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3)Testing(S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Gate 5 Objective: –Business evaluate Activity: –Financial and market review Members: –Senior management Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch (S5) Idea Generation G2 G3G4G5

Stage 5 Objective: –Get ready… Activity: –Create campaign –Advertising company Members: –PR and marketing –Product development team Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4)Prepare to launch (S5 to launch (S5) Idea Generation G2 G3G4G5

Launch Objective: –Deploy product Activity: –Customer support –Client feedback –Find new features Members: –Operation –Product Manager Market Research (S1) G1 Business Planning (S2) Development & Marketing (S3) Testing (S4) Prepare to launch(S5) Idea Generation G2 G3G4G5

Pro and cons for Stage gate process AdvantagesDisadvantage Structural processTime consuming Control point, Go/Kill. Save money and timeBureaucracy Increase successes rateMissing rewarded plan Risk control.Customer feedback Set time frameBottle neck Revenue oriented – “Don’t fall in love in your dreams” Adjustment to new standards Gatekeeper is not involved in the stage before Does not fit for upgrades \ maintenances

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