1 ETM 5391 – New Product Development and Commercialization Spring, 2004 Instructor: Mr. C. Michael Carolina Date: March 25 – April 22, 2004

2 ETM 5391 Web site: / /

3 Recap of Lecture 4 The Opportunity and Threat of Disruptive Technologies Professor Clayton Christensen Harvard Business School Summary of Living on Internet Time: Product Development at Netscape, Yahoo!™, NetDynamics, and Microsoft® The Balanced Scorecard Kaplan and Norton, HBR. (January, 1992)

4 Why Do It? Competitive advantage/staying competitive Short-term and long-term viability/sustainability Fund more research To improve the quality of life To solve technology-based problems New platforms and derivative products Improve productivity and efficiency

5 Why Do It? (cont’d.) Protect installed base Protect customer’s investment Create brand loyalty Vehicle for strategic partnership Meet stakeholders’ expectations –customers –employees –investors Renewal and transformation of the organization

6 Starting Premise Innovation is key to the long-term vitality of all enterprises Innovation means more than just new products; it also means new services and ways of doing business While the challenge to innovation is originating new ideas, time is at the core of successful innovation. Timely execution is very demanding

7 Environment Technology evolution Globalization Shorter product lifecycles Increased competition Downsizing/rightsizing Entrepreneurial/intrapreneurial Virtual corporation Corporate corruption Workforce development Continuous improvement

8 Competitive Factors Speed Efficiency Quality/Reliability Supply Chain/Distribution Channels Translation: Creating Value for Customers

9 Our New Product Development Journey The Basics The elements of NPD NPD as the lifeblood of the corporation Linkage to strategic and business planning Baselining, benchmarking, and planning for continuous improvement and competitive advantage Becoming a Fast Innovator Planning and preparation Product definition Design development Manufacturing ramp-up Product improvement

10 Our New Product Development Journey (cont’d.) Some Examples of Successful Innovators Across industry sectors Core values, organizational structure, results-oriented Sustainable value (systems and processes)

11 The Language of NPD Disruptive technologies Core competence Benchmarking Traditional vs. emerging markets Mergers and acquisitions (M & A) Full stream life cycle management (ISO 15288) Exit strategies “Hurdle” rates (ROI) Percent revenue from new products

12 The Language of NPD (cont’d.) Green technology Value engineering Multi-disciplinary solutions Sustainable development Mission Vision Strategic priorities Implementation plan Performance metrics

13 New Product Introduction Thinking Strategically Thinking Commercially Thinking Globally People, Programs, and Processes Transforming Knowledge Into Economic Value

14 Strategy, Technology, Investment, and Value Bringing Disruptive Technologies and Processes to Market Improving Existing Products and Services Comparative and Competitive Advantage Avoiding the “Blinded by Success Syndrome”

15 A New Paradigm for Innovation Invention vs. Innovation A Business Imperative Sources of Innovative Ideas Building Innovation Capabilities The Culture for Innovation Ringing the “Cash Register”

16 Successful Innovation Companies Vision/mission/values Alignment around values People systems around values Organize for success Effective integration and communication Clarity of responsibility and accountability Focus on results thru flawless execution

17 Applying Development Strategy and Resources to Stay Ahead of the Power Curve Preemptive Proactive Maximum Value

18 Business Planning and Business Case Marketing Decisions Risk Analysis/Mitigation Project’s Resource Requirement Financial Projections Production Demands Supply Chain/Provisioning Product Support/Technical Assistance Personnel Needs

19 Four Types of Product/Process Development Projects 1.Research or Advanced Development Projects 2.Breakthrough Development Projects 3.Platform or Generational Development Projects 4.Derivative Development Projects

20 Types of Development Teams Functionally Organized Team Structure Lightweight Team Structure Heavyweight Team Structure Autonomous Team Structure

21 Benchmarking Strengths Weaknesses Opportunities Threats

22 Design and Development Methodologies Quality Function Deployment (QFD) Design for Manufacturability (DFM) Computer-aided Design (CAD) Computer-aided Engineering (CAE) Computer-aided Manufacturing (CAM) Total Quality Management (TQM) System of Systems

23 Innovation An economic, social, and environmental responsibility.

24 Innovations based on: Economic justification Technological feasibility Addressable market Customer/supplier relationship Multi-disciplinary, seamless solutions Technology forecasting/roadmapping

25 Innovation Building on: Documented and sustained successes Common themes Correlations Lessons learned

26 What do successful innovators do well?

27 AT&T Boeing Lockheed Martin GE Intel GM Ford Toyota Yahoo Microsoft IBM Cisco Systems HP Sonic

28 Summary of the HP Deskjet Printer Project Clear Product Definition and Market Segment Clear Focus/Objectives (Low Cost, High Quality) Created New Development Process Emphasizing Speed, Design for Manufacturability, and Teamwork Effective Use of Early Production Tools (CAD, CAM, CAE, PDM, SAP Software) Effective Use of Heavyweight Team Structure Effective Use of Prototypes/Customer Involvement Achieved Objectives for Cost, Quality, Customer Satisfaction Reduced Cycle Time from Months to 22 Months Became the Model for Subsequent Development at HP Vancouver

29 Assignment 3 Case Study 2 (HBR ) – McAlasdaire Imaging, PLC: AE-1 Project In 400 words or less, characterize the development of the MI AE-1 Project. - Successful Intro? Why? - Introduction Failure? Why? Due By: 4/22/04

30 Summary of Assignment 3 – McAlasdaire Imaging’s AE-1 Project No clear upfront product definition or specifications Poor communications between marketing and engineering Lacked overall ingredients for success - “Start With The End in Mind” (Steven Covey, The 7 Habits of Highly Effective People) - Alignment - Commitment and utilization of resources - Project tracking to meet schedule and costs objectives - Communication and teamwork across functional departments No clear path for capturing the lessons learned

31 Video “Guest” Lecture Clayton Christensen, The Opportunity and Threat of Disruptive Technologies

32 “We are living in a period of time that will produce more change for humanity than any previous era in history.” John Peterson WavePeriodActivitiesTime Span Hunter/GathererNuts/Berries & Game10,000 Years First WaveAgriculturalFarming1,000 Years Second WaveIndustrial AgeMass Production100 Years Third WaveInformation AgeKnowledge BasedDecades

33 Structuring for NPI and Continuous Performance Improvement Mission/Values Baseline/Benchmark Metrics Document the Lessons Learned Adjust the Process

34 Successful companies look for successful suppliers and partners with a history of excellence: new products enhanced products quality and reliability customer satisfaction price value