1. Energizing New Product Development
PennTAP Webinar
September 26, 2014
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Mark Toda
PennTAP
Pennsylvania Industrial Resource Center
Pennsylvania Ben Franklin Technology Partners
Pennsylvania Small Business Development Centers
Pennsylvania Keystone Innovation Network

2. Energizing New Product Development
Overview
Opportunity/problem
NPD Success Factors
An approach to New Products
New Product Strategy
Idea Generation
Idea Screening & Selection
Concept to Launch (Stage-Gate™)
Metrics and Assessing the New Product Process
University/external resources’ role in product development

3. New Product Development
Opportunity
50% of U.S. Companies’ sales come from new products.
Degree of Innovativeness – measure of investment value.
Manufacturers that are not now developing new products will wither and die.
Problem
Picking winners from losers, insuring the product delights the customer.
Managing risk and allocating resources to successfully deliver new products.
1/3 of new products fail at launch.

4. The Stage-Gate Process
Idea
Screen
Idea
Stage 1
First
Review
Stage 2
Ideation
Preliminary Investigation
Detailed Investigation
Stage 5
Second
Review
Stage 3
Stage 4
Gate
Gate
Testing & Validation
Full Production &
Market Launch
Development
Winning at New Products
Dr. Robert Cooper

5. Value of a Structured, Systematic NPD Process
Guides the project team through a seemingly chaotic, multidisciplinary process
Facilitates management of many projects
Facilitates optimized resource allocation
Facilitates selection of “winners”, and elimination of “losers”
Evaluate the quality of development activities & action plans
Improved communications between functional areas

6. New Product Success Factors
A unique superior product (unique benefits, product value)
A strong market orientation (customer, competition, market)
More pre-development homework (concept, market, technical, business)
Sharp and early product definition
Right organizational structure
Speed of execution
Look to the world products
High quality, disciplined, systematic process
Winning at New Products
Dr. Robert Cooper

7. New Product Strategy Aligned with Corporate strategic plan.
Clearly understood & communicated role for new product development
Defined strategic arenas (products, markets, technologies)
Goals or objectives for new product development efforts
Long term thrust
A new product strategy can help with -
idea generation, project selection & priority, portfolio management, resource planning

8. Corporate Goals and Objectives
Strategic Plan
New
Product Plan
Goals &
Objectives
Things like:
# of new products introduced per year……………………… 15
Revenue from new products per year………………………. $1.5M
% of new products that are new to the company………….. 15%
% of new products that are new to the world………………. 3%
Customer satisfaction with new products…………………… 95%
Note: fictitious numbers

9. Growing with New Products & New Markets
Dr. Irene Petrick
Penn State University

10. New Product Ideas
Market Pull Ideas – generated from the marketplace, recognition of market need, customer requests, and competitive advantage
Technology Push ideas – generated by science or technology research, or serendipitous discovery
Ideas trigger the process – technological possibilities are matched with market needs.

11. Internal Sources for New Product Ideas
Establish a focal Point – collects ideas, facilitates idea generation
Engage all sources of new ideas
research, product design & engineering, sales & marketing
customer service, production, other executives & board of directors
Suggestion Box
Group Creativity Sessions
Scouting Time

12. Internal Process for New Ideas
Screen
Focal
Point
Ideas Go
Idea
Bank
Kill – or -
Hold, Low Priority
We manage everything else, why not idea generation?

13. Idea Submission Form Describe the new product idea
What customer need or problem will the new product address
Who are the potential markets and customers
Is the product a modification, substitute or leading edge product

14. Idea Generation
Brainstorming : lots of ideas, positive atmosphere, record every idea
One on One: capture information from one-on-one interactions
Focus groups: usually used to test ideas, or clearly define problems/opportunities
Interaction groups: customers, sales, & technical people are involved
Immersion: develop complete understand of a market(s)
Plusing/amplifying: focus on enhancing a current product or new product idea

15. Idea Screen First Review Second Review Gate Gate
1. Preliminary Investigation
First
Review
2. Detailed Investigation
Second
Review
Ideation
Strategic alignment
Market potential
Technical feasibility
Technical feasibility
Market attractiveness
1st cut financial analysis
Technical assessment
Market assessment
Financial assessment
4. Testing & Validation
5. Market Launch
3. Development
Gate
Gate

16. Status by Stage Idea Stage1 Stage 2 Stage 3 Stage 4 Stage 5 Project1

17. New Product Evaluation Techniques
Benefit Measurement Techniques – (qualitative) rely on subjective assessments of strategic variables
Fit with corporate objectives
Competitive advantage
Market attractiveness  
Financial or Economic Models – this is the conventional investment decision
ROI Payback period
Break-even analysis
Discounted cash flow analysis  
Portfolio Methods – prioritization and resource allocation methods
Maximize the total portfolio value
Yield the right balance of projects
Yield a strategically aligned portfolio  

18. New Product Project Metrics
Unique & appropriate metrics at each stage of the development process
Assess quality of the stage activities
Forecast return on investment (ROI) from new product projects
Prioritize projects and allocate resources
Optimize portfolio of new product projects
Ensure alignment to corporate goals & objectives
Learn from successful, and unsuccessful projects
You can’t manage what you don’t measure

19. New Product Performance Metrics
Project
Qualitative
Benefit Score
Predevelopment
Launch
Development Costs - actual
(hours, expenses)
Projected Sales
(1 yr after launch)
Actual Sales
Projected 1st year ROI
Actual 1st year ROI
Project A  
$225,000
$350,000
$450,000

20. New Product Performance Metrics
Select metrics that are useful, only collect what you are going to use.
Select metrics that are can be readily obtained.
Select metrics that are easy to understand and tell the pass/fail story
Collect appropriate metrics at various points in the development cycle.
Insure timely gathering & communication of metrics.

21. An Approach to Assessing the New Product Process
Interview representatives from key functional areas.
Likes, dislikes, suggestions, rate NPD performance
Distribute audit questionnaire
Reviews NP projects, NP process, and NP performance.

22. University Resources in Product Development
1. Preliminary Investigation
2. Detailed Investigation
Ideation
University R&D
University R&D
University R&D
4. Testing & Validation
5. Market Launch
3. Development
Penn State Integrated Design Solutions
Faculty led, short duration, asyncronous, funded projects
Penn State Learning Factory
Student team, semester long, set cost

23. Resources Available to Assist You
PennTAP
Grant funded technical assistance
Connection with University and other external resources
Industrial Resource Centers
Innovation Engineering services
Technology Scouting
Technology Driven Market Intelligence
Ben Franklin Technology Partners
University collaboration
Funding assistance
Business development
Small Business Development Centers
Business planning
Market Analysis and Competitive Research
Technology Commercialization
Keystone Innovation Network

24. Questions?
Mark Toda
PennTAP