1. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (1) The New Product Development Process

2. Copyright © 2002 by Rabikar Chatterjee (2) Northern Telecom: The Norstar Launch Exemplary Product Development Process Parallel cross-functional development team from the outset Voice of the customer – end-user and reseller Clear business model Zero-based design Structured “gating” procedure to convert business proposition into marketing program

3. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (3) The Stage-Gate System

4. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (4) Benefits of the Stage-Gate Process Quality focus Market orientation Up-front homework Parallel processing –Speed –Multifunctional, multidisciplinary inputs Better project evaluations Road map for project leader and team

5. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (5) Critical Variables in Choice of New Product Development Process Complexity  longer time to complete project Novelty (dynamic, unpredictable markets and environment  shorter response time  Sequential process does not work if response time must be short relative to time to complete project!

6. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (6) Complexity vs. Novelty: Implications for NPD Process

7. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (7) Integrating New Technology with Customer Preferences: The Adaptive Co-Development Process

8. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (8) Uncertainty Profiles in Traditional Versus Adaptive Co-Development Process

9. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (9) NPD Process: Netscape Navigator 3.0

10. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (10) In Summary…. The new product development process must be – Methodical and cross-functional –Customer oriented What’s the right NPD process for you? –Complexity v. Novelty –Other industry- and company-specific factors Analytical tools and methods available –Examples: Lead user research, conjoint analysis

11. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (11) Lead User Research Who are Lead Users? –Lead with respect to cutting edge applications of important market and technical markets –Experience needs ahead of others Types of Lead Users –Lead users in the target application –Lead users in analogous markets –Lead users involved with the more important attributes relevant to the target application

12. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (12) Lead User Analysis: “Extremes versus Means” Identification of functionally novel products and service concepts should be done at the leading edge of markets and applications Evaluation of commercial potential should be done at the “means” of markets and market segments Good reference on lead user research: Eric von Hippel, Stefan Thomke, and Mary Sonnack, “Creating Breakthroughs at 3M,” Harvard Business Review. September-October 1999

13. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (13) Conjoint Analysis: Basic Process Alternatives defined as combination of attributes, each specified at a particular level Identify important attributes and define appropriate levels and range for each (critical step!) Carefully selected set of alternatives evaluated by respondents –Preference data collected in various ways (rankings, ratings, pair- wise comparisons) Overall preferences for alternatives “decomposed” into utilities (“part worths”) for each attribute level –Assumption: Overall utility for a product is a combination (usually additive) of the utilities (“part worths”) of the attribute levels

14. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (14) Example: Partners for Dates  How many possible combinations?  2  2  2  2  2  2 = 64  Need 8 (carefully selected!) profiles for estimation

15. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (15) Conjoint Analysis of Dating Preferences PART WORTH UTILITIES: TOTAL SAMPLE (N = 40) 1.0 0.5 0 Common Interests Few Many 1.0 0.5 0 Personality Introvert Extrovert 0.44 1.0 0.5 0 Wealth Poor Rich 0.31 1.0 0.5 0 Attractiveness Plain Gorgeous 0.45 1.0 0.5 0 Education Less More 0.22 1.0 0.5 0 Age Younger Older 0.18

16. The New Product Development Process Copyright © 2002 by Rabikar Chatterjee (16) Conjoint Analysis of Dating Preferences PART WORTH UTILITIES: MEN (N = 37) AND WOMEN  (N = 3) 1.0 0.5 0 Common Interests Few Many 1.0 0.5 0 Education Less More 0.20 0.64 1.0 0.5 0 Age Younger Older 0.16 0.59 1.0 0.5 0 Attractiveness Plain Gorgeous 0.42 1.00 1.0 0.5 0 Personality Introvert Extrovert 0.42 0.64 1.0 0.5 0 Wealth Poor Rich 0.27 0.95