2. Open Floor Guest Speaker Update… John Jolliff (Service) COUNTRY Insurance and Financial Services SVP Operations Dr. Simon Luthi & Peter Reugger (Product) i-Generator Consulting Firm Under Armour Cleated Footwear

3. Today… Midterm Overview Discussion Lecture Design Team Management Testing Discussion on Midterm II

4. Open Floor Midterm I Good Effort Section 001: 218.2 Points (87%) Section 002: 221.8 Points (89%) Comments throughout paper (Track changes) Comments at end Number of Your Group’s Evaluations that Fell under Twenty

5. Midterm Comments Proof Read and Edit… Page Numbers Please Cut the BS… “Endeavor” “Advancement” “Was then Engaged” Graphs in Text Picking Numbers out of the Sky…

6. Midterm Comments Reasoning Used Think of Your Audience Know What You Don’t Know

7. Midterm Discussion Look Over Comments “What Could We Improve?” Questions Direction for Midterm II

8. PART FOUR DEVELOPMENT McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

9. CHAPTER 13 DESIGN McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

10. What Is Design? Has been defined as “the synthesis of technology and human needs into manufacturable products.” In practice, design can mean many things, ranging from styling to ergonomics to setting final product specifications. Design has been successfully used in a variety of ways to help achieve new product objectives. One thing it is not: “prettying up” a product that is about to manufactured!

11. Contributions of Design to the New Products Process Figure 13.1

12. Principles of Universal Design Equitable Use: The design is useful to people with varied abilities. Flexibility in Use: The design accommodates a wide variety of preferences. Simple and Intuitive to Use: The design is easy for anyone to understand. Perceptible Information: The design communicates the required information to the user. Tolerance for Error: The design minimizes adverse consequences of inappropriate use. Low Physical Effort: The design can be used efficiently by anyone with minimal fatigue. Size and Space for Approach and Use: The product is easy to reach, manipulate, and use. Figure 13.2 Source: James M. Mueller and Molly Follette Story, “Universal Design: Principles for Driving Growth Into New Markets,” in P. Belliveau, A. Griffin, and S. Sodermeyer (eds.), The PDMA Toolbook for New Product Development (New York: Wiley, 2002), pp. 297-326.

13. Range of Leading Design Applications Purpose of Design Aesthetics Ergonomics Function Manufacturability Servicing Disassembly Item Being Designed Goods Services Architecture Graphic arts Offices Packages Figure 13.3

14. Product Architecture The process by which a customer need is developed into a product design. Solid architecture improves speed to market, and reduces the cost of changing the product once it is in production. Product components are combined into “chunks,” functional elements are assigned to the chunks, and the chunks are interrelated with each other.

15. Product Architecture Illustration Figure 13.4

16. Product Architecture and Product Platforms Product architecture development is related to establishing a product platform. If chunks or modules can be replaced easily within the product architecture, “derivative products” can be made from the same basic platform as technology, market tastes, or manufacturing skills change. Examples: 200 versions of the Sony Walkman from four platforms.

17. Assessment Factors for an Industrial Design Figure 13.5

18. Prototype Development Comprehensive Prototype: complete, fully- functioning, full-size product ready to be examined by customers. Focused Prototype: not fully functioning or developed, but designed to examine a limited number of performance attributes or features. Examples: a crude, working prototype of an electric bicycle; a foam or wood bicycle to determine customers’ reactions to the proposed shape and form.

19. Model of the Product Design Process Figure 13.6

20. Improving the Interfaces in the Design Process Co-location Digital co-location Global teams “Produceability” engineer Upstream partnering with vendors

21. Computer-Aided Design (CAD) Greatly accelerates the design step and allows assessment of multiple possible designs without building expensive prototypes. Design for Manufacturability (DFM): search for ways to minimize manufacturing costs. Design for Assembly (DFA): search for ways to ease assembly and manufacture. Rational for DFM: A seemingly trivial detail in design phase might have huge manufacturing cost consequences later on!

22. Some of the Uses of CAD in Auto Industry Determining fit of subassemblies: does the radio/CD player protrude too far into the engine area? Facilitating “decking” of cars (attaching the powertrain to the upper body): do all the pieces fit together perfectly? Crashworthiness: can we modify any aspects of the car’s design to improve its ability to protect the passengers in a crash?

23. CHAPTER 14 DEVELOPMENT TEAM MANAGEMENT McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

24. Some Terms in New Products Organization Functional: People in business departments or functional areas are involved, and product development activity must mesh with their work. Project: The product innovation activity requires people who think first of the project. Matrix: Two people are likely to be involved in any piece of work: project manager and line function head.

25. Options in New Products Organization 1. Functional 2. Functional Matrix 3. Balanced Matrix 4. Project Matrix 5. Venture These are listed in increasing projectization, defined as the extent to which participants see themselves as independent from the project or committed to it. Figure 14.1

26. Options in New Products Organization 1. Functional: work is done by the various departments, very little project focus. Usually a new products committee or product planning committee. Does not lead to much innovation. 2. Functional Matrix: A specific team with people from various departments; project still close to the current business. Team members think like functional specialists. Departments call the shots. 3. Balanced Matrix: Both functional and project views are critical. May lead to indecision and delay. Many firms are making it work successfully. 4. Project Matrix: High projectization, team people are project people first and functional people second. People may drive the project even against department’s best wishes. 5. Venture: Team members pulled out of department to work full time on project.

27. Operating Characteristics of the Basic Options Characteristic Functional Venture Decision Power of LeaderLowHigh Independence of GroupLowHigh % of time spent on project by memberLowHigh Importance of ProjectLowHigh Degree of risk of project to firmLowHigh Disruptiveness of projectLowHigh Degree of uncertaintyLowHigh Ability of team to violate company policyLowHigh Independent fundingLowHigh Figure 14.3

28. Decision Rules for Choosing Among the Options Score each on a scale of 1 (low) to 5 (high): 1. How difficult is it to get new products in the firm? 2. How critical is it for the firm to have new products at this time? 3. How much risk to personnel is involved? 4. How important is speed of development? 5. Will the products be using new procedures in their manufacturing? 6. In their marketing? 7. What will be the $ profit contribution from each new item? 8. How much training do our functional people need in the markets represented by the new products we want? Rating: Below 15: functional matrix will likely work. 15-30: a balanced matrix will probably work. Over 30: You need a project matrix or even a venture! Figure 14.4

29. Another View: Home Runs Vs. Singles  Characteristics of “home run” projects: Distance from regular business -- markets, technologies, distribution system. Conflicts with regular business -- success will threaten people in the organization’s regular business (production, sales, technical). Major financial importance -- dollars, risk, or (especially) both. Timing -- a project that may be a “single” in normal times -- competition, market change, threatened acquisition, insecure management team, shortage of new product projects.  (Do the opposite conditions make for singles?)  The more like a “home run” a project is, the more suited to a more projectized organizational structure.

30. Considerations when Selecting an Organizational Option High projectization encourages cross-functional integration. If state-of-the-art functional expertise is critical to project success (e.g., in a scientific specialty such as fluid dynamics), a functional organization might be better, as it encourages the development of high-level technical expertise. If individuals will be part of the project for only a short time, it might make more efficient use of their time if they were organized functionally. Industrial designers may be involved in any given project for only a short time, so different projects can simply draw on their expertise when needed. If speed to market is critical, higher projectization is preferred as project teams are usually able to coordinate their activities and resolve conflicts more quickly and with less bureaucracy. PC makers often use project teams, as they are under severe time pressure. Figure 14.5

31. Who Are the Team Members? Core Team: manage functional clusters (e.g., marketing, R&D, manufacturing) Are active throughout the NPD process. Ad Hoc Group: support the core team (e.g., packaging, legal, logistics) Are important at intervals during the NPD process. Extended Team Members: less critical members (e.g., from other divisions)

32. Participants in the Product Management Process Project Manager Leader, integrator, mediator, judge Translator, coordinator Project Champion Supporter and spokesperson May be the project manager Enthusiastic but play within the rules Sponsor Senior executive who lends encouragement and endorsement to the champion Rationalist The “show-me” person Strategist Longer-range Managerial -- often the CEO Spelled out the Product Innovation Charter Inventor Creative scientist “Basement inventor” -- may be a customer, ad agency person, etc. Idea source Facilitator Enhance team’s productivity and output Figure 14.6

33. Myths and Truths About Product Champions The Myths: Champions are associated with market successes. Champions are excited about the idea. Champions get involved with radical changes. Champions arise from high (or low) levels in the firm. Champions are mostly from marketing. The Truths: Champions get resources and keep projects alive. They are passionate, persuasive, and risk-taking. Champions work in firms with or without formal new product processes. Champions are sensitive to company politics. Champions back projects that align with the firm’s innovation strategy. Figure 14.7

34. Guiding Principles in New Product Process Implementation Clarity of Goals and Objectives Ownership Leadership, at both senior and team levels Integration with business processes Flexibility Figure 14.8

35. Issues in Team Management Team compensation and motivation Monetary vs. non-monetary rewards? Process-based vs. outcome-based rewards? Closing the team down

36. Five Conflict Management Styles Figure 14.10

37. Some Insights on Global Innovation From Senior Executives Idea Generation: Leverage global knowledge. Source ideas from customers, employees, distributors, etc. Product Development: Focus on incremental vs. home run breakthroughs. Share development costs. Use standardization to better manage global operations. Commercialization: Early vs. late entrant decision. Consider local support/local partner. Figure 14.11

38. Managing Globally Dispersed Teams Levels of language skills among team members Physical distance among team members Cultural differences among team members

39. 3-Minute Drill Examine A Product or Service… Possible Global Implications? Strengths Weaknesses

40. CHAPTER 15 PRODUCT USE TESTING McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

41. What is Product Use Testing?  Product use under normal operating conditions.  Some terms: Alpha testing: done in-house. Beta testing: done at the customer site.  Typical goals of beta testing: to determine if the product works and is free of “bugs.”

42. The Role of Marketing During Development Marketing is involved from the beginning of the new products process. Advises the new product team on how the product development fits in with firm’s marketing capabilities and market needs. Early involvement of marketing increases product’s chances for success. Think of marketing’s task as more information coordination than information gathering.

43. Marketing Ramp-Up The “I think we’ve got it” phase. Once this point is reached, the team’s attitude toward the project changes. Marketing’s role increases as marketing people “rev up” their operations. Plan field sales and service availability. Begin work on packaging and branding. Begin work with advertising agency reps. etc. Marketing “ramps up” for the product launch.

44. Arguments Against Product Use Testing A fortune has already been spent on the product. Market research says the product is a winner. Competitor is working on a similar product. May suggest lack of faith in product. Customers have to learn how to use the product. Competitor may steal our idea and beat us to the market.

45. One Argument For Product Use Testing: Dry Idea Deodorant Process was anything but linear. Gillette discovered flaws in product design through in-house “alpha testing” and beta testing with users. Gillette got some surprises in terms of benefits sought -- “back to the drawing board” near end of process! (Luckily, quick fix was available.) Figure 15.1

46. Arguments For Product Use Testing Better to build off a technology base that provides some insulation from competitive copying than to worry about such copying. Customer needs are complex sets -- use testing would have identified problems with GTE Airfone, Apple Newton, P&G Olestra. Delivering a total quality product -- avoiding "horror stories" of poor product quality before product is marketed.

47. Knowledge Gained From Product Use Testing Pre-use sense reactions. Early use experiences ("Does it work?"). Major benefits results (beta tests). Diagnostic information. Figure 15.4

48. Common Pitfalls of Beta Testing Figure 15.5 Beta test site firm has no internal capacity to test the performance of the product at the required level and lacks the funding to hire an outside firm to do the test. Developer puts in a wishy-washy performance requirement like "user-friendly" which is meaningless without a measurable specification. Testing is done too late in the new products process, which almost ensures that development time will be extended and production delays will occur. Doing testing in increments throughout the process can avoid this pitfall. Developers attempt to beta-test their own products. By definition they are too close to the product to critically test it and find problems. Developers ignore early negative results, hoping that the product will improve by itself during the new products process. All beta test results, whether positive or negative, need to be honestly evaluated.

49. Gamma Testing Beta testing may not meet all the product developer’s requirements. Does the new product meet customers’ needs? Is it cost-effective for them? Gamma testing involves thorough use and evaluation of the new product by the end user. It’s an ideal product use test -- but in many cases firms go with beta testing. Cost and time considerations Keeping ahead of competitors

50. Some Key Testing Dimensions User groups to contact (lab personnel, experts, employees, stakeholders). Mode of contact (mail vs. personal, individual vs. group, point of use vs. central location). Identity disclosure (avoid halo-image effects). Degree of use explanation (no comment, some, full explanation). Degree of control over use (supervised vs. unsupervised) Singularity (monadic usually less sensitive than paired or triangular comparison).

51. More Key Testing Dimensions Duration of use (single use vs. extended periods). Source of product (batch, pilot plant, final production). Product form (single product vs. variants). Mode of recording reaction (like/dislike, preference, descriptive information). Source of norms (past experience, market research firms). Research service (internal vs. outside personnel).

52. Types of Product Use Tests Figure 15.6

53. Data Formats: Like/Dislike Figure 15.7

54. Data Formats: Preference and Descriptive Figure 15.7 (cont.)

55. Midterm II E-mailed last Week, Let me Know if You Need It… How Will Your Group Do This? Prototypes Forecasting Screening

56. Midterm II Midterm II Topics… A-T-A-R Awareness Trial Availability Repeat Concept Statement Full Screen Forecast Product Protocol