Tech innovation s11_npi

ATOA Scientific Technologies Engineering Simulation For Innovation

Technology and Innovation Management: S11 New Product Introduction Raj C Thiagarajan, PhD

To

SIBM SIII MBA Students

ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 2

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ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 3

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ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management

Technology in New Products

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• New products Introduction (NPI)

• NPI Process

• Stages of the product life cycle.

• Cases

• Product life cycle strategies


NPI

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• Any new product or service that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.

• It includes physical objects, services, technology, organizations, ideas and people.

• Development of original products or Services, product improvements, Process improvements, product modifications, and new brands through the firm’s own Research and development efforts


NPI Pipeline

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• NPI Team

• Toll/ stage gate process

• Idea Funnel

• Value Chain, Benefit

• Strategy, Timing

• Product Development Cycle


NPI

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• Products

• Platform/ Family


NPI Team

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• A Collaborative cross functional Team

• Develop and launch a successful product

NPI Team

Marketing Manager

Advertising Agency

Finance

Marketing Research

Sales Promotions

Research and Development

Engineering

Production


NPI is an Integrated Process

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• Customer Experience

– Better experience, benefit

• Production Cost

– Low product cost

• Development cost

– Low development cost

• Time to market

– Shorter time

• Innovation

– DNA for NPI

Innovation

Customer Experience

Production Cost

Development cost

Time to market


End to End product development

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Source?


NPI Design Changes Cost

• Cost of fixing = Stages X Times

• Cost of Design changes increases exponentially with product development cycle.

• 80% of the product cost is determined or committed at the concept design stage

• Management influence reduces over time

Product Planning

Concept Design

Final Design

Pilot Production

Mass production

HIGH

Low

Act

ivit

y, In

flu

ence

Ind

ex,

Des

ign

ch

ange

Co

st

NPI Activity

@

Part

1X

@

Sub assembly

10 X

@

Final Assembly 100 X

@

Dealer

1000 X

@

Customer

10000 X

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Development & Commercialization NPI

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• Product Strategy

• Market Strategy

NPI

DESIGN

Performance

Manufacturability

Quality and Cost

Service, Life

Environmental

Pilot

production

Testing &

Verification

Mass

Production

Commercialization


Value Chain

• Set of activities that create Value

• Through products or services to customer

• Industrial, Customer Value chain

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Customer Benefit Chain

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• The Benefit Chain – How Values leads to Needs


Stage-Gate Process

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• Cooper Stage-Gate Process’s


NPI Funnel

Initial marketing and technical concepts

Idea

Charter

Contract

Launch Proposal

Post Launch Review

Feasibility

Concept refinement and prototype creation

Product optimization

Commercialization Production & Distribution

Prototype Launch & Rollout

KEY

= Decision

= Deliverables

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Toll Gates:

• Major milestones

• Decision making process

– allow passage for potential success projects

– Sacrifices potential failure Projects

– Continue working on the project, moving it along to the next stage in the funnel; or

– Stop working on the project, shelving it or canceling it; or

– Hold and Get additional information and reconsider the project for passage through the same gate once that information becomes available

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The Key ? Answered By Each Phase

Phase Review 1 Phase

Review 2 Phase Review 3

Portfolio Review

Phase 1: Concept Investigation

Phase 2: Feasibility

Phase 3: Development

Phase 4: Post Release

Current Product Support

E N T E R

E X I T

•Does the product make sense from marketing, technical & financial perspectives?

If yes, then concept approved & full team allocated

•What is the product spec? •Can we develop it within budget and schedule? •Can we produce it at the required cost & volume?

If yes, then prototype approved & full team allocated

•Has the product been fully verified and validated? •Have production objectives been met?

If yes, then full manufacturing approved & sub-team allocated

•Does the idea fit roughly with our strategy and resource availability?

If yes, then concept document approved & sub-team allocated

•Is the product meeting safety, efficacy and business targets in the market?

If yes, then closeout approved & handoff to product support

Phase Review 4

Idea Generati

on

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Source:?


NPI Case Study: Microsoft

• $50 billion in profits over 27 years

• Early NPI relied heavily on copying the competition

• $4.2 billion annually invested in R & D

• Innovation is critical to Microsoft’s future success

• Much of R & D efforts are Internet related

• Many new products and services are in development to counter Google and Open source

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Product Life-Cycle

• Five Stages

– Product Development, Introduction, Growth, Maturity, Decline

– Exceptions

• Fads

• Styles

• Fashions

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PLC Symptoms and Strategy

Stage 1:Introduction 2:Growth 3:Maturity 4:Decline

Sales Low Rapidly rising Sales peak Declining

Customer cost High Average Low cost Low cost

Profits Negative Rising High Declining

Target Innovators Early adopters Middle majority Laggards

competition Little Growing begins to decline Declining

Product Offer a basic product

Offer product extensions Diversify brand and models

Phase out weak items

Price Use cost-plus basis Penetration pricing Set to match or beat rivals Cut price

Distribution Build selective distribution

Build intensive distribution

Build more intensive distribution

Selective, phase out unprofitable outlets

Advertising Build awareness among early adopters

Build awareness and interest in the mass market

Stress brand differences and benefits

Reduce to level needed to retain hard-core

Sales promo

Heavy expenditures to create trial

Reduce expenditures to take advantage of consumer demand

Increase to encourage brand switching

Reduce to minimal level

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Product-Process Matrix

Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209

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NPI and Strategy

• Effective NPI pipelines must be embedded in a broader strategic context

Phase I Phase II Phase III Launch

Innovation and Technology strategy

New Product Development support system

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Global NPI Strategic Options

• EXTENSION STRATEGY –

– Same approach as home market

• ADAPTATION STRATEGY -

– Makes changes to fit new market requirements

• INVENTION STRATEGY -

– Entirely new approach is developed for the new market

• STANDARDIZATON –

– Same product, all markets

• GLOBAL PRODUCTS

– Only some aspects of the product is standardized

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Product Strategy Benefits

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Product Strategy Benefits

EXTENSION

Cost effective, Allows for greater economies of scale, Rarely used for consumer type, Used mainly for industrial type

ADAPTATION Product formulations are changed, Entails R&D expenses, economies of scale benefit is low

INVENTION Usually redesigning of an original product at a lower level of complexity, Recognizes the socio-cultural and economic differences, Leads to more purchases due to reinvention

STANDARDIZATON Easier management and control , Homogeneity of markets, Cultural insensitivity, Made in Image. Economies of Scale.

GLOBAL PRODUCTS

Economies of Scale in, Production, Marketing/communications, R&D


• Market-entry timing is critical. A company may be faced with the challenge of trying to enter a market with a new product and learns that a competitor is nearing the end of its development work.

• You/Firm can have 3 Choices

– First entry

– Parallel entry

– Late entry

NPI Timing

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NPI Timing

• First Entry:

– First mover advantages of locking up key distributors and customers

– Product leader reputation

– Product can acquire a flawed image.

• Parallel Entry

– Coincide with the competitor’s entry.

– The market may be receptive

• Late Entry:

– launch after the competitor has entered.

– The competitor pickups the cost of educating the market.

– Product faults can be avoided

– Additional features can be included by the late entrant.

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Development & Commercialization

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• Product Strategy

• Market Strategy

NPI

DESIGN

Performance

Manufacturability

Quality and Cost

Service, Life

Environmental

Pilot

production

Testing &

Verification

Mass

Production

Commercialization

Business

Tech innovation s11_npi