New Product and Service Development Stage Gate Process

Innovation distinguishes a leader from a followerSteve Jobs

VL1ContextWhy Innovate? How can we lower the risk of this process?Main Causes of new Product and Service failureThe critical success factorsThe old Product processThe new NPSD Process (Maltezana Beach Hotel Case)

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ASTYPALEA

3Maltezana Beach HotelMaltezana Beach Hotel is the biggest hotel in Astypalea. The hotel offers a wide gamma of tourist services and facilities. In addition, Maltezana Beach hotel through its subsidiary travel agency fulfills a significant part of the Astypaleas tourist product.The company recorded revenues of $639.964 thousand during the financial year ended January 2009, a decrease of 5.7% over 2008. The operating profit of the company was $223.510 thousand during FY 2009. The net profit was $157.856 thousand in FY 2009, a decrease of 12.21% over 2008. The decline in net profit was partially due to reduced sales during 2009 as well as due to the change in tax policy.

4Innovation: A history of business life through failure and successInnovation in business world functions as the front cortex part of our brainInnovation is a vital reason of business longevity40% of the major corporations that existed in America in 1975 no longer exist today!25 to 45 % of new products launched, fail. Percentage will vary by industry!Coca-Cola became a market leader with only one product!

5Main causes of new product and service failure Poor or not at all the existence of a strategic planPoor orientation to the market needs Inefficient market analysis (market oriented approach)Product or Service problems or defectsLack of effective marketing effortHigher costs than anticipated (low ROI)Poor timing of introductionTechnical or production problems..but the most important cause is the lack of a clear and efficient NPSD process

6 The critical success factorsA superior product or service that delivers unique benefits to the userA well-defined product prior to the development phaseQuality of execution of technological activitiesTechnological leverageMarketing leverageQuality of execution of marketing activities (build in the voice of the customer)Market attractiveness (more attractive markets lead to more successful products or services)

7The old NPD process

8Problems with that processNot enough ideas (missed opportunities)The entrance of the management is lateNot structural phases and steps in the processResources and funds dont specific demonstratedToo vague to teach this processThe whole process is not under a group of independent (killers) peopleThe risk before launching the product is still high because there is a lack of preventing mechanisms 9Goldsmiths NPSD process

10A superior process for superior products and servicesWell organized and well structured processEasy to teach it It s a powerful tool that brings together all the businesss departments Can be applied in any business type and in any levelCan be customized and it is flexible for producing profit and non profit products and servicesIt brings under the same umbrella all the necessary resources, tools and mechanisms to ensure the consistency of the processIt builds the necessary environment to develop, execute and transform productively an idea to a product or serviceExpectations metIncreases creativity, productivity and efficiencyBlocks ideas that do not contribute positively to the companyDecreases the risk of failure.

11Before implementing the NPSD processUnderstand and leverage the whole process. Build it up according to your companys needs (stakeholders, employees, customers, society)Establish a) the screens and the necessary criteria to pass through your ideas b) the go/kill pointsFormulate the appropriate NPSD team and the appropriate Gate/keepers teamsPut a time frame in each phase of the process.

12Phases and Gates of NPSDPhase 1: IdeationIdeationIdeation screenPhase 2: EliminationExpansion and surface evaluationSurface evaluation screenDetailed evaluationPhase 3: DevelopmentCross-functional Development CFD gateTesting Testing GateDeployment Deployment GateLaunchPro Launch Review PLR gate

13Phase 1: IdeationThis is the first step of our procedureExpand the mouth of the funnel Idea generation The most ideas we input in the system, the better probability we have in terms of developing a successful product or service

14Creating IdeasIdea BankDirect researchTechnological innovationAlliances/acquisition/licensingNational policyCreative methodsExploratory customer studiesFacilitating lead user analysisLinking marketing and technology

15Hotels Idea BankExternal SourcesSuppliersTourist Market ProfessionalsPress Media Internet related with the Travel Market ResearchInternal SourcesFront line Personnel (maids, waiters, front desk assistants, maintainers)Managers (from all the hotels departments)Questionnaires (guests opinions and suggestions)

16 Triggers of InnovationWear others hatSpend more mental time in the futureAwaken your childhood consciousness (family market)Change your physical workspace (sea view)Storyboard ideas (the hotel service itself is a story)Cross pollinate (combination of leisure and hobby)Take fields-trips (see other approaches)Take the international perspective (tourist product has a worldwide audience)17Ideation ScreenEliminate your ideas from 100 to 7 by implementing broad criteria such as:

Must be service and not productFrom 5000 Euros to 50000 EurosBrand new service and not a new approach of an old oneGuest-centered serviceRelated with families holiday activities

18Phase 2: EliminationThis is the second step of eliminating our ideas (from 7 to 3 ideas)

It is divided in four steps:Surface EvaluationSurface Evaluation ScreenDetailed Evaluation Detailed Evaluation Screen19Surface EvaluationFields that we have to consider in this step:Strategic compatibilityProduct superiorityMarket attractivenessResearchLaws and Policies in specific regions

20Surface Evaluation ScreenSpecific criteria that we have to implement in this step:No more than five months of developmentNo more than three employees to run the serviceCompatible with the hotels philosophy which is to create memorable vacation time through an aesthetic place where functionality meets your personalityEasy access and transfer of any demandable resource to launch the service

21 Detailed EvaluationIn-depth detailed review of the existing ideasGathering as much information as we can: Competitive analyses in-depth investigation with customerstarget market product strategyproduct benefitsvalue propositionfeatures, attributesmarket studies cost to manufactureROIinvestmentExtent of research and time, amount and format of research data

22Detailed Evaluation ScreenSpecific criteria that we have to implement in this step:Net contribution to hotels revenue >5%Compatible with the specific and general legislations that this service is required to fulfillROI no more than two seasonsCost of failure no more than 1/8 of the total investmentThis is the last step before the company starts to invest a significant amount of money in developing the serviceOnly one idea passes on to the next phaseWe move from the thinking investment to the money investment in our process23Phase 3: DevelopmentOur idea is going to be developed under a strict and careful processGate keepers are going to regulate the process (my parents are going to play the role of the referees) This is the five stages and four gates of the Development processCross functional Development/CFD GateTesting/Testing GateDeployment/Deployment GateLaunchPost Launch Review/Post Launch Review Gate

24Cross-Functional DevelopmentThis is the stage that we start transforming our idea into a product or serviceIn this step we formulate cross functional teams in order to contribute with their experience from the previous phase in building the appropriate characteristics of the product or the serviceSub-NPSD processes start running from separate departments (we want the ideal support for our departments)

Parallel marketing & operationsIn-house testsRapid prototypeAlpha testsWorking modelUpdate financialsFirst prototypeFacilities requirementsLegal patent/trademarksMarket launch plansLab testsContinue:25Cross-Functional Development GateGatekeepers ensure all essential activities which has been performedFor example:They check the quality of your workReview your financials

26TestingBuild a variety of scenarios and run your prototype product or service into these scenarios Analyze and evaluate the service through a variety of characteristics:During Christmas and Easter the hotel is going to offer this service, by inviting for free accommodation and vacation, in a variety of people like loyal guests, friends, suppliers and tourist professionalsReview our financials

27Testing GateGatekeepers evaluate the tests and check if the outcomes meet the criteriaWere the tests conducted properly?Did the testers build a representative scenarios for the service (ask the right questions?)Did the testers do their jobs without emotional attachments? Did they act independently?Were questions skewed or was the test skipped altogether?28DeploymentSet up all the necessary resources, activities and teams in order to start launching the serviceThis stage gives the chance to the company to adjust everything before launchingIn our case, to make sure that we have the necessary verifications and insurances before launcing29Deployment GateThe one last checking point before launchThis is the most vital gate which our service is going to pass through

30LaunchPut life and offer our service to guestsLaunch the servicePlace advertisements and other promotions to press, internet, magazines, and tourist exhibitionsFill the distribution channel ( tour operators and travel agencies)

31Post Launch ReviewA stage that we try to excellence the whole development procedure of the product or serviceIn this point we need to take under consideration:Costs (Are my actual costs meet my estimation costs?)Profits (Are my profits the desirable ones?)Team members (Did my team members do their job accurately/independently?)Make a SWOT Analysis for my new servicePlace of improvement (Can I provide the same service faster, cheaper and better)What has been learnedSource of competitive advantage

32Post-Launch Review GateIt contains the final check point that compares the desirable characteristics of our new service with the actual characteristics of the service.33A suggestion to think about..Dont fall in love with your own ideas..we paid to think not to love our thinking!Put them as all the other ideas in a well structured and customized NPSD process without exceptions Minimize the risk and any challenge of failureMaximize your desire outcomes by offering a more sophisticated and superior product or serviceGoldsmiths NPSD process guarantees better results

THANK YOU34