New Product Development Process

New Product Development Workshop

Dr. Iain Sanders – Sustainable Innovative Solutions LtdSome of the material contained in this presentation is copyright © to: Sustainable Innovative Solutions Ltd.

Delivered in conjunction withCanterbury Development Corporation

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How the Problems Feed Each Other – A Downward Spiral

A LACK OFRESOURCES

FOR NEWPRODUCTS

A LACK OFFOCUS

NO NEWPRODUCTPROCESS

TOO MANYSMALL, LOW

IMPACTPROJECTS

POOR PROJECTPRIORITIZATION & FAILURE TO

KILL PROJECTS

TOO MANYPROJECTS FOR

THE LIMITEDRESOURCESAVAILABLE

POOR DATAON PROJECTS

POOR JOB DONE ON

PROJECTS

weak marketstudies, poor

launch,inadequate

testing

NO ROADMAPFOR PROJECTS

LOWIMPACT

ONSALES,

PROFITS

POOR CYCLE TIMES

HIGHFAILURERATES

Ref: R.G. Cooper

2

Doing the Right PD Project the Right Way

Salestargetsnot met

GoodGoodbusinessbusinesspracticepractice

Going bankrupt

fast

Projectcosts

overrun

Doing the Wrong Projects

Doing the Right Projects

Doing projects

badly

Doing projects

right

3

The Right PD Process: Key Activities in the NPD ProcessInitial Screen The idea screen – the first decision to go ahead with the project; the initial commitment of resources (people

and money).

Preliminary Market Assessment

The initial market study: a “quick and dirty” assessment of the marketplace, customer requirements, possible market acceptance, and competitive situation; largely nonscientific and relying on in-house sources.

Preliminary Technical Assessment

An initial technical appraisal, addressing questions such as “can the product be developed? How? Can it be manufactured? Etc.”; based largely on discussions, in-house sources, and some literature search.

Detailed Market Study Marketing research: detailed market studies such as user needs-and-wants studies, concept tests, positioning studies and competitive analyses; involves considerable field work and in-depth interviews with customers.

Predevelopment Business and Financial Analysis

The decision to go to a full development program; involves, for example, a financial analysis, risk assessment, and a qualitative business assessment, looking at market attractiveness, competitive advantage, etc.

Product Development The actual development of the physical product.

In-house Product Tests

Testing the product in-house under controlled or laboratory conditions; alpha tests.

Customer Product Tests

Testing the product with the customer; field trials, beta tests, or preference tests: giving the product to customers and letting them try it under live field conditions.

Trial Sell A trial sell or test market of the product: an attempt to sell the product to a limited number of customers or in a limited geographical area; a “soft launch”.

Precommercialization Business Analysis

The decision to commercialize: final business and financial analysis prior to launch.

Production / Operations Start-up

Start-up of full-scale or commercial production or operations.

Market Launch The full market launch of the product: the implementation of the marketing plan. 4

PD-Trak Coverage

What is Phase-Gate Product Development & Portfolio Mgt.?

A complete solution for managing your product development initiatives

Phase-Gate Process (go/kill, guidance)

New Product Development (NPD) Process

Portfolio Management (Which projects)

Pipeline Management (Resource assignment)

Product Development Strategy (Business Plan)

DevelopmentPhase

FeasibilityPhase

LaunchPhase

InvestigationPhase

Manufacturing/Deployment

Phase

Pilot/TestPhaseDF P L M R

Management Process

Product Development Process

DFM/AQFD Target costing FMEARef: DRM Asscs.

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Tools Configured To Your Phase-Gate Process

Project Brief/

Proposal

Budget & Schedule

Financial Justification

QFD Product Planning

Matrix

Project Brief

Project Plan

ProductDefinition

Test Plan & Results

Test Plan

Marketing Launch

Plan

Customer Support

Plan

IdeasList

Metrics Tracking

Voice of the

Customer Plan

Market Defn &

Forecast

Task Plans: Standard Project Tasks By Phase

Lessons Learned

Ref: DRM Asscs.

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Managing Risk With A Phase-Gate Process

The fundamental objectives of an effective Phase-Gate Process are to reduce project risk as rapidly as possible:

With the minimum possible expense With the lowest possible administrative effort

Ref: DRM Asscs.

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Phase-Gate Process

NPD Process defined at three levels:

1. Phases & gates

2. Tasks & deliverables

3. Document templates

Ref: DRM Asscs.

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“New Product” Process – Phase Descriptions

Investigation Phase

Develop the idea by gathering readily available data; preliminary identification of target market, application and product concept. Determine plan for feasibility phase focusing on voice of the customer and competitive data collection, concept identification, assessment and selection and data needed to develop a comprehensive business case.

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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Investigation Phase

DevelopmentStage

FeasibilityStage

LaunchStage

InvestigationStage


Stage

Pilot/TestStageDF P L M R

Voice of the Customer

Secondary Market Research

Project Brief

Budget & Schedule

Co AProd 2

Co B

UsNew

UsProd 1

Co AProd 1

Market Analysis & Definition

Target Price & Target Cost Calculation

Market Definition

& Forecast


Voice of the

Customer Plan

Idea List

Project Brief

Project Plan (Feasibility

Phase)Task Plan

Ref: DRM Asscs.

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Feasibility Phase

Complete customer needs and competitive assessment; develop product requirements and identify the target cost; assess several alternative concepts and select the one that best satisfies the project targets; demonstrate the feasibility of the selected technical approach, assess manufacturing process implications and finalize the business case.

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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Feasibility Phase

Voice of the Customer Product/

Project Brief

Customer Needs Data Dictionary

QFD Product Planning

Matrix

QFDSubsystem Deployment

Matrix

ProductSpecification

Concept Development

ConceptSelection

Matrix

Target Cost Evaluation Worksheet

DevelopmentStage

FeasibilityStage

LaunchStage

InvestigationStage


Stage


Market Definition

& Forecast

Voice of the

Customer Plan


Ref: DRM Asscs.

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Feasibility Phase (Continued)

DevelopmentStage

FeasibilityStage

LaunchStage

InvestigationStage


Stage


Concept Development

QFDConceptSelection

Matrix

Target Cost Evaluation Worksheet

SelectedConcept Project

Brief

Project Plan


Budget & Schedule

Task Plan

Mfg. Plan

Marketing Plan

Program Plan This section completed during the Feasibility stage and updated as required in later stages to reflect changes in the overall program plan..

Program Objectives and Success Criteria What are the program objectives and the success criteria th at the program will be measured against.

Program Strategy Describe the general program strategy that the plan is based on.

Key Program Milestones and Dates List key program milestones dates and schedule constraints, e.g., complete development to support a specific trade-show date or OEM customer launch date.

Key Assumptions What are the key assumptions that the program plan and approach are predicated on.

Program Trade-Off’s Describe the priorities for program trade -offs.

Least Flexible Medium Flexible Most Flexible

Schedule

Scope/Features

Resources

Summary of Major Program Risks Summarize major program risks based on the Risk Mana gement Plan and identify prevention and mitigation actions to take. Identify issues that require management action to resolve or mitigate.

Program Plan

Risk Management

Plan

Market Definition

& Forecast


Ref: DRM Asscs.

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Development Phase

Complete the design of the product, demonstrate specification conformance by building and evaluating a number of prototype units, design the manufacturing processes, create and release a full manufacturing documentation package.

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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Development Phase

Mfg. Plan

QFDAssy/Part

DeploymentMatrix

ProductDesign

Assy/PartConceptSelection

Matrix

ProductSpecification

DFM/AAssessment

DFMGuidelines

Failure Modes & Effects Analysis

Process Planning

Matrix

Drawings Bill of Material

Design Verification

Plan & Results

Supplier Plan

DevelopmentStage

FeasibilityStage

LaunchStage

InvestigationStage


Stage


Marketing Plan

Ref: DRM Asscs.

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Pilot/Launch Phase

Prove out the manufacturing processes and documentation. Introduce the product to the market, train the sales and technical support teams, prepare for first shipments.

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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Pilot / Test (Launch) Phase

Customer Support

Plan

DevelopmentStage

FeasibilityStage

LaunchStage

InvestigationStage


Stage


Process Planning

Matrix

Quality Control Matrix

Control Plan

Design & Process

Verification Plan

Design & Process

Verification Results

Product Build

BuildReport

RefineDesign

DrawingsBill of

Material

Marketing Plan

Supplier Plan

Service & Repair Plan

Ref: DRM Asscs.

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Manufacturing Phase

Ramp up production. Demonstrate the ability to manufacture the product at the projected volume and cost.

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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“New Product” Process – Gate Descriptions

I Gate – Product managers screen ideas/opportunities and select potential projects for initial investigation

F Gate – Based on preliminary investigation, management reviews product proposal and commits to funding Feasibility Phase

D Gate – Management reviews comprehensive product definition, product plan and business case and decides whether to commit funds to development (most critical gate)

P Gate – Management reviews development and verifies that the product is ready for pilot and launch

M Gate – Management reviews product is ready for production ramp up

R Gate – Reviews conducted to determine results relative to project objectives and collect lessons learned

DevelopmentPhase

FeasibilityPhase

InvestigationPhase

ManufacturingPhase

Pilot/LaunchPhase

F

D

P

M

R

I

Ref: DRM Asscs.

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Gate Review Objectives

Ensure that:

• A valid business case for the development project exists – project will provide adequate return with acceptable risks

• Program is still aligned with company strategy

• Continued investment in the product development or R&D project is warranted– Significant issues are being addressed– The project plan & request for resources is sound

• The project has a high priority relative to other project portfolio opportunities

Ref: DRM Asscs.

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3 Decisions to Pass a Stage-Gate Review

Ref: DRM Asscs.

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Decisions to Define Gate Review Process

1. Where and when in the process should gate reviews occur?

2. What information is needed for the gate review?

3. Who makes the gate review decisions?

4. What is the process for conducting gate reviews?

5. How do we make gate reviews more effective?

Ref: DRM Asscs.

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Gate Criteria

• Gates must have clear criteria so that senior managers can make Go/Kill & prioritization decisions objectively

• Criteria must be:– Easy to use– Realistic (make use of available information)– Discriminating (differentiate the good projects from the mediocre

ones)

• Ideally, criteria are scored and summarized into an overall rating

• Project killed if it falls below minimum acceptable level

• Scoring also supports project prioritization for portfolio management

Ref: DRM Asscs.

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SOFT versus HARD Gates

Ref: DRM Asscs.

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Gate Review Meeting – a Two-Step Process

• The gatekeepers/approvers may cover both decisions in the gate review meeting or may make the second step decision subsequent to the gate review meeting.

• In the case of the latter, the decision should be made within one business day to avoid potential waste.

Ref: DRM Asscs.

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Portfolio Management

Technology Development

New Products

Enhancements & Line Exten. TOTAL

Business Unit A 7% 24% 4% 35%Business Unit B 2% 16% 7% 25%Business Unit C 0% 6% 11% 17%Business Unit D 2% 14% 6% 22%

TOTAL 11% 60% 28% 99%

Annual/5 Year

BusinessPlan

Strategic AllocationCorporate or BU Level

Corporate or BUPortfolio Mgt. Review to

Ensure Balance

Review to ConsiderRoadmap Relationships(Technology & Platforms)

R&D BudgetR&D Headcount

Scorecard MethodDevelopment Productivity Index

Portfolio Bubble Chart

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

0 10 20 30 40 50 60 70 80

NPV

Prob

abili

ty o

f suc

cess

GeminiAquariusAriesCapricornTaurusVirgoLeo

Done outside of PD-Trak

Ref: DRM Asscs.

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What Happens When You Lack Effective Portfolio Management

A reluctance to kill projectsMany projects added to list

A total lack of focus

Too many projects - resources thinly spread. Projects in a queue.

Quality of execution suffers.

Increased time to marketHigher failure rates

Weak decision pointsPoor Go / Kill decisions

Too many low value projects:-Tweaks and modifications-Good projects are starved

Too few stellar product winnersMany ho hum launches

No rigorous selection criteriaProjects selected on emotion,

politicsWrong projects are selected Many failures

No Strategic criteria for project selection

Projects lack strategic directionProjects not strategically aligned

Scatter gun effortDoes not support strategy

No Portfolio Management Means…

Immediate Result End Result: Poor New Product Performance

Ref: R.G. Cooper

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Portfolio Management – Resource Impact

Flexible modeling of resource requirements and potential actions - add resources, contract labor, suspend projects, cancel projects,

adjust schedule

Proposed Portfolio (Master Project

Schedule)

Resource Plan

ResourcesAvailable?

Ref: DRM Asscs.

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Project Scoring

A structured method for determining relative strategic importance of projects

Ref: DRM Asscs.

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Proposed Portfolio Projects - 1

Product manager(s) screen ideas in Ideas List & selects projects to investigate

Ref: DRM Asscs.

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Project file created, investigation phase conducted & key documents created (Project Brief, Budget & Schedule, and Financial Justification)

Ref: DRM Asscs.

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Proposed project added to the Master Project Schedule

Ref: DRM Asscs.

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Master Project Schedule

Master project schedule lists all active and proposed (sponsored) projects and key portfolio and financial information for portfolio prioritization and decision-making

Ref: DRM Asscs.

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Portfolio Management – Balance / Mix

• Portfolio bubble chart provides a way to graph projects on two axes to assess balance and mix of projects

• A common bubble chart is risk-reward (high risk-reward vs. low risk-reward)

Ref: DRM Asscs.

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Portfolio Management – Balance / Mix

• Pie chart provides a breakdown of active projects as a basis to check allocation by type of project

• Uses process type as a basis for the breakdown – requires process template to be established for each type used

Ref: DRM Asscs.

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Portfolio Management – Strategic Alignment

Product maps can be checked against portfolio plan to assure that needed technology or platform projects are not overlooked (otherwise revise roadmap)

Product maps are maintained in the

Project File

Ref: DRM Asscs.

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Other Portfolio Management Reports

Ref: DRM Asscs.

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Resource Analysis

Central Resource Pool Resources Added To Project

Resource Analysis

Ref: DRM Asscs.

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Additional Resources and Information

•Websites:– General NPD Informationhttp://www.npd-solutions.com

(especially the Product Development Forum)

– Specific Product Information

http://www.pd-trak.com

•Sustainable Innovative Solutions:

Dr. Iain SandersSustainable Innovative SolutionsP.O. Box 20-452BishopdaleChristchurch 8543New Zealand

Email: [email protected]

Mob: +64 (0)273 566 401

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http://www.npd-solutions.com/

http://www.pd-trak.com/

New Product Development Process

Business

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