Which of the stages in the new product development process may be skipped?
The future of your company is dependent upon it staying relevant. In this day and age, that means that new, innovative products must keep pace with the marketplace. Product development lifecycle times are becoming shorter and shorter to keep up with customer’s expectations and needs. While perhaps daunting, a short lifecycle can optimize your company’s strengths by tightening processes and cutting out extra steps. The following guide is a comprehensive lesson on product development for both new products and those undergoing a revamp. We explain what new product development is, as well as the history and pioneers of product development. Next, we delve into all of the different process models, including product development lifecycles, and discuss the best practices for developing your own processes along with some tips from our experts. Finally, we’ll take a closer look at new product development in marketing. Show
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What Is New Product Development?New Product Development (NPD) is the total process that takes a service or a product from conception to market. New or rebranded products and services are meant to fill a consumer demand or an opportunity in the marketplace. The steps in product development include drafting the concept, creating the design, developing the product or service, and defining the marketing. A new product opens a whole new market: It can completely replace a current product, take over an existing product, or simply broaden the market for something that already exists. Sometimes existing products are introduced to new markets, repackaged, or marketed differently. New products can improve the use of a company’s resources, launch a company into a new market or segment of the market, improve the relationship a company has with its distributors, or increase or defend a company’s market share. New products generally differ from a product line extension, which are products that are slightly different to the company’s existing array of offerings. Examples of new goods include mass-market microwaves and Keurig one-cup gourmet coffee machines. In the case of microwaves, a whole new market was born when they were mass-produced and offered at reasonable household prices. In the case of the Keurig machine, the gourmet coffee experience previously only found in a coffee shop was brought into the home. Examples of product line extensions include the Infiniti automobile line and Diet Coke. For the Infiniti line, Nissan targeted the premium vehicle market by extending their auto line at a higher price point. Coca-Cola company used Diet Coke to target the market of soda drinkers that wanted a lower calorie soda than their regular Coke product. Both of these products capitalized on pre-existing products that had already garnered brand loyalty. What Is Fuzzy Front End, and Why Is It So Important in Product Development Processes?Process management is a technique that ensures improvements are introduced with a consistent, structured set of activities. In your product development processes, whether for a new or revamped product, your process management strategies are critical to ensuring that your products will be continuously improved. These strategies will necessarily include your product development processes, and ensure that even very complex products make it to market consistently and improved regularly. The four phases of product development are: 1. Fuzzy Front-End (FFE): FFE, often called the ideation step, is considered one of the best opportunities for driving innovation in a company. FFE is not frequently mapped in any formal way, since this is the phase where you pitch all of your great ideas for solutions to your customer’s problems. FFE is called fuzzy because it occurs before any formal development starts, in the vague period where little structure or defined direction exists. Very few products that are originally pitched in FFE come out of it; however, this stage of pre-development is critical. Successful completion of pre-development can take you seamlessly into development. There have been many case studies that examine how FFE is done in different companies, looking for consistencies and best practices. Some companies have idea management software or some type of regular way that they generate ideas. Some companies use integrated product teams (IPTs), a group that is responsible for defining the product. Volumes have been written about FFE because of its relative importance in product development, but the FFE process is unique to each company. However, there are a few consistent activities that occur with every FFE approach, and provide teams with critical decision points before moving forward. These include:
Regardless of how your company performs FFE, there are some deliverables you should expect to create for each product that moves beyond FFE. These include:
Regardless of how innovative they are, all new product ideas must meet certain criteria for your company. They must:
Use these criteria to whittle down your ideas into manageable new products for your company and keep innovation in check. Not every “great idea” is appropriate for every company to develop. Further, when you are defining your product, there are several questions that you should ask as early in the process as possible. You can disperse these questions into your FFE process or put them into a checklist before moving to development. The intent is to ensure that all of your bases are covered prior to moving forward, and to ensure that your stakeholders do not surprise you with questions that you can’t answer. These include:
Download Checklist Here 2. Design: Once a product is more than just a notion, the next step in the product development process is the product design. Some of these activities may have been started in FFE, but in this step, all of the planning goes into high gear so that you capture both the high-level design processes and detail-level requirements. This step is mostly about validating the manufacturing feasibility of the product, and how you’ll integrate the internal components of the design. 3. Implementation: During this phase of development, you will determine whether your prototype meets your design and requirements specifications from the previous steps, and you will also figure out how to deliver the product and provide support for your customers. At this point, you prepare your facilities that will manufacture, provide the supplies for, transport, and distribute the product. 4. Fuzzy Back-End (FBE): This stage is sometimes called the “messy” back-end of innovation. This process is not considered as fun as the innovation process because in FBE, fun meets the execution processes and you must be disciplined about the release. This is the true commercialization phase where production and product launch happen in a structured way. In other words, the FBE is where the product truly comes to life in the marketplace, executing a company’s strategic vision. What Is Innovation?Innovation refers to any time you introduce new products, or even make changes to old products. From your customer’s perspective, ideas that become solutions to their problems are innovative. There are many different ways that you can categorize the different types of new products. Depending on how you break them down, these may include products that are only new to your company. However, there are four universally agreed-upon categories for innovation:
The History of Product Development ProcessesProduct development processes started to evolve when more formalized process management approaches were applied to product development practices in the 1990’s. Companies such as Ford, AT&T, and General Electric started pioneering new ways to evolve their product development activities in more efficient ways. At the same time, many companies also took on Business Process Reengineering efforts that revamped their manufacturing and business processes. With the new approach, they found three truths:
Further, once companies learned that they should take and plan all of their development projects collectively, they could develop according to strategic priorities and stop falling behind in deadlines. From the development of the formalized processes, several membership groups emerged to share ideas and concepts, and to stay on top of industry research and trends. Some of the organizations certify professionals and sponsor conferences, seminars, and coursework. These include:
Product Development Process ModelsYour company depends on being able to formalize your innovation process properly. According to urban legends of new product development, between 70 and 90 percent of new products fail. More conservative, peer-reviewed studies compiled by the Product Development and Management Association (PDMA) actually put that failure number between 30 and 49 percent. Even with these lower failure rates, however, there is still a large amount of money at stake. Therefore, a process model is critical to saving your company money and time. There are many different approaches and models for innovation, depending on the needs of your company. Most process models can be categorized according to their relative objective within your company. These include those that:
The following are the most commonly used models, with varying levels of utility and success for different companies. The Scorecard-Markov model: The Markov analysis model is a mathematical model that deals with the probabilities of things happening. These things are divided into the past, present, and future. The past isn’t as relevant as the present, because the present gives us the probability of something happening in the future. The Markov model is especially helpful in scenarios where there are transitions from one state to another. In this model, you develop a matrix that represents the transition states and how likely they are to go from one to another, and apply it to the Scorecard-Markov model to make new product screening decisions. Developed to act as a scorecard for new product ideas, the matrix includes your customers’ needs, the strength of your marketing, your company’s competency, the compatibility of your manufacturing, and your distribution channels. In other words, this model is used to whittle down all of your ideas from FFE to ones that make mathematical sense for your company. It is a formal, evidenced-based process for the people you report to who want “real data” on why some ideas make it out of FFE and some do not. The IDEO Process: This model comes from a design and consulting firm of the same name, and is set apart because it is the “human-centered design process,” designing from the perspective of the user. IDEO’s designers make a point to observe real people in real situations, looking for the Form-Fit-Function (FFF) of their designs. FFF specifies the interchangeability of parts in a system and describes the characteristics of parts. Further, if a part is not needed for the fit, form, or function, it should not be added. This process targets the FFE of innovation and includes the following steps:
The Booz, Allen, and Hamilton (BAH) model: This is one of the earliest and most well-known models for new product development. It is considered foundational for all other models developed to the present day in any industry and is meant to be sequential. Booz, Allen, and Hamilton state that, “For every seven new product ideas, only one succeeds.” This model does not take into account the need for speed and flexibility in today’s marketplace product development. The seven steps of the BAH model are:
The Stage-Gate model: Also known as the Phase-Gate model, this is a project management approach that divides up the process of developing new products into a funnel system. Once each stage of product development is complete, it passes through a management-approved gate prior to moving onto the next stage. Sometimes stages are processed simultaneously. In this model, companies save money by filtering out the bad concepts and ideas through a funnel by the time the process is complete. In a study in 2010 by the American Productivity & Quality Center (APQC), the Stage-Gate model was the most popular system for new product development in the United States - 88 percent of businesses use it. Originally, Robert G. Cooper developed this eight-step model in the 1980s, boasting a 30 percent cycle reduction time. Dr. Cooper developed the Stage-Gate model using benchmarking research, on the premise of determining why some products succeed and some fail. Benchmarking in the Stage-Gate model is evaluating your process against other processes or standards of product innovation in the industry. The following eight stages were developed to improve the new product’s marketability and your team’s productivity once you have a product idea. After each stage is complete, you must decide whether or not to continue. Stage 1: Generating Stage 2: Screen the Idea In this step, an objective group or committee reviews criteria that you developed and decides to either continue or drop a project. This step is done quickly so that you drop any ideas that do not make the cut. Market potential, competition, ROI, and realistic production costs should be part of the criteria. Stage 3: Test the Concept In this step, you are testing the concept with your customers. This is after the internal screening step, so the picture itself is more firm. The customers should be able to display their understanding of the product, and say whether they want or need it. Their feedback gives your company some marketing ideas and potential tweaks to the product itself. Stage 4: Business Case Analysis In this step, you have a fully formed product; the concept has been reviewed internally and externally. At this time, you can develop a set of metrics and a business case. The metrics should include the development time, the value of any launched products, the sales figures, and other data that shows the utility of your process. The business case should paint a complete picture of the product, from the marketing strategy to the expected revenue. Stage 5: Product Development This is the step where your product takes flight. You are getting ready for consumer testing, so the technical team must complete your design. During this step, you should complete beta versions, settle on manufacturing methods, and address packaging. Stage 6: Test Market In this step, the whole concept is together and pitched to your consumer test group as the beta test. In this way, you validate your concept. At this time, you should work out any technical issues with the product. Stage 7: Commercialization This is the step that finally takes your product to launch in the marketplace. Complete final marketing and prices, and give the finalized details to rest of your company - especially the sales and distribution teams. Set up technical support to monitor customer’ needs. Stage 8: Launch! The launch plan should be comprehensive for maximum impact. At a minimum, include these seven things in your launch plan:
It is important to understand this model, as many firms still adhere to the traditional eight-step process. The APQC revamped this eight-step model and consolidated into a five-step, five-gate model. This also aligns with traditional process mapping. Stage zero of this consolidated process is your innovation process with all of your company’s great ideas. Stages one and two could ideally be categorized under the same screening step. Also, after you launch the product, you should perform a review of your process. The steps in this consolidated and slightly reworked model are: Stage 1: Discover new product ideas Stage 2: Build your business case Stage 3: Development Stage 4: Test Stage 5: Launch The following picture illustrates where the stages are in the new model. Decreasing the number of steps also decreases the number of decision points, which streamlines your process.
What Is the Product Development Lifecycle?All of the previous processes outlined had aspects of new product development in them. However, the Product Development Lifecycle (PDLC) encompasses every phase of a product, from the idea to retirement. You should approach product planning with an organized, thoughtful process, so that you don’t have poorly implemented products that are either unnecessary, unwanted, or overly expensive. Many different PDLCs have been produced for product and service development, including separate ones for new software development. However, experts recommend that your cycle reflects your company’s unique processes and needs. Some example follow. You can view PDLC at a high-level, including the four stages of the fuzzy front end, messy back end, commercialization, and retirement.
You can also look at PDLC in a quite detailed way, such as the following cycle:
There are many methodologies that have been incorporated into product development. Many of these are familiar to business professionals, as they have roots in Business Process Management concepts. These include:
No discussion of process methodology would be complete without acknowledging the more recent capabilities that technology has to offer. Virtual product development (VPD), especially in markets where competition is fierce and the lead time for new products in necessarily short, is a great alternative to developing physical prototypes before production. VPD is the production of prototypes in a digital 2D or 3D setting. You can design, test, stage, and plan the manufacturing of a product in a digital environment. VPD is now done in almost every industry from fashion to manufacturing, although it was traditionally used in construction. Aside from the speed to manufacturing, it allows teams to work remotely, decreasing the general and administrative costs of personnel, and considerably decreasing the development cycle time. Before VPD, a 24-hour development cycle was unheard of. Now, it’s a reality. How to Create a Product Development ProcessEspecially in a tough economy, innovation may be necessary because it makes companies more competitive. Even though the natural managerial response to an economic downturn is to reduce spending, it would be ill-advised in development. Innovation can reposition a company in the marketplace and grow it for the future. Whether you are looking to improve your current processes or build new ones, there are some best practices and mistakes to avoid. Best practices to improve your product development processes:
Some additional best practices for those companies dispersed in different countries:
Many decisions are made and practices are built at the highest levels. Sometimes we do not realize that our carefully crafted practices can lead to bad decisions in the future, or down the hierarchy of our company. The following are ways to head off bad decisions in product development: When possible, standardize your decision-making criteria. For many companies, decision-making is based on experience and may be difficult when you are creating a new development process. However, you should still give your teams the benefit of knowing what information management needs to make a decision, and give management the “real” picture that includes risks and problems without the fear of punitive action. With clear information requirements, your teams can give management a clear picture. Make your timelines realistic. Be willing to take a stand. Pull down any functional silos. Ensure that your product is the best it can be. Some companies struggle with the idea of pushing back a launch. Remember: launching a product that is inferior to what you first projected is not better than pushing your launch back or even cancelling it. Should you find yourself in the unfortunate position where you have to decide to either push your launch back, cancel your launch completely, or launch what you have, run a cost-benefit analysis (CBA). Your CBA should especially take into account those items you noted on your risk register as possible if you skimp on quality or any step. It is true that sometimes rushing to market is necessary, even critical to securing your product’s rightful place. But at the end of the day, you must ask yourself: Is it worth alienating your customers with a sub-par product? How Fast Can You Get a Product to Market?In this guide, we’ve covered the idea that a quality product shouldn’t alienate your customer base, and that it’s better to have a quality product than a fast-to-market product. However, what if fast-to-market is the most important criterium for your business model? And for that matter, do speed and quality have to be mutually exclusive? For many entrepreneurs, speed is the answer. The shortened development cycle is critical when you have only a small window to keep your customer’s attention. To continue to shorten your development cycle, you need a few things:
If you have all of these things, the time it takes to get to market is only dependent upon whether your products satisfy your company’s strategic goals. Your core products will maintain a competitive edge regardless of their quality. Another way to keep your development cycles short is to work in a parallel approach, which can work in two ways. In the first option, you have multifunctional teams working in parallel. In the second, those teams can complete as many tasks as possible in parallel. This is where your process maps become critical, as well as senior managers whose support is guaranteed. Some other aspects of fast parallel product development are:
Experts Weigh in on Product Development.Our experts have a lot to say about product development. We interviewed two experts with experience in software and new product development.
According to Sarah Meerschaert, PMP, Research and Development, CenTrak: “I have been the Project Manager for R&D for three and a half years. I consider myself a bit like a midwife, helping the development team bring new products into the world. The newer or how unique a new product is as compared to your current offerings, the more risks associated with it. Often small improvements over time can be the safer option. Emerging technologies and emerging markets can open up opportunities where it is worthwhile to build a new product farther outside the wheelhouse. Development of something truly new can offer a greater reward, but also more room for error!
Our expert Dean Geraci, with more than 25 years of product development is the General Manager at ProMation Engineering, Inc. He tells us, “The most important aspect of new product development for newcomers it to follow the steps needed for any new product in a development pipeline. While called different things, each level needs to be completed before the next. First is Concept – What is the product and can it be made? Here customer requirements meet technical details. One might not have all the answers at this stage, but the essence is that can the product be made that meets market or customer needs. “The next stage (they are also called gates – because you need to pass through to get to the next) is Feasibility. This is probably the most important and takes considerable thought. Can and how do I make the product at the price point I need? Market research, component identification, capital requirements, initial business plan (including marketing) as well as many other aspects need to be fleshed out in this phase. Development/Qualification is the next phase. Sometimes these two aspects are combined, but many times are separated, especially if there is a regulatory need or extensive field testing of the product after making the initial run of products or first articles. “The Development phase defines the processes and operating procedures to make the product efficiently. Qualification is the testing required to ensure that the developed product meets the market or customer needs. The last phase is Launch where all the elements come together – business plan, go to market strategy, pricing, customer/market segmentation, promotion/advertising to name just a few – to bring the product to market. Skipping any of these steps can lead to failure of the product or worse: recalls, lost opportunity, retreating from the market. The key is to fail early and fix the issues at hand before the product is in the customer's hands.” What Is Product Development in Marketing?Your product development marketing strategy helps you generate interest around your new or revamped product. Your product marketing strategy incorporates your new product introduction process (NPI), which comes into effect after completing the design and testing. This is the stage where manufacturing takes over. In other words, this is where the prototype goes to full production and into a sale. NPI takes over where NPD leaves off. A product marketing strategy should include your customer analysis, product development, pricing, branding, and sales and distribution plan. The following are a list of things you should do to be effective in your product marketing:
Streamline New Product Development Processes with SmartsheetEmpower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today. Which of the following are stages in the newAlthough the product development process differs by industry, it can essentially be broken down into seven stages: ideation, research, planning, prototyping, sourcing, costing, and commercialization.
Which of the following is the last stage of the newMarket Commercialization
This is the final stage of the New Product Development (NPD) process. Here the team involved finalizes everything that is needed for the product to be launched in the market. With that they also begin the process of manufacturing and also setting up a customer support department.
At what stage of the newe. Most new-product ideas are rejected at this stage, called the idea screening stage.
Which of the following are common marketing reasons for new products to fail?So many things contribute to new product failure: bad design, poor user experience, sloppy implementation, feature creep, and lack of quality control. Microsoft alone has several examples of how poor execution affected their product's performance on the market.
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