New Product Development is the overall process of strategy, organization,
concept generation, product and marketing plan creation and evaluation,
and commercialization of a new product. In the most general terms, there
are two elements needed for new product development: a process and the
people to participate in it. Figure 1 presents a generic new product development
process model, based on the analysis of processes of companies undergoing
new product development.
No new product development process is exactly the same. Two processes may have similar steps, but the underlying function of the process is controlled by the specific company culture. New product development processes can be broken down into four general categories:
Every organization must come up with new products and/or improvement ideas for an existing lines. Developing and using all sources for potential ideas is vital. The specific sources that tend to be good idea generators include: market research, focus groups, third-party/inventor input, sales, technical service, competitive intelligence, brainstorming, suggestion boxes, specific company laboratory/research groups, and management.
The ability to reduce the vast number of ideas into a more realistic figure is a key issue in most organizations. Depending on the organization, unused ideas are either stored or discarded. One organization stores all ideas in a database and revisits them until they are deemed useless. Another company charges the individual designer with deciding whether to keep or discard an idea. In the end, the company culture and the company's industry combine to determine what happens to unused ideas
Once the viable ideas are selected, they must be further developed, examined, and prioritized before the select few concepts proceed to full design. This phase requires a more formal review and planning process that ensures the concepts are technically feasible, will make a sustainable product, and will, with conservative estimates, allow the organization to make a profit.
Feasibility assessments can be considered a subset of this phase. It usually is performed, however, on a regular basis throughout the front end of the new product development process (idea generation to design). This phase typically includes development of a formal business plan with actual forecasts, product description and initial specifications, preliminary marketing strategy, and project schedule and resource requirements. At that point, an executive review generally approves the product for design and additional resource allocation.
The business plan approval includes action items such as strategy alignment, competitive positioning, sourcing plan, resource identification, design-to-cost analysis, return on investment analysis, risk assessment, and a preliminary process plan. Once the business plan is approved, the concept is given a formal review. Key steps undertaken here include top-level product simulation; design failure mode effects analysis; and simulation, test, characterization, and quality plans.
Several major questions need to be answered before proceeding in the venture: How is the company going to build this? What technologies should be used? What resources are available to contract for necessary services, e.g. equity sharing?
This stage involves turning the concept into a tangible product design and transforming that design into a working model, be it a prototype or a pilot. Along with designing the product, it is essential to design the process that will produce the product. The main areas addressed include: identifying, monitoring, and implementing changes to specifications; design freeze; and verifying product designs through pilots. Any changes have to be monitored to determine if the quality of the product has changed or if customer requirements are better met.
At a number of organizations, the design is frozen when the product specifications are developed and set. Minor changes, refinements, and tuning of the product can occur only to a certain extent. Other organizations never completely freeze the design and are open to change even after the product has gone to production. If a change is determined to be necessary and vital to fulfilling customer needs and expectations, the organization will make the change.
Prototypes or pilots allow the designers to test and verify the ability of the product or service to satisfy original performance expectations.
Once the final design is verified and approved, the product is launched into production. A scale-up period normally is required before full production can begin. Individuals from numerous functional areas are needed to ensure a smooth transition between design and manufacturing. Several items normally are required before production can begin. They include: a formal manufacturing/production plan including all product requirements, a detailed service plan, a quality plan to ensure all products conform to specifications/customer needs, a marketing plan, and a continuous improvement effort for the process.
Tools and Metrics for New Product Development
Specific tools and activities are used throughout the new product development process to enable organizations to better understand the markets they wish to enter, the products they wish to produce, and the means needed to develop the finished goods. Many organizations have and use documentation tools and/or methods that capture new product development information. These tools have a variety of names and activities, but common themes arose during the data collection process of this study.
The first main category is specification requirements, which includes systems, internal customers, product, hardware, software, and function. The second main category is a product development master file that contains information on various projects and their history as they proceed through the development process. Future teams use this information as a reference. Included in these files is information on past business plans, all elements of design and development, launch plans, team activities, minutes from meetings, and project schedules.
Key measures are an important element of any new product development process. They enable practitioners to make decisions about the viability of new product ideas, monitor those new product ideas that have been selected to enter the new product development process, make necessary adjustments to a product development effort as it moves through the process, and help determine the success or failure of the product after development. These metrics can fall into a variety of categories: risk, corporate strategy, market, technology, production, financial, cost, and time.