New Product Development

Successful Innovation in the Marketplace

Erdener Kaynak, Nicholas Mills, Michael Z Brooke

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136400353
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Keep ahead of your competitors!New Product Development will help you and your company overcome an expensive and common weakness: the lack of adequate new product development. This vital book examines the requirements of new product development in detail as well as in the context of corporate strategy. Packed with practical information that can immediately be put into effect, New Product Development can help you keep your company on the leading edge, no matter what type of industry you're in!This uniquely insightful volume will help you become a successful innovator by showing you how to plan and execute strategies for developing a continuous flow of new products and services to help you stay ahead of the competition. It demonstrates how innovation, far from being a staff function, is a dynamic line management task. It calls for the same aggressive thrust as marketing and sales, and every officer of the company, from the president on down, has a share in this responsibility.Medium size, small, and even large companies constantly face a mass of problems in achieving successful innovation. New Product Development will help you deal with issues including:

• inaccurate budgeting
• costs exceeding budgets
• faulty market and technical research findings
• flaws in design
• inadequately durable materials
• unforeseen consumer rejection caused by the lack of proper consumer trials
• leakage of plans to competition
• failure by outside suppliers
• missed opportunities for cooperation with outside specialists
• poorly coordinated development staff
• ineffective leadership
• and much more!

Beginning with an "executive summary" that will guide you quickly to the chapters most relevant to your business, this well-organized book should be on the shelf of every company officer who wants to see his firm prosper, innovate, and create new products that sell-now and for years to come!

PART I:
FINDING NEW PRODUCTS

The first two chapters set the scene—what do we mean by new product development and how do we make it happen? These chapters mark the horizon, as it were, for the successful developments and centers of excellence discussed in Parts II and III.

A vital, active organization can and will ensure a flow of new products, but this comes about through an innovative and pioneering spirit throughout the firm.

The finding of new products should consist of the sifting of ideas that crowd around. This, a topic of Chapter 2, is a clue to progress. Strive to maneuver yourself into a place where new products find you and not the other way around. Your role is to umpire between attractive offers.

Chapter 1

Innovation: A Relentless Thrust

A committee is a group that keeps the minutes and wastes hours.

Milton Berle

“Jones, that is a super idea.” The president of a large technological corporation is speaking. “I don’t know whether it should be reported at once to the chief executive or written up for the next meeting of the Product Development Committee. We must make our own products obsolete before our competitors do!” In that saying, the speaker contrasts the role of a committee with that of the chief executive.

We all have a fund of sayings and memories expressing or ridiculing committees, fueled perhaps by a guilty feeling that we would not like to have been left out of one. But our world is run by committees—what else is a cabinet, a board of directors, a football team, or a research group? No doubt a world run by committees is ten times more efficient, more worth living in, as well as less corrupt and less terrifying than a world run by dictators. We tirelessly quote such sayings as, “A camel is a horse designed by a committee.” We could also say that a mouse is like a horse designed by a dictator, and we have seen companies run by dictators who have left someone else to clear up the mess they’ve caused. These days there is apt to be too much emphasis on personalities. We place great emphasis on personalities ourselves but we are not looking for companies managed by mice.

The point is, as we also know instinctively, a committee is a route to profitable progress but it can lead to frustration unless properly organized and managed—and that is why these words start a book on the quest for new products. The problem is to find a means of producing results from a range of bodies and to tap the wisdom and experience available to the company without causing gridlock.

A committee will not produce a successful new product; its role is to screen ideas and to assist the project leaders who are responsible for converting the ideas to profitable ends by monitoring their progress. In business a leader will usually be appointed by higher management—although, hopefully, with an eye to the need for a satisfactory rapport with the committee. Some committees are led by charismatic characters whose sheer force of personality makes them acceptable without special appointment, but most of the bodies to be considered do come together in a formal way. Who are these “charismatic” characters? Nowadays the word is used freely in the press to describe individuals who stand out to such an extent that people instinctively follow them. It was widely remarked that the deaths of Princess Diana, Mother Teresa, and Sir George Solti in the early autumn of 1997 robbed the world of three charismatic individuals in one week. The word “charismatic” was first used by a German sociologist who devised a theory of organization while at the same time practicing what he preached: he reorganized the German hospital system after Germany’s defeat in 1918 in World War I.

The purpose of these introductory remarks is to emphasize that proposals for new products need project leaders who are personally answerable for the acceptance and success of their projects while the leaders, themselves, are answerable to committees or groups carefully selected from relevant experts to stimulate and control the leaders.

It is almost certain that some people will be appointed to high office while lacking “charisma” and will have to earn the right to be heard. No one can assume that he or she will automatically practice leadership in the way hoped or gain the confidence of associates without winning it. No one really knows how to turn ordinary individuals into charismatics, but later chapters will present some ideas and at least one striking example in each chapter.

Chapter 16 directly faces questions about the recruitment and training of innovators. Chapters 17 and 18 cover the insights to be derived from technical and market research—essential elements in innovation like the rest of the book.

New Product Development is made up of nineteen chapters in four parts which takes the reader through the body of knowledge and inspiration that marks the quest for new products. The rest of this part emphasizes the need for leadership and sorts out the organizational framework to make it work.

Part II brings into this framework the factors that produce success and profit including the ideas and strategies. This is followed by “centers of excellence” (Part III). What are they and what are they not? The high-sounding title covers also some more routine but no less necessary chapters on subjects such as whether to produce in-house or to contract out, and decisions on design and materials. Staffing is also considered in this part (Chapter 8) which is then followed by Part IV: along with a glimpse at “facing failures” (Chapter 17) as well as manufacture and primary industries. Part IV takes in the service sector, while chapters in this part also focus on market research, Chapter 15, relationships with governments, Chapter 16, facing failures and investment, Chapter 18, while the book ends with a forward-looking Chapter 19, “Where do we go from here?” which summarizes the whole and takes its ideas into the future.

But where do we look first for the innovation without which our company goes into slow decline? That is the main question asked in this chapter. Today’s marketing success quickly becomes tomorrow’s failure and that is issue one in our program. As soon as the latest marketing success has been launched, someone—one person—is detailed to look for a modification to take over as soon as sales show signs of flagging and to make the product obsolete before the competition do so. That person will be the focal point of a team (call it “committee” if you like) given the boundaries in product design and in dates during which a new product must be designed, produced, and launched—or the equivalent for a service industry. If the program leaves you a little breathless, so be it; it is not your lung power but the company’s progress that is on the agenda. The timing must be tight to allow space for the next innovation.

Let us be clear that innovation is an executive job, and not usually a staff job. The young people in the staff planning department are there to provide facts, evidence, thought power, and general backup to the team leader. The team leader has been detailed to have the new product or service ready on time and to report (if on this issue only) directly and often to the chief executive who will ensure that innovation is on the agenda for every board meeting.

The innovating executive’s committee will not be called a waste of time because its discussions will be efficiently prepared with a summary of proposals and a background support for each item. It will be deeply imbued with the need for a relentless thrust. There will also be timings for all the items according to their importance or immediacy. Thus a committee timed to last 100 minutes and with ten items, for example, will not allocate ten minutes to each item but a longer period for the more important ones. To illustrate, a Cambridge (England) college council [board of directors] once met to consider an agenda with two main items: (1) considering a new building and (2) appointing a new master [chief executive]. While the new building would be standing beside buildings that had already stood for over 500 years, the new master was to succeed predecessors whose average tenure had been between four and five years. The council [committee] spent four hours deciding on the new master and ten minutes considering the plans for the new building, which many of them disliked once it had been completed. This is an example of how not to manage the time of a committee. However, the college might not have survived another five years if an inadequate headmaster had been appointed.

A professional organization will normally have a partner looking out for new products while a manufacturing concern will have a marketing manager who will be offering new ideas to the most suitable among the product managers. While new product inspiration comes mainly from the marketers, it is not uncommon for suggestions to come from the shop floor via production management.

THREE LEVELS OF INNOVATIVE VISION

To maintain an effective flow of new products, those who run a business must exercise intelligent vision on three levels: the broadest long-term strategy, the strategy for product or service supremacy, and the tactics for maintaining the lead.

The broadest long-term strategy has been practiced by British Aerospace in an attempt to maintain a twenty-five-year forward view on the future of civil and military air travel, both worldwide and in outer space.

In the field of civil aviation, it is economical to transport the largest number of people or the biggest quantity of freight in one craft. How long and how far can the expansion of heavier-than-air machines be built to fly double current payloads safely and economically?

Could it be safer and more economical to move large numbers of people rocket-fashion up into space from, say, New York City, and let the spacecraft descend directly onto Tokyo? In other words, will the flight of today’s jets, which is the flat trajectory of the dart, be replaced by the up-and-down trajectory of the mortar bomb in far quicker time than at present? If, in the future, fewer, more costly, larger machines are developed to move, say, 1,000 people, could this create substantial increases in demand for smaller, shorter-haul aircraft to handle journeys between London and Amsterdam?

If the broadest long-term strategy worked out by British Aerospace, Dassault, Boeing, McDonnell Douglas, and Lockheed is faulty, billions of pounds and dollars will get locked up in plants and tooling which will become prematurely derelict.

Hindsight is easy. Could better vision of the broadest long-term strategy have avoided the mass of derelict coal mines across many countries? Perhaps the captains of the American and the British coal industries should have spent more time bringing down the costs of coal-derived products such as carbon fibers, synthetic rubber, and motor car fuel. Similarly, could the hundreds of discarded steel works all over the world have been avoided if the trend toward plastics and the demand for high performance metals had been foreseen a decade or two before it happened?

Chairpersons can cultivate and improve their vision of the broadest long-term strategy by investing in pure research within the field of the industry and possibly investing in other businesses that show evidence of pioneering techniques likely to come to fruition in twenty years’ time.

PRODUCT AND SERVICE SUPERIORITY

In the food and drink industry, where most innovation is a variety of existing products, the tactic is to create a stream of new products to increase profitable market share. For example, the Mars Confectionery Group, traditionally renowned for chocolate bar products, have moved into the boxed chocolates sector of the market by launching a new brand called Celebrations. The Celebrations box contains miniature world famous bar products such as Mars Bar, Milky Way, and others, all in their traditional wrappings. Meantime one of their for-midable competitors, Cadbury Schweppes, is widening its range of bar products by launching Shush, containing a lightly whipped nougatine smothered in milk chocolate.

In the consumer durables field, one of the largest cutlery manufacturers in the world, Richardson of Sheffield, now part of the Macpherson Group of Australia, specializing in kitchen knives, has a product supremacy strategy which is implemented by striving to develop enough new products annually to increase profitable sales volume by 15 percent. This requires innovation in several product areas which include quality standards and price levels, edge geometry, design, edge durability, and professional and domestic uses.

The tactics for maintaining the lead are handled skilfully by Tesco stores in the United Kingdom. The first shop was opened by the founder, Jack Cohen, in 1919. At the age of twenty-one, with only £30 ($45), he was demobilized after service with the Royal Air Force in World War I. His tactics were “Stack it high and sell it cheap.” Today, the Tesco Group operates over 600 stores and serves 50 million customers. Goods are no longer sold cheap but at attractive prices that make the product a good value for the money.

Tesco’s own branded products, some subbranded “value,” are on sale alongside world famous names in all product groups. Each store is moving steadily toward complete one-stop shopping. The comprehensive range of food and drink products are complemented by newspapers and magazines, toiletries and medicines, clothing and household goods, stationery and toys. Customer amenities and services feature a new attraction every month. They comprise generous car parking, a restaurant, rest rooms, a mail-box, cash machines, cash-back facilities with debit cards at automatic tellers, financial services, insurance, home delivery, and gasoline at competitive prices as one goes out. In some stores, toiletries and medicines have been complemented by a full pharmacy service. Some of their stores stay open twenty-four hours a day from Monday morning until Saturday evening. Recently they have begun to display competitors’ retail prices on their own price tickets to demonstrate their own cheaper offers.

All these improvements to Tesco customer service are achieved by taking the initiative to keep their “product” ahead. This is not done by copying competitors, but by clear forward thinking and a continuous thirst for doing or making things better.

The same stay-ahead tactics can be seen in the development of the simple hammer. Originally, since ancient times, a wooden shaft has been slotted into a metal head. The leading manufacture...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Foreword
• About the Authors
• Preface
• Using This Book
• Executive Summary
• Part I: Finding New Products
• Part II: Moving on—Successful Developments
• Part III: Centers of Excellence
• Part IV: Where do We Go from Here?
• References
• Index of Names
• Index of Topics