However, the development of new products from concept to realization is often challenging, due to organizations being unable to either produce a product that the customer wants or at a price that is profitable. To successfully develop a new product, an organization should not solely rely on research and development but all departments such as design and engineering, product management, marketing and sales need to operate in tandem to achieve their strategic goal.
The common problem presented to organizations are that “new products and essence are exploding onto the scene overnight, while current products are becoming obsolete faster than ever’ (Wiley, 1999) and as such, in 2013, the world’s largest electronics company Samsung had a reported annual spend of ?billion for new product development, surpassing their nearest competitor Apple’s $4. Billion expenditure. For technology driven organizations, innovation management and new product development is required to not only to stay competitive, but to actually survive.
Business Strategy For any organization deciding to create a new product, they must review their existing business strategy and the possible impact a new product may have on their organization. Morgan (2001) states that “if you confine someone, tie hem down and force them to stick to particular thought patterns, you leave little or no room for this freedom of thought” and such, creativity is suppressed and new products will never be achieved.
With “only one product concept out of seven becoming a new product winner, and 44% of businesses’ product development projects failing to achieve their profit targets” (Cooper & Gadget, 2005), organizations must consider whether their existing resources and capabilities are sufficient to compete. One of the most valuable strategic tools available to management and marketers in planning for future growth is he Insofar matrix, which helps organizations determine whether to increase their product range or market scope, or both. Empower, 2011) Market Penetration One of the more basis growth strategies available is the concept of market penetration, increasing the level of sales of an existing product in an existing market. This is often achieved using a marketing-mix, most notably price promotions or advertising as means to increase sales. The cereal manufacturer Kellogg have enjoyed success using this method by promoting their products as a “snack” to be eaten anytime during the day rather than the conventional breakfast time.
Market Development A highly successful method of increasing sales is making products available to other markets, typically geographic. In recent years, many organizations have began to strategically enter emerging markets such as Asia in order to generate additional revenue. Product Development Most organizations will implement a growth strategy based on improving their existing products to generate sales. This may be in the form of a new release (a 2nd or 3rd edition) with additional features that helps maintain it’s competitiveness against rivals.
However, it can also be a product that is new or the organization, such as McDonald’s salad range – a product that is not usually associated with fast-food outlets. Diversification Conglomerate diversification is considered high-risk, when an organization enters a new market with a new product that is outside their normal activity. In recent years, many computer manufacturers (Acre, Leno, Apple) have began diversifying into smoothness with huge success.
From Strategy to Implementation The level of product development required is dependent on the growth strategy an organization decides to undertake, taking into consideration the acre environment that it is operating in and the budget an organization has available. However, management must consider if the organizational change is accepted throughout all departmental levels. To help organizations achieve this, Proof. John Cotter, a leadership and change management guru explains an eight stage process.
The initial step is to Create Urgency, by identifying threats posed and providing convincing reasons why the organization needs to change. This is supported by Forming a Powerful Coalition, where strong leadership and key stakeholders build urgency and momentum for change. For those who may be reluctant, it is important to Create a Vision for Change and provide a supporting strategy along with a key summary which will make easier for employees to support the change. Any employee that is anxious or concerned, good leadership will involve continuous reminders of the change by Communicating the Vision.
After successfully creating the vision and having employees onboard, leaders should Remove Obstacles and barriers that prevent employees delivering the change. However, it is not possible to do this overnight and instead; an organization should Create Short-Term Wins hat will motivate employees towards even greater success in the future. A major drawback explained by Cotter is declaring victory at an early stage, instead they should Build on the Change by putting in as much effort in their tenth product as they did with their first product, keeping the ideas fresh and setting even greater goals.
Finally, an organization will Anchor the Changes in Corporate Culture so that the change will become core to the culture, repeatedly building onto the success, strengthening the team with new members and reinforcing the vision of those original team members. Bryant, 2009) Any organization undertaking development of a new product requires substantial investment and therefore, a structured process is required to maximize profitability and reduce the risk of failure.
One such recommendation is to set “objectives that are SMART: specific, measurable, action-orientated, realistic and has a timeshare” (Cooper & Gadget, 2009). TO help achieve this, organizations can chose to follow several different approaches including the eight-stage process, fuzzy front end (FEE) process or the most commonly used [email protected] idea-to-launch model – used by 68% f organizations based in the United States. (Shaving, 2003) The Stage- [email protected] idea-to-launch model was developed by Dry.
Robert G. Cooper in the late sass’s in conjunction with DuPont, Procter and Gamble and United Aircraft. The aim is to introduce new products to market more effectively and efficiently so that weak ideas are removed from the process early and potentially successful concepts are brought to market in a faster time. Furthermore, it should provide project management structure, standardization in planning & control activities and an efficient decision- making process (Greener, 2005).
Throughout the entire process (from initial idea to commercialism’s), each development stage is met with a “gate”, a checkpoint at which a decision is made by management whether the project “should be killed, sent back for more development, or advanced to the next stage” (Harvard Business Essentials, 2003) Stage-Gate Product Innovation Process (Stage Gate, 2014) Stage O: Idea Generation The initial phase of the process is to generate ideas for a new product from a wide variety of sources, typically from both internal and external.
This includes brainstorming meetings throughout all departments, customer dieback, Surveys from industry research, information gained from suppliers as to what type of materials other manufacturers are purchasing and also identifying areas where competitors may be gaining an advantage. Stage 1: Scoping The next phase of the product development process is to evaluate the product and the market in which it is aimed for, referred to as scoping. During this phase, the strengths and weaknesses will be identified and the impact a product will have on the consumer market.
The management of an organization will determine whether production of the product is realistic, aging into account the likelihood of a competitor to retaliate. Stage 2: Project Evaluation After a project passes the scoping phase gate, a project will be evaluated based on qualitative and quantitative measures, determining whether the project will meet the expectations of their consumers at a level that is profitable for the organization. This is a difficult phase to determine, due to the reliance on estimated data at such an early stage of the development.
Stage 3: Development Once the project is determined to be feasible for an organization to carry-out, the development stage will begin, often starting with the design through to customer testing. At this point, all resources available to an organization will become active, including marketing, human resources and production. As such, teamwork and communication is critical in the development stage so that no department will delay the development.
Ultimately, the end result of the development stage should be a working prototype that is both consistent with the organization’s growth strategy and with the decisions made in the previous phases. Stage 4: Testing and Validation An organization will undertake testing of all areas concerned, from the manufacturing process to the functionality of the product. This is critical for an organization as their aim is to discover any potential areas of weaknesses that may have been overlooked in previous stages.
There are various testing scenarios including near testing where the organization or partners will perform testing of the product, beta testing which gives a select group of customers the product to review and finally, market testing were the organization will release the product in a select region to monitor sales before a national or international launch. This approach is used by Academy, who test their new products in select regions to help determine their childhood of success. Stage 5: Launch The final phase is the product launch, when the product is announced.
A full launch requires marketing department to create a strategy that will maximize demand, sales team to fully understand the unique selling points, service staff to acquire the necessary skills to repair any returns and also human resources to have the personnel available in each department. In recent years, major organizations such as Apple and Sony have built anticipation for their new products by announcing their release at annual events such as the E (Electronic Entertainment Expo) and VIVID (Worldwide Developers Conference).
However, although research suggests that the Stage-gate model meets profitability and timescale targets 77% and 79% of the time respectively (Gadget, et al. , 2003), there is an argument by some large organizations that Stage-gate can inhibit growth than actually increase it, due to it’s built-in constraints. Salesrooms. Com, one of the world’s largest CRM software solution specialists “replaced its stage gates with an agile approach using cross- functional teams that worked iteratively with the market through frequent tests”. Accentuate, 2012) This was due to their team exceeding 200 employees and with such a large team operating one Stage-gate model, their productivity dramatically decreased, decisions and the time to release new products slowed by almost four times. Conclusion The need for creativity, innovation and new product development, coupled with a strategic business plan for growth is vital for organizations at present.