Transcript Today’s Topic R&D: Market-focused Product Development Course Schedule        The Marketing Function (Lenovo) Sales & Sales Channels (GolfLogix) Internet-based Marketing (HubSpot) R&D: Product Development (Guidant) Operations (Crocs) Product Launch (Invisalign) Final.

Today’s Topic
R&D:
Market-focused
Product Development
Course Schedule
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The Marketing Function (Lenovo)
Sales & Sales Channels (GolfLogix)
Internet-based Marketing (HubSpot)
R&D: Product Development (Guidant)
Operations (Crocs)
Product Launch (Invisalign)
Final Exam on Product Launch (Emotiv)
Today’s Agenda
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Market-focused product development
More on product decisions (resources,
objectives, positives-and-negatives)
Next week’s case & assignment:
Operations (Crocs)
Learnings: R&D
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Characteristics of market-focused new product
development processes
Process dimensions: What? How? How well?
(objectives, structure/discipline, execution
quality)
New product development “best practices”
Homework Reading
Guidant: Cardiac Rhythm
Management Business (A)
Guidant: CRMB in 1997
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Guidant spun-off from Eli Lilly in 1994
Guidant is a medical device company
CRMB is a division of Guidant
CRMB was profitable in 1996 (see Exh. 1A,
income statement)
Two product lines:
- pacemakers (brady - for slow heart beat)
- defibrillators (tachy - for fast heart beat)
Guidant case….cont’d
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CRMB is the market share leader (#1)
in tachy
(hint: identify the key factors in their success)
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CRMB is a follower (#4) in brady
Significantly revised their tachy new
product development processes in the
early/mid 90’s
Decision on new R&D initiatives
(additional investment in brady or atrial
fibrillation or congestive heart failure?)
Homework Assignment
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List the dozen or more changes Guidant/CRMB
made to its tachy product development process;
which three do you think had the greatest
impact, and why?
Does Guidant/CRMB have the financial resources
to pursue new initiatives?
What objectives (decision criteria) should CRMB
use in making the decision on whether to invest
more in its brady business?
What are the positives-and-negatives of CRMB
devoting additional resources to the “brady”
business in order to improve its brady market
position and financial performance?
(identify at least five of each)
Effective Product Design
and Development
What were the product
development process changes
made by Guidant CRMB?
Which 3 changes, in your
opinion, had the greatest
impact?
Dimensions of
Process Change
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What? --------- objectives and
philosophy
How? ---------- structure and
discipline
How well? ---- excellent execution
Getting Products to Market:
from concept to product launch
(various names/labels for this activity)…
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R&D/Engineering (a misnomer)
New product development (NPD)
Product realization
Product innovation
Product commercialization
Product development & management
…etc…
What’s a “New” Product?
New to the
company
New
Product
Line
Core
Product
Revisions
Completely
New
Line
Extensions
Product Enhancements
Repositionings
New to the
world
Many new products fail…
“35 percent of all new [IT] products
now fail to achieve minimum
acceptable market share or financial
return --and the failure rate is
rising.”
VAR Business, November 1999
New Product Failure Rates
For every 4 projects that enter development, only
1 makes it to the market.
At launch, at least 1 of 3 products fail despite
research and planning.
An estimated 46% of all resources allocated to
product development and commercialization by
U.S. firms is spent on products that are cancelled
or fail to yield an adequate financial return.
Source : Winning at New Products, Dr. R.G. Cooper, 2001
What are some reasons that a new
product might “fail” ?
(i.e., fail to meet the market and
financial objectives set for it)
Some Reasons for Product Failures
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Mismatched to market needs
Little/no competitive differentiation
Late to market
Too costly (price and/or COGS)
Poor quality
Inability to deliver to customers
Poor service/support
Ineffective sales/channels
Unrealizable objectives
Poor execution/teamwork
…
Product Development Process:
Overall Structure
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Linear (“handoffs”)
Parallel/concurrent (multifunction
involvement at all/most stages)
Core Product Team and Roles
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Marketing - leader, product definition,
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R&D - product development (milestones and
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Operations - manufacturing engineering,
project management, marketing program,
sales training, forecasts, financials
dates), tech support for marketing/sales,
transfer to manufacturing, support for
trials/betas, product fixes/revisions
manufacturing (ramp), product costs and
quality, logistics and service plan
Other Team Members
Depends on the Product, Market and
Company Practices
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Sales? Friendly customers?
Finance?
Information technology/MIS?
Field operations (installation and service)?
Public Relations?
Partner companies (esp. manufacturing
and/or sales and service)?
Product Development Process:
Common Elements
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Stages/phases with “gates”
Customer involvement and/or input
Concept-through-lifecycle tenure
Goals/measurements/rewards
focused on overall success
Example of NPD Stages & Gates
Product Development Process:
Some Best Practices
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design-to-market (customers/needs)
design-to-cost (COGS)
concurrent engineering
requirements “freeze”
time-driven milestones
time-to-market or time-to-volume
fast iteration
cross-team communication
team goal compensation
Example: Traditional Milestone Planning
Features and
Performance
ReadytoShip
(time)
Cost and
Quality
Team
Resources
Why might it be important to get a
product to market sooner rather
than later?
So maybe…..Time-driven Milestones ?
Features and
Performance
ReadytoShip
(time)
Cost and
Quality
Team
Resources
Information Sources
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Product Development and Mgmt
Assoc (PDMA) www.pdma.org
Product Development Solutions
www.npd-solutions.com/bok
New Product Dynamics
www.newproductdynamics.com
Guidant case: a great example of
best practices
Homework Assignment
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List the dozen or more changes Guidant/CRMB
made to its tachy product development process;
which three do you think had the greatest
impact, and why?
Does Guidant/CRMB have the financial resources
to pursue new initiatives?
What objectives (decision criteria) should CRMB
use in making the decision on whether to invest
more in its brady business?
What are the positives-and-negatives of CRMB
devoting additional resources to the “brady”
business in order to improve its brady market
position and financial performance?
(identify at least five of each)
“More Brady?”
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Market
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Technology
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Competitive
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Financial
Topic for Next Class
Operations
(Manufacturing and Logistics)
Making and delivering products,
with consideration of
time-to-market, costs, responsiveness,
outsourcing ---and how these things impact
R&D and Marketing
Readings for Next Class
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Can Marketing and Manufacturing
Coexist? -- read to understand the 8 issues
listed in the article’s Exhibit
Crocs: Revolutionizing an Industry’s
Supply Chain-- an example of the
importance of Operations in the success of a
business
Assignment for Next Class
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In what ways can technical people (R&D, technical
sales, etc) assist with the resolution and/or
minimization of the marketing-manufacturing issues
cited in the first reading? Provide one
thought/example for each of the 8 issues in the
exhibit in the “Coexist” reading.
What are Crocs’ competitive advantages? Which of
these are related to its operations function?
To what extent do each of these growth strategies
leverage Crocs’ competitive advantages: (a) internal
manufacturing of raw materials used in compounding,
(b) internal development of new products, (c)
acquiring companies to get new products, and (d)
acquiring companies to get new customers?