The Basic New Product Process

The Basic New Product Process (State-gate process): Opportunity identification & selection (E: direction - where should we look?), concept generation (E: Initial review - is the idea worth screening?), concept/ project evaluation (E: Full screen - should we try to develop it?), development (technical/ marketing tasks), and launch. "Gate" refers to evaluation tasks between the stages or phases, which the hard GO/ No-Go decisions need to be asked. Firms using this process have reported improvements in product teamwork, less rework, greater success, earlier identification of failures, improved launch, and up to 30% shorter cycle times. Per each phase, there are the evaluation task different kinds of question need to be asked - concepts that pass this stage move on to development & begin incurring significant costs. They are best answered through progress reports.

In reality the activities in the Basic New Product process are not sequential, but overlapping. There is also much pressure to accelerate time to market for new products, and this overlapping of phases is an important tool in speeding new products to market. Product development today is a multifunctional program, where all functions work together on a cross-functional team.

Phase 1: Opportunity identification & selection

It is strategic in nature & is the most difficult to describe/ define. There are 3 main streams of activity feed strategic planning for new products.

i) Ongoing marketing planning (the annual marketing plan for a line extension to meet encroachment of a new competitor selling primarily on price).

ii) Ongoing corporate planning (management adopts a strategy that says either own a market or get out of it. This will require new product activity in all desirable markets where the firm holds a minor position).

iii) Special opportunity analysis - 1 or more persons are assigned to take an inventory of the firm's resources (a firm called for an audit of its manufacturing operation and it turned out that a process engineering had been overlooked which skill could serve as the base for a new products program.

From the above activities, the opportunities identified could be sought into 4 categories:

i) An underutilized resource

ii) A new resource (discovery of new resource)

iii) An external mandate (the stagnant market combined with a competitive threat)

iv) An internal mandate (long range planning of sale target & the new products must fill part of the gap between current sales & that target - product innovation gap)

Opportunity identification is the process of creatively recognizing such opportunities (analyze to confirm that a sales potential does exist). Some opportunities may not fit with company skills, too risky, does not go with the firm's self image, some require more $ than the firm has.

Phase 2: Concept generation

Product concepts are the new product ideas created by new products people. The most fruitful ideation involves identifying problems people/ businesses have & suggesting solutions. The 1st ideation step is to study those people, and find what problems they have.

Phase 3: Concept/ project evaluation

Before development work can begin on new ideas - they need to be evaluated, screened, and sorted out. It is called screening or pre-technical evaluation. Technical people may propose a solution to the competitive problem, and there is a concept test to see what potential Customers thought about it. If the decision is to go ahead, the evaluation turns into project evaluation where we no longer evaluate the idea but the plan we propose for capitalizing on that idea. This involves preparing a statement of what is wanted from the new product, called product protocol - it is important that there be agreement between the various groups before extensive technical work get under way.

The lack of good info complicates all pre-technical evaluation. The 1st three phases is called the fuzzy front end - the product concept is fuzzy but by the end of the project, most fuzz will have been removed.

Phase 4: Development

In this phase, the item acquires finite form - a tangible good or a specific sequence of resources & activities that will perform in an intangible service. It is the stage, which the marketing plan is sketched & gradually fleshed out. Business practice pieces:

i) Resource preparation: for product improvement/ line extensions it is often fine. But for new-to-the-world products, then the team may need special training, new reward systems, revisions in the firm's usual project review system, and special permission. Without adequate preparation of the ball field, a firm does not get much of the home advantage.

ii) The major body of effort: the actual development of the item/ service itself, the marketing plan, and a business/ financial plan that final approval requires. Marketing decisions are completely interlaced with technical ones and involve package design, brand name selection, and marketing budgets. Along the way, concept evaluation continues; we evaluate the concept well enough to permit development work. Prototypes are evaluate to be sure that the technology being developed meets the needs & desires of the Customers in a way that creates value for them, while at the same time being profitable.

iii) Comprehensive business analysis: the financial analysis is still not firm, but it is good to assure the management that this project will be worthwhile.

Phase 5: Launch

Launch (commercialization or often -