ETM 5391 – New Product Development and Commercialization

ETM 5391 – New Product Development and Commercialization

Fall, 2003

Instructor: Mr. C. Michael Carolina

Date: August 19 – September 16

Engineering and Technology Management

ETM 5391 Website

www.okstate.edu/ceat/msetm/courses/etm5391/


“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”

Albert Einstein


Course Syllabus

ETM 5391 – New Product Development and

Commercialization

Scope

• The elements of NPI--marketing, design, development, manufacturing, provisioning, and support

• NPI as an integral part of business strategy and business planning

• NPI as a vehicle to create competitive advantage for the organization and its customers

• The environment for sustaining NPI consistency and realizing improvement project after project


Course Syllabus



Scope (cont’d.)

• The tools and metrics of new product development and introduction

• The order realization infrastructure needed to get new products to customers in a manner that meets or exceeds their expectations, and that delivers the desired financial and overall business objectives


Course Syllabus



Fall 2003 Schedule

Week 1 (8/19): Introduction, Objectives, Class

Profile, Technology Evolution, Current Engineering vs. New Product Engineering, and Review of

Strategic and Business Planning Processes

Week II (8/26): The NPI Process: Traditional vs.

Contemporary Approach

Assignment: Case Study 1 (“Living on Internet Time”)


Course Syllabus



Fall 2003 Schedule (cont’d.)

Week III (9/02): Benchmarking, Project Planning,

Cross-functional Integration, Systems and Tools

Week IV (9/09): Building Development Capability, and Creating an Environment for Invention and

Innovation

Assignment: HBR Case Study 2

Week V (9/16): Review and Wrap-Up




Assignment 1

Individual Profile Including Organizational

Affiliation, Job Responsibilities, Career

Aspirations and Other Pertinent Information




Assignment 2

Product Development at Netscape, Yahoo!

™,

NetDynamics, and Microsoft®

In approximately 400 words, (a) compare and contrast the development philosophy, process and culture at

Netscape, Yahoo!, NetDynamics, and Microsoft; and

(b) rank the companies (1 through 4) in terms of yearover-year growth (e.g. market share, revenue, profitability, dividends, etc.) since the early and mid-

90’s—the time frame in the case study.

DUE DATE: 09/02/03




Starting Premise

• Innovation is key to the long-term vitality of all enterprises

• Innovation means more than just new products ; it also means new services and ways of doing business

• While the key to innovation is originating new ideas, time is at the core of successful innovation

• Timely execution is very demanding




Purpose

Connectivity

Relevancy

Application

Science: “what is”

Engineering: “creating what has never been”




Environment

• Technology evolution

• Shorter product lifecycles

• Globalization

• Increased competition

• Downsizing/rightsizing

• Entrepreneurial/intrapreneurial

• Virtual corporation

• Corporate corruption

• Workforce/workplace/worktools



Competing Through Innovation

Changing Business Climate

• Globalization

• Increased Competition

• Technology Revolution/Evolution

• Fragmented, Demanding Markets

• Shorter Product Lifecycles

• Virtual Organizations

• E-Business



Competing Through Innovation (cont’d.)

Competitive Factors

• Speed

• Efficiency

• Quality/Reliability

• Supply Chain/Distribution Channels

Translation: Creating Value for Customers




Full Stream Lifecycle Management (ISO 15288)

• Design

• Build

• Operate

• Dispose




The Role of the Engineer in Product Development

D B O D

• Create sustained value for customers and stakeholders

• Do no harm (product safety and environmental protection)

• Do the right things to meet objectives for top-line revenue and bottom-line profitability




Joint Strike Fighter (JSF/X-Plane)

• Competing defense contractors (Lockheed

Martin and Boeing)

• Innovative engineering (products and process)

• Multi-modal platform (conventional, hover, carrier)

• Fewer parts/commonality of parts

• Hardware/software integration

• Human factors engineering




The Language of NPD

• Disruptive technologies

• Core competence

• Benchmarking

• Traditional vs. emerging markets

• Mergers and acquisitions (M & A)

• Full stream life cycle management (ISO 15288)

• Exit strategies

• “Hurdle” rates (ROI)

• Percent revenue from new products




The Language of NPD (cont’d.)

• Green technology

• Value engineering

• Multi-disciplinary solutions

• Sustainable development

• Mission

• Vision

• Strategic priorities

• Implementation plan

• Performance metrics


Disruptive Technologies (Some Examples)

- Analog to Digital

- Cu to Fiber

- Voice to Data

- Wireline to Wireless

- Albums/Tapes to CDs

- VHS/VCRs to DVD

Improved Productivity/Efficiency


“…at some point in the future, all scientific knowledge may be completed.”

Stephen Hawking

“A Brief History of Time”




Moore’s Law

Transistor count (power) will double every 18 months and will continue for many years.




Successful Innovation Companies

• Vision/mission/values

• Alignment around values

• People systems around values

• Organize for success

• Effective integration and communication

• Clarity of responsibility and accountability

• Focus on results thru flawless execution



Successful Innovation Companies (cont’d.)

• Technology platform leader

– Provide the technological foundation on which other products are built

– Interoperability

– Encourage other companies to develop and build complementary innovations

• Entrepreneurship/intrapreneurship/ “venture capital”

• Focus on continuous improvement

– Marketing/customer requirements and expectations

– Research, design, and development

– Manufacturing and provisioning

– Strategic suppliers

• Celebrate/reward success




Some Examples (Visions/Missions)

• HP

• LU

• GE

• Others



A New Paradigm for innovation

• Invention vs./and innovation

• A business imperative

• Sources of innovative ideas

• Building innovation capabilities

• The culture for innovation

• Ringing the “cash register”



The Essentials of NPD/NPI

• NPI in Strategic Terms/Linkage (What)

• NPI in Tactical Terms (How)

• The Entrepreneurial/Intrapreneurial Mindset (Innovation)

• Baselining/Benchmarking

• The New Product Development Game

(Continuum)

(Competition)




The Essentials of NPD/NPI (cont’d.)

• An Imperative for a High Performance Team

Recognition (Excellence)

• DFX (Manufacturability, Testability, Installation,

Supply Chain, E-Business, Environment)

(Integration)




Business Planning and Business Case

• Marketing Decisions

• Risk Analysis/Mitigation

• Project’s Resource Requirement

• Financial Projections

• Production Demands

• Supply Chain/Provisioning

• Product Support/Technical Assistance

• Personnel Needs




New Marketing Paradigms

• Fit Both “Old World” and “New World” Economy

• Total Access

• IP/Networked World

• Globalization

• Hypercompetition

• Virtual “Always On” Presence (Anywhere/Anytime)

• Relationship Marketing

• Delivering Value to Customers, Collaborators,

Company




Design and Development Methodologies

• Quality Function Deployment (QFD)

• Design for Manufacturability (DFM)

• Computer-aided Design (CAD)

• Computer-aided Engineering (CAE)

• Computer-aided Manufacturing (CAM)

• Total Quality Management (TQM)

• System of Systems




Creating Breakthroughs at 3M

Step-by-Step Process

• Phase 1: Laying the Foundation

– Identify target markets and involve key stakeholders in the company

• Phase 2: Determining the Trends

– Identify experts in the field —people who have a broad view of emerging technologies and leading-edge applications in the area being studied




Creating Breakthroughs at 3M (cont’d.)

Step-by-Step Process (cont’d.)

• Phase 3: Identifying Lead Users

– Identify and learn from users at the leading edge of the target market and related markets to shape preliminary product ideas and to assess the business potential and how they fit with the mission of the company




Creating Breakthroughs at 3M (cont’d.)

Step-by-Step Process (cont’d.)

• Phase 4: Developing the Breakthroughs

– Move preliminary concepts toward completion…host workshops with several lead users, marketing and technical people to arrive at final design that fits customer’s and company’s needs. At conclusion, design team may disband; however, one team member should stay involved for continuity and help with related products and services.

Source: von Hippel, Thomke, and Sonnack, Creating Breakthroughs at

3M . HBR, October, 1999. Reprint 99510.


“Progress lies not in enhancing what is, but in advancing toward what will be.”

Kahlil Gibran




Time and Innovation

• Innovation is key to the long-term vitality of all enterprises

• Innovation means more than just new products ; it also means new services and ways of doing business

• While the challenge to innovation is originating new ideas, time is at the core of an innovation’s success

• Timely execution is very demanding

• Examples of fast, time-based innovators (Honda, Ford,

GM, Sun Microsystems, Cisco, Toys “R” Us, UPS)




Time and Innovation (cont’d.)

• Roughly right vs. “final product”

• The “hollowing of America”

- transfer of manufacturing

- long new product development and introduction cycles

• The price for being a slow innovator

• The rewards for being a fast innovator

• Becoming a fast innovator

Source: George Stalk & Thomas Hout, “Competing Against Time.”

The Free Press. ISBN 0029152917




Becoming a Fast Innovator

I.

Time is the key performance variable to be managed to attain improved cost and quality.

II.

Time benchmarks are set by the performance of competitors and, if faster, by what is technologically possible.

III.

The support functions necessary to advance the development process are actively managed to be “invisible.” Their need is to be anticipated; they are to be invested in and kept up-to-date. They are never to be allowed to slow the development process.




Becoming a Fast Innovator (cont’d.)

IV.

Each program is to be managed and executed by a small, dedicated, decision-empowered, and experienced team. Team members have common goals and are measured and evaluated as part of a team.

V.

The development programs are to have four steps, and company will organize itself around these steps:

1.

Planning and preparation

2.

Product definition

3.

Design development

4.

Manufacturing ramp-up

5.

Product Improvement




Becoming a Fast Innovator (cont’d.)

VI.

The objective of planning and preparation is to avoid having to invent in the middle of the development process —make unknowns be knowns.

VII.

After definition, the product specification is frozen. The definition is committed to and not allowed to be changed. The improvement phase is to be used for costs and feature enhancements.





VIII.

Functional expertise resides in the development program. Manufacturing and design resources are full-time participants in the definition team. Manufacturing resources are full-time participants in the design team.

IX.

Team members are collocated.





X.

Senior management reviews are few. The role of senior management is to ensure that the program teams have the appropriate resources, incentives and environment to execute their tasks quickly.

XI.

New programs are generated continuously, at regular market-driven intervals, and incorporate more incremental advances and fewer “great leaps forward.”




Four Types of Product/Process Development Projects

1.

Research or Advanced Development Projects

2.

Breakthrough Development Projects

3.

Platform or Generational Development Projects

4.

Derivative Development Projects




Typical Events (Delays Can Occur at Virtually

Any Point in the Process)

• Idea

• FPR

• Approval

• Design specification

• Approval

• Preliminary transfer price

• Approval




Typical Events (Delays Can Occur at Virtually Any

Point in the Process) (cont’d.)

• Vendor selection

• Approval of quote

• Engineering sample approval

• Initial production

• Production sample approval

• Customer trials

• Approval

• Production ramp

Source: Stalk and Hout, “Competing Against Time.”




Applying Development Strategy and Resources to

Stay Ahead of the Power Curve

Preemptive

Proactive

Maximum Value




Developing a Radical New Innovation Agenda

• Continuous Reinvention (Transformation)

• Avoiding “One-Vision” Wonders

• Harnessing the Imagination of Every Employee

• Developing New Financial Measures That Focus on Creating New Wealth

• Creating Vibrant Internal Markets for Ideas,

Capital, and Talent

Reference: Gary Hamel, Leading the Revolution.




Competitive Benchmarking

• The Search of Those Best Methods, Practices, and

Processes That Will Lead to Superior Performance

• Pioneered by Xerox and Other Corporations in the Early

80’s

• Essentially Means Studying Major Competitors to Discover

Their Strengths and Weaknesses

• Typically Looks at Design, Marketing, Manufacturing,

Customer Support, Distribution, etc.

• Information Gathering Not Clandestine But Available in

Public Financial Statements, Industry Analysis and Trade

Journals

• There Is A Defined Benchmarking Process



Reasons for Benchmarking

WITH BENCHMARKING WITHOUT BENCHMARKING

Becoming Competitive

• Internally Focused

•

Evolutionary Change

•

Low Commitment

Industry Best Practices

•

Not Invented Here (NIH)

•

Few Solutions

• Average of Industry Progress

•

Frantic Catch Up Activity

• Concrete Understanding of Competition

•

New Ideas of Proven Practices/Technology

•

High Commitment

•

Proactive Search for Change

•

Many Options

• Business Practice Breakthrough

•

Superior Performance




Reasons for Benchmarking (cont’d.)

WITHOUT BENCHMARKING WITH BENCHMARKING

Defining Customer Requirements

•

Based on History or Gut Feel

•

Market Reality

• Perception

•

Low Fit

• Objective Evaluation

•

Higher Conformance

Source: Robert C. Camp,

Benchmarking

.




NPI: A Philosophy, Strategy and Discipline

NPI Goal: Consistently Create Great Products on Time, Within Budget

The HP DeskJet Printer Project

Objective: Low Cost, High-Quality Printer, and Achieve Excellence in:

1.

Functionality

Superior print quality based on HP’s proprietary ink-jet technology

2.

Coherence

- Seamless interface between marketing/design/manufacturing

3.

Fit

- Understanding of customer expectations

- Evolutionary path/next generation or derivative products




The HP DeskJet Printer Project

(A Model for Collaboration, Integration and Success)

An In-depth Review

Timeframe: Mid-1980s

Competitive Setting: Dominated by Epson with 80% Market Share

Vision: Create a New Market Segment for the HP DeskJet Highquality, Low-cost Printer

Target Market: Low-end Personal Computing and Small Offices

Technologies: Ink-jet vs. Laser

Time-to-Market Strategy:

- Market Surveys/Customer Involvement

- Face-to-face Meetings Between Engineers and Targeted Customers

- Involve Manufacturing Early

- Design for Easy Manufacturing

- Design to Meet Cost Targets (Product/Process Synchronization)




The HP DeskJet Printer Project

(A Model for Collaboration, Integration and Success) (cont’d.)

Sales and Sales Infrastructure:

- Easy to Sell

- Easy to Order

Installation and After-sales Support:

- Ease of Hook-up

- Ease of Operation

Successes:

- Simple Concept, Easy to Grasp

- Expanded HP Capabilities (e.g., Advanced Printhead and Manufacturing

Process)

- Created Excitement/Energy Around HP Products

- Laid Foundation for Follow-on Products

- Created Brand Loyalty

- Strengthened Communication/Collaboration Between Design and Mfg.




The HP DeskJet Printer Project

(A Model for Collaboration, Integration and Success) (cont’d.)

Successes: (cont’d.)

- Expanded Customer Base

- Forged Stronger Relationship with Customers

Source: Bowen, Clark, Wheelwright et al., Make Projects the School for Leaders , HBR, September-October, 1994. (Reprint 94503)




Intellectual Property

“…the effect of a well-managed patent portfolio on a company’s market value will only increase.”

James Oelschlager, Manager

White Oak Growth Fund


ETM 5391 – New Product Development and Commercialization

ETM 5391 Website

“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”

“…at some point in the future, all scientific knowledge may be completed.”

“Progress lies not in enhancing what is, but in advancing toward what will be.”

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