6.1.4 How NPD can be applied?

The product development funnel is one of the NPD process frameworks.1 The funnel concept illustrates how customer needs and technological possibilities influence concept generation and selection and how projects then evolve through the subsequent steps of product design, prototyping and testing, and pilot production to end up in manufacturing ramp-up and release, all taking place under decreasing levels of uncertainty –which simultaneously means reduced flexibility- as the development phases unfold over time.
One of the most widespread and well-accepted conceptual descriptions of the NPD process is that of Clark & Fujimoto (1991) who identify five successive but overlapping stages of the process:

  • Concept Generation where designers and product planners define the character of the product from a customer's perspective.
  • Product Planning where the concept is translated into specifics for detailed design, including major specifications, technical choices and cost targets.
  • Product Engineering where product plans are transformed into blueprints or CAD-drawings then into prototypes and ultimately into real parts and components.
  • Process Engineering where the manufacturing tools that will realise the product are developed and material flows, plant lay out, work organisation and tasks are defined.
  • Production Process where final products are made and assembled for the end customer.The NPD process then ends with feedback into the product and process engineering steps from ramp-up production and pre-series.

Figure 2: Funnel concept of New Product Development2

Another widely used model is the stage-gate model of new product development (Cooper et al, 2002) which we introduced in 6.1.1. It identifies a series of development stages, similar to the ones described above, but complements these models by explicitly identifying a series of evaluation gates through which a new product project has to pass from idea to commercial launch. The stage-gate model creates discipline in the NPD process by requiring periodic systemic review of projects at multiple milestones in the development cycle.
Hughes & Chafin (1996) propose a final complementary dimension they call the value proposition process (VPP), consisting of keeping managers focused on four critical issues/questions: capturing market value (answering the question "does the customer care?"); developing business value (answering "do we care?"); delivering winning solution (answering "can we beat the competition?"); and applying project and process planning (answering "can we do it?").
Keeping these questions on the top of the development agenda, calls for continuous performance monitoring from a customer satisfaction-, a financial-, a strategic management-, and a process management perspective. Figure 2 illustrates the product development process integrating and building on the steps of Clark & Fujimoto, the product development funnel, the stage-gate model, and the value proposition process.

Has any of the above mentioned NPD methods been used in your organisation? In your opinion, what benefits would arise from adapting New Product Development methods for your organisation?

Required definitions

The stages3 : Stages are where the action occurs. The members of the project team undertake key tasks to gather information needed to advance the project to the next gate or decision point. Stages are cross-functional: There is no R&D or marketing stage. Rather each stage consists of a set of parallel activities undertaken by people from different functional areas in the firm, working together as a team and led by a project team leader.

To manage risk via a stage gate method, the parallel activities in a certain stage must be designed to gather vital information - technical, market, financial, operations in order to drive down the technical arid business risks. Each stage costs more than the preceding one, so that the game plan is based on incremental commitments. As uncertainties decrease, expenditures are allowed to mount and risk is managed.

The gates4: Preceding each stage is an entry gate or go/kill decision point, shown in the diagram. Effective gates are central to the success of a fast-paced, new product process: Gates serve as quality control checkpoints: Is this project being executed in a quality fashion?

Gates also serve as Go/Kill and prioritisation decision points. Gates provide the funnels where mediocre projects are successively culled.
Finally, gates are where the path forward for the next stage is decided, along with resource commitments. Gate meetings are usually staffed by senior managers from different functions, who own the resources, the project leader and team required for the next stage. These decision-makers are called ‘’gatekeepers’’.

Gates have a common format and include the following 3 elements:

  • Deliverables: These are the inputs into the gate review-what the project leader and team deliver to the meeting. They are the results of the actions of the previous stage and are based on a standard menu of deliverables for each stage.
  • Criteria: These are questions or metrics on which the project is judged in order to make the Go/Kill and prioritisation decision.
  • Outputs: These are the results of the gate review-a decision (Go/Kill/Hold/Recycle). An action plan is approved and the date and deliverables for the next gate are agreed on.

The stage-gate reviews should have a well-defined entry criteria, review objectives and agendas for each review.

Success Factors
In order for a product launch to be successful, 7 different factors5 have to come together in just the right way. If one is wrong, it’s likely the whole launch will fail.

Seven Actionable Critical Success Factors

  1. Solid up-front homework – to define the product and justify the project
  2. Voice of the customer – a slave-like dedication to the market and customer inputs throughout the project
  3. Product advantage – differentiated, unique benefits, superior value for the customer
  4. Sharp, stable and early product definition – before Development begins
  5. A well-planned, adequately resourced and proficiently executed launch
  6. Tough go/kill decision points or gates – funnels not tunnels
  7. Accountable, dedicated, supported cross-functional teams with strong leaders.

The challenge of NPD is to make sure that all of these things are achieved all of the time. NPD is difficult to manage. One of the often-heard comments is that the NPD process is difficult to manage and this is certainly true for two reasons: At the beginning of a project, the outcome and the work that will have to be undertaken are often uncertain. For many groups in the company, such as supply chain management and manufacturing, NPD is disruptive, causing them to interfere with processes that have been painstakingly optimised.

Following is a case study of how the Stage Gate™ new product development process has helped an energy company become highly competitive in a newly deregulated energy market.

1 InnoSupport: Supporting Innovations in SME. 6.1 New product development methods, 2005
2 lbid
3 John Wiley and Sons, 1995
4 lbid
5 SAP A.G, 2004