Contents
Innovation and New Product Development
Rationale
In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process : one involves the idea generation, product design , and detail engineering ; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.
- Choice Modelling
- Flexible product development
- Time to market
- Social design
- Product management
- Requirements management
- Brand management
- Marketing
- Engineering
- product
- Document management
- Industrial Design
- Association of International Product Marketing & Management
- Conceptual economy
- Product Development and Management Association (PDMA)
- References
The classic definitions of Innovation include:
- the process of making improvements by introducing something new
- the act of introducing something new: something newly introduced (The American Heritage Dictionary).
- the process of translating new ideas into tangible societal impact
- the introduction of something new. (Merriam-Webster Online)
- a new idea, method or device. (Merriam-Webster Online)
- the successful exploitation of new ideas (Department of Trade and Industry, UK).
- change that creates a new dimension of performance Peter Drucker (Hesselbein, 2002)
- A creative idea that is realized [(Frans Johansson)] (Harvard Business School Press, 2004)
- "The capability of continuously realizing a desired future state" ([John Kao, The Innovation Manifesto, 2005])
- "The staging of value and/or the conservation of value." (Daniel Montano 2006.)[1]
In economics, business and government policy,- something new - must be substantially different, not an insignificant change. In economics the change must increase value, customer value, or producer value. Innovations are intended to make someone better off, and the succession of many innovations grows the whole economy.
The term innovation may refer to both radical and incremental changes to products, processes or services. The often unspoken goal of innovation is to solve a problem. Innovation is an important topic in the study of economics, business, technology, sociology, and engineering. Since innovation is also considered a major driver of the economy, the factors that lead to innovation are also considered to be critical to policy makers.
In the organisational context, innovation may be linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share, etc. All organisations can innovate, including for example hospitals, universities, and local governments.
While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organisational forms and practices. Organisations that do not innovate effectively may be destroyed by those that do. Hence innovation typically involves risk. A key challenge in innovation is maintaining a balance between process and product innovations where process innovations tend to involve a business model which may develop shareholder satisfaction through improved efficiencies while product innovations develop customer support however at the risk of costly R&D that can erode shareholder returns.
Four commonly accepted types of innovation are Product, Process, Position and Paradigm (Tidd, Bessant and Pavitt, 2005)
Course Objectives
1. To provide an understanding of the management aspects of innovation and the role of new product development in competitive business environments
2. To provide students with current knowledge about the integration of business functions and practices with the processes of innovation, commercialization of new product, and the adoption of new product and process technologies.
3. To provide students of varied background with a common body of knowledge about the ever-growing role that innovation, new products, and scientific advances play in the economy of the 21st century.
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Teaching and Learning Resources
Introduction. Innovation. Development Processes and Organizations
Innovation comes from the Latin innovationem, noun of action from innovare. The Etymology Dictionary further explains innovare as dating back to 1540 and stemming from the Latin innovatus, pp. of innovare "to renew or change," from in- "into" + novus "new".
Innovation can therefore be seen as the process that renews something that exists and not, as is commonly assumed, the introduction of something new. Furthermore this makes clear innovation is not an economic term by origin, but dates back to the Middle Ages at least. Possibly even earlier.
The central meaning of innovation thus relates to renewal. For this renewal to take place it is necessary for people to change the way they make decisions, they must choose to do things differently, make choices outside of their norm. Schumpeter c.s. (~1930) seems to have stated that innovation changes the values onto which the system is based. So when people change their value (system) the old (economic) system will tumble over to make room for the new one. When that happens innovation has occurred.
On a lower level, innovation can be seen as a change in the thought process for doing something, or the useful application of new inventions or discoveries.[1] It may refer to incremental, emergent, or radical and revolutionary changes in thinking, products, processes, or organizations. Following Schumpeter (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. In many fields, such as the arts, economics and government policy, something new must be substantially different to be innovative. In economics the change must increase value, customer value, or producer value. The goal of invention is positive change, to make someone or something better. Invention and introduction of it that leads to increased productivity is the fundamental source of increasing wealth in an economy.
Innovation is an important topic in the study of economics, business, entrepreneurship, design, technology, sociology, and engineering. Colloquially, the word "innovation" is often synonymous with the output of the process. However, economists tend to focus on the process itself, from the origination of an idea to its transformation into something useful, to its implementation; and on the system within which the process of innovation unfolds. Since innovation is also considered a major driver of the economy, especially when it leads to new product categories or increasing productivity, the factors that lead to innovation are also considered to be critical to policy makers. In particular, followers of innovation economics stress using public policy to spur innovation and growth.
Those who are directly responsible for application of inventions are often called pioneers in their field, whether they are individuals or organizations. When pioneers are followed by many other the dominant value system may be replaced by the new one. When this happens innovation has occurred a posteriori.
- Introduction
- Market outcome
- Sources of innovation
- Value of experimentation
- Diffusion
- Goals
- Failure
- Measures
- Public awareness
- Academic article on Being a Systems Innovator on SSRN
- "Communication on Innovation policy: updating the Union's approach in the context of the Lisbon strategy" – The European Commission.
- Commission proposes 2009 to become European Year of Creativity and Innovation – The European Commission.
- PRO-INNO Europe - Innovation policy analysis and development throughout Europe (Initiative of the European Commission).
- 12 Innovations that Changed the World
- Inno Inc's Frontier Visionary Interview with Innovators
Product innovation is the creation and subsequent introduction of a good or service that is either new, or improved on previous goods or services of its kind. This is broader than the normally accepted definition of innovation to include invention of new products which, in this context, are still considered innovative.
External links
New product development (NPD) is a critical aspect of almost all businesses, whether they be manufacturers or service providers, technology leaders or followers, or in mature or emerging industries. This course analyzes the research, development, and provision of new products from the point of view of top management. It examines the organizational aspects of both how firms develop new products and what makes them successful in their development and examines the issues related to the management of the R&D and innovation process, with emphasis on new product development and the commercialization of technology. The course focuses on strategic, behavioral, inter-functional (team) and international aspects of the innovation and new product development processes. Topics include promotion of creativity, strategic management and competitiveness, technology transfer, entrepreneurship, and the processes by which new products are brought into the marketplace. Advances in technology, including information technology and the Internet, and the evaluation of technology on the economy and society are also discussed.
In business and engineering, New Product Development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process : one involves the idea generation, product design, and detail engineering ; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.
New Product Development Process
Because introducing new products on a consistent basis is important to the future success of many organizations, marketers in charge of product decisions often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g., medicines) while less scientific companies may pull together resources for product development on a less structured timetable.
In this section we present a 7-step process comprising the key elements of new product development. While some companies may not follow a deliberate step-by-step approach, the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products. The process also shows the importance market research plays in developing products.
We should note that while the 7-step process works for most industries, it is less effective in developing radically new products. The main reason lies in the inability of the target market to provide sufficient feedback on advanced product concepts since they often find it difficult to understand radically different ideas. So while many of these steps are used to research breakthrough ideas, the marketer should exercise caution when interpreting the results.
Read More:
- Developing New Products
- Categories of New Products
- How New Products Are Obtained
- New Product Development Process
- Product Development Steps 1-3
- Product Development Steps 4-5
- Product Development Steps 6-7
- Managing Existing Products
Product Planning. Identifying Customer Needs. Analytical Attribute Approaches: Introduction and Perceptual Mapping. Analytical Attribute Approaches: Trade-Off Analysis and Quantitative Methods. Product Specifications
Tutorials
- Identifying Customer Needs
- Product Specifications
- Product Planning
- Consumer Perception
- Measurement of Attitudes and Perceptions
- Trade-off Analysis
Readings
- Overview of Perceptual Mapping
- Perceptual Mapping Using Ordered Logit Analysis
- Xerox
- Bad Product Designs
- Specialized Bicycle Components
Workshop
Concepts. Concept Testing
Tutorials
Readings
Concept testing is the process of using quantitative methods and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market. It can also be used to generate communication designed to alter consumer attitudes toward existing products. These methods involve the evaluation by consumers of product concepts having certain rational benefits, such as "a detergent that removes stains but is gentle on fabrics," or non-rational benefits, such as "a shampoo that lets you be yourself." Such methods are commonly referred to as concept testing and have been performed using field surveys, personal interviews and focus groups, in combination with various quantitative methods, to generate and evaluate product concepts.
The concept generation portions of concept testing have been predominantly qualitative. advertising professionals have generally created concepts and communications of these concepts for evaluation by consumers, on the basis of consumer surveys and other market research, or on the basis of their own experience as to which concepts they believe represent product ideas that are worthwhile in the consumer market.
The quantitative portions of concept testing procedures have generally been placed in three categories:
- (1) concept evaluations, where concepts representing product ideas are presented to consumers in verbal or visual form and then quantitatively evaluated by consumers by indicating degrees of purchase intent, likelihood of trial, etc.,
- (2) positioning, which is concept evaluation wherein concepts positioned in the same functional product class are evaluated together, and
- (3) product/concept tests, where consumers first evaluate a concept, then the corresponding product, and the results are compared.
See also
- What's a Concept?
- Concept Generation
- Slides for Concept Generation & Selection Lecture
- Stanley Tools
- Delphion Patent Database
- Novo
Nordisk
Development. Design. Industrial Design. Design for Manufacturing. Prototyping
Tutorials
Readings
Industrial design is the use of a combination of applied art and applied science to improve the aesthetics, ergonomics, and usability of a product, but it may also be used to improve the product's marketability and production. The role of an industrial designer is to create and execute design solutions for problems of form, usability, physical ergonomics, marketing, brand development, and sales.[2]
The first use of the term "industrial design" is often attributed to the designer Joseph Claude Sinel in 1919 (although he himself denied this in interviews), but the discipline predates 1919 by at least a decade. Christopher Dresser is considered the world's first Industrial Designer. Industrial design's origins lie in the industrialization of consumer products. For instance the Deutscher Werkbund, founded in 1907 and a precursor to the Bauhaus, was a state-sponsored effort to integrate traditional crafts and industrial mass-production techniques, to put Germany on a competitive footing with England and the United States.
The earliest use of the term may have been in the following work:
The Art Union. A monthly Journal of the Fine Arts Volume One for the year ending December 1839 Published at the Art Union Office Catherine Street Strand Page 143
“Dyce’s report to the Board of Trade on foreign schools of Design for Manufactures. Mr Dyces official visit to France, Prussia and Bavaria for the purpose of examining the state of schools of design in those countries will be fresh in the recollection of our readers. His report on this subject was ordered to be printed some few months since, on the motion of Mr Hume.”
“The school of St Peter, at Lyons was founded about 1750 for the instruction of draftsmen employed in preparing patterns for the silk manufacture. It has been much more successful than the Paris school and having been disorganized by the revolution, was restored by Napoleon and differently constituted, being then erected into an Academy of Fine Art: to which the study of design for silk manufacture was merely attached as a subordinate branch. It appears that all the students who entered the school commence as if they were intended for artists in the higher sense of the word and are not expected to decide as to whether they will devote themselves to the Fine Arts or to Industrial Design, until they have completed their exercises in drawing and painting of the figure from the antique and from the living model. It is for this reason, and from the fact that artists for industrial purposes are both well paid and highly considered (as being well instructed men) that so many individuals in France engage themselves in both pursuits.”
- Definition of industrial design engineering
- Process of design
- Industrial design rights
- Notable industrial designers
- Automotive design
- Product design
- Sensory design
- Interaction design
- Communication design
- Core77
- Form follows function
- Industrial Designers Society of America
- Creative engineering
- Designer
- Emotional Design by Donald Norman
- Environmental design
- Experience design
- Hague system
- Product development
- Rapid prototyping
- WikID
- Notes
- References
- U.S. Department of Labor's Handbook: Commercial and Industrial Designers
- Doodles, Drafts and Designs: Industrial Drawings from the Smithsonian (2004) Smithsonian Institution Libraries
- Industrial Design
- MIT Photo Gallery
- Motorola
- Industrial Designers' Society of America
- General Motors
- Boothroyd-Dewhurst, Inc.
- Apple Computer
- Wohlers Associates Links/Reports
- Ford Motor Company
Sales Forecasting and Financial Analysis. Product Protocol
Tutorials
Readings
Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. In any case, the data must be up to date in order for the forecast to be as accurate as possible.[1] Usage can differ between areas of application: for example in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. Risk and uncertainty are central to forecasting and prediction; it is generally considered good practice to indicate the degree of uncertainty attaching to forecasts. The process of climate change and increasing energy prices has led to the usage of Egain Forecasting of buildings. The method uses Forecasting to reduce the energy needed to heat the building, thus reducing the emission of greenhouse gases. Forecasting is used in the practice of Customer Demand Planning in every day business forecasting for manufacturing companies. Forecasting has also been used to predict the development of conflict situations. Experts in forecasting perform research that use empirical results to gauge the effectiveness of certain forecasting models.[2] Research has shown that there is little difference between the accuracy of forecasts performed by experts knowledgeable of the conflict situation of interest and that performed by individuals who knew much less.[3] Similarly, experts in some studies argue that role thinking does not contribute to the accuracy of the forecast.[4] The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and a consensus process. An important, albeit often ignored aspect of forecasting, is the relationship it holds with planning. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like.[5][6] There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions (data etc.).[7] A good place to find a method, is by visiting a selection tree. An example of a selection tree can be found here.[8] Although quantitative analysis can be very precise, it is not always appropriate. Some experts in the field of forecasting have advised against the use of mean square error to compare forecasting methods.[9]
- Forecasting Principles: "Evidence-based forecasting"
- Introduction to Time series Analysis (Engineering Statistics Handbook) - A practical guide to Time series analysis and forecasting
- Time Series Analysis
- Global Forecasting with IFs
- Earthquake Electromagnetic Precursor Research
Design for Environment. Organizing Concurrent Engineering
Tutorials
Readings
Concurrent engineering is a work methodology based on the parallelization of tasks (i.e. performing tasks concurrently). It refers to an approach used in product development in which functions of design engineering, manufacturing engineering and other functions are integrated to reduce the elapsed time required to bring a new product to the market.
- ESA's Concurrent Design Facility
- Open Concurrent Design Server
- Product Life Cycle
- Product lifecycle management
- References
Patents and Intellectual Property. Product Development Economics
Tutorials
- Intellectual Property
- Intellectual Property
- Product Development Economics
- Economic & Environmental Analyses Relationships & Challenges
Readings
Intellectual property (IP) is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized, and the corresponding fields of law.[1] Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property rights include copyrights, trademarks, patents, industrial design rights and trade secrets in some jurisdictions. The term intellectual property is used to describe many very different, unrelated legal concepts.
Although many of the legal principles governing intellectual property have evolved over centuries, it was not until the 19th century that the term intellectual property began to be used, and not until the late 20th century that it became commonplace in the majority of the world.[2] The British Statute of Anne 1710 and the Statute of Monopolies 1623 are now seen as the origins of copyright and patent law respectively.[3]
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- Intellectual property entry in the Stanford Encyclopedia of Philosophy
Supply Chain Design. Strategic Launch Planning. Implementation of the Strategic Plan
Tutorials
Readings
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions[1]:
- "What do we do?"
- "For whom do we do it?"
- "How do we excel?"
In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.
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Exercise
Market Testing: Pseudo Sales Methods. Market Testing Continued: Controlled Sales and Full Sale
Readings
Market Testing: Pseudo Sales Methods
Pseudo sale refers to the presentation of the product directly to its potential consumers in order to record their thoughts about it and then use it to figure out if the product will have a market or not. Pseudo sale market testing has two different categories which are speculative sale marketing and simulated test marketing.
A Test Market, in the field of business and marketing, is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out. The criteria used to judge the acceptability of a test market region or group include:
- a population that is demographically similar to the proposed target market; and
- relative isolation from densely populated media markets so that advertising to the test audience can be efficient and economical.
- ACXIOM - 150 USA test markets ranked best to worst as to how well they reflect the US market as a whole. (accessed Sept. 13, 2005)
- [1] - Marketing by David Mercer, Chapter 6
Public Policy Issues
Readings
New Product Development: What's the Problem
Newspapers are increasingly looking at diversification. Good. But the important question is why has it taken 100 years to get there?
I'm not offering a lecture in "I told-you-so!" or providing armchair quarterback analysis. But for the record, I've been arguing this point for 20 years.
Now that structural change has affected the newspaper industry as much as the Great Recession, it is well past the time to find a new business model.
This is no longer the motto du jour. It's time to find a whole new business: one that protects and nurtures. Rather than being the only asset, diversification is the route forward. And newspapers have plenty going for them with this strategy.
As the traditional newspaper product fragments, we are going to see classified and other advertising verticals migrate into specific branded digital services. Newspapers were slow to realize this trend, but are now, encouragingly, recovering their position. Well-strategized newspaper companies should now be able to look forward to reclaiming some of the cash, and profits, they enjoyed from their previous classified operations.
Read More ...
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Resources
- Glossary
- Internet Assignments
- Marketing Presentation
- New Product Development Body of Knowledge
- Toolbox Cases
- Toolbox Exercise
SPRU Science and Technology Policy Research - Origin of the concept of 'Systems of Innovation' and centre of research and learning on innovation policy and innovation management.
Innovation Studies at Centre for Technology, Innovation and Culture (TIK), University of Oslo - One of the world's leading research centres on Innovation Studies.
TIK working papers on Innovation studies at RePec.
Research effort in Understanding Innovation (Centre for Advanced Study).
PREST: now part of Manchester Institute of Innovation Research, centre for research, consultancy and teaching on innovation (especially in services), innovation policy, and related topics such as research evaluation and Technlogy Foresight.
Welcome to the DTI's Innovation Home Page - Department of Trade and Industry, UK.
Innovation and Technology Policy - Organisation for Economic Co-operation and Development (OECD).
Welcome to The Innovation Unit's homepage - The Innovation Unit - one of the UK's leading organisations for promoting innovation to improve education.
Academic article on Being a Systems Innovator on SSRN
European Union:
- "Communication on Innovation policy: updating the Union’s approach in the context of the Lisbon strategy" - The European Commission.
- Innovation articles.