chpt19 the management of new product development, and entrepreneurship
TRANSCRIPT
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8/9/2019 Chpt19 the Management of New Product Development, And Entrepreneurship
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The Managementof New Product
Development, and
Entrepreneurship
The Managementof New Product
Development, and
Entrepreneurship
1919
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Innovation, Technological Change and
Competition
Innovation, Technological Change and
CompetitionTechnology refers to the skills, knowledge,experience, body of scientific knowledge,tools, computers, machines used in the design
and production of goods and services.Quantum technologicalchange: fundamentalshift in technology that results in innovation.
The Internet and genetic engineering are examples.
Incrementaltechnologicalchange: refinements of
current technology over time.
Most firms seek incremental product innovations which
allows constant, but small, improvements.
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Effect of Technological ChangeEffect of Technological Change
Many products undergo constant change and
improvement.
Electronic products provide a great example.
This change can be a threat to firms that are slow to
improve but provides benefits to firms that adjust.
Technological change is both a threat and an
opportunity.
Smith Corona typewriter company missed out on word
processing and is now out of business.
Microsoft was quick to embrace graphic user interface
programs and now is dominant in the software business.
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Product Life CyclesProduct Life Cycles
Refers to demand changes for a product over time.
Embryonic stage:product is not widely accepted and
has minimal demand.
Growth stage: many consumers seek out the product
and buy it for the first time.
Mature stage: demand peaks since most buyers already
have the product and only buy replacements.
Decline stage: demand falls off perhaps since the
product is obsolete.
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Product Life CyclesProduct Life Cycles
Embryonic
Stage
Growth
Stage
Mature
Stage
Decline
Stage
Time
Demand
Figure 19.1
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Relationship Between Technological
Change and Life Cycle Duration
Relationship Between Technological
Change and Life Cycle Duration
Length of Product Life Cycles
Rate of Technological
Change
Figure 19.2
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Rate of Technological ChangeRate of Technological Change
The rateofchange determines the length of the product
life cycle demand curve.
The computer industry, life cycle is about 18 months; in
the steel industry, it is many years.
Fads andfashions also impact the life cycle duration.
Style changes alter the demand for goods.
Usually, goods subject to fads and fashion changeswill experience shorter life cycles.
In general, life cycles are getting shorter, forcing
managers to be more responsive to customers.
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The Four Goals of New ProductDevelopment
The Four Goals of New ProductDevelopment
Reduce Product
Cycle Time
Maximize Fit with
Customer needs
Maximize
Manufacturability
Maximize
Product Quality
New ProductNew Product
DevelopmentDevelopment
GoalsGoals
Figure 19.3
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The Four Goals of New Product
Development
The Four Goals of New Product
Development1) Reduce Product Cycle Time: reduce time needed to
develop a product from conception to market
introduction.
Early to market products can command premium pricesand will have a longer life cycle.
Can add new features before competitors
2) Maximize fit with Customer Needs: most products
fail because they were not designed to fit customerneeds.
Ensure customers want the product features before adding
them to the product.
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The Four Goals of New Product
Development
The Four Goals of New Product
Development3) Maximize Product Quality:be sure new products
are of superior quality.
Poor quality in a new product can doom its acceptance
even if quality is fixed later on. Quality problems usually result from rushing product to
market.
4) Maximize Manufacturability: the efficiency with
which the product is built impacts its time to market. Ease of production can shorten development time.
Efficient production can also avoid production
problems and improve quality.
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Stage-Gate Development FunnelP
rinciples
Stage-Gate Development FunnelP
rinciples Principle 1: Use aStage-Gate DevelopmentFunnel;
managers often try to fund too many projects at once.
Stage 1 considers all new ideas. Those that are feasible
and meet the strategic goals of the firm go through Gate
1.
Stage 2 focuses on the product development plan and
then evaluated at Gate 2. Only the best continue.
Stage 3 issues a contract bookand focuses on
responsibilities, budgets, resources, etc. This is the
symbolic launch of the formal development.
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Stage-Gate Development FunnelStage-Gate Development Funnel
Ship
Stage 3Stage 2Stage 1
Ideas
Gate 1 Gate 2
Figure 19.4
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Cross Functional Teams PrinciplesCross Functional Teams Principles
Principle 2: Cross functionalteams seem to be a crucial
part of effective product development.
Core members of the team are the 3 to 6 people
primarily responsible for the development effort.
Must ensure there is coordination and communications
between team members.
Often are located physically together
Successful teams will develop a clear sense of their
objectives and share a common mission.
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Members of a Cross-Functional NewP
roduct Development Team
Members of a Cross-Functional NewP
roduct Development Team
TeamTeam
LeaderLeader
CoreCoreMembersMembers
PeripheralPeripheral
MembersMembers
Figure 19.5
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Concurrent Engineering PrinciplesConcurrent Engineering Principles
Principle 3: ConcurrentEngineering: Traditional
approach follows a sequential flow between steps.
This results in long development times and poor quality
when managers do not communicate betweendepartments.
Development managers may design the product without
talking with manufacturing, resulting in problems.
By working concurrently, design and production issuesare considered together.
Production concerns are addressed while the product is
designed and can still be changed.
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Sequential v. Parallel DevelopmentProcesses
Sequential v. Parallel DevelopmentProcesses
Figure 19.6
OpportunityOpportunity
IdentificationIdentification
ConceptConcept
DevelopmentDevelopment
ProductProductDesignDesign
ProcessProcess
DesignDesign
CommercialCommercial
ProductionProduction
OpportunityOpportunity
IdentificationIdentification
ConceptConcept
DevelopmentDevelopment
ProductProduct
DesignDesign
ProcessProcess
DesignDesign
CommercialCommercial
ProductionProduction
A Sequential Process
A Partly Parallel Process
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Bring in Customers & SuppliersBring in Customers & Suppliers
A key reason the products fail is that they do not meet
the needs of the customers.
Customerideas andneeds should be included in thedesign process.
Solicit customer input from many sources.
Suppliers are alsocriticalto the success of a product.
Embrace them during concurrent engineering.
Seek their ideas and input early in the process.
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Product Development ProblemsProduct Development Problems
Successful product development is a critical component
of a successful firm.
While most managers know this, it can be difficult to
actually carry out good development strategies.
Many managers have difficulty in releasing control of
their part of the process and allowing groups to take
part.
Conflict management skills can address this.
Product development often requires a break in the
traditional organizational culture to be highly successful.
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EntrepreneurshipEntrepreneurship
Entrepreneurs are people that notice
opportunities and take the initiative to
mobilize resources to make new goods and
services. Many entrepreneurs work for themselves and start new
firms.
Intrapreneurs: work in large companies and contribute
to innovation in the firm.
Intrapreneurs that become frustrated with the lack of
opportunity at some large firms often leave and form
their own business called a new venture.
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Entrepreneurship and New VenturesEntrepreneurship and New Ventures
Characteristics of entrepreneurs--most share these
common traits:
Open to experience: they are original thinkers and take
risks.
Internal locus of control: they take responsibility for
their own actions.
High self-esteem: they feel competent and capable.
High need for achievement: they set high goals and
enjoy working toward them.
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IntrapreneurshipIntrapreneurship
A learningorganization encourages employees to act as
intrapreneurs. To help, form:
Product Champions:person that takes ownership of a
product from concept to market.Skunkworks: group of intrapreneurs kept separate from
the rest of the firm.
Allows workers total flexibility and innovation.
New Venture Division: allows a division to act as itsown smaller company.
Rewards for Innovation: link innovation by workers to
valued rewards.