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Personal ID

(department assessment code)

E205

MODULE NUMBER

4E4

MODULE NAME

Management of Technology

COURSE LEADER

Dr T. Minshall

HAND IN DATE

18 January 2010

word count
1461

I confirm that this submission is my own unaided work, except as specified below; all
sources are fully acknowledged and referenced; the submission does not contain
material that has already been used to any substantial extent for a comparable purpose
New Product Development

Most companies provide products or services in competitive markets and to win in these
over a longer period of time means sustaining substantial competitive advantage. Offering
new products is naturally one of the most common ways of gaining that advantage but the
complexity of the process that leads to the marketing of a new product can be huge and
payoffs uncertain. This essay starts with a short discussion on the objectives and potential
benefits of launching new products. Afterwards, the importance of detailed project planning
is highlighted. This is followed by a discussion about successful product differentiation and
a proper understanding of customer needs with comprehensive technology management
are introduced as key factors in product innovation. Portfolio management as a way of
insuring against early misjudgment is discussed next and the role of senior management is
brought up against suggestions that its involvement comes often too late. Problems
associated with the later stages of product development, when significant resources are
being committed, are debated and the essay concludes with a suggestion of three factors
key for the success of new products.

The origins of new products vary significantly. Ulrich and Eppinger (2007) list eight
different process types associated with product development, including responding to
customer demands, finding applications for new technologies, investing in areas with the
potential for windfall profits, creating new platforms or conversely, customising existing
ones. According to Wheelwright and Clark (1992), there are three main benefits to be
earned by developing new products: market position, resource utilisation and
organisational renewal and enhancement. Some companies set new standards in an
industry or provide superior products that establish their leadership and brand name, some
profit from their research and development investments while others inspire their
employees and transform their business in the process. The best companies try to profit
on all three fronts, confident that success in one will induce success in the others.

While company circumstances will determine the set of design and delivery options faced
by the development team, by the time it starts investing in a product, it should be clear on
what it wants to achieve, how it intends to get there and what resources it has at its
disposal. Project planning, therefore, must be at the heart of all product development
efforts for it is at the very early stages that radical changes to design or technology are
cheap and easy to implement.

Indeed, it is at the product concept stage that the developers have to resolve what markets
they intend to serve and what will be the key novel attributes of their product, i.e. what
design or technology improvements they plan to implement. Of the many important criteria
determining the success of a new venture, product differentiation with clear customer
benefits stands out in its ability to make it or break it (Mullins, 2004).

Understanding customers is inherently difficult and history shows that even elaborate
market research, surveys or pilot testing may fail to cast light on customer preferences.
They may be enticed by an interesting idea for which they find ultimately little use (e.g.
PDA with recognisable handwriting from Apple) or they may not realise how useful a new
product is before they start using it (e.g. Post-it stickers). The latter problem is exacerbated
in truly disruptive technologies where the first models of the product cannot actually deliver
its full potential or compete with established ways of meeting that customer need (e.g.
electric cars) (Christensen, 1997). However, innovating even established products often
stumbles when companies place too much focus on features that customers do not value
highly or when competitors are faster in incorporating new technology or better at
educating their customers about its benefits.

Managing new technology well is crucial to the success of firms that need to innovate their
products regularly. With the fast rate of product change and an increasing number of
innovation sources, “technology decisions must be checked for consistency and
completeness” (Gregory, 1995), requiring active management and continuous decision-
making and evaluation. Gregory found conscious technology management to be in short
supply at product-heavy companies, though the idea appealed to his respondents.

Attempting to match customer preferences with technological advances and corporate


strategy can be compared to shooting at a “moving target” (Wheelwright and Clark,1992)
and a common way of increasing the chances of a successful hit is multiplying the number
of these targets. Companies frequently work on several products at the same time,
increasing the probability of being successful by postponing the decision about what
exactly to put on the market. Postponing decisions is, however, costly and not all
companies are successful in managing their product portfolios well. Cooper et. al. (2001)
found significant correlation between successful new product introduction and the
importance placed on active portfolio management in companies. Companies that treat all
their products as a portfolio, with explicit and established methods, rules and processes for
its evaluation and in which senior management strongly supports this are performing
significantly better than companies that treat portfolio management lightly (Cooper et. al.,
2001)
Arguably, this is not surprising. Market knowledge and technology selection lead to early
product designs from which the company has to choose its favourites. Clear articulation of
the selection criteria is therefore analogous to the articulation of the companyʼs strategy,
which not only helps select the best products but also sends a clear signal to all
stakeholders. These may include technology managers, suppliers and possibly even
customers, who may in turn express their preferences and help the market researchers. If
a company can complete this circle, it is very well placed to develop products that
customers want.

Unfortunately, strong management involvement is often what is lacking in new product


development, frequently with dire consequences. Wheelwright and Clark (1992) document
with the example of a car manufacturer the mismatch between management activity and
the ability to influence the outcomes as time progresses, demonstrating that the first
significant peak of management attention often rises as late as during the prototype
building phase, with the following one occurring at the point when manufacturing capacity
is ramped-up. Correspondingly, both the ability to influence the product and the number of
options available are significantly reduced at the prototype stage and drop to zero at the
start of manufacturing.

The preceeding paragraph suggests that management attention is only aroused when the
company has to pull all of its resources together to deliver a new product. Indeed, at this
stage the company has to commit significant resources to translate its plans into
manufactured products with appropriate sales networks and servicing infrastructure. This
may be a crucial period with regards to the exploitation of competitive advantage. When
product is easy to imitate, securing complementary assets (and thus creating production
“bottlenecks”) may be key in keeping competitors at bay (Teece, 1986).

Unsurprisingly, this is a period most prone to mishaps. Whilst during project planning
engineers, designers and market analysts could all be placed within one building,
delivering a product means cooperating across much wider distances, both geographically
and perhaps culturally. Design imperfections, excessive optimism about manufacturing
capabilities or wrong cost estimates may stall manufacturing ramp-up. Communication
difficulties and unclear division of responsibility can lead to inefficient decision-making,
cost overruns and delays in meeting project milestones.

Managing large logistical operations is difficult and companies often have to give up on
one of the three ideals of quality, cost and timeliness. While being first to the market may
mean greater leverage in setting the industry standards and building a stronger brand
name, many claim that “best beats first” (Mullins, 2004). Alienating premium-paying early
adopters with considerable blogging power by lacklustre product performance may be
deadly. Which one is most disposable depends ultimately on the circumstances of the
company and its product portfolio.

In conclusion, three factors stand out in importance during the process of developing and
introducing new products on the market. First, thorough project planning, incorporating an
analysis of the market and customer needs, comprehensive overview of technological and
design options and their regard to future manufacturing capabilities set the scene for
successful product development. Second, good communication channels, clear rules and
division of responsibilities facilitate a seamless product delivery process. And third, strong
focus of senior management along the whole process brings it all together. Product
development is a risky entreprise with uncertain outcomes but competitive pressures leave
companies no other choice but to innovate. A key message to remember is that from
Wheelwright and Clark (1992) who point out that successful product development typically
feeds on itself. If a company can keep its focus, then employees remain enthusiastic,
broad user base can serve as a reliable feed-back source and all of the difficulties
described in this essay remain somebody elseʼs concern.
Bibliography

Christensen, C.M., 1997. The Innovator's Dilemma: When New Technologies Cause Great
Firms to Fail illustrated edition., Harvard Business Press.  

Cooper, R., Edgett, S. & Kleinschmidt, E., 2001. Portfolio management for new product
development: results of an industry practices study. R and D Management, 31(4), 361–
380.  

Gregory, M.J., 1995. Technology management: a process approach. Proceedings of the


Institution of Mechanical Engineers. Part B. Journal of engineering manufacture, 209(5),
347–356.  

Mullins, J., 2004. The New Business Road Test: What entrepreneurs and executives
should do before writing a business plan, FT Press.  

Teece, D.J., 1986. Profiting from technological innovation: Implications for integration,
collaboration, licensing and public policy. Research Policy, 15(6), 285-305.  

Ulrich, K. & Eppinger, S., 2007. Product Design and Development 4 ed., McGraw-Hill
Higher Education.  

Wheelwright, S.C. & Clark, K.B., 1992. Revolutionizing Product Development: Quantum
Leaps in Speed, Efficiency and Quality, The Free Press.