Chapter 3

Opportunity
Identification &
Selection:
Strategic Planning
for New Products

Chapter 4 Kelompok 1 - PS20A

Creativity and Affan Himawan

Cheryl Nefidya
2006552306
2006499351

Product Concept Ekki Primanda R.

Felicia Sung
2006553012
2006499452
Inez Gabrina 2006553385
Chapter 3
Opportunity
Identification
& Selection:
Strategic
Planning for New
Products
A Product Strategy for a “Company within a Company”

“Company within Product

a Company” Strategy Product
(The ‘Sandbox) Innovation
The group of people who Charter
lead the development of a
new product act as a
Tell the products team to (PIC)
where it must go or not
company within a company go, objective, and rules.
New Product 1. Product Platform Planning
...defined as a set of systems and interfaces that form a
Strategy Inputs common structure
and Identifying
Opportunities affecting affecting

Corporate Product Product

Strategy Platform Projects

Different Honda Accord Product from one Product Platform

New Product 2. Opportunity Identification
...Throughout the firm people in the course of doing their
Strategy Inputs jobs discover new opportunities.
and Identifying
Opportunities Sources are:
- Underutilized or New Resources;
- Mandates from external (regulation change);
- Internal Mandates (new leadership)

Find Another New Activity Identify Fast Find a “New to

Location Center Growing Needs You” Industry
New Product 2. Opportunity Identification
Strategy Inputs
and Identifying
Opportunities
New Product 3. Non Corporate Strategic Planning
Strategy Inputs Although the major thrust of strategic planning comes from the top down (i.e.,

and Identifying corporate and platform strategy development), much of it also comes from the
heads of the functions (silos or chimneys) in the firm—marketing, technical,
Opportunities manufacturing, and finance, and from the planning of suppliers, customers, and
others.
New Product 4. Miscellaneous Sources
Strategy Inputs ...some inputs can start at the lower level of activity and influence upward, as

and Identifying when a new product is so successful it drives corporate strategy to change.

Opportunities

Unintentional succeed of new product from slow and gradual restructuring

business practice.
 The PIC is a document prepared by senior management designed to provide guidance to the
The Product business units on the role of innovation
Innovation
Charter
The Product
Innovation ● Most firms have a PIC, though it may not go by that name

Charter ● Innovation rates are substantially higher in cases where the PIC has detailed and
specific content, and where there is general satisfaction with the new products
process within the firm. The more specific the corporate mission is presented in the
PIC, and the more clearly senior management’s strategic directions are spelled out,
the better the performance of new products developed by the firm

Why Have a PIC?

The PIC provides the direction, or directions, the team should concentrate on in new
product development
A clear-cut PIC, designed to overarch the entire new products process, helps to minimize
costly and time consuming problems. There is even value to be gained in the very process
of working together and formulating a PIC. A good process fosters high levels of
commitment from the participants, consensus on goals and objectives, and agreement on
the ways the goals will be achieved
 The Arena (Area of Focus) Section of the PIC
The Sections of The best option is a balanced, or dualdrive, strategy (technology and market)
the PIC Technology Drivers
The most common technological strengths are in the laboratories. But many times, a firm
finds it has a valuable non -laboratory technology.

T-P-M linkage: Procedure of converting technical specifications to product features and

benefits, to market needs

Market Drivers
The other half of the dual-drive strategy also comes from two market sources: customer group
and end-use. The best new product ideas are based on customer problems, and these problems
serve as the heart of the concept generation process
 Combinations: Dual-Drive
The Sections of Putting one technical driver together with a market driver yields a clear and precise arena
the PIC focus

Goals and Objectives Section of the PIC

The PIC uses the standard definition as follows:
● Goals > longer-range, general directions of movement (ex: market dominance)
● Objectives > short-term, specific measures of accomplishment (ex: 25 percent market
share the first year)
●
Both goals and objectives are of three types:
● Profit, stated in one or more of the many ways profit can be stated;
● Growth, usually controlled, though occasionally a charter is used defensively to help the
firm hold or retard a declining trend;
● Market status, usually increased market share
 Degree of Innovativeness
Special How innovative does a management want a particular group to be.
Guidelines First-to-Market

Section of the ● State-of-the-art breakthrough

Leveraged creativity
PIC ●
● Applications engineering
Adaptive product
Taking one’s own or a competitive product and improving it in some way
Imitation
Risky; A firm cannot wait too long to enter the market, by which time the earliest firms to
enter have well-established, loyal customer bases and ties to the supply networks and
distribution channels.
Incumbent firm may take an innovator to court over alleged patent, trademark, or copyright
infringement
 Timing
Special Four options: first, quick second, slower, and late
Guidelines First is pioneering

Section of the A quick second tries to capture a good second-share position, perhaps making no significant
improvement, or just enough to promote. Firm has to make the decision to enter the market
PIC before the innovator is successful or has even come to market.
Slower entry is safer in the sense that a firm knows the outcome of the pioneer’s efforts and
has time to make a more meaningful adaptation. But the good market opportunities may be
taken by quick seconds.
Late entry, is usually a price entry keyed to manufacturing skills.

Miscellaneous Guidelines
Innumerable specialized guidelines can be found in product innovation charters.
Example:
A pharmaceutical firm said, “It must be patentable.”
Product integrity, meaning that all aspects of the product are internally consistent.
 The process for developing a PIC lies in its contents.
How to Prepare ● First, we are always looking for opportunities, inside the firm or outside it. Each strategy can
The Product be traced to a strength of the company involved. No one firm can be strong in everything.

Innovation ●
●
Second, we have to evaluate, rate, and rank them.
Third, we simply begin filling out the PIC form—focus, goals, and guidelines. Usually there is no
Charter shortage of suggestions for all the sections—not unlike any marketing situation analysis.
 Many firms use a product-portfolio approach in which management allocates R&D and other scarce
Product resources across several categories defined by strategic dimensions. This approach bears some

Portfolio similarity to the familiar Boston Consulting Group portfolio model, but allows great flexibility in the
choice of dimensions, which can include:

Analysis • Strategic goals, such as defending current base of products versus extending the base
• Project types, such as fundamental research, process improvements, or maintenance projects
• Short-term versus long-term projects
• High-risk versus low-risk projects
• Market familiarity (existing markets, extensions of current ones, or totally new ones)
• Technology familiarity (existing platforms, extensions of current ones, or totally new ones)
• Ease of development
• Geographical markets (North America, Europe, Asia)
Chapter 4
Creativity
and
Product
Concept
Preparation:
Management’s Certainly, management has a role in getting the best out of its “ideas
people.”
Role in Creativity
Recent work on idea generation in large organizations suggests that
top managers should keep control over innovative projects, while at the
same time allowing the employees to do as much of the work as
possible.

Creative people can benefit from training. Training programs range

from introductory classes in traditional brainstorming to elaborate
sessions that include games and horseplay. Obvious, but often
overlooked, is training in the company’s products, its markets,
competition, technologies used, and so forth.
Activities to
Encourage Management should allow innovators freedom to associate with others in

Creativity similar positions. Management should also permit innovators to help

select projects for development, though this is often difficult.

● Some firms deliberately create competitive teams and have them

race to a deadline.
● Another technique is free time.
● Flextime is a similar tool, but for creative types it means letting
employees take work home or stay in their workplaces and work all
night if they want.
● Creative people have a need for novelty and want to change
situations occasionally.
Activities to
Encourage Creative firms often use a computerized database, or “idea bank,” to
store and document ideas from earlier, unused new product projects
Creativity
for reuse later.

These ideas can come from market research or test market results,
project audits, design plans, engineering notes, and elsewhere.
Special
Rewards Creative people are usually unimpressed by group rewards.

The Removal of The concept “simply won’t work,” or “it’s against policy,” or “we don’t do
things that way.”
Roadblocks
These statements are often well intentioned, and they may be accurate
statements of status quo. But they are extremely discouraging to fragile
ideas.

To encourage creativity, some firms deliberately encourage conflict by

putting certain employees together on the same team. This technique is
sometimes called creative abrasion.
The Product
Concept A new product only really comes into being when it is successful —that
is, when it meets the goals/objectives assigned to the project.

3 inputs required by the creation process:

1. Form
2. Technology
3. Need/Benefit

Technology permits us to develop a form that provides the benefit. If

any of those three is missing, there cannot be product innovation.

The best way is to have first the benefit, then the technology, and then
the finished form.
Two Basic The Ready Made Source
Approaches ● Experience in the field of product innovation has it that 40 to 50 percent
of new product ideas are ready-made and comes from employees,
suppliers, end users and other stakeholders, and published information.
● Seek ideas from the lead users: the customers associated with a
significant current trend, have the best understanding of the problems
faced, and expect to gain solutions to problems.
● Crowdsourcing
● Concept from customers are mostly for product improvements rather
than new-to-the-world products.
● Product development professionals (or more experienced users) will
have a more realistic view of what is and is not feasible
Two Basic Sources The Ready Made Source
Approaches
Two Basic Doing it Ourselves (Toolkits for User Innovation)
Approaches ● A method that formally turns the innovation task over, to some
extent, to the users themselves.
● A toolkit is a user-friendly set of design tools that customers can use,
together with their understanding of their own needs, to customize a
product that would be best suited to them
● Customers who actually used toolkits to create new products showed
that they were willing to pay substantially more for them.
● Increased costs of customer support associated with user toolkit
● use were shown to be partially offset by encouraging interaction and
support among the users, with the result that the learning from the
toolkit is enhanced
● Taken together, these studies suggest that using even simple toolkits
to get customer design input can create much value for the firm.
Open Innovation ● New developments in new product development is the adoption by
many firms of an open innovation policy
● Open innovation has been defined as “the process a company
employs to externally search for . . . research, innovation, new
technologies, and products.
● Open innovation does not mean that the firm outsources its R&D.
Rather, the firm’s goal is to reach out beyond its familiar research
partners and to access R&D carried out globally
Open Innovation Advantages and Risks

● Importing new ideas multiplies innovation building blocks—ideas

and expertise, resulting in more total sales generated from new
products.
● Exporting ideas raises cash, and improves employee retention,
since creative types know that good ideas will be exported and not
buried.
● Exporting signals true worth of an innovation.
● Exporting clarifies core business
● Risk: deal is not structured in a way that captures the financial
value of your innovation.
● Proprietary secrets can be lost to a partner, even inadvertently.