Opportunity Identification and Selection: Strategic Planning for New Products CHAPTER 3

Details the first phase of the New Product Process Phase (Opportunity analysis and strategic planning) 2 strategic elements! product innovation charter (PIC) & product portfolio management

Company within a Company group of people who lead the development of a new product whom represents all of the necessary functions, ie develop and allocate budget, do financial analysis and projections, assign and implement tasks gives direction of where to go and not go as well as providing objectives New Product Strategy Inputs product platform! set of systems and interfaces that form a common structure from which a family of products can be developed efficiently o effected by corporate strengths sometimes more efficient to design a line of products rather than one single product platforms can evolve through bottom-up or top-down (corporate and platform strategy development), pg 61 applies to service industry as well tradeoff: customers want distinct products while common products produce the greatest cost efficiencies brand platforms, pg 62 brand equity! value of an established brand that can be measured through market research category platform! group levels are mostly targeted therefore any strategic change in one are may influence all new products developed under that category group level opportunity identification is important, pg 64 o modern trends of consumers: just-in-time life, sensing consumers, transparent self, in search of enoughness, virtual made real, co-creation noncorporate strategic planning o technical or supply-push conditions, marketing, manufacturing, and others all can effect new product work o product-market matrix, pg 66 o diversification, pg 67 The Product Innovation Charter Typically a document prepared by senior management designed to provide guidance to the business units on the role of innovation Reminds us that the strategy is for products and innovation and it is a charter Strategy statements can be for an entire firm, a standing platform, or for a specific product Needed to direct focus and time as well as directing resources, defines what sandbox the team is in or wants to be in and also where it does not want to be, pg 70 Scope creep & unstable product specifications, pg 70

The Sections of the PIC 1. Area of Focus Section of the PIC Core competencies! where to look for charter arena definitions 2. Focus achieved through: technology, product experience, customer franchise, and end-use experience Dual-drive strategy, pg 72 Technology drivers o Turning technical specifications into product features that satisfy market needs o T-P-M linkage, pg 72 Market drivers, pg 73 o Coproducers o Mass customization o Variation through distributors Combinations: Dual-Drive, pg 73 3. Goals & Objectives Section of the PIC Goals are long term directions whereas objectives are short term measures of success (3) types of goals and objectives o profit, growth, and market status 4. Guidelines Degree of innovativeness o First-to-market! through leveraged creativity or applications engineering, pg 75 o Adaptive product o Imitation or emulation Timing (first, quick second, slower, late) Misc Guidelines o Product integrity, pg 76 How to Prepare a PIC Look for opportunities Evaluate, rate and rank opportunities Fill out the PIC form

Product Portfolio Analysis: New Products Strategic Fit Used to check strategic balance and maintain a dependable, continuous flow of products Low market newness vs high market newness, pg 80 Extent of product change vs extent of process change, pg 81 Strategic Decision Group portfolio evaluation model, pg 82

Creativity and the Product Concept CHAPTER FOUR

Preparation PIC provides a playing field and rules for the new product Top managers should keep control over innovative projects and stay involved to maintain direction o Two packages of activity one to encourage creativity and another to thwart roadblocks The Product Concept New products only come into being when they are successful, launched products are still in tentative forms 3 inputs required by the creation process, need all three for a product innovation o Form physical thing or w/ a service, the sequence of steps o Technology the source from which the form was attained o Need/benefit product only has value if it provides some benefit to the customer o See decaf coffee example if theres a question, pg 100 Product concept statement when 2/3 inputs are there, tells the customer and technical people what they need to know in order to review a product and decide if it should be developed, pg 102 Two Basic Approaches for Developing the Product Concept Receiving product ideas created by others and a managed process run by a team, most industries use a ready-made source Concept generation should be an ACTIVE process Important Sources of Ready-Made New Product Ideas Sources include employees, suppliers, end users, stakeholders, consulting engineering firms Crowdsourcing, pg 106 End user concepts are usually product improvements over product innovations but it depends on the industry o End users w/ wide diversity of perspectives and experiences are beneficial o Now incorporated into new product teams Lead users are more likely to be elicited by firms, front edge of trends, best understanding of product faced, use problem-find-solve method, pg 107 o Issue is identifying lead users in the first place Important to ask all consumers for outcomes or what they want the product to do for them Benefits from tinkerers, ie dentists, medical technicians, farmers Toolkits for user innovation, pg 109 Open Innovation External search process used to complement a companys own internal resources

Accelerates innovation Improved joint value for all partners, firms can sell off innovations they dont use, etc NOT R&D, goal is to reach out beyond familiar research partners and to select the best partners Risks & benefits, pg 115