EMGT- PRODUCT DESIGN AND DEVELOPMEN

Opportunity Identification &

Product Planning

Important Notes
The information that appears in many of these
slides is based on support materials that
accompany the primary text books for this course:
Product Design and Development, 5th edition, by
Ulrich and Eppinger
SMC Systems Engineering Primer & Handbook 3 rd
edition, by Space & Missile Systems Center U.S.
Air Force
Sources for other information are cited where
appropriate.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Product Design and Development
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Introduction
Development Processes and Organizations
Opportunity Identification
Product Planning
Identifying Customer Needs
Product Specifications
Concept Generation
Concept Selection
Concept Testing
Product Architecture
Industrial Design
Design for Environment

13.
14.
15.
16.
17.
18.

Design for Manufacturing

Prototyping
Robust Design
Patents and Intellectual Property
Product Development Economics
Managing Projects

EMGT- PRODUCT DESIGN AND DEVELOPMEN

What is an opportunity?

It is an idea for a new product.

Its a product description in embryonic form,
a newly sensed need, a newly discovered
technology, or a rough match between a
need and possible solution.
It is an hypothesis about how value might
be created.
Example:
Opportunity pursued by FroliCat following a
brain storming session.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

What is an opportunity?
Opportunity pursued by
FroliCat following a brain
storming session
This is an example of an
opportunity that includes a
possible solution concept, which
is typical for efforts focused on
identifying opportunities for
new products in a well defined
category like cat toys.

Excerpted from http://www.perpetualkid.com/frolicat-swaymagnetic-cat-toy.aspx

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Types of Opportunities
Two dimensions that are particularly useful to
categorize opportunities.
The extent to which the team is familiar with the
solution likely to be employed (knowledge of the
technology )
The extend to which the team is familiar with the
need that the solution addresses (knowledge of
the market)

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Types of Opportunities
Horizons 1,2 and 3 represent
increasing levels of risk,
reflecting different types of
uncertainties.
Example:
In need to launch a product
within a year, FroliCat
avoided Horizon 3
opportunities. It focused on
its existing customers and
existing needs as it wished to
build success with the bolt
cat toy.
It sought a next generation
solution for the existing need
to entertain cats, and thus
focused on Horizon 2
opportunities.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Tournament Structure of Opportunity Identification

Opportunities vary widely in value;

however that value is plagued by
uncertainty.
Selecting a subset from a set of
opportunities (opportunity
identification process) with just a few
best ones coming to fruition is the
Product
process
of innovation tournament.
Opportunity
Product
OpportunityIdentification
Identification
Development Process
Process
Process

Development Process

Innovation
Tournament

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Tournament Structure of Opportunity Identification
Product
Product
Development
DevelopmentProcess
Process

Opportunity
OpportunityIdentification
Identification
Process
Process

Opportunity Tournament

Exceptional Opportunities

Concept System-Level
Detail
Concept System-Level
Detail
Planning
Design
Design
Planning Development
Development
Design
Design

Testing and Production

Testing and Production
Refinement Ramp-Up
Refinement Ramp-Up

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Tournament Structure of Opportunity Identification

Example:
The opportunity
identification
tournament
structure used by
FroliCat, starting
with 50 opportunities
and eventually
resulting in one
chosen to go into full
product
development.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Opportunity Identification Process

Opportunity identification process

can be divided into 6 steps:
1. Establish a charter.
2. Generate and sense many
opportunities.
3. Screen opportunities.
4. Develop promising opportunities.
5. Select exceptional opportunities.
6. Reflect on the results and the process.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 1: Establish an Innovation Charter
The innovation charter articulates the goals
growing revenues from existing customers,
filling a hole in a product line,
entering new market segments
creating a new product related to an area of personal interest
establishes boundary conditions for an innovation effort.

Charters are closely analogous to the mission statement for a new product.
Example:
The charter for FroliCat effort was to create a physical product in the cat toy
category that we can launch to the market within about a year through our existing
retail sales channel
The main restrictions in this charter:

Emphasis on physical goods instead of software or services.

Focus on the cat toy category.
Preference for opportunities that would not require investments of calendar time.
Desire to take advantage of the companys existing relationships with retailers.

The charter requires resolving a tension between leaving the innovation

problem unconstrained, and specifying a direction that is likely to meet the
goals of the team and organization.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 2: Generate and Sense Many Opportunities

Based on a survey, about half of innovation opportunities are

generated internally to an organization and about half are recognized
from customers and other external sources.

Fortunately, this daunting task of identifying opportunities is made

much easier through the application of some structured
techniques which we outline here.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 2: Generate and Sense Many Opportunities

Techniques for generating opportunities

Follow a personal passion.

Compile bug lists.
Pull opportunities from capabilities. (Use
VRIN Valuable, Rare, Inimitable,
Nonsubstituable)
Study customers.
Study implications of trends.
Imitate, but better.
Mine your sources.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 3: Screen Opportunities
Goal is to eliminate unlikely opportunities to result in value creation
and to focus on worth full opportunities for further investigation.
The process must be relatively efficient, even at the expense of
perfect accuracy.
Two methods of effective approaches to screening:
Web based surveys:
The participant dont know the author of each idea. So, the votes
are based on the quality of the opportunity, not on the originator.
In our experience we need at least 6 independent judgment and
preferable more than 10 to make reliable decisions.
Workshops with multi-voting:
Each participant presents a single slide, page, flip chat sheet of one or
more opportunities to the group.
The group of raters multi-vote on the opportunities.
By this method you avoid influencing the voting decisions with
information about how others have voted.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 3: Screen Opportunities
Example:
The FroliCat team developed 50 raw
opportunities as a result of 6 individuals
working independently and in brain storming
sessions.
The team identified 7 opportunities worthy of
further development, by aggregating the
individual judgments of the team members
including both product designers and
marketing designers at FroliCat.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 4: Develop Promising Opportunities
The goal is to resolve the greatest uncertainty surrounding
each one at the lowest cost in time and money.
This can be done by listing the major uncertainties
regarding the success of each opportunity, the tasks you
could take to resolve the uncertainties and the
approximate cost of each task followed by performing the
tasks that resolve the most uncertainty at the lowest cost.
Example:
The FroliCat team explored 7 opportunities from step 3 and
selected 3 opportunities for further development. The further
development tasks were to build functional prototypes and test
them with cat and cat owners, create packaging concepts, test
their appeal with consumers and complete financial analysis
based on manufacturing cost and price points.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 5: Select Exceptional Opportunities
Enough uncertainty should be resolved in order to pick the
exceptional few opportunities that warrant a significant
investment in product development.
One specific approach used within established companies is
Real-Win-Worth-It (RWW) method, developed originally
by 3M.
The method summarizes the following three questions:
Is the opportunity real? market size, potential price, technology
availability, likelihood of delivering the product in the required
volume at the required cost.
Can you win this opportunity? Can you establish a sustainable
competitive advantage? Can you patent or brand the idea? Are
you more capable of executing it than competitors?
Is the opportunity worthy it financially? Do you have resources?
Are you confident that the investment will be rewarded with
appropriate returns?

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 5: Select Exceptional Opportunities

The RWW criteria applied to Swinging ball opportunity for

FroliCat.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 6: Reflect on the Results and the Process
The FroliCat team pursued the swing ball opportunity and developed
a product for sale which was named the Sway.
It was launched through major retailers such as Amazon.
The market success is not the only success criterion for the process.
Some questions to be considered are:
How many of the opportunities identified came from internal sources
vs. external sources?
Did we consider dozens or hundreds of opportunities?
Was the innovation charter too narrowly focused?
Were our filtering criteria biased, or largely based on the best possible
estimates of eventual product success?
Are the resulting opportunities exciting to the team?

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Textbook
Product Design and Development
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Introduction
Development Processes and Organizations
Opportunity Identification
Product Planning
Identifying Customer Needs
Product Specifications
Concept Generation
Concept Selection
Concept Testing
Product Architecture
Industrial Design
Design for Environment

13.
14.
15.
16.
17.
18.

Design for Manufacturing

Prototyping
Robust Design
Patents and Intellectual Property
Product Development Economics
Managing Projects

EMGT- PRODUCT DESIGN AND DEVELOPMEN

The Product Planning Process

The product plan identifies the portfolio of

products to be developed by the organization and
the timing of their introduction to the market.
The product planning process takes place before
a product development project is formally
approved, before substantial resources are
applied, and before the larger development team
is formed.
It is an activity that considers the portfolio of
projects that an organization might pursue and
determines what subset of these projects will be
pursued over what period of time.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

The Product Planning Process
An example of a product plan listing products to be
developed and indicating the time frame for each

The product plan identifies the portfolio of projects to be pursued by the

development organization
This plan divides projects into 4 categories: New platforms, Derivatives of
existing platforms, product improvement and fundamentally new products.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

The Product Planning Process
Four types of Product Development Projects
1. New product platforms:
It involves a major development effort to create a
new family of products based on a new, common
platform.
Example: The Xerox Lakes project, aimed at the
development of a new, digital copier platform is
an example for this type of project.
2. Derivatives of existing product platforms:
These extend an existing product platform to
better address familiar markets with one or more
new products.
Example: To develop a new copier based on an

EMGT- PRODUCT DESIGN AND DEVELOPMEN

The Product Planning Process
Four types of Product Development Projects
3. Incremental improvements to existing products:
It only involves adding or modifying some features of
existing products in order to keep the product line
competitive.
Example: A slight change to remedy minor flaws in an
existing copy of product is an example of this type of
project.

4. Fundamentally new products:

It involves radically different products or production
technologies and may help to address new and unfamiliar
markets. It involves more risk and long term success
depends on what is learnt through these important projects.
Example: The first digital copier Xerox.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

The Product Planning Process
The Process

First, multiple opportunities are prioritized and set of

promising projects are selected.
Resources are allocated to these projects and they are
scheduled.
Once projects have been selected and resources
allocated, mission statement is developed for each
project.
The formulation of a product plan and development of a
mission statement therefore precede the actual product
development process.

Step 1: Identify Opportunities

Opportunity identification process

can be divided into 6 steps:
1. Establish a charter.
2. Generate and sense many
opportunities.
3. Screen opportunities.
4. Develop promising opportunities.
5. Select exceptional opportunities.
6. Reflect on the results and the process.

Step 2: Evaluate and Prioritize Projects

This step involves selecting the most

promising projects to pursue.
The 4 basic perspectives useful in evaluating
and prioritizing opportunities for new
products in existing product categories:
1.
2.
3.
4.

Competitive strategy.
Market segmentation.
Technological trajectories.
Product platforms.

Step 2: Evaluate and Prioritize Projects

1. Competitive Strategy
An organizations competitive strategy defines a basic approach to
markets and product with respect to competitors.
Several strategies such as
Technology leadership:
Great emphasis on basic research on development of new technologies and
deployment of these technologies through product development.

Cost leadership:
Competes on production efficiency, either through economies of scale, use of
superior manufacturing methods, low cost labor or better management of the
production system.

Customer focus:
The firm works closely with new and existing customers to assess the changing
needs and preferences. This may lead in a broad product line featuring high
product variety.

Imitative:
It involves closely following trends in the market, allowing competitors to explore
which new products are successful for each segment. The firm quickly launches
new products to imitate the successful competitors whenever viable opportunities
have been identified.

Step 2: Evaluate and Prioritize Projects

2. Market segmentation
Dividing a market into segments allows the firm to consider the actions of
competitors and strength of firms existing products with respect to each well
defined group of customers.
Example: product segment map showing Xerox B&W digital products and
competition in three market segments: personal, workgroup and department
machines.
65 ppm

65 ppm
network
$31k

$23k
55 ppm

Department

$20k
40 ppm

60 ppm
network
$35k

Lakes
Project

$16k
25 ppm
$10k

35 ppm
$15k

Lakes
Extensions
Legend

40 ppm
$20k

Xerox
product

Workgroup
30 ppm
$10k

40 ppm
network
$20k

competitor
product

Hodaka Project
Personal

20 ppm
$8k

25 ppm
$9k

potential
competitor

30 ppm
$10k

20 ppm
$7k

1997

1998

1999

2000

Year of
Release

Step 2: Evaluate and Prioritize Projects

3. Technological trajectories
The key product planning decision is when to adopt a basic new technology
in a product line. Technology S-curves are a conceptual tool to help think
about such decisions.
The S-curve illustrates the basic important concept: Technologies evolve
from initial emergence when performance is low, through rapid growth in
performance based on experience and finally approach maturity when some
natural technology limit is reached and technology may become obsolete.
Digital
Technology

Copier
Performance

ample:
chnology S-curve illustrating
rox belief when digital
pier technologies were just
merging and would improve
oduct performance in coming years

Light-Lens
Technology

Time

Step 2: Evaluate and Prioritize Projects

4. Product platform planning
It is a set of assets shared across a set of products. Components
and sub assemblies are often the most important of these assets.
To create a technology road map, multiple generations of
technologies are labeled and arranged along a timeline.

The technology road map can be augmented with the

timing of projects and projects that would utilize these
technological developments (Also known as product-

Step 2: Evaluate and Prioritize Projects

Evaluating fundamentally new product
opportunities
Example: This
technology road map
shows the life cycles of
several digital
photocopying
technologies and
identifies which
technologies would be
used in each product.
For the Lakes platform,
Xerox selected
technologies for critical
functions that could be
extended to the higher
speeds and color
capability required of its
derivative products.

Step 2: Evaluate and Prioritize Projects

Evaluating fundamentally new product
opportunities
Some investment are necessary to periodically
rejuvenate the product portfolio. Some criteria for
evaluating fundamentally new product opportunities:
Market size (units/year X average price).
Market growth rate (% per year).
Competitive intensity (no. of competitors and their
strengths).
Depth of the firms existing knowledge of the market.
Depth of the firms existing knowledge of the technology.
Fit with the firms other products.
Fit with the firms capabilities.
Potential for patents, trade secrets or other barriers to
competition.
Existence of a product champion within the firm.

Step 2: Evaluate and Prioritize Projects

Balancing the portfolio
Wheelwright and Clark (1992) plots the portfolio of projects along two
specific dimensions: the extent to which the project involves a change in the
product line and the extent to which project involves a change in production
process. This mapping is called product-process change matrix.

The size of the circles

Indicates the relative cost
of the development projec

Step 3: Allocate Resources and Plan Timing

Resource allocation
Aggregate planning helps an organization make
efficient use of its resources by pursuing only those
projects that can reasonably be completed with the
budgeted resources.
Estimating the resources required for each of the
projects in the plan by month, quarter, year forces the
organization to face the realities of finite resources.
Estimates of required resources in each period can be
compared with available resources to compute an
overall capacity utilization ratio as well as utilizations
by resource types.

Step 3: Allocate Resources and Plan Timing

Resource allocation
This spreadsheet uses units of person-years, although smaller time units are
commonly used in practice.

Step 3: Allocate Resources and Plan Timing

Project timing
Determining the timing and sequence of projects,
called pipeline management must consider the
factors:
Timing of product introductions:
Generally the sooner the product to market the better.

Technology readiness:
The robustness of the underlying technologies plays a critical role
in planning process.

Market readiness:
The sequence of product introductions determines whether early
adopters buy the low end product and may trade up or they buy
the high end product offered at a high initial price.

Competition:
The anticipated release of competing products may accelerate the
timing of development projects.

Step 3: Allocate Resources and Plan Timing

The Product plan
The set of projects approved by the planning process,
sequenced in time, becomes the product plan.
Product plans are updated on a periodic basis, perhaps
quarterly or annually.
The plan may include a mix of fundamentally new products,
platform projects and derivative projects of varying size.

Step 4: Complete Pre-Project Planning

Mission Statement
The team formulates a detailed definition of the target market and the assumptions
under which the development team will operate, known as mission statement.
Lakes Project Mission Statement

Product Description
Networkable, digital machine with copy, print, fax, and scan functions
Key Business Goals
Support Xerox strategy of leadership in digital office equipment
Serve as platform for all future B&W digital products and solutions
Capture 50% of digital product sales in primary market
Environmentally friendly
First product introduction 4thQ 1997
Primary Market
Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)
Secondary Markets
Quick-print market
Small satellite operations
Assumptions and Constraints
New product platform
Digital imaging technology
Compatible with CentreWare software
Input devices manufactured in Canada
Output devices manufactured in Brazil
Image processing engine manufactured in both USA and Europe
Stakeholders
Purchasers and Users
Manufacturing Operations
Service Operations
Distributors and Resellers

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 4: Complete Pre-Project Planning
The team formulates a detailed definition of the target market and the assumptions
under which the development team will operate, known as mission statement.
Lakes Project Mission Statement

Product Description
Networkable, digital machine with copy, print, fax, and scan functions
Key Business Goals
Support Xerox strategy of leadership in digital office equipment
Serve as platform for all future B&W digital products and solutions
Capture 50% of digital product sales in primary market
Environmentally friendly
First product introduction 4thQ 1997
Primary Market
Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)
Secondary Markets
Quick-print market
Small satellite operations
Assumptions and Constraints
New product platform
Digital imaging technology
Compatible with CentreWare software
Input devices manufactured in Canada
Output devices manufactured in Brazil
Image processing engine manufactured in both USA and Europe
Stakeholders
Purchasers and Users
Manufacturing Operations
Service Operations
Distributors and Resellers

Step 4: Complete Pre-Project Planning

Staffing and other pre-Project planning
activities

It generally addresses project staffing and

leadership.
Budgets are also generally established during
pre-project planning.
For fundamentally new products, budgets and
staffing plans will be for the concept
development phase of development only. This
is due to high uncertainty. More detailed
planning occurs if the concept is developed
further.

EMGT- PRODUCT DESIGN AND DEVELOPMEN

Step 5: Reflect on the results and the process
Suggested questions at the final step of the planning and strategy
process to assess the quality of both the process and the results:
Is the opportunity funnel collecting an exciting and diverse set of product
opportunities?
Does the product plan support the competitive strategy of the firm?
Does the product plan address the most important current opportunities facing
the firm?
Are the total resources allocated to product development sufficient to pursue
the firms competitive strategy?
Have creative ways of leveraging finite resources been considered, such as the
use of product platforms, joint ventures and partnerships with suppliers?
Does the core team accept the challenges of resulting mission statement?
Are the elements of the mission statement consistent?
Are the assumptions listed in the mission statement really necessary or is the
project over constraint? Will the development team have the freedom to
develop the best possible product?
How can the product planning process be improved?

This early stage is the time to remedy the known flaws, lest they
become more severe and expensive as the development process
progresses.