Article

New Product Development

Experts always bemoan the low success rates of new products launched in the market. As per Nielsen report, more than 85% of new consumer packaged goods fail. To be fair, failure rates are actually difficult to assess. There are different definitions of success and failure between companies and between researchers. But it remains a well known fact that the failure rates of new products are significantly high. New products getting shelved before launch may be another story. Product failures occur when a new product after its launch fails to gain adequate sales, and fails to recover its cost. Company makes a loss on the product. The products that look great on paper often fail to meet customers’ expectations. There are many examples from some of the biggest companies in the world.

In 2012 “Google Glass” was launched as the future of Artificial Intelligence, which officially ended in 2015. “Apple Air Power,” a cable free charging mat to power iPhone, Apple Watch and AirPods simultaneously, ended in failure before its launch. Amazon's “Fire Phone” launched in 2014 was discontinued the very next year. “Microsoft Zune,” launched in 2006 in competition to the iPod, was discontinued in 2011. Cosmopolitan magazine expanded into yogurt in 1999. The ill-fated yogurt line lasted 18 months. Galaxy Note 7 encountered a serious problem with the phone's battery. It caught fire on several occasions leading to suspension of its production. Maruti (Suzuki) introduced “Kizashi” midsize luxury sedan in 2011. It was withdrawn within three years.

 

Recently, in the last week of March 2022, fire incidents involving electric two-wheelers were reported in Pune, Vellore, Tiruchirappalli and Chennai. These models belonged to brands such as Ola, Okinawa and Pure EV. The Government of India is still investigating this matter, as these have potential to derail Indian EV journeys, at least in two wheelers.

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New product development is one of the most important activities of an organization.  It impacts the company’s competitive position. Decisions made during new product development determine quality, durability, reliability, costs, sales volume, and brand value of the product. In turn the company brand value gets impacted. But most companies struggle to do the new product development well. Products and services often fail to live up to customer expectations. Cost overruns and delays are common. Late and costly engineering changes, often done post product launch, kills the product in the market. 

New Product Development is not as easy as we think. It is more about creating usable knowledge. New Product development requires purposeful creativity to increase the value for the customer and lower the cost of producing product. More value creates demand for the product in the market. Lower cost structure enables companies to offer products at a competitive price. Thus, enough revenue and profit get assured. New Product Development begins with a few important questions: Who are the customers for the new product? What value must we provide to the customers? What price will make the product competitive? What target cost are we aiming at? What actions does each function need to carry out to contribute to the purpose of new product development? What new knowledge is being created? How do we make use of the new knowledge? What new capabilities need to be developed? What attractive quality features are we aiming to provide?  Are these unique or superior to the competitors?

 

"Attractive quality product and stretched target cost encourages creativity and develops new knowledge."

We are in a hyper-competitive world with technological disruptions. Geo-political landscape is in flux. These make new product development essential for every business and every country. Timely and efficient development of new products is essential. In fact, its matter of survival and growth. But what we see is antiquated, cumbersome, inefficient and ineffective new product development processes in the companies, whereas many master the art of reverse engineering. Organizations often plan a large number of projects. Managements keep  changing their priorities. Project delays are common. Products are launched in a hurry and many design changes are made after customer complaint analysis and warranty analysis. Same mistakes  are repeated again and again. At times, the wheel is rediscovered.

Significant improvements are required to bring in the customer-needs, stated and implied, into the new product development process. Very few companies use Quality Function Deployment to systematically and rigorously evaluate customers' needs. Rarely, the Kano Model is used to analyze attractive quality elements to develop hit products. These methods help the development teams to interact with target customers and understand their real problems. The challenges of new product development keep changing, as markets and competition become more global, as engineering and design talent become more dispersed, as product development efforts start involving a broader set of organizational units, and as information and communications technologies keep changing in the way people work.

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An integrated new product development process requires teams to be cross functional. The marketing chain, design and development of the product, assembly and manufacturing, and the supply chain, must all be put together to create a hit product. As the process becomes more integrated, the demand for information increases. New Product Development teams must integrate information by collecting customer voice, benchmarking product performance from customer view point, technical benchmarking with competitive products, and collecting inputs from sales service, assembly, manufacturing, and supply chain. The greatest leverage in designing new products is in the early stages of the product development process. Therefore we need front loading of the development process. Methods such as collecting the voice of the customer, developing House of Quality and Kano Model empowers the development team to develop a product that delights the customer. A hit product attracts customers and competitors. Attractive quality products and features soon get copied by competitors. Competitive Intelligence is needed to remain one step ahead in the market.

Leading organizations are continuously under pressure to launch new products and services to gain competitive advantage. Traditional design practice tends to quickly converge on a solution, a point in the solution space, and then modify that solution until it meets the design objectives. Often one picks the wrong starting point. Subsequent iterations to refine that solution can be very time consuming and lead to a suboptimal design. In contrast, “set-based concurrent engineering” (SBCE) begins by broadly considering sets of possible solutions and gradually narrowing the set of possibilities to converge on a final solution. A wide net from the start, and gradual elimination of weaker solutions, makes finding the best or better solutions more likely. 

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In SBCE process, the developers:

  • Use trade-off curves and design guidelines to characterize known feasible design sets

  • Identify and develop multiple alternatives, and eliminate alternatives when proven inferior or infeasible

  • Start with design targets, and allow the actual specifications and tolerances to emerge through actual analysis and testing

  • Delay selecting the final design and establishing the final specifications until the team knows enough to make a good decision

 

The SBCE approach yields substantial organizational learning. It takes less time and costs less in the long term than point-based engineering systems that select a design solution early in the development process, with the typical consequence of false starts, rework, failed projects, and minimal learning.

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