Managing the product development process 267 Process, with the three functions-R&D, manufacturing and marketing -playing the central role in turns(Song et al, 1998) Think break Are you a manager? If yes, answer the questions directly. If no, answer the questions as related to your manager 1. For what area of product development are you(or the manager) responsible? 2. Identify your responsibilities 3. How do these relate to the responsibilities of the manager above you? 4. How do these responsibilities relate to your abilities? Do you need more abilities or improved abilities? How could you attain these? 5. How do you relate to other areas of product development, other people in product development? 6. Would these relations improve with a top management decision to have collaboration as a basic company philosophy? 6.3 Designing the pd process The PD Process is the framework to build up both product development projects and the product development programme. The selection of activities in the PD Process depends on the knowledge and skills in the company, knowledge easily available outside the company, the risks involved through lack of knowledge, he importance of the product development for the future of the company, and most important the level of innovation 6.3.1 The effects of knowledge and skills on the pd process Knowledge and skills in the company, and also the company's philosophy on product development, affect the choice of activities and therefore the structure of the PD Process. If the company is not able to do consumer research, it may do personal research with the retailer, food service buyer, their family and friends. If the company does not have formulation skills, it will take a formula from the ingredient supplier. If the company does not have process engineering skills, it will buy a turnkey processing line from an equipment supplier. Or if there are no innovation skills in the company, then it will acquire another company! Some company managers are conservative and some want excitement. some are risk takers and some are fearful of risk these differences cause differences in the PD Process used in the company. Some companies bring new products through to market as quickly as possible issing activities such as business analysis and test marketing, as they are prepared to live with failures, other companies include all activities so as to
Process, with the three functions – R&D, manufacturing and marketing – playing the central role in turns (Song et al., 1998). 6.3 Designing the PD Process The PD Process is the framework to build up both product development projects and the product development programme. The selection of activities in the PD Process depends on the knowledge and skills in the company, knowledge easily available outside the company, the risks involved through lack of knowledge, the importance of the product development for the future of the company, and most important the level of innovation. 6.3.1 The effects of knowledge and skills on the PD Process Knowledge and skills in the company, and also the company’s philosophy on product development, affect the choice of activities and therefore the structure of the PD Process. If the company is not able to do consumer research, it may do personal research with the retailer, food service buyer, their family and friends. If the company does not have formulation skills, it will take a formula from the ingredient supplier. If the company does not have process engineering skills, it will buy a turnkey processing line from an equipment supplier. Or if there are no innovation skills in the company, then it will acquire another company! Some company managers are conservative and some want excitement, some are risk takers and some are fearful of risk; these differences cause differences in the PD Process used in the company. Some companies bring new products through to market as quickly as possible, missing activities such as business analysis and test marketing, as they are prepared to live with failures; other companies include all activities so as to Think break Are you a manager? If yes, answer the questions directly. If no, answer the questions as related to your manager. 1. For what area of product development are you (or the manager) responsible? 2. Identify your responsibilities. 3. How do these relate to the responsibilities of the manager above you? 4. How do these responsibilities relate to your abilities? Do you need more abilities or improved abilities? How could you attain these? 5. How do you relate to other areas of product development, other people in product development? 6. Would these relations improve with a top management decision to have collaboration as a basic company philosophy? Managing the product development process 267
268 Food product development reduce their risk of failure in the market. So the pD Process is specific to the company and its knowledge, skills, and philosophy 6.3.2 Level of innovation and the pd process A comparison of the PD Processes for radical and incremental changes is shown in Table 6. 1. The sequence of the activities varies, for example in the incremental change there is generally a linear sequence in the PD Process, but in the radical innovation, there is often recycling of activities. The incremental product changes can be developed and marketed according to a standard PD Process with strong involvement of the functional departments such as marketing and production. The radical innovation uses generalised Table 6.1 Differences in the PD Process for platform and derivative products Radical innovations Incremental changes (new platform products) (derivative products) Stage 1: Product strategy development Probing problems with consumers Consumers setting attributes Focused project objectives Clear schedules and time goals Developed product concept General product concept New product design specifications Standard product design specification New market probing studies Market surveys Stage 2: Produc and process development Refining product attribute measures onship studies Product formulation Pilot plant studies ocess improvement Frequent product testing Strategic product testing Stage 3: Product commercialisation Design of new production method Adaptation of production Design of new quality assurance Adaptation of quality assurance Commissioning of new plant Minor plant changes New marketing strategy Improvement of marketing strategy Detailed business and market analysis Setting market and financial targets tage 4: Launching and post-launch evaluation Rolling launch or pre-launch test market National launch Continuous market analysis Assessing if market targets met Continuous financial analysis Assessing if financial targets me Overall managemen High ong-term commitment of capital Short-term commitment of capital Long-term commitment of human resources Short-term commitment of human re sources Source: From Earle and Earle, Building the Future on New Products, o LFRA Ltd, 2000, by permission of Leatherhead Food RA, Leatherhead, UK
reduce their risk of failure in the market. So the PD Process is specific to the company and its knowledge, skills, and philosophy. 6.3.2 Level of innovation and the PD Process A comparison of the PD Processes for radical and incremental changes is shown in Table 6.1. The sequence of the activities varies, for example in the incremental change there is generally a linear sequence in the PD Process, but in the radical innovation, there is often recycling of activities. The incremental product changes can be developed and marketed according to a standard PD Process with strong involvement of the functional departments such as marketing and production. The radical innovation uses generalised Table 6.1 Differences in the PD Process for platform and derivative products Radical innovations Incremental changes (new platform products) (derivative products) Stage 1: Product strategy development Probing problems with consumers Consumers setting attributes Focused project objectives Clear schedules and time goals Developed product concept General product concept New product design specifications Standard product design specification New market probing studies Market surveys Stage 2: Product design and process development Building product attribute measures Refining product attribute measures Product/process interrelationship studies Product formulation Pilot plant studies Process improvement Frequent product testing Strategic product testing Stage 3: Product commercialisation Design of new production method Adaptation of production Design of new quality assurance Adaptation of quality assurance Commissioning of new plant Minor plant changes New marketing strategy Improvement of marketing strategy Detailed business and market analysis Setting market and financial targets Stage 4: Launching and post-launch evaluation Rolling launch or pre-launch test market National launch Continuous market analysis Assessing if market targets met Continuous financial analysis Assessing if financial targets met Overall management Project milestones to control High importance of speed Long-term commitment of capital Short-term commitment of capital Long-term commitment of human resources Short-term commitment of human resources Source: From Earle and Earle, Building the Future on New Products, LFRA Ltd, 2000, by permission of Leatherhead Food RA, Leatherhead, UK. 268 Food product development
Managing the product development process 269 ctivities because creativity and problems in the project are difficult to predict or the radical innovation, there is a need to develop technical and market knowledge in the first two stages of the product development process and to include product/market testing and business analysis in the product commercia isation stage. In the initial stages product concepts are developed with the consumers; product designers make some models or prototypes of possible products and ask the consumers to evaluate further product concepts are developed; and evaluated by marketing and processing technologists to see if any are possible for commercialisation Later in the PD Process, early versions are marketed quickly on a small scale, btaining the user feedback and making modifications before expanding the market. Usually for the radical innovation, the company's resource commit ments are made at sequential times in the PD Process, and not at the beginning of the project as for incremental products(Mullins and Sutherland, 1998 In the incremental product projects, a great deal of the knowledge is already n the company, so there is less need for new research in building the direction of the project(Earle and Earle, 2000 ). The product concept can be developed by a marketer and a product designer, evaluated by consumers to check that no mistakes have been made, and the product specifications written in the standard form for this type of product. A national launch usually targets the total market Between the extremes of radical and incremental changes, major hanges can need different types of PD Processes. If major changes in market and production are being made, they can be similar to the PD Process for radical innovations. If the major change is marketing related, for example a positioning change, the PD Process is similar to the incremental PD Process with an emphasis on the marketing change; if production related, such as a new process, it is an incremental PD Process with an emphasis on technical development 6.3.3 Other factors in designing the pd process Other factors to be considered in designing the PD Process framework for the ompany are: place in the food system, environment, technology, marketing and company resources. Primary production, industrial and consumer food product development have differences in their PD Processes, which will be described Chapter 7. There may be strong societal and political constraints on product development that need to be included in the PD Process, obviously food regulations limit the processing and the raw materials, but religious requi ments are also often important; or it can be recycling of packaging or othe environmental problems. If these are not included in an early part of the PD Process, a great deal of time and money can be wasted. Technology in processing, distribution and marketing has also to be considered what is
activities because creativity and problems in the project are difficult to predict. For the radical innovation, there is a need to develop technical and market knowledge in the first two stages of the product development process and to include product/market testing and business analysis in the product commercialisation stage. In the initial stages: • product concepts are developed with the consumers; • product designers make some models or simple prototypes of possible products and ask the consumers to evaluate them; • further product concepts are developed; and • evaluated by marketing and processing technologists to see if any are possible for commercialisation. Later in the PD Process, early versions are marketed quickly on a small scale, obtaining the user feedback and making modifications before expanding the market. Usually for the radical innovation, the company’s resource commitments are made at sequential times in the PD Process, and not at the beginning of the project as for incremental products (Mullins and Sutherland, 1998). In the incremental product projects, a great deal of the knowledge is already in the company, so there is less need for new research in building the direction of the project (Earle and Earle, 2000). The product concept can be developed by a marketer and a product designer, evaluated by consumers to check that no mistakes have been made, and the product specifications written in the standard form for this type of product. A national launch usually targets the total market. Between the extremes of radical and incremental changes, major product changes can need different types of PD Processes. If major changes in product, market and production are being made, they can be similar to the PD Process for radical innovations. If the major change is marketing related, for example a positioning change, the PD Process is similar to the incremental PD Process with an emphasis on the marketing change; if production related, such as a new process, it is an incremental PD Process with an emphasis on technical development. 6.3.3 Other factors in designing the PD Process Other factors to be considered in designing the PD Process framework for the company are: place in the food system, environment, technology, marketing and company resources. Primary production, industrial and consumer food product development have differences in their PD Processes, which will be described in Chapter 7. There may be strong societal and political constraints on product development that need to be included in the PD Process; obviously food regulations limit the processing and the raw materials, but religious requirements are also often important; or it can be recycling of packaging or other environmental problems. If these are not included in an early part of the PD Process, a great deal of time and money can be wasted. Technology in processing, distribution and marketing has also to be considered – what is Managing the product development process 269
270 Food product development standard, what is new?(Earle and Earle, 2000). With the large multinational food companies, there is often a requirement for fast processing and large-scale equipment. This means that the product design, and the process development, start in the first stage of the pd process with the consumer research, and then develop together. In recent years there has been a great deal spoken about concurrent engineering in other industries(Tomiyama, 1998), developing the product and the production methods in parallel. In the food industry it is crucial that the product design and the process development are interwoven from early in product concept development and product design. For the smaller companies sing simpler equipment, it can be possible to do a significant amount of product design on kitchen size equipment before building up the process 6.3.4 Using and changing the pd process The company, often through experience, has found the important activities for their industry and business-although sometimes this is not so much by careful analysis after product development projects are completed, but by copying the actions of competitors or the industry in general or the latest fashion. Selecting both the activities and also intensity of work in each activity needs to be based not on we have al ways done it that way"the industry does it that way but on what is needed to achieve the target aims and outcomes Selection of the activities involves · resources needed outcomes timing of activities ontrols for measurement of progress( Gruenwald, 1988 The PD Process is not a static framework but needs to be evaluated regularly so that it can be updated for the new knowledge and skills in the company, the new directions chosen for the company and the changing environment. The use of some novel activities in the PD Process leads to the competitive edge of the company But the PD Process always has a basic framework, which has been built up by T strategies and therefore new PD Processes for product development but this need exceptional entrepreneurial skills, sustained commitment to new products for company growth and an acceptance of risk taking(Gruenwald, 1988). Without making drastic changes, top management can send the right signals to the organisation for evaluation and necessary change to the PD Process,for ommunication between different people to recognise changes, and for a dynamic organisation that can cope with change in the PD Process(O'Connor, 1996) The management of the pd process varies from ce companies put the framework on the internal communication network and expect product development staff to consult it; other companies set out a rigid PD Process with the activities and often the techniques identified as to what is to be done in all projects
standard, what is new? (Earle and Earle, 2000). With the large multinational food companies, there is often a requirement for fast processing and large-scale equipment. This means that the product design, and the process development, start in the first stage of the PD Process with the consumer research, and then develop together. In recent years there has been a great deal spoken about concurrent engineering in other industries (Tomiyama, 1998), developing the product and the production methods in parallel. In the food industry it is crucial that the product design and the process development are interwoven from early in product concept development and product design. For the smaller companies using simpler equipment, it can be possible to do a significant amount of product design on ‘kitchen’ size equipment before building up the process. 6.3.4 Using and changing the PD Process The company, often through experience, has found the important activities for their industry and business – although sometimes this is not so much by careful analysis after product development projects are completed, but by copying the actions of competitors or the industry in general or the latest fashion. Selecting both the activities and also intensity of work in each activity needs to be based not on ‘we have always done it that way’ or ‘the industry does it that way’ but on what is needed to achieve the target aims and outcomes. Selection of the activities involves: • reason for the activity; • resources needed; • outcomes expected; • timing of activities; • controls for measurement of progress (Gruenwald, 1988). The PD Process is not a static framework but needs to be evaluated regularly so that it can be updated for the new knowledge and skills in the company, the new directions chosen for the company and the changing environment. The use of some novel activities in the PD Process leads to the competitive edge of the company. But the PD Process always has a basic framework, which has been built up by experience and is only slowly changed. Top management can instigate new strategies and therefore new PD Processes for product development but this needs exceptional entrepreneurial skills, sustained commitment to new products for company growth and an acceptance of risk taking (Gruenwald, 1988). Without making drastic changes, top management can send the right signals to the organisation for evaluation and necessary change to the PD Process, for communication between different people to recognise changes, and for a dynamic organisation that can cope with change in the PD Process (O’Connor, 1996). The management of the PD Process varies from company to company. Some companies put the framework on the internal communication network and expect product development staff to consult it; other companies set out a rigid PD Process with the activities and often the techniques identified as to what is to be done in all projects. 270 Food product development
Managing the product development process 271 Think break Does your company have a PD Process framewo 1. Discuss how the pd process framework. (a) recognises the companys philosophy, knowledge and skills, (b)adapts to innovation level, type of technology, marketing, environment, food regulations, (c) identifies the activities for each of the four stages of the PD Process, (d) puts these activities into parallel or sequential positions (e) shows the necessary collaboration between people and departments 2. What changes could be made to your company's PD Process framework that would make product development more effective and efficient in your company (If your company does not have a PD Process framework, design one using the above criteria. 6.4 Establishing key decision points and the decision makers Many people make decisions in product development at all levels- from the top management and the board of Directors, who decide on the overall project and its resources, to the process worker, who decides on the detail of production for the new product, and the salesperson, who decides the factors that they think will encourage the customer to buy the product. All the decisions follow on from decisions made by other people, and are linked with other decisions. This interrelationship between decisions is not always recognised in the company and therefore important decision making is not identified. The top management receives a report that is based on the knowledge and decisions of middle management or perhaps of a product approval committee, and then makes its decision on this report combined with other knowledge it may have. The decision made by top management determines the project for the project leader, whose decisions determine how the project is to be organised. Decisions and the development; poor decisions based on inaccurate knowledge lead to product failures, and good decision making based on sound knowledge leads to product success 6.4.1 Top managements decisions Top management and often the directors on the company Board handle the ritical decisions between the stages. Basically there are two decisions ve go on or stop the pro What resources does the company put into further development?
6.4 Establishing key decision points and the decision makers Many people make decisions in product development at all levels – from the top management and the Board of Directors, who decide on the overall project and its resources, to the process worker, who decides on the detail of production for the new product, and the salesperson, who decides the factors that they think will encourage the customer to buy the product. All the decisions follow on from decisions made by other people, and are linked with other decisions. This interrelationship between decisions is not always recognised in the company and therefore important decision making is not identified. The top management receives a report that is based on the knowledge and decisions of middle management or perhaps of a product approval committee, and then makes its decision on this report combined with other knowledge it may have. The decision made by top management determines the project for the project leader, whose decisions determine how the project is to be organised. Decisions and the knowledge used to make them are the foundation stones for product development; poor decisions based on inaccurate knowledge lead to product failures, and good decision making based on sound knowledge leads to product success. 6.4.1 Top management’s decisions Top management and often the directors on the company Board handle the critical decisions between the stages. Basically there are two decisions: • Do we go on or stop the product development? • What resources does the company put into further development? Think break Does your company have a PD Process framework? 1. Discuss how the PD Process framework: (a) recognises the company’s philosophy, knowledge and skills, (b) adapts to innovation level, type of technology, marketing, environment, food regulations, (c) identifies the activities for each of the four stages of the PD Process, (d) puts these activities into parallel or sequential positions, (e) shows the necessary collaboration between people and departments. 2. What changes could be made to your company’s PD Process framework that would make product development more effective and efficient in your company? (If your company does not have a PD Process framework, design one using the above criteria.) Managing the product development process 271