272 Food product development Business strategy Product development programme Go/no-go Commit resource scale-up costs Go/no-go Commit resources Plant equipment capital costs Distribution changes Go/no-go Commit resources stage 4: Product launching and Production and distribution costs Critical decision points Critical decision points for directors and top management During Stage 1: Developing the product strategy, there are another three critical acceptance decisions does the company accept the product strategy, the innovation strategy and the product development programme? In the first stages of product development, Urban et al.(1987) identified the important top management decisions as: commit company to new products approve PD Process and budgets, product portfolio and market strategy. Before roduct design, there was a review of market entry strategy and then after product design, review and commit to test, followed by go/no-go decision and review launch plan. They noted that after launch the important decisions were approve one- and five-year plans and finally approve strategy to milk ejuvenate. The general critical decision points for top management are shown in Fig. 6.4, and some additional decisions for radical innovations are shown within Stages 2, 3 and 4. Because of uncertainties in radical and some major product changes, there can be changes in the product concept during design, hanges in processing which need design and building of new equipment, changes in the storage conditions which alter the distribution method. and changes in the target market which need product or marketing alterations. These
During Stage 1: Developing the product strategy, there are another three critical acceptance decisions – does the company accept the product strategy, the innovation strategy and the product development programme? In the first stages of product development, Urban et al. (1987) identified the important top management decisions as: commit company to new products, approve PD Process and budgets, product portfolio and market strategy. Before product design, there was a review of market entry strategy and then after product design, review and commit to test, followed by go/no-go decision and review launch plan. They noted that after launch the important decisions were approve one- and five-year plans and finally approve strategy to ‘milk’ or ‘rejuvenate’. The general critical decision points for top management are shown in Fig. 6.4, and some additional decisions for radical innovations are shown within Stages 2, 3 and 4. Because of uncertainties in radical and some major product changes, there can be changes in the product concept during design, changes in processing which need design and building of new equipment, changes in the storage conditions which alter the distribution method, and changes in the target market which need product or marketing alterations. These Fig. 6.4 Critical decision points for directors and top management. 272 Food product development
Managing the product development process 273 uncertainties need to be recognised at the beginning and the additional critical decision points they introduce included in the PD Process. In incremental nev products, it is unlikely for top management to be involved in decision making within stages unless there are unusual problems that could for example cause disharmony with company ethics or cause time and costs overruns Senior management needs to review the right information at the right time to make the right decision. It also needs to make its decisions quickly, so that the project is not delayed while people wait for decisions. If the project is allowed to proceed to prototype product or to product commercialisation before management decision, it may be too late to stop the project even though need more development and therefore more resources. But managemer not get directly involved in ' fighting fires'on products that are late or have roblems. By this time most of the major decisions have been made by other people, and the real impact of top mangement involvement is minimal. The decision makers at this stage are the technical and marketing people who have the knowledge to solve the problems. If major problems occur, the project leader is responsible for reviewing the project and for devising a solution that can ther be reviewed by top management, who make the decision to proceed or kill the project. Several important aspects for top management reviews are(McGrath et al,1992) to provide a clear and consistent process for making major decisions on new products and improvements to empower project teams to execute a project plan to provide the link for applying product strategy to product development; to provide measurable checkpoints to monitor progress, to establish milestones that emphasise a sense of urgency For all these critical decisions by the directors and senior management there is a need for knowledge, much of which is in the outcomes of the various stages within the pd Process. If the critical decisions and the knowledge needed to make these decisions are clearly identified by top management, during design of the PD Process framework at the beginning of the individual projects, the oroduct development team knows what information it has to produce and in what form. There also needs to be a warning system in place for resource or time overruns or difficult problems impeding progress in the project 6.4.2 Product development managers decisions The product development manager, the person responsible for the product development programme, also has decisions to make. He or she is responsible for the administrative framework of the product development programme, deciding on the activities, the schedules and the budgets, and most important the integration of different product development projects that are running in parallel He or she decides on the workload forecasts, the standard of product development performance of the team and individuals, the efficiency expected
uncertainties need to be recognised at the beginning and the additional critical decision points they introduce included in the PD Process. In incremental new products, it is unlikely for top management to be involved in decision making within stages unless there are unusual problems that could for example cause disharmony with company ethics or cause time and costs overruns. Senior management needs to review the right information at the right time to make the right decision. It also needs to make its decisions quickly, so that the project is not delayed while people wait for decisions. If the project is allowed to proceed to prototype product or to product commercialisation before the top management decision, it may be too late to stop the project even though it will need more development and therefore more resources. But management must not get directly involved in ‘fighting fires’ on products that are late or have problems. By this time most of the major decisions have been made by other people, and the real impact of top mangement involvement is minimal. The decision makers at this stage are the technical and marketing people who have the knowledge to solve the problems. If major problems occur, the project leader is responsible for reviewing the project and for devising a solution that can then be reviewed by top management, who make the decision to proceed or kill the project. Several important aspects for top management reviews are (McGrath et al., 1992): • to provide a clear and consistent process for making major decisions on new products and improvements; • to empower project teams to execute a project plan; • to provide the link for applying product strategy to product development; • to provide measurable checkpoints to monitor progress; • to establish milestones that emphasise a sense of urgency. For all these critical decisions by the directors and senior management there is a need for knowledge, much of which is in the outcomes of the various stages within the PD Process. If the critical decisions and the knowledge needed to make these decisions are clearly identified by top management, during design of the PD Process framework at the beginning of the individual projects, the product development team knows what information it has to produce and in what form. There also needs to be a warning system in place for resource or time overruns or difficult problems impeding progress in the project. 6.4.2 Product development manager’s decisions The product development manager, the person responsible for the product development programme, also has decisions to make. He or she is responsible for the administrative framework of the product development programme, deciding on the activities, the schedules and the budgets, and most important the integration of different product development projects that are running in parallel. He or she decides on the workload forecasts, the standard of product development performance of the team and individuals, the efficiency expected Managing the product development process 273
274 Food product development of the PD Process( Gruenwald, 1988). In particular, a product development manager has to decide how and when to involve the companys functional groups in the PD Process, and very importantly how the consumer needs are related to the product. The product development manager leads the coordination between the consumers and the development team, and helps the project leaders to integrate technical and business perspectives. He or she is responsible for the development of new skills and knowledge, as well as bringing in outside consultants and other sources of knowledge(Burgelman and Maidique, 1988) Some important decisions of the product development manager in Stage I Product strategy development are aim, outcomes and constraints for the individual projects depth of activity in developing the product concept and the product design specifications ccuracy needed in the market predictions amount of product design and other technical development time schedule for the activities resources available for each of the activities involvement of the functional departments in developing and evaluating the product concept and the product design specifications, and in predicting the market and technical success. communication methods with the team members and among them recognition of lack of skills and knowledge for the later stages and planning of involvement of outside knowledge sources and of education of team The product development manager has to decide how to produce the outcomes for Stage 1, but has also to look ahead to later stages so that the necessary basis for them is laid during this stage. The later stages have similar types of decisions and these become more complex as the costs of the development and the opportunity for a large failure increase. It is very important that the product development manager ensures that decisions by the top management and by the project leaders are made at the right time. Otherwise the project can lose its urgency and the time to market extends. It is important when technical and marketing decisions are proving difficult that resources are organised by the product development manager to solve the problems without delay 6.4.3 Project leader's decisions The project leader has also decisions to make so as to achieve the outcomes set y top management within the time and budget structure of the product development manager. Firstly the project leader has to decide with more senior management on the aim, outcomes and constraints of the project. The project leader selects techniques for the activities identified by the product development manager, which are within the capabilities of the team members or outside agencies, and which will produce the product with the qualities needed by the
of the PD Process (Gruenwald, 1988). In particular, a product development manager has to decide how and when to involve the company’s functional groups in the PD Process, and very importantly how the consumer needs are related to the product. The product development manager leads the coordination between the consumers and the development team, and helps the project leaders to integrate technical and business perspectives. He or she is responsible for the development of new skills and knowledge, as well as bringing in outside consultants and other sources of knowledge (Burgelman and Maidique, 1988). Some important decisions of the product development manager in Stage 1: Product strategy development are: • aim, outcomes and constraints for the individual projects; • depth of activity in developing the product concept and the product design specifications; • accuracy needed in the market predictions; • amount of product design and other technical development; • time schedule for the activities; • resources available for each of the activities; • involvement of the functional departments in developing and evaluating the product concept and the product design specifications, and in predicting the market and technical success; • communication methods with the team members and among them; • recognition of lack of skills and knowledge for the later stages and planning of involvement of outside knowledge sources and of education of team members. The product development manager has to decide how to produce the outcomes for Stage 1, but has also to look ahead to later stages so that the necessary basis for them is laid during this stage. The later stages have similar types of decisions and these become more complex as the costs of the development and the opportunity for a large failure increase. It is very important that the product development manager ensures that decisions by the top management and by the project leaders are made at the right time. Otherwise the project can lose its urgency and the time to market extends. It is important when technical and marketing decisions are proving difficult that resources are organised by the product development manager to solve the problems without delay. 6.4.3 Project leader’s decisions The project leader has also decisions to make so as to achieve the outcomes set by top management within the time and budget structure of the product development manager. Firstly the project leader has to decide with more senior management on the aim, outcomes and constraints of the project. The project leader selects techniques for the activities identified by the product development manager, which are within the capabilities of the team members or outside agencies, and which will produce the product with the qualities needed by the 274 Food product development
Managing the product development process 275 onsumer. The project leader decides how to do this within the resources and the time allowed so that the project remains on schedule. The project leader decides e balance between the effectiveness and the efficiency of the product levelopment, that is balancing the quality of the product development and the time and resources used(see Fig. 6.10 on page 295). This is very difficult decision making, especially for the young project leader. There needs to be help from more senior management. Nothing is worse than senior management telling the project leader to produce the ideal product but not allocating the resources to attain it, or to give them a project known to be a problem without the knowledge to start solving it. The project leaders most important organisational decision is the product development project plan with the actIvities ces, time, and the communication and control during the project. The project plan with its predicted timing and use of resources is the basis for decisions that determine the efficiency of the product development; the project leader using it to make the decisions on overruns of time and resources Few product development projects, except for simple incremental product changes, can be predicted accurately either the direction of the design and levelopment or the outcomes in the results. So the project leader is continuously making decisions during the project on the relationships between product and the consumer needs product and the company process, distribution and marketing production and marketing functions These decisions are made not only with the core product development team but also with the wider team in the functional departments and in outside organisations. These decisions are extremely important to the quality of the research and need to be recognised reasonably early before the project become infused and disorganised hink break 1. For product development in your company, outline the PD Process for each of the following (a) product imp (b) new product introductions (c) process improvements (d) new process introductions If your company does not have PD Processes, design them for the company. Identify the individuals or groups who are responsible for the product strategy and the product development programme, and for go/no-go decision making at the end of Stages 1 2. 3 and 4 in the PD Process
consumer. The project leader decides how to do this within the resources and the time allowed so that the project remains on schedule. The project leader decides the balance between the effectiveness and the efficiency of the product development, that is balancing the quality of the product development and the time and resources used (see Fig. 6.10 on page 295). This is very difficult decision making, especially for the young project leader. There needs to be help from more senior management. Nothing is worse than senior management telling the project leader to produce the ideal product but not allocating the resources to attain it, or to give them a project known to be a problem without the knowledge to start solving it. The project leader’s most important organisational decision is the product development project plan with the activities, resources, time, and the communication and control during the project. The project plan with its predicted timing and use of resources is the basis for decisions that determine the efficiency of the product development; the project leader using it to make the decisions on overruns of time and resources. Few product development projects, except for simple incremental product changes, can be predicted accurately – either the direction of the design and development or the outcomes in the results. So the project leader is continuously making decisions during the project on the relationships between: • product and the consumer needs; • product and the company; • process, distribution and marketing; • production and marketing functions. These decisions are made not only with the core product development team but also with the wider team in the functional departments and in outside organisations. These decisions are extremely important to the quality of the research and need to be recognised reasonably early before the project becomes confused and disorganised. Think break 1. For product development in your company, outline the PD Process for each of the following: (a) product improvements, (b) new product introductions, (c) process improvements, (d) new process introductions. If your company does not have PD Processes, design them for the company. Identify the individuals or groups who are responsible for the product strategy and the product development programme, and for go/no-go decision making at the end of Stages 1, 2, 3 and 4 in the PD Process. Managing the product development process 275
276 Food product development 2. Select a recent project, which was a radical product innovation, and ident critical decisions, where they occurred in the project and who were the de makers Identify decisions and decision makers in (a) the go/no-go decisions, (b) decisions that led to final product qualities, product image, product features and uses (c) decisions that led to production method, distribution method, marketing strategy, costs and pricing (d) decisions on the project efficiency, in achieving timing and costs 6.5 Establishing outcomes, budgets and constraints Decision making is the key framework for product development, but knowledge fills out the framework to give the live project. Knowledge is brought into the framework, and also created within the framework so that the decisions can be made. But knowledge has a cost; increasing the knowledge adds to the cost of a project. In product development, the intelligent and systematic balancing of knowledge and costs is fundamental to successful product development. Others might say it is the balancing of the costs of product failure against project costs In product development, there is a need to define outcomes(the collected and created knowledge)and the budget(the costs)at the beginning of the project, and also to reconsider these at the completion of the four stages and at any other critical point in the PD Process. Conditions change throughout the individual projects and there is a need for top management to reconsider the outcomes and the budgets at the same time as permission for the project to proceed to the next stage Is gI 6.5.1 Defining outcomes At the end of each stage of the PD Process, the top management requires for its 四如 ge of develop The product form will develop in the project from a product concept, to product design specifications to prototype products, to commercial product, to final lunched product. The report can vary from many pages with detailed knowledge to a one page executive summary, dependent on what top management feels it needs to know. The areas listed in the reports in Table 6.2 are important areas of knowledge in product development for decision making but the top management may not wish to see any details, especially in incremental product development where there is not a great risk of making wrong predictions. Some of these critical decisions may be made by the middle management before the final executive
6.5 Establishing outcomes, budgets and constraints Decision making is the key framework for product development, but knowledge fills out the framework to give the live project. Knowledge is brought into the framework, and also created within the framework so that the decisions can be made. But knowledge has a cost; increasing the knowledge adds to the cost of a project. In product development, the intelligent and systematic balancing of knowledge and costs is fundamental to successful product development. Others might say it is the balancing of the costs of product failure against project costs. In product development, there is a need to define outcomes (the collected and created knowledge) and the budget (the costs) at the beginning of the project, and also to reconsider these at the completion of the four stages and at any other critical point in the PD Process. Conditions change throughout the individual projects and there is a need for top management to reconsider the outcomes and the budgets at the same time as permission for the project to proceed to the next stage is given. 6.5.1 Defining outcomes At the end of each stage of the PD Process, the top management requires for its two outcomes: • product form to that stage of development; • report on which to base its decisions. The product form will develop in the project from a product concept, to product design specifications to prototype products, to commercial product, to final launched product. The report can vary from many pages with detailed knowledge to a one page executive summary, dependent on what top management feels it needs to know. The areas listed in the reports in Table 6.2 are important areas of knowledge in product development for decision making but the top management may not wish to see any details, especially in incremental product development where there is not a great risk of making wrong predictions. Some of these critical decisions may be made by the middle management before the final executive 2. Select a recent project, which was a radical product innovation, and identify the critical decisions, where they occurred in the project and who were the decision makers. Identify decisions and decision makers in: (a) the go/no-go decisions, (b) decisions that led to final product qualities, product image, product features and uses, (c) decisions that led to production method, distribution method, marketing strategy, costs and pricing, (d) decisions on the project efficiency, in achieving timing and costs. 276 Food product development