Improving the product development process Best practice in product development is a dynamic target. Not only are new practices being developed and refined but the differences in organisations demand the tailored application of these practices. There are eight basic principles and four basic stages in product development which are true for all companies, all projects and at all times. But the company philosophy, knowledge, skills and assets change: and these changes cause changes in the pes of produ Successful companies recognise that product development is an important strategic issue that demands constant attention. There is a need to evaluate the product development performance and the product development success rate (product development efficiency and effectiveness), and then combine this evaluation with the companys strategic direction to determine and organise improvements in both the effectiveness and efficiency in the future. This is not simple because creativity and criticism are two opposing thought processes Creativity, vital to product innovation, goes into the unknown and makes mistakes, the product development evaluation looks for mistakes and criticises them. Emphasis on mistakes leads to conservative product development emphasis on creativity leads to wild product development; the successful ompanies intertwine the creativity and the evaluation in the project Product development is unique to the company and is related to the company's history, philosophy and knowledge, but the companys position relative to the best practice in the related industry and market is an indicator of the companys past and present product development effectiveness and efficiency. From this evaluation can be built up strategic plans for improving product development. As shown in Fig. 8.1, product development effectiveness and efficiency are improved together to give the strategic product success
Best practice in product development is a dynamic target. Not only are new practices being developed and refined but the differences in organisations demand the tailored application of these practices. There are eight basic principles and four basic stages in product development which are true for all companies, all projects and at all times. But the company philosophy, knowledge, skills and assets change; and these changes cause changes in the types of product innovations and the activities in product development. Successful companies recognise that product development is an important strategic issue that demands constant attention. There is a need to evaluate the product development performance and the product development success rate (product development efficiency and effectiveness), and then combine this evaluation with the company’s strategic direction to determine and organise improvements in both the effectiveness and efficiency in the future. This is not simple because creativity and criticism are two opposing thought processes. Creativity, vital to product innovation, goes into the unknown and makes mistakes; the product development evaluation looks for mistakes and criticises them. Emphasis on mistakes leads to conservative product development; emphasis on creativity leads to wild product development; the successful companies intertwine the creativity and the evaluation in the project. Product development is unique to the company and is related to the company’s history, philosophy and knowledge, but the company’s position relative to the best practice in the related industry and market is an indicator of the company’s past and present product development effectiveness and efficiency. From this evaluation can be built up strategic plans for improving product development. As shown in Fig. 8.1, product development effectiveness and efficiency are improved together to give the strategic product success 8 Improving the product development process
Improving the product development process 349 Company history, philosophy, knowledge development efficiency Product development effectiveness Product development evaluation Product development improvement Fig 8.1 Evaluating and improving product development. indicated by the company top management Product development effectiveness nd efficiency are inextricably linked 8.1 Key messages There is no single recipe for successful product development. During the previous chapters, a number of basic principles were identified which are common to all successful product development as shown in Table 8.1 8.1.1 Link to overall business strategy Doing the right things must always be central to any product development effort. The product development strategy must be in harmony with the overall business strategy. It should both receive and provide direction to the business strategy. The balance of reactivity to proactivity will depend on the nature of the organisation and its overall goals Table 8.1 Basic principles of product development Link to overall business strategy Balanced product development portfolio learly defined product development strategy Appropriate systems rocesses for project management and physical resources Committed and rive organisational climate Understanding the consumer, customer, market and society
indicated by the company top management. Product development effectiveness and efficiency are inextricably linked. 8.1 Key messages There is no single recipe for successful product development. During the previous chapters, a number of basic principles were identified which are common to all successful product development as shown in Table 8.1. 8.1.1 Link to overall business strategy ‘Doing the right things’ must always be central to any product development effort. The product development strategy must be in harmony with the overall business strategy. It should both receive and provide direction to the business strategy. The balance of reactivity to proactivity will depend on the nature of the organisation and its overall goals. Fig. 8.1 Evaluating and improving product development. Table 8.1 Basic principles of product development Link to overall business strategy Balanced product development portfolio Clearly defined product development strategy Appropriate systems and processes for project management Appropriate human and physical resources Committed and supportive organisational climate Understanding the consumer, customer, market and society Improving the product development process 349
350 Food product development 8.1.2 Balanced product development portfolio The business goals and strategy should define the key criteria to be used preparing the product development portfolio. These include degree of novelty or newness level of technology target market level of risk. desired return on investment time frame Preparing a balanced portfolio of new product development, consistent with business aims, is a critical part of product development manageme 8.1.3 Clearly defined product development strategy The product development strategy should provide total clarity about the relationship between the portfolio of product levelopment projects and the overall business strategy clear definition of the portfolio of new product development projects relative to business selection criteria indication of the costs and timeframes involved to achieve the desired outcomes of the portfolio indication of the resources required to achieve the desired outcomes- what esources are required internally and what should be out-sourced The product development strategy is linked to, and indeed is the basis for, the tactical strategy that organises the product development programme and the individual product development projects. In a number of companies there is often a communication blockage between the product development strategy and the tactical strategy that determines the work of the designers, engineers marketers, production and other personnel involved in the project. This can reduce both the effectiveness and efficiency 8.1.4 Appropriate systems and processes for project management Having decided on what things to do(the portfolio), it is important to have the appropriate systems and processes to support individual projects-'doing things right. There are four clearly identified basic stages in the PD Process-product strategy development, product design and process development, product commercialisation, product launch and evaluation. But there are differences in the activities, decisions and outcomes in the different projects, although there are significant ones that occur in many projects Although the PD Process is important to the successful completion of projects on time, in budget and in line with the initial target, it would be wrong to force all projects into a standard process. The PD Process is unique to the company
8.1.2 Balanced product development portfolio The business goals and strategy should define the key criteria to be used in preparing the product development portfolio. These include: • degree of novelty or newness; • level of technology; • target market; • level of risk; • desired return on investment; • time frame. Preparing a balanced portfolio of new product development, consistent with business aims, is a critical part of product development management. 8.1.3 Clearly defined product development strategy The product development strategy should provide: • total clarity about the relationship between the portfolio of product development projects and the overall business strategy; • clear definition of the portfolio of new product development projects relative to business selection criteria; • indication of the costs and timeframes involved to achieve the desired outcomes of the portfolio; • indication of the resources required to achieve the desired outcomes – what resources are required internally and what should be out-sourced. The product development strategy is linked to, and indeed is the basis for, the tactical strategy that organises the product development programme and the individual product development projects. In a number of companies there is often a communication blockage between the product development strategy and the tactical strategy that determines the work of the designers, engineers, marketers, production and other personnel involved in the project. This can reduce both the effectiveness and efficiency. 8.1.4 Appropriate systems and processes for project management Having decided on what things to do (the portfolio), it is important to have the appropriate systems and processes to support individual projects – ‘doing things right’. There are four clearly identified basic stages in the PD Process – product strategy development, product design and process development, product commercialisation, product launch and evaluation. But there are differences in the activities, decisions and outcomes in the different projects, although there are significant ones that occur in many projects. Although the PD Process is important to the successful completion of projects on time, in budget and in line with the initial target, it would be wrong to force all projects into a standard process. The PD Process is unique to the company, 350 Food product development
mproving the product development process 351 level of innovation, and the level of technological knowledge. The company can design different PD Processes for product improvements and major innovations for consumer products and industrial products, and also make some changes between product development projects(de Brentani, 2001). The chance and costs of product failure can also cause the company to make changes in activities, for example, the low cost of project failure may lead to significant short cuts in market analysis and business analysis. The choice of activities also lepends on the company's level of risk. If the compar ot afraid to live with oroduct failures, it may omit many activities; if the company does not want to risk product failure, it will include activities that increase its knowledge of the echnology and the market. In creating both new products and new services, a platform-based approach can be used, which relates directly to the design of systems and PD Processes(Meyer and De Tore, 2001) 8.1.5 Appropriate human and physical resources All the best systems and processes can be worthless without the right resources People, above everything else, make product development successful. Know/ dge of technology, market, consumer, product development activities and decision making, and the skills to use this knowledge in practice are the basis of successful product development. Capable and committed people, who are able to work in teams, across functional boundaries, will make systems and processes work for them. Systems and processes will rarely change people. There is a need to recognise the tacit knowledge of individuals and teams, as well as the knowledge bases both within and outside the company. Most important is the ability of the individual and the team to create new knowledge during the project 8.1.6 Committed and supportive organisational climate Perhaps the most important aspect of all in determining successful product development is the organisational climate. Historically, this has received relatively little attention in the product development literature and yet it has the otential to have the greatest impact on product development outcomes. Climate larity of direction management commitment. · flexibility tandards The decision making by top management at the beginning and throughout the roject must be timely and based on knowledge, from this the project anagement and the team need to see clear directions which are not changed without further knowledge and discussion
level of innovation, and the level of technological knowledge. The company can design different PD Processes for product improvements and major innovations, for consumer products and industrial products, and also make some changes between product development projects (de Brentani, 2001). The chance and costs of product failure can also cause the company to make changes in activities; for example, the low cost of project failure may lead to significant short cuts in market analysis and business analysis. The choice of activities also depends on the company’s level of risk. If the company is not afraid to live with product failures, it may omit many activities; if the company does not want to risk product failure, it will include activities that increase its knowledge of the technology and the market. In creating both new products and new services, a platform-based approach can be used, which relates directly to the design of systems and PD Processes (Meyer and DeTore, 2001). 8.1.5 Appropriate human and physical resources All the best systems and processes can be worthless without the right resources. People, above everything else, make product development successful. Knowledge of technology, market, consumer, product development activities and decision making, and the skills to use this knowledge in practice are the basis of successful product development. Capable and committed people, who are able to work in teams, across functional boundaries, will make systems and processes work for them. Systems and processes will rarely change people. There is a need to recognise the tacit knowledge of individuals and teams, as well as the knowledge bases both within and outside the company. Most important is the ability of the individual and the team to create new knowledge during the project. 8.1.6 Committed and supportive organisational climate Perhaps the most important aspect of all in determining successful product development is the organisational climate. Historically, this has received relatively little attention in the product development literature and yet it has the potential to have the greatest impact on product development outcomes. Climate includes: • clarity of direction; • management commitment; • team commitment; • flexibility; • standards; • rewards. The decision making by top management at the beginning and throughout the project must be timely and based on knowledge; from this the project management and the team need to see clear directions which are not changed without further knowledge and discussion. Improving the product development process 351
352 Food product development 8.1.7 Understanding the consumer customer, market and societ If the needs, wants, attitudes and behaviour in the target market and in the ociety in general are not identified and understood, and then interwoven into product development practice, then product failure can occur either in the short or long term. The food industry has a history of introducing innovations over the years that cause suspicion by the general public and the consumers, so that food regulations are used to control the product. The immediate customer, whether industrial user or retailer, needs to be integrated into the PD Process from the initial stages of developing the product concept to the final evaluation after launch. In developing new consumer products and indeed in all food product development, the final consumer who buys and eats the food is an integral part of product development. Think break The authors have summarised what they identify as the basic principles of product development from the preceding seven chapters 1. Do you agree with their list? Have you identified any other basic principles? Would you drop some of their basic principle 2. Compare with other principles in the literature, e.g. Cooper and Kleinschmidt's (1995)factors found to drive new product success 3. For your own company, list the basic principles for product development at the present time 4. How have these principles changed in the past and how do you predict they will change in the future? 5. List the basic principles for product development for your company for the next decade 8.2 Evaluating product development Conducting a post-development review of a specific product development project and a regular review of the product development programme, is a very good way of learning what is excellent, all right and bad in the companys product development. For the product development project, the initial product strategy needs to be compared with the final total product in the market; the final product characteristics with the consumer needs and wants; the efficiency of the product development project with the overall implementation of the launch. For the product development programme, some important measures are ratio of major innovations to incremental products key differentiating factors in products and services number of new products in a time period
8.1.7 Understanding the consumer, customer, market and society If the needs, wants, attitudes and behaviour in the target market and in the society in general are not identified and understood, and then interwoven into product development practice, then product failure can occur either in the short or long term. The food industry has a history of introducing innovations over the years that cause suspicion by the general public and the consumers, so that food regulations are used to control the product. The immediate customer, whether industrial user or retailer, needs to be integrated into the PD Process from the initial stages of developing the product concept to the final evaluation after launch. In developing new consumer products and indeed in all food product development, the final consumer who buys and eats the food is an integral part of product development. 8.2 Evaluating product development Conducting a post-development review of a specific product development project and a regular review of the product development programme, is a very good way of learning what is excellent, all right and bad in the company’s product development. For the product development project, the initial product strategy needs to be compared with the final total product in the market; the final product characteristics with the consumer needs and wants; the efficiency of the product development project with the overall implementation of the launch. For the product development programme, some important measures are: • ratio of major innovations to incremental products; • key differentiating factors in products and services; • number of new products in a time period; Think break The authors have summarised what they identify as the basic principles of product development from the preceding seven chapters. 1. Do you agree with their list? Have you identified any other basic principles? Would you drop some of their basic principles? 2. Compare with other principles in the literature, e.g. Cooper and Kleinschmidt’s (1995) factors found to drive new product success. 3. For your own company, list the basic principles for product development at the present time. 4. How have these principles changed in the past and how do you predict they will change in the future? 5. List the basic principles for product development for your company for the next decade. 352 Food product development