penntappsu edu Energizing New Product Development Penn TAP

penntap@psu. edu Energizing New Product Development Penn. TAP Webinar September 26, 2014 NOTE: You should hear music playing. If you do not, please go to: Meeting>Manage My Settings>Audio Setup Wizard , then follow the steps of the wizard. Please be sure that your speakers are not muted. If you have any questions, please enter them in the chat area. Mark Toda Penn. TAP 814 -865 -0427 mtoda@psu. edu Pennsylvania Industrial Resource Center Pennsylvania Ben Franklin Technology Partners Pennsylvania Small Business Development Centers Pennsylvania Keystone Innovation Network December 26, 2021

penntap@psu. edu Energizing New Product Development Overview • Opportunity/problem • NPD Success Factors • An approach to New Products New Product Strategy Idea Generation Idea Screening & Selection Concept to Launch (Stage-Gate™) Metrics and Assessing the New Product Process • University/external resources’ role in product development December 26, 2021

penntap@psu. edu New Product Development Opportunity • 50% of U. S. Companies’ sales come from new products. • Degree of Innovativeness – measure of investment value. • Manufacturers that are not now developing new products will wither and die. Problem • Picking winners from losers, insuring the product delights the customer. • Managing risk and allocating resources to successfully deliver new products. • 1/3 of new products fail at launch. December 26, 2021

penntap@psu. edu The Stage-Gate Process Idea Screen Ideation Second Review Stage 1 First Review Preliminary Investigation Stage 3 Development Gate Stage 4 Testing & Validation Stage 2 Detailed Investigation Gate Stage 5 Full Production & Market Launch Winning at New Products Dr. Robert Cooper December 26, 2021

penntap@psu. edu Value of a Structured, Systematic NPD Process • Guides the project team through a seemingly chaotic, multidisciplinary process • Facilitates management of many projects • Facilitates optimized resource allocation • Facilitates selection of “winners”, and elimination of “losers” • Evaluate the quality of development activities & action plans • Improved communications between functional areas December 26, 2021

penntap@psu. edu New Product Success Factors • A unique superior product (unique benefits, product value) • A strong market orientation (customer, competition, market) • More pre-development homework (concept, market, technical, business) • Sharp and early product definition • Right organizational structure • Speed of execution • Look to the world products • High quality, disciplined, systematic process Winning at New Products Dr. Robert Cooper December 26, 2021

penntap@psu. edu New Product Strategy • Aligned with Corporate strategic plan. • Clearly understood & communicated role for new product development • Defined strategic arenas (products, markets, technologies) • Goals or objectives for new product development efforts • Long term thrust A new product strategy can help with idea generation, project selection & priority, portfolio management, resource planning December 26, 2021

penntap@psu. edu Corporate Goals and Objectives Corporate Strategic Plan New Product Plan Goals & Objectives Things like: # of new products introduced per year…………… 15 Revenue from new products per year……………. $1. 5 M % of new products that are new to the company…………. . 15% % of new products that are new to the world………………. 3% Customer satisfaction with new products………… 95% Note: fictitious numbers December 26, 2021

penntap@psu. edu Growing with New Products & New Markets Dr. Irene Petrick Penn State University December 26, 2021

penntap@psu. edu New Product Ideas • Market Pull Ideas – generated from the marketplace, recognition of market need, customer requests, and competitive advantage • Technology Push ideas – generated by science or technology research, or serendipitous discovery Ideas trigger the process – technological possibilities are matched with market needs. December 26, 2021

penntap@psu. edu Internal Sources for New Product Ideas • Establish a focal Point – collects ideas, facilitates idea generation • Engage all sources of new ideas research, product design & engineering, sales & marketing customer service, production, other executives & board of directors • Suggestion Box • Group Creativity Sessions • Scouting Time December 26, 2021

penntap@psu. edu Internal Process for New Ideas Focal Point Idea Screen Idea Bank Go Kill – or - Hold, Low Priority We manage everything else, why not idea generation? December 26, 2021

penntap@psu. edu Idea Submission Form • Describe the new product idea • What customer need or problem will the new product address • Who are the potential markets and customers • Is the product a modification, substitute or leading edge product December 26, 2021

penntap@psu. edu Idea Generation • Brainstorming : lots of ideas, positive atmosphere, record every idea • One on One: capture information from one-on-one interactions • Focus groups: usually used to test ideas, or clearly define problems/opportunities • Interaction groups: • Immersion: customers, sales, & technical people are involved develop complete understand of a market(s) • Plusing/amplifying: focus on enhancing a current product or new product idea December 26, 2021

penntap@psu. edu Idea Screen Ideation Strategic alignment Market potential Technical feasibility 3. Development Gate 1. Preliminary Investigation First Review 2. Detailed Investigation Technical feasibility Market attractiveness 1 st cut financial analysis 4. Testing & Validation Gate Second Review Technical assessment Market assessment Financial assessment 5. Market Launch December 26, 2021

penntap@psu. edu Status by Stage Idea Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Project 1 Project 2 Project 3 December 26, 2021

penntap@psu. edu New Product Evaluation Techniques Benefit Measurement Techniques – (qualitative) rely on subjective assessments of strategic variables Fit with corporate objectives Competitive advantage Market attractiveness Financial or Economic Models – this is the conventional investment decision ROI Payback period Break-even analysis Discounted cash flow analysis Portfolio Methods – prioritization and resource allocation methods Maximize the total portfolio value Yield the right balance of projects Yield a strategically aligned portfolio December 26, 2021

penntap@psu. edu New Product Project Metrics • Unique & appropriate metrics at each stage of the development process • Assess quality of the stage activities • Forecast return on investment (ROI) from new product projects • Prioritize projects and allocate resources • Optimize portfolio of new product projects • Ensure alignment to corporate goals & objectives • Learn from successful, and unsuccessful projects You can’t manage what you don’t measure December 26, 2021

penntap@psu. edu New Product Performance Metrics Project A Qualitative Benefit Score Predevelopment & @ Launch 6 8 Development Costs - actual (hours, expenses) Projected Sales (1 yr after launch) Actual Sales (1 yr after launch) $225, 000 $350, 000 $450, 000 Projected 1 st year ROI Actual 1 st year ROI December 26, 2021

penntap@psu. edu New Product Performance Metrics Select metrics that are useful, only collect what you are going to use. Select metrics that are can be readily obtained. Select metrics that are easy to understand tell the pass/fail story Collect appropriate metrics at various points in the development cycle. Insure timely gathering & communication of metrics. December 26, 2021

penntap@psu. edu An Approach to Assessing the New Product Process Interview representatives from key functional areas. Likes, dislikes, suggestions, rate NPD performance Distribute audit questionnaire Reviews NP projects, NP process, and NP performance. December 26, 2021

penntap@psu. edu University Resources in Product Development 1. Preliminary Investigation 2. Detailed Investigation University R&D 3. Development 4. Testing & Validation Ideation 5. Market Launch Penn State Integrated Design Solutions Faculty led, short duration, asyncronous, funded projects Penn State Learning Factory Student team, semester long, set cost December 26, 2021

penntap@psu. edu Resources Available to Assist You Penn. TAP Grant funded technical assistance Connection with University and other external resources Industrial Resource Centers Innovation Engineering services Technology Scouting Technology Driven Market Intelligence Ben Franklin Technology Partners University collaboration Funding assistance Business development Small Business Development Centers Business planning Market Analysis and Competitive Research Technology Commercialization Keystone Innovation Network December 26, 2021

penntap@psu. edu Questions? Mark Toda Penn. TAP 814 -865 -0427 mtoda@psu. edu December 26, 2021