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An innovative approach to new product development.

An Innovative Approach to New Product Development


New products are the lifeblood of any company, fueling its survival and growth in the long run. But the development and introduction of new products that will ultimately be profitable is fraught with the risks of heavy up-front expenditures and uncertain future payoffs. A daunting combination of stagnating sales in mature markets, rising costs, and a focus on short term earnings leaves management in a very uneasy position.

These pressures are augmented by such forces as inflation, intensifying global competition, and the growing influence of government agencies over marketing activities. In recent years, the Federal Trade Commission has cracked down on unsubstantiated advertising claims; the Food and Drug Administration has been enforcing stringent requirements for the introduction of safe and effective new products; the Consumer Product Safety Commission has issued safety standards for a broad range of products; and the Environmental Protection Agency has stepped up enforcement of environmental laws.

Challenges of Product


As companies address the challenging task of new product development, these external constraints conspire with an array of internal hindrances that are either personal or organizational in nature. Personal hindrances include: (1) the bicamerality of the brain where creative thought originates in the right side but may be suppressed by the organized left side, (2) the natural tendency to stay with the familiar "tried and true" instead of "wasting time" on new approaches, (3) the pressure toward convention and conformity imposed by society, (4) the innate fear of the unknown which can cause discomfort, (5) the inclination to let the mind wander instead of concentrating, and (6) paranoia about others appropriating one's ideas.

Corporate obstacles to creativity in new product development encompass: (1) the need for individuals to "play it safe" due to a company's low tolerance for costly mistakes, (2) stringent requirements for justification of innovative moves which are fiercely resisted by defenders of the "status quo," (3) the lack of incentives to risk one's reputation as a winner with another foray into uncharted territory, (4) pressure to produce current results as opposed to contemplating future possibilities, (5) tight scheduling in lean-and-mean organizations that leaves little time for creative speculation, and (6) a prevailing attitude that efforts to produce change will be futile.

It is intriguing to note in this context that many truly innovative products have historically originated with small companies and independent inventors. These types of sources achieve greater creative success than large corporations, because they are not burdened with the corporate hindrances that resist innovation. Quite in contrast, they have both the mind set and the incentive to create innovations. Ironically, however, they need large corporations to capitalize on their inventions, because they lack the resources to produce and market them on a grand scale.

Corporations need a steady stream of new products to defend market shares and profits against competitive erosion. Standing still means falling behind. But new products are costly to develop and introduce and may well fail in the marketplace. Management can improve the odds by hiring outside consultants and using an effective system for managing the innovation process.

There are a number of reasons for the use of consultants in new product development. Consultants can augment the firm's capabilities with a broad range of knowledge and experience as well as a fresh viewpoint. They also bring objectivity to the situation, because they are not involved in the politics of the company and have no axe to grind. They add credibility to a project and provide the flexibility of a variable cost as opposed to hiring permanent employees. Consultants also have powerful incentives to produce successful results since this will reflect on their ability to attract business in the future.

The Strategic Innovation System

"Strategic Innovation System" (SIS) was designed by Strategic Innovations International, Inc. as a means of improving the success rate of new product development for major corporations throughout the world. The system is a refinement of the traditional steps or stages in the new product development effort. The refinement focuses on the steps which represent concept development and testing.

The traditional marketing textbook approach to the new product development process consists of: (1) idea generation, (2) idea screening and evaluation, (3) business analysis, (4) product development of a prototype, (5) execution of the plan via test marketing, and (6) commercial product launch. The SIS method follows these steps, but with significant variations.

These variations start with drawing up a list of product specifications or criteria for the ideal product, based on the strengths of the particular firm, before beginning the traditional idea generation process. The merits of this approach are twofold. In addition to saving time and cost, it efficiently eliminates options which are inappropriate for that company. Thus, it changes the character of the traditional generation stage, which would have generated any type of new product ideas, and adjusts the evaluation stage, which would have wasted time and effort on eliminating many incongruous concepts.

The second key difference of the SIS from the traditional approach is in the research methodology. Instead of utilizing consumers at the start of idea generation, the SIS uses though-leader type focus groups of experts. The idea generation and idea screening stages are considerably more detailed in the SIS approach. There are seven steps in the SIS process.

Step 1. Organization and Target Setting

* Select the new product Functional Project Team members * Identify minimum objectives to be achieved (i.e., establish the Success Criteria for a new product) * Identify the company's strengths which will form the basis for the "perfect" next new product.

Step 2. Strategy Development

* Review relevant external market, social, economic/competitive, technological, and regulatory environments * Identify significant trends from a variety of sources.

Step 3. Conduct the Innovation Session

* Recruit six outside experts * Send them a briefing document * Conduct and tape the session * Use standard creative techniques to stimulate participation and interaction among the outside experts.

Step 4. Conduct a Building Session with the Functional Project Team

* Lead the team in reviewing (without judgment or criticism) the ideas from the Innovation Session, as well as inviting them to contribute their own ideas.

Step 5. Conduct an Evaluation Meeting

* Lead the company team in an evaluation of all possibilities and concepts against their perceived potential to meet the original Success Criteria.

Step 6. Conduct a Second Cycle of Sessions - That's How You Get the Winners!

* Recruit six new outside experts * Send them a new briefing document for a Focused Innovation Session * Have another Building Session * Conduct another Evaluation Meeting.

Step 7. Qualification/Business Analysis

* Analyze the feasibility of the best ideas for development, production, and marketing.

Step 8. Design a Management Action Plan (MAP)

* Pick one of the new product ideas for testing * Design an action plan * Implement the plan.

Organization for Product


A new product development leader or director should be selected (usually from inside the corporation). This leader, in order to be most effective, should be at the same level as the other functional managers to impart key decision making authority and support from top management.

The personality traits and qualifications of a successful new product leader/director are similar in nature to those of an entrepreneur. The director should, of course, be bright, possessing sufficient knowledge about marketing strategies and techniques and environmental trends. The candidate should have good written and verbal communication skills (including being both persuasive and diplomatic), have creative and analytical abilities, be an effective manager/leader of people and projects, and exhibit an unflappable confidence and tenacity to persevere in the midst of uncertainty to achieve desired results. The director should also be aware of the company's overall strategic direction. (Finding someone who matches this demanding composite description is certainly not an easy task. However, the closer the match, the greater the chances are for a favorable outcome.) He/She will be the leader of the all important Functional Project Team.

The members of the Functional Project Team typically are recruited from the key areas of the firm that need to be represented. Included are the top managers from production, marketing, planning/product development, research and development (or engineering), finance (possibly), and general management (definitely!). The members should be compatible with each other to minimize internal political struggles that waste time and divert efforts. Also, the team members do not necessarily have to be those with the title of Manager, Director, or Vice President of their respective functions; the key factors to consider when choosing people for this special job are that they are: (1) respected action-takers, (2) open-minded, and (3) able to stimulate and evaluate creative concepts. They should also believe and support the notion that new product development is an important, essential task for their firm.

The internal company factors consist of the strengths and other capabilities of the firm. The strengths of the company would include its reputation, its technological production, and its marketing expertise. What are the firm's perceived and actual competitive advantages? The strengths of the company should be matched to the anticipated needs of the market.

If a company is capital intensive in production, for example, the solution could be to find new markets for the current technology. Or if a new technology develops which will outdate the company's, it should focus on redeploying its fixed assets into more productive activities - options that can satisfy new needs in the market.

Another question to ask is: "What other types of products can be produced with the current factories (using the newest, most expensive, biggest, most unique equipment already owned)?" The firm may need to modify existing equipment or buy some new additions to the factory. Of course, no new equipment should be purchased until market research substantiates that it will be profitable. Then the producing strategy options are whether to produce new products for existing customers or introduce new products to new customers - a riskier strategic move.

After all the information has been digested, analyzed, and interpreted, it is translated into specific "ideal product criteria." The "winning" specifications should be described in terms of clear attributes that work together, have market appeal, and are technically and financially feasible to be produced under the timetable. These criteria should gain a consensus from the team and be ranked in terms of importance. This orientation briefing and the subsequent revision meeting should be tape recorded to capture all inputs accurately.

A Viable Strategy

As in any marketing venture, it is necessary to review the external as well as the internal influences affecting the company. The external variables would include the various environments for relevant trends and potential opportunities to determine where the market is going in the future. The information to forecast these trends can be derived from trend studies, trade and consumer media, other secondary reports, consultants, salespeople, advertising executives, stock analysts, etc. Timing is everything in new product success!

The Innovation Session

Recruiting. The Innovation Session is a thought-leader type of focus group of approximately seven participants. The participants are composed of experts from outside the firm. They could be scientists, engineers, consultants, professors, researchers, editors, bankers, doctors, government experts, or any other professionals from the specific fields in question. From a creative perspective, these people should be of the "Alpha" and "Beta" types. "Alpha" types are those who easily generate multitudinous ideas, and "Beta" people are those whose strength lies in building on original ideas to make them bigger and better.

Two other kinds of people are needed at later stages in the development process: "Gamma" types who translate ideas into action and "Delta" types who can make minor, yet desirable product revisions. The participants recruited should be of top caliber and capable of articulating their ideas. The main goal of the session is to stimulate technology-transfer product possibilities and fresh creative concepts and approaches.

To determine which fields the participants should represent, one should turn to the results of the prior analysis that suggest a group of technologies which are related to the "ideal" product criteria. For each of these technologies, the following questions should be raised and answered: What type of businesses use this technology in conjunction with other forms of technology? What theoretical/scientific applications of the technology are currently being considered? What kind of businesses could utilize this technology in a wide range of possibilities? (It is important to note that no members of the functional team should be included at this session to prevent any bias).

Briefing. Once the Innovation Session members have been enlisted for the endeavor, it is necessary to prepare a briefing document to be sent to them (about two weeks before the session). There are ten guidelines for putting together a briefing document, which is typically about ten to 15 pages in length.

* Explain up front what the (unidentified) company's

goal is and include a description of the

company's key strengths, image, and reputation * State in succinct terms a positive hypothesis * Share only key data which will stimulate

creativity * Have the content follow the natural order of the

mind's three dominant modes: perception, processing,

and preparation of a response * Don't use narrowly focused questions that make

judgments * Use open-ended questions * Employ "fun" techniques that stimulate creativity

such as fill in the blanks, list completion, etc. * Ask many questions about the area of expertise * Stay with only one topic at a time (group the

questions by topic) * Encourage the best quality ideas/answers from

the participants.

Conducting the Session. Some "rules of thumb" have proved instrumental in increasing the success rate of the Innovation Session. The session should be held at a location outside the company's premises. The session room should contain a round table and be equipped to show visuals to stimulate ideas. Provisions should be made to tape record (audio) or videotape the session. A skilled group leader (who should sit near the door) acts as a catalyst to provide explanations to develop new perspective on a situation. The leader should, in addition to helping stimulate ideas, keep a steady pace going in the right direction and effectively control time-wasters in a tactful manner. An assistant leader may also be employed (who is seated opposite the leader at the table) in the role of a facilitator. This person would encourage active, insightful participation.

Standard creative techniques can be utilized to bring about participation, insights, and synergy. There are three main objectives to be accomplished via the implementation of certain creative techniques. The three goals and the techniques that can be used to achieve them are: (1) ego protection (to eliminate self-consciousness for openly expressed opinions). The techniques that can be used are key triggering, role playing, role reversal, and synectics. (2) Heightened perception can be achieved by changing the frame of reference, using bionics or attribute listing. (3) Facilitating product design can be done by employing word mapping, forced relationships (lateral thinking), and morphological analysis.

The Building Session

This subsequent session leads the members of the new product development team within the company in discussing the results of the Innovation Session. For maximum productivity, somewhere under one-hundred new ideas should be reviewed. Included should be any ideas that the members themselves may have generated or come across. The team leader should emphasize that the natural tendency to be overcome is the preference for what is most familiar, just for the sake of comfort. It should also be noted that it is always easier to study something than to take action on it. Also, recognition can be given to the fact that no one manager is thoroughly qualified to make an accurate judgment on a new idea; however, intuition can be a strong asset in an intelligent, open-minded discussion that further narrows down the possibilities.

The Evaluation Meeting

This is a separate meeting with the same team members to sort through and evaluate the latest, revised new product idea list. An In Situ Delphi technique is used to save time and still eliminate committee bias. This version of the Delphi method of decision making works in the following manner. To start, all the ideas are numbered in the order in which they were originally generated by the Innovation Session participants. Then each team member puts his/her initials on a piece of paper with three vertical columns. Column A means "Yes, has potential." Column B is a "Maybe" product idea. Column C means "No, won't work." A ballot is taken by each member for each product idea, by placing it in only one of the columns. A tally is then done for all of the votes in Column A per product. A tally could also be taken for the votes in Column B. At this point, the pros and cons are analyzed, to keep the winning ideas and eliminate the losers. Of course, the winners meet the criteria list for the "ideal" product.

The Second Cycle

Six new outside experts are recruited for a Focused Innovation Session. A newly revised briefing document contains a narrower range of potentially successful new product concepts. Afterwards, a second Building Session and Evaluation Meeting are conducted with the company new product team (same members).


In this stage of the SIS process, it is necessary to find out if the new product concept can be produced and marketed successfully by the company. If the product concept passes the first two tests, then a financial/economic analysis is done, with calculations based upon an assumed price and estimated volume derived from projected market demand. This three point check is done for each idea that has passed the scrutiny of the team. A PERT chart could also be used to illustrate, plan, and direct the feasibility study. Feedback loops should be included to make necessary revisions in the product concept along the way.

During this entire analysis, it should be noted that this is the stage where many new product ideas are really shot down, because they exhibit the potential to become losers. Each step in the new product development process should be analyzed from a financial resources viewpoint to decide if the next step is justified. If the research results from one step do not support the rationale for moving into the next step, this next step should not be taken. This puts a logically manageable control mechanism into the whole process.

Management Action Plan

In this last step of the Strategic Innovation System, a comprehensive plan of action is developed. Included are details on what has to be accomplished to achieve the goals, when deadlines are, and who in the firm is responsible for implementing each task.

Benefits of the SIS

The benefits or advantages of the SIS are many. In particular, the major ones are that SIS:

* Brings top experts from outside the corporation

to a firm's assistance * Combines the state-of-the-art outside thinking

with the views of the company's key executives * Directs the top managers' efforts to a future

oriented, important responsibility (new product

development) * Provides a chance for the company's top managers

to work together on a common goal and

develop an esprit de corps * Generates numerous product ideas that are potentially

lucrative for future growth * Provides a method of controlled development

costs during the process * Inspires confidence and gives direction to companies

that have ideas, but are unsure about how

to evaluate and take action on them * Requires a formalized, sequential step by step

method for achieving new product success * Insures progress will continue to occur with a

well organized new product program * Instills a new creative capability in executives

that can be applied over time to other situations.

In conclusion, the Strategic Innovation System is a valuable tool for corporations that want to maximize their future growth potential via new product development, simultaneously reducing the risks inherent in the process.


[1.] Buggie, F. D. New Products Development Strategies. American Management Association, New York, New York, 1981.

[2.] Cooper, R. G. "Why New Industrial Products Fail." Industrial Marketing Management, June 1975, pp. 315-326.

[3.] Crawford, C. M. "New Product Failure Rates: Facts and Fallacies." Research Management, September 9-13, 1979.

[4.] Management of the New Product Function: A Guidebook. Association of National Advertisers, Inc., 1980.

[5.] Moore, W. L. "Concept Testing." Journal of Business Research, September 1982, pp. 279-294.

[6.] ____________. "New Product Development Practices of Industrial Marketers." Journal of Product Innovation Management, March 6-20, 1987.

[7.] Murphy, P. E. and R. K. Robinson. "Concept Testing for Services." In Donnelly, J.H. and W. R. George, eds. Marketing of Services. American Marketing Association, Chicago, Illinois, 1981, pp. 217-220.

[8.] "The Quickening Pace of New Products." Business Week, May 30, 1983, p. 61.

[9.] Ronkainen, I. A. "Criteria Changes across Product Development Stages." Industrial Marketing Management, August 1985, pp. 171-178.

[10.] Scheuing, E. E. New Product Management. Columbus, Ohio: Merrill Publishing, 1989.

[11.] Schwartz, D. A. "Concept Testing Can Be Improved - and Here's How to Do It." Marketing News, January 6, 1984, p. 22.

[12.] Uttal, B. "Speeding New Ideas to Market." Fortune, March 2, 1987, pp. 62-66.
COPYRIGHT 1990 St. John's University, College of Business Administration
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Buggie, Frederick D.; Scheuing, Eberhard E.; Vaccaro, Valerie L.
Publication:Review of Business
Date:Sep 22, 1990
Previous Article:Innovation in organizations: toward an integrated model.
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