1. Management of Technology (OM476) Managing the NPD Process March 1, 2006 S. Fisher

2. Agenda 30,000 new consumer products are introduced annually, and over 90% of them fail (Christensen, Cook and Hall, 2005, HBR) What’s wrong with the new product development (NPD) process? What are the challenges? How can firms improve? Mid-semester feedback

3. In-class writing List at least two stakeholder groups who have input on NPD in the auto industry. What can each of these stakeholders offer to the NPD process?

4. Auto industry: Innovation sources Source: Center for Automotive Research (March 2005). Automotive Product Design and Development Delphi. Retrieved from http://www.cargroup.org/documents/ProductDesignandDevelopmentDelphi.pdf

5. NPD Process Three primary objectives  Maximizing fit with customer requirements  Minimizing development cycle time  Controlling development costs How important is each of these to the firm’s ability to make money on the new technology?  How much can we sell?  At what cost to the firm?

6. Maximizing customer fit Involving customers in NPD Getting feedback on failed products  First Palm product, the Zoomer, failed. Turned out that customers wanted connectivity with their computers, leading to synchronization. Observation Beta testing  Google  But are lead users representative of later user groups?

7. Minimizing development cycle time Related to first mover advantages Product life cycles generally becoming shorter Shorter cycles allow a company to  Respond to consumer needs/desires, competitor designs  Correct mistakes Downsides of short cycle time?

8. Development cycle time

9. Development costs Break-even analysis Example - Honda Today For Option 3 (increase both bore and stroke), how many cars would you have to sell in order to recoup the R&D costs?  Per car profit = 25,600 yen  1.5 billion yen additional investment  Need to sell 59,000 additional cars  In 1987, sold 100,660 Todays

10. Sequential vs. parallel Benefits of partly parallel process? Potential drawbacks? Outsourcing of development Another approach to the same goal: using cross-functional teams – will discuss more in Chapter 12

11. Involving the supply chain Firm’s supply chain managers  How hard will it be to get the needed components at the right time?  Assemble in-house or use modular delivery?  Logistical and cost implications of absorbing warranty costs, reverse supply chain Suppliers  Tapping into knowledge base for ideas on products or production process  Can help with overall cost savings

12. Product Design and Development for Auto Interiors

13. Product Design and Development for Body/Chassis/Suspension

14. Project champions Commonly used, but impact on project success is debatable  Appears unrelated to success in the marketplace  Does appear to enhance odds of finishing the project – is this a good thing?

15. For next class Finish reading chapter 11 (pages 224-236)  NPD tools, measuring performance  Will also discuss technology acceptance model On Wed. March 8  Eli Lilly case  Team 5 presenting  Team 1 review/questions  All others – exec summary

16. Mid-semester feedback Anonymous What do you like about the class so far? What should we keep doing? How can we improve the class for the remainder of the semester?