1. Type author names here © Oxford University Press, 2012. All rights reserved. Operations Management Chapter 10 Developing New Products and Services Jones & Robinson

2. Jones & Robinson: Operations Management Understand the different levels of novelty in developing new products or services Outline the new product development (NPD) and new service development (NSD) process Identify the factors that affect the NPD and NSD process Compare and contrast informal and formal approaches to NPD and NSD Learning Objectives

3. Jones & Robinson: Operations Management “Innovation is anything new that a firm does, irrespective of whether it is new to the world, copied from competitors, or adapted from existing products and services.” (Jones 1993) Innovation may apply to: products services processes or even organisations Innovation

4. Jones & Robinson: Operations Management Invention is the creation of something which is entirely new to the world – irrespective of whether it can put into use or not. So New Product and New Service Development is more concerned with Innovation and Novelty than simply Invention. Invention

5. Jones & Robinson: Operations Management Innovation and Invention

6. Jones & Robinson: Operations Management Innovation can be categorized by its impact: Incremental Innovation – small scale changes to products or services which may have little impact individually but this is the basis for continuous improvement Radical (or Disruptive) Innovation – large changes, based on invention, introducing new products or services which can seriously affect existing offerings in the market Types of Innovation

7. Jones & Robinson: Operations Management Modifications – taking an existing product and changing it in some way. Restaging – modifying the product so that it can be used on different occasions, or by new market segments. Line extensions – a product variation of an existing brand. New products in existing categories – developing a new product as part of an existing range of products. New categories – developing an entirely new product or product range that a firm had not previously produced before, although other firms may have done so. Inventions – this refers to a product that is entirely new to the world. Six Levels of Novelty

8. Jones & Robinson: Operations Management Six Levels of Novelty

9. Jones & Robinson: Operations Management There are four main stages: Formulating ideas Deciding on whether to proceed Testing the design Evaluating the outcome of the process Stages in the Development Cycle

10. Jones & Robinson: Operations Management Stages in the Development Cycle

11. Jones & Robinson: Operations Management Product/Service Features Originality of the product or service Degree of ‘protection’ from competitors Amount of capital investment required Range of professional expertise needed Number of stakeholders Potential life cycle of the product or service Factors influencing NPD and NSD

12. Jones & Robinson: Operations Management Organizational Characteristics Size of company Organizational culture Degree of in-house capability Formal R&D department Environmental Factors Maturity of the marketplace Supply chain Industry Association sponsorship Whether it is a formal or informal process Factors influencing NPD and NSD

13. Jones & Robinson: Operations Management Informal v Formal Process NPD and NSD processes are more likely to be formal if: new products, with major process impact, are developed a number of interrelated innovations are being developed simultaneously the new product is protected by a licence or patent product life cycles are long competitors are unlikely to enter the market with a similar product/service the innovation is original or "new-to-the-world"

14. Jones & Robinson: Operations Management Informal v Formal Process NPD and NSD processes are more likely to be informal if: simple modifications are made to existing products or services innovation is not part of a major change program there is no licence or patent protection competitors are actively innovating the "new" product is largely a copy of a competitor's product.

15. Jones & Robinson: Operations Management Appropriate development process for the product or service Development team – the right mix of skill types Leadership – positive and open personality style Collaboration within the team – including trust issues Knowledge management – e.g. development of data warehouses and methods of communication digitally to become ‘learning organizations’ Involvement of suppliers and distributers – to reduce development time Factors affecting the success of NPD and NSD