1. Comparing new product development processes in new ventures and established firms Joe Giglierano, San Jose State University

2. Purpose Explore the NPD process in new firms, compare to NPD observed/studied in established firms How much of what we know applies in new firms? Can understanding new ventures’ NPD be translated for established firms?

3. The Research Exploratory, qualitative Based on interviews, discussions, observations 12 companies –11 Software, 7 include services (web-based) –1 combined software and hardware –4 discontinuations –2 established companies –4 clear product successes

4. Expectations – New Venture Process, compared to Established Firms more iterative less formal less use of stage gates less use of market research and analysis less use of business analysis and planning

5. Expectations – what happened? more iterative less formal less use of stage gates less use of market research and analysis less use of business analysis and planning Yes Well, maybe Does anyone? Sort of What was I thinking?

6. Outcomes – Successful Products Benefits clear and compelling Usage straightforward or facilitated by customer service Business models relatively simple Semi-formal NPD processes Well managed

7. Outcomes -- Discontinued Benefits not clear Complex business model Management issues Iterative process, but viable market and model not found

8. Outcomes – Jury still out Same problems as the discontinued Clear benefits? Compelling benefits? Business model too complex? Iterations haven’t found a good fit Competitive problems, too But it hasn’t killed them yet.

9. IDEA GENERATION IDEA SCREENING PRELIMINARY ASSESSMENTS BUSINESS PLANNING PRODUCT/ STRATEGY DEVELOPMENT MARKET TESTING LAUNCH Stages with Activities Prelim. Tech Assess. Prelim. Mkt Assess. Detailed Mkt Stdy Bus./Fin. Analysis Prod. Dvlmt Prod. Tests -- IH Prod. Tests -- Cust. Trial Production Finl Bus. Analy. Production Start Mkt Launch

10. Differences between new venture NPD and established company NPD Lack of formal screening – provided by VCs Extended analysis and planning (good planning?) Importance and role of first customer –Development customer Iterative process Marketing differences –Business development –Geurrilla marketing –No real launch

11. Seek 2 nd group of customers Develop prototype Find first customer Develop for first customer Launch to first segment? Determine scope needed/desired Translate for broader market Test broader market Develop business concept Refine concept for target market Develop for first segment Develop revenue model further Business idea generation Product idea generation

12. Implications for New Ventures Too much drunk-under-the-lamppost marketing; Too much grass-is-greener-over-there targeting

13. Implications for new ventures Right first customer –High need level – addressable by core product –Patient Right second customer –Less patient is OK –Translatable Inclusion of learning as specific objective

14. Implications for established firms Get more customer contact earlier Move up beta test; recast as development customer

15. Future directions More interviews; different industries Flesh out model Add levels of innovativeness –Incremental vs. Radical –Sustaining vs. disruptive Go deeper into individual aspects of model Content vs. process