Managing New Product Development Projects


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Managing New Product Development Projects Kevin Chan

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The Short Course Project Managers (PM) involved with new product development (NPD) projects should first understand the structure of the NPD process. With this knowledge, the PM has greater control on the flow of the entire project and it assists in the planning stage of the project. The course will hopefully give you an insight into the structure of a NPD project and various PM tools that can be used at each part of the NPD process. There will be examples throughout the course and a basic case study to apply your new knowledge.

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New Product Development (NPD) Essential to countless companies for growth in their market area NPD – the entire process of realising a new product/service to market The process consists of several phases or stages

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New Product Development (NPD) Why NPD? Innovation – new or improved product ideas required for competing in the market sector The inevitable – sales decline from an ageing product Examples of NPD: Xbox to Xbox 360 Playstation 2 to Playstation 2 Slim Coca Cola Zero Coca Cola Zero:

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New Product Development (NPD) NPD everywhere! Used to revive or generate a new revenue stream NPD Process provides basic framework to the creation of a replacement or brand new product

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NPD Process Structure 6 Stages of the NPD Process Idea Generation Idea Screening Concept Development & Testing Business Analysis Beta & Market Testing Commercialisation There are slight variations on how many stages there are in the process but the fundamentals are the same

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Idea Generation & Screening Most difficult part to get right first time Very important – foundation for the complete project Ideas – good ideas are hard to find, requires screening Referred to as the “Fuzzy Front End” of the NPD Process – difficult to pinpoint key idea Must be done properly or may lead to issues further into the project

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Idea Generation & Screening Generating concepts – various methods Employees, Customers, Salespeople The Competition

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Idea Generation & Screening Screening Process – answer key questions Can the product be made? (Technology available?) Is there anything else like it on the market? (The competition) Who would buy it? Why would they buy it? Will it make a profit? Project Manager must ensure answers are obtained – communication with all affiliated with the project Authorisation from Top Level Manager – due to allocating company resources to project

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Idea Generation & Screening Idea phase not expensive with regards to money BUT can be very time consuming! Clock:

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Concept Development & Testing Further Development of initial product idea – features of the product Research in potential market sector Investigation into intellectual property – don’t want lawsuits arising later Application of Patent – protection of idea Designers and technical staff work on ‘blueprints’ for possible prototype Obtain feedback from potential consumers to improve product concept Project Manager – certify that tasks within this stage of process is completed Communication – highly important for PM to deal with various teams involved in project

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Business Analysis Analyse the profitability of the product in depth Constantly expanding on market research Identify Pricing Potential sales Fourt-Woodlock Equation: Terms explained in accompanying notes Project Manager – keeping organised history of spending on the project, ready to relay information to project team V = ( HH . TR . TU ) + (HH . TR . MR . RR . RU )

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Beta & Market Testing Implementation of a physical prototype Hardware, Software, Safety and Quality testing Launch to small test group for more feedback – refine for final launch Project manager again needs to observe that beta and market tests are carried out thoroughly Bad Example – Fallout: New Vegas...

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Beta & Market Testing Video link:

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Commercialisation Final part of NPD Process often considered post-NPD Time running out Deadline to launch product imminent Consider competition before launch Avoid conflicting with other similar products Delays – Project Manager’s nightmare Costly in money and reputation First to market is key for many new products

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Commercialisation Use of Launch events to promote new product Widely used throughout the consumer good industry May seem like a time to reap the rewards but... Settling period once product is with end user Problems begin to surface as demonstrated from the release of Apple’s IPhone 4

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Commercialisation Iphone 4 Issues: Loss of signal due to antenna design Discoloration of screen Non-scratchproof Incompatibility with 3rd party accessories Recall of product would cost up to £1bn!

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Commercialisation Sales continued despite product flaws Reputation and popularity major help to project Casings were given to consumer to resolve antenna issue Replacements for screen discoloured products Project Manager still tied to project and must deal with the problems

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Project Management Role Not hands on – but strong connection to the various project teams to have a clear idea of project status Project’s success judged on 3 aspects of Iron Triangle

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Project Management Role Project Manager expected to balance all 3 aspects of the Iron Triangle accordingly

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Qualities & Skills Project Manager should have some of the following attributes and skills: Understanding of the NPD Process Communication Skills People Skills Organised Thriving under Pressure Enthusiasm Persistence Persuasive Confidence

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PM Tools Various PM tools can also help with NPD projects as well as others Stakeholder Maps Gantt Charts Critical Path Method Risk Register

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PM Tools Stakeholder Maps Stakeholders – individuals or organisations that have a direct or indirect connection to project Anyone who can be affect negatively or positively should also be considered Placed in a stakeholder map to determine and manage their effect on the project

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PM Tools Mendelow’s Stakeholder Matrix Identifying the key stakeholders will be advantageous for the project

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PM Tools Gantt Charts Used for planning out the project Identifying tasks and associating completion times with them More complex Gantt Charts include percentage of completion in each bar representing a specific task

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PM Tools Critical Path Method Network analysis tool Isolates the set of tasks that takes the longest to execute Any delays in these task will result in a delay for the overall project

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PM Tools Risk registers Effective way to record and manage risks Organised in a table Row headings Risk Numbers Column headings Risk Name Probability Impact Risk Score Mitigation Contingency Plan

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PM Tools Risk registers can be as simple or complex as required

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The Real World Project Management not an exact science PMs can only handle situations as then come as all projects are different There will be similarities between NPD or any projects so prior experience can be called upon No project manager is perfect – learning from mistakes is part of the job Course has now covered NPD Process structure & main function of the project manager within the NPD Process

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Case Study Video link: Watch the following video and note any key events you think may be relevant as a project manager or to anything we have covered

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Case Study Video link: Watch the following video and note any key events you think may be relevant as a project manager or to anything we have covered

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Case Study Video link: Watch the following video and note any key events you think may be relevant as a project manager or to anything we have covered

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Case Study Video link: Watch the following video and note any key events you think may be relevant as a project manager or to anything we have covered

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Case Study Key Events – The iPod Revolution Part One Return of Steve Jobs Company losing money – critical state Existing bad Apple products Steve Jobs eliminating bad products from market Reduced R&D projects – minimising investment into bad ideas New colourful iMacs Concept of sharing music digitally over the internet - Napster

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Case Study Key Events – The iPod Revolution Part Two Birth of iTunes – jukebox software 2001 Entry into digital music concept Developing the iPod Simplicity User feedback Development snag problem 3 months before launch power management – dead after 3 hours, poor battery life 8 weeks to fix problem Oct 2001 release of iPod Clever Marketing – “It’s not a Mac...”

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Case Study Key Events – The iPod Revolution Part Two Worse timing for a new product launch Napster sued 9/11 Silicon valley economy falling apart The iPod Scepticism – expensive product Excellent integration with software Poor competition Ease of use Apple loyalists 2 months of sales – thousands of trend setters

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Case Study Key Events – The iPod Revolution Part Three The right target market White ear buds project continues – Great Marketing! Sales on the rise Napster out of Market for music online Steve Jobs Persistent, Intense, Charismatic, Self Confident, Persuasive Steve Jobs starts selling music online Idea of selling songs rather than ‘renting’ April 2003 - Launch of iTunes Music Store Major Success + special announcement...

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Case Study Key Events – The iPod Revolution Part Four First 18 month 700000 iPod sold Still considered niche product Special announcement April 2003 - Windows compatibility – 3rd generation of iPod

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Case Study Refer back to the accompanying notes and attempt the Questions section of the case study.

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Conclusion From the release of the iPod in Oct 2001 to April 2003, there were already 2 product revisions made to the original iPod making Apple into a billion dollar company. This just shows the value of NPD process to a company and that there is potential for all project managers to achieve success of the highest order with one simple product idea.

Summary: Covers the basic structure of the New Product Development Process and the role as a project manager involved such a project.

Tags: ms418 project managment new product development npd

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