MPO Markt- en productontwikkeling

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MPOMarkt- en productontwikkeling

• Product planning
• Deel I

2 februari 2001
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Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zorgverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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Product management managing the entire life cycle
Product life cycle
Withdrawal
Introduction
Operation
Development
Phase out
Execution Project organisation
Execution Standing organisation
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Development 3 sub-fases
Operation
Development
Phase Out

• Development break through products
• Development platform products
• Development derivative products

Pizza-box interface
Product planning

• Development product technology
• Development process technology

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Example HP - Filling the pizza bins
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Product planning Portfolio planning
Account 1 Account 2 Account 3 . . . Account
n Account n1 Account n2
Product planning

• Which products need to be. . .
• Phased out?
• Added to the portfolio?

Product 1 Product 2 Product 3 . . . Product
n Product n1 Product n2
gt
P
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Product development continuous renewal
Introduction
Withdrawal
Operation
Development
Phase out
Development
Development
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Example Motorola - Life cycle planning
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Product family concept
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Program management
What has the portfolio to look like in 1 year, 3
years and 10 years?

Program 1

Program 2
1 year
3 years
10 years
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From vision to new ideas
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The idea funnel
From vision to new ideas
Assessment of future technological developments
Assessment of future market developments
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The idea funnel
Each selected idea constitutes the input of a new
project
Project definition

• Brief description of product idea
• Corporate mission
• Primary target group
• Secundary target group
• Assumptions
• Stakeholders

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The idea funnel
A 3-step process
Generate and select alternative strategies
Generate and select search fields
Generate and select product ideas
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Generating and selecting ideas a three-step
process
Strategy
Selected search fields
Selected ideas
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The selection process
Market potential
Technical complexity

• Categorise ideas
• Create balanced portfolio

• Qualify ideas per category
• Use category-specific criteria

• Test high-potential high-risk ideas that require
  substantial investment

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Summary product planning

• Research and commercial projects
• Product families
• Mix of projects
• Product and process development
• Projects and programs

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Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zorgverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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Idea generation
Product planning
Idea generation
Idea selection
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Example 3M - How to keep the innovative spirit
alive

• If management is intolerant and destructively
  critical when mistakes are made, I think it kills
  initiative.
• William McKnight, the spiritual father of 3M

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Example 3M - Two ground rules

• 25 Sales need to come from products introduced
  in the last five years
• 15 Time may be spend on bootlegging

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Example 3M - Two ground rules

• 25 Sales need to come from products introduced
  in the last five years
• 15 Time may be spend on bootlegging

Post-it Notes The Invention of 3M's Post-it Notes
began when Art Fry dug out an old idea for an
adhesive, because the bookmarks for his choir
hymnal wouldn't stay in place. The idea, applying
a strip of repositionable adhesive to each sheet
in a note pad became a practical innovation now
used in homes and offices worldwide.
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Creativity as a means of creating new knowledge
Creative problem solving techniques
Modelling techniques

• Creativity is seen as the cause and successful
  innovation as the effect
• Nyström (1979)

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Need for knowledge creation
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Creative thinking

• I like to think of creative thinking as the sex
  of our mental lives
• Roger von Oech

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How the printing press and movable type was
invented
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The creative cycle
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Different ways of thinking

• Right part of the brain à creative-intuitive
  thinking
• Left part of the bain à logical-rational thinking

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Mental locks

• The right answer
• Thats not logical
• Follow the rules
• Be practical
• Play is frivolous
• That is not my area
• Dont be foolish
• Avoid ambiguity
• To err is wrong
• Im not creative

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Stepping stone
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The idea funnel

• Two classes of techniques
• Divergent
• Convergent

The idea funnel
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Categories of divergent techniques

• Associative techniques
• Creative confrontation techniques
• Systematic techniques

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Associative techniques

• Based on the following ways of thinking
• Association
• Provocation

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Association

• Stimulate creativity by thinking along
  association patterns like
• Opposites (e.g. high and low, thick and thin)
• Part and whole (e.g. finger and hand, shoelace
  and shoe)
• Proximity in time and space (e.g.station and
  train, pen and ink)
• Cause and effect (e.g. wound and pain)
• Form (e.g. swan and duck)
• Sound (life and wife)

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Provocation

• Stimulate creativity by asking provoking
  questions
• What happens if you turn the problem around?
• How would superman do this?
• What is the worst solution you can think of?

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Provocation slay a sacred cow

• Groningen is NO fun as a student!!!

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Creative confrontation techniques

• Stimulate creativity by confronting the problem
  with
• Words that contain analogies
• Randomly chosen words

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Analogies

• Direct analogies
• Personal analogies
• Symbolic analogies
• Fantasy analogies

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Direct analogies
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Creative problem solving techniques
Creative confrontation How do the communication
needs of a marathon runner, a soldier, a car
service station, an ambulance, an insurance
agent, and so on compare to those of our
customers. . .?
At the Rotterdam marathon every runner had an
electronic communication device tied to one of
her/her shoelaces
McLaren services its cars through a satelite
link-up
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Why is not everybody using these techniques?

• Techniques are often
• Unknown
• Misused
• The reasons for this are
• Insufficient training
• Inexperience
• Resistance to change

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Summary creative problem solving techniques

• Product ideas may have different sources
• Idea generation may be of an ad-hoc or structural
  nature
• Creativity is used throughout the NBD process,
  but most noticeable during the fuzzy front end
• Creative problem solving techniques stimulate
  creativity by unlocking mental locks
• Creative problem solving techniques may be
  divergent or convergent in nature
• Creative problem solving techniques are often
  unknown or misused

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Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zorgverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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Background

• Company
• Health care insurance company
• 80 Market share in Friesland
• Social position towards health care insurance
• Market developments
• Liberalisation of health care insurances
• Cross-regional competition

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Example strategy - search field - idea
Strategy
Selected search fields
Selected ideas
To capture the market for collectivities by
delivering additional services in order to
counter competition
Example Administrative services that make life
easier for companies with collective insurance
Example Automatic mutation process for companies
with a changeable workforce
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Approach

• 6 Sessions
• Board of directors, department heads, employees
  customers
• Generate and select service elements
• Create packages of service elements
• Evaluate packages in two rounds

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Process
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Summary De Friesland Zorgverzekeraar case

• No real sense of urgency
• Fundamental disagreement concerning social
  position
• Internal acceptance of future development
  projects
• Linking market needs to company means
• Getting people out of their work process
• Short divergence and convergence cycles

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MPOMarkt- en productontwikkeling

• Product planning
• Deel II

2 februari 2001
50
Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zoregverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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Idea evaluation and selection
Product planning
Idea generation
Idea selection
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A common falancy too many projects
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Innovation is a risky excercise. . .

• Despite more than three decades of empirical
  research designed to determine the
  characteristics of technically progressive
  firms and the factors associated with success
  and failure in innovation, there still exists no
  precise prescription or recipe for successful
  innovation.
• Rothwell (1992)

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Failure rate of fully developed products
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Many products also fail before introduction!
The 'mortality curve'
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Number of ideas, concepts or projects
46 of all the resources allocated to product
innovation
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1.3
1
Screening and evaluation
Business analysis
Development
Testing
Commercialisation
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Bottom line definition of excellence
The 'mortality curve'
Number of ideas, concepts or projects
Overall success rate
Success rate of best in class companies
Screening and evaluation
Business analysis
Development
Testing
Commer-cialisation
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Luck, science or art?

• There is nothing more difficult to plan, more
  doubtful of success, nor more dangerous to manage
  than the creation of a new system
• Machiavelli, Il Principe

MPO
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Success factors SAPPHO

• Successful innovators

had a much better understanding of user needs
made more use of outside technology and
scientific advice
payed more attention to marketing and publicity
involved key individuals with more seniority
and authority
performed their development work more efficiently
but not necessarily more quickly
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Success factors Stanford Innovation Project

• Successful products had the following success
  factors in common

high market proficiency and significant sales
resources
early introduction
well planned and executed RD process
high performance to cost ration through in-depth
understanding of the customer and the market place
high level of top management support
high synergy with existing strengths
high contribution margin
well interfaced and coordinated functions
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Success factors NewProd

• The most important factors were found to be

product superiority and uniqueness
project/ company fit
market need, size and growth
economic advantage
newness to the firm
technological compatibility
competitive market,
product customness
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Summary success factors

• Success does not depend on mere chance
• No one factor is solely responsible for success
• Lack of understanding of strengths and weaknesses
• Critical activities are often omitted or poorly
  executed

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Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zorgverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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Productidea selection tool NewProd

• Model predicts success or failure with an
  accuracy of 84
• Model links factors to financial performance
  based on experiences with 200 real product
  introductions

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NewProd factors 4 aspects of success
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Applying NewProd
Teammembers fill in standard questionnaire
Scores are entered in NewProd model
NewProd predicts chance of success
NewProds prediction of successes and failures is
correct in 84 out of 100 cases
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NewProd process

• Brief the project leader on NewProd and gather
  information about the project
• Adapt the questionnaire to the specific context
  of the project
• Select and invite the participants
• Instruct participants and discuss definitions
• Have participants fill in the questionnaire
• Check if all questionnaires have been filled in
  completely
• Process the data and analyse the results
• Present the results

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NewProd outcomes

• Prediction of success or failure
• Areas that are strengths or weaknesses
• Areas where information is lacking
• Areas where consensus is lacking
• Team building

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Benefits of NewProd

• Enhances objectivity of the judgement
• Systemizes selection and evaluation process
• Focuses discussion
• Focuses information gathering
• Involves different functional areas and
  hierarchial levels
• Reduces complexity decision making

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Drawbacks of NewProd

• NewProd does
• Not yield a very profound evaluation
• Not advise how to improve the project
• Not take organisational aspects into account
• Probably wrongly predict me-too project
  development projects
• Not learn from new projects

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Summary product idea evaluation and selection

• Products often fail
• Success may be predicted
• Evaluation and selection as early as possible
• Different tools exist (e.g. NewProd)
• Tools structure evaluation and selection process

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Contents
Part 1

• Product planning
• Idea generation
• Case 1 De Friesland Zorgverzekeraar

Part 2

• Success factors
• Idea evaluation and selection
• Tool NewProd
• Case 2 PTT Post BU Brieven

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PTT Post the problem

• Product ideas from
• Account managers
• Product managers

?
No integral prioritisation of ideas
?
No match with development capacity
Bottleneck
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Consequences
Bottleneck in development of new productideas
Delay in realisation of development
projects Deadlines agreed with sales and
customers can not be met
Priority is given to the loudest mouth
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Different options
Chosen option
Smart development
Structural portfolio planning
Increase capacity PD department

• Reuse by
• modularization
• Knowledge management
• Speed up by
• parallelization
• process reengineering
• etc.

• Predict success chance
• Prioritise projects
• importance
• urgency
• Match with development capacity

• Outsource development
• Increase department

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Structural portfolio planning
Generate ideas (e.g. as part of an product/
account plan)
AM
PM
Input ideas (described according to template)
Integrate and determine required capacity (in
preparation of strategic meeting)
Evaluate and select ideas
Develop
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Match with existing processes
Generate ideas
AM
PM
Input ideas
Categorise ideas
Custom build for one customer
Generic product ideas
RD ideas
Qualification by NewProd
Bid/ no bid review
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Match with existing processes
Custom build for one customer
Generic product ideas
RD ideas
J
N
Capacity requirement larger than X?
N
Mid-term commercial potential?
J
NewProd test
Bid/ no bid review
Strategic management decision
Selection and prioritization by management
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Match with existing processes
Selection and prioritization by MT Commercie
300 of available capacity
Selection and prioritization by Topplatform
150 of available capacity
100 of available capacity
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NewProd pilot Frankeerservice

• Ease of use
• Big envelop to collect all mail
• Business-like presentation
• Deferred payment with cost overview
• Entry product
• New logistic process

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Success chance Frankeerservice
Frankeerservice has a chance of success of 73
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Success factors
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Summary of strengths and weaknesses
Product
Technology

• Average price-performance ratio

• New
• Not complex
• Bad technological fit
• Unclear specifications

Organisation
Market
Right competencies Strong competitive position
Small Stable Existing market need Little
competition
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Impact of price performance ratio
83
Impact of organisational fit
84
Impact of market potential
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Evaluation of NewProd pilot

• Een team wordt gedwongen om een productidee
  aan de hand van een aantal gezichtspunten
  kritisch tegen het licht te houden. Daar
  ontbreekt het in de huidige praktijk nogal eens
  aan.

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Summary PTT Post case

• Lack of prioritization constitutes real problem
  for project/program managers
• Teamwork is most important benefit of tool like
  NewProd
• Evaluation of single project give good assessment
  product development organisation