The Pennsylvania State University
The Graduate School
College of Engineering
NEW PRODUCT DEVELOPMENT IN EARLY-STAGE FIRMS
A Thesis in
Industrial Engineering
by
Tucker J. Marion
© 2007 Tucker J. Marion
Submitted in Partial Fulfillment
of the Requirements
for the Degree of
Doctor of Philosophy
August 2007
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The thesis of Tucker J. Marion was reviewed and approved* by the following: Timothy W. Simpson Professor of Industrial and Mechanical Engineering Thesis Adviser Chair of Committee Soundar R. T. Kumara Distinguished Professor of Industrial Engineering Richard A. Wysk Professor and Leonhard Chair of Industrial Engineering Douglas Thomas Associate Professor of Management Smeal School of Business Steven B. Shooter Special Member Professor of Mechanical Engineering Bucknell University Marc H. Meyer Special Member Matthew Distinguished University Professor of Management Northeastern University Richard J. Koubek Professor and Department Head of Industrial Engineering * Signatures are on file in the Graduate School.
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ABSTRACT
For early-stage or start-up companies, the risks associated with missteps in the new
product development (NPD) process can lead not only to product failure, but company
failure. Disciplined product development has been a hallmark of mature companies for
decades, resulting in shorter development cycles, reduced costs, and higher quality
products. For early-stage firms, detailed investigation into their NPD processes is lacking.
This dissertation focuses on NPD of start-ups and early-stage companies and is divided
into three parts. The first is a comprehensive survey and analysis of 35 firms, which
details the NPD methods actually used by start-ups, both successful and unsuccessful.
Independent variables include the use of cross-functional teams, market planning,
industrial design, product platforms, cost accounting, and limited phase-gate management.
What was found is that early-stage firms using the core development principles
experienced positive results in firm performance. The second part of the dissertation is a
detailed case study of three start-ups. The case studies include historical case information
provided by the Innovation Factory, Accentra (PaperPro), and KCF Technologies (KCF).
The third and final part of the dissertation introduces a novel product development
process for improving NPD within early-stage companies that is demonstrated with a
case study from industry. The dissertation concludes with discussion on contributions
and future research.
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TABLE OF CONTENTS
List of Figures…………………………………………………………………………….vi List of Tables……………………………………………………………………………viii Acknowledgments.……………………………………………………………………......ix
CHAPTER 1: INTRODUCTION……………………………………………………….1 1.1 Introduction to New Product Development and Early-Stage Firms…………………..1 1.2 Motivation for the Research….………………………………………………………...2 1.3 Research Objectives…………………………………………………………………...9 1.4 Outline of Dissertation……………………………………………………………….11
CHAPTER 2: LITERATURE REVIEW……….…………………………………….12 2.1 Introduction to New Product Development (NPD)………………………………….12 2.2 Factors Impacting NPD in the 21st Century….……………………………………….13
2.2.1. Globalization………………………………………………………………13 2.2.2. E-Collaboration and Globalization………………………………………..17 2.2.3. Globalization and Product Platforms……………………………………...19
2.3 Global NPD…………………………………………………………………………..22 2.4 NPD Core Principles…………………………………………………………………28
2.4.1. Cross-Functional Teams ………………………………………………….29 2.4.2. NPD Gated Process……………………………………………………….31 2.4.3. Up-Front Market Planning……………………………………………….33 2.4.4. Product Platforms………………………………………………………...35 2.4.5. Industrial Design…………………………………………………………36 2.4.6 Cost Modeling and Tracking …..…………………………………………37
2.5 Chapter Summary……………………………………………………………………38 CHAPTER 3: SURVEY OF NEW PRODUCT DEVELOPMENT AT EARLY-STAGE COMPANIES………………………………………………………………….40 3.1 Introduction………………………………………………………………………….40 3.2 Research Focus………………………………………………………………………41 3.3 The Analysis Framework and Generation of Hypotheses…………………………...42 3.4 Methods……………………………………………………………………………...46
3.4.1. Sample and Survey Design………………………………………………..46 3.4.2. Explanatory Variables in the Self-Selection Survey………………………47
3.5 Basic Statistics……………………………………………………………………….50 3.6 Basic Hypothesis Testing ...………………………………………………………….53 3.7 Regression Analysis …………………………………………………………………54 3.8 Factor Analysis of Sorted Firms……………………………………………………..61 3.9 Multivariate Analysis….……………………………………………………………...64 3.10 Discussion…………………………………………………………………………..66 3.11 Limitations………………………………………………………………………….69 3.12 Chapter Summary…………………………………………………………………..71
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CHAPTER 4: CASE STUDIES OF EARLY-STAGE FIRMS AND THEIR NEW PRODUCT DEVELOPMENT PROCESSES………………………………………... 72 4.1 Introduction…………………………………………………………………………..72 4.2 Case Study Firms…………………………………………………………………….73 4.3 Field Study Results: PaperPro……………………………………………………….76 4.4 Field Study Results: KCF Technologies……………………………………………..82 4.5 Field Study Results: The Innovation Factory…...……………………………………..88 4.6 Discussion……………………………………………………………………………98 4.7 Chapter Summary…………………………………………………………………..102
CHAPTER 5: A SIMPLIFIED NEW PRODUCT DEVELOPMENT PROCESS FOR EARLY-STAGE FIRMS……………………………………………………………...104 5.1 Introduction………………………………………………………………………...104 5.2 New Product Development Early-Stage (NPDES) Process…...……………………...106 5.3 Steps in NPDES..........................................................................................................112 5.4 Discussion…...……………………………………………………………………….118 5.5 Chapter Summary…………………………………………………………………..119
CHAPTER 6: CASE STUDY: PAPERPRO APPLICATION OF NPDES
PROCESS…………………………………………………………………………........120 6.1 Introduction………………………………………………………………………....120 6.2 Stapler Example......………………………………………………………………….121
6.2.1. Case Company Background……………………………………………...121 6.2.2. Application of NPDES to the PaperPro 3000…...………………………….122
6.3 Discussion…………………………………………………………………………..142 6.4 Chapter Summary…………………………………………………………………..147
CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS…………………..149 7.1 Contributions……………………………………………………………………….149
7.1.1. Survey and Analysis of NPD within Early-Stage Firms…………………150 7.1.2. Detailed Case Studies of NPD within Early-Stage Firms………………..150 7.1.3. NPD Framework for Early-Stage Firms…...………………………………151
7.2 Limitations of the Research……………………………………………………...…152 7.3 Recommendations for Future Research…………………………………………….153 7.4 Closing Comments…………………………………………………………….........154
REFERENCES………………………………………………………………………...156
APPENDICES………………………………………………………………………....167 Appendix A. U.S. and Chinese tooling and COGS estimates……….………………...167 Appendix B. Independent variable histograms and power analysis…………………...169 Appendix C. Early-Stage NPD Survey….……...………………………….…………...173 Appendix D. Early-Stage NPD Survey raw data……..…………………...…………...182 Appendix E. Early-Stage NPD Survey total data sample……...……………………....184
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LIST OF FIGURES
Figure 1.1 - Motorola NPD problems and the affect on stock price………………………3 Figure 1.2 - Revenue growth via NPD, then bankruptcy at the Innovation Factory……... 3 Figure 2.1 - Compensation for Production Workers (2002 Hourly Wage, $ U.S.)……... 15 Figure 2.2 - Email design suggestions. Photo courtesy of FlashPoint Development…… 17 Figure 2.3 - Venn diagram of the intersection of CAD, Web-based tools, and the global supplier network………………………………………………………………………….22 Figure 2.4 - Global NPD (GNPD) framework…………………………………………...24 Figure 2.5 - Apple mock-up at the beginning of the product development phase……….25 Figure 2.6 - Apple iPod generation chart. Example chart courtesy of wikipedia.org……26 Figure 2.7 - Apple GNPD framework……………………………………………………27 Figure 2.8 - NPD hierarchy starting with Cooper’s fundamentals……………………… 29 Figure 2.9 - GM Cadillac market segmentation grid of the Sigma Platform. Photos courtesy of GM………………………………………………………………………………..….. 35 Figure 3.1 - Theoretical framework and hypotheses……………………………………. 46 Figure 3.2 - Sample mean radar chart of the Core Principles……………………………51 Figure 3.3 - Histogram of Question 18 responses (Likert)………………………………52 Figure 3.4 - All firm three factor interaction (C2, C4, C5) and (C2, C3, C5)…………...60 Figure 3.5 - All firm three factor interaction (C1, C2, C3) and (C3, C4, C5)…………...60 Figure 3.6 - Sorted firm (in-process removed) three factor interaction (C2, C4, C5) and (C3, C4, C5)……………………………………………………………………………...63 Figure 3.7 – Sorted firm (in-process removed) three factor interaction (C1, C2, C5) and (C1, C2, C3)……………………………………………………………………………...63 Figure 3.8 - Dendrogram of independent variable clusters………………………………64 Figure 4.1 - PaperPro original 1000 stapler. Photo courtesy of PaperPro………………. 76 Figure 4.2 - PaperPro’s global design and development………………………………... 77 Figure 4.3 - PaperPro’s development team………………………………………………78 Figure 4.4 - PaperPro development process for the 1000 stapler……………………….. 78 Figure 4.5 - PaperPro Core Principle radar chart……………………………………….. 82 Figure 4.6 - KCF global network………………………………………………………...83 Figure 4.7 - KCF’s development team…………………………………………………...84 Figure 4.8 - KCF development process…………………………………………………. 85 Figure 4.9 - KCF Core Principle radar chart……………………………………………..88 Figure 4.10 - The Innovation Factory IceDozer………………………………………… 89 Figure 4.11 - Design comments from virtual team meeting…………………………….. 90 Figure 4.12 - The Innovation Factory’s virtual development resources………………… 90 Figure 4.13 - IF core team organization chart……………………………………………91 Figure 4.14 - IF development process……………………………………………………92 Figure 4.15 - Innovation Factory market segmentation grid……………………………. 94 Figure 4.16 - IceDozer industrial design concepts……………………………………….95 Figure 4.17 - Innovation Factory Core Principle radar chart…………………………….98 Figure 4.18 - Case study radar chart……………………………………………………..100 Figure 4.19 - Case study Core Principle interaction……………………………………..101
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LIST OF FIGURES
Figure 5.1 - Proposed NPDES low-phased gate development process………………….107 Figure 5.2 - Relationships between NPDES and the Core Principles…………………...109 Figure 5.3 - NPDES hierarchy via Chapter 3 survey and case study firms……………...111 Figure 6.1 - PaperPro family of staplers. Photo courtesy of PaperPro………………… 121 Figure 6.2 - PaperPro 3000 development team…………………………………………123 Figure 6.3 - PaperPro competitors……………………………………………………... 125 Figure 6.4 - PaperPro market segmentation planning grid…………………………….. 126 Figure 6.5 - PaperPro 100 sheet testing with the 2000………………………………… 127 Figure 6.6 - ‘Heritage’ industrial design chosen by the CEO…………………………..128 Figure 6.7 - Customer Needs, 3000 stapler……………………………………………..129 Figure 6.8 - ‘Heritage’ design variations……………………………………………….130 Figure 6.9 - Scaling the 3000 stapler…………………………………………………...131 Figure 6.10 - Main power spring……………………………………………………….132 Figure 6.11 - 3000 section denoting major components………………………………..133 Figure 6.12 - Spring force curve………………………………………………………..134 Figure 6.13 - Comparison of the 2000 and initial 3000 design………………………... 134 Figure 6.14 - 3000 issue list…………………………………………………………….136 Figure 6.15 - 3000 EMS diagram……………………………………………………… 137 Figure 6.16 - February 2006 design clean-up…………………………………………..138 Figure 6.17 - 3000 component BOM…………………………………………………...139 Figure 6.18 - Tooling sample issues, noting larger than expected striker track gap……140 Figure 6.19 - Tooling sample issue list…………………………………………………141 Figure 6.20 - PaperPro 3000 production sample………………………………………. 142 Figure 6.21 - 3000 monthly development costs………………………………………...143 Figure 6.22 - 3000 project cost breakdown……………………………………………. 143
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LIST OF TABLES
Table 2.1 - Eppinger and Chitkara’s (2006) NPD comparison………………………… 23 Table 3.1 - Survey questions and explanation…………………………………………..48 Table 3.2 - Descriptive statistics, 35 respondents……………………………………… 50 Table 3.3 - Person independent variable data correlation……………………………… 51 Table 3.4 - Hypothesis regression results………………………………………………. 53 Table 3.5 - Factor regression results………………………………………………….... 56 Table 3.6 - Significant factor interaction regression results…………………………….58 Table 3.7 - Hypothesis regression results, sorted firms………………………………... 61 Table 3.8 - Significant factor interaction regression results, sorted firms……………....62 Table 3.9 - Clustered factor regression results…………………………………………..65 Table 4.1 - Contact and general characteristics of the case firms……………………… 74 Table 4.2 - PaperPro 1000 costs………………………………………………………... 80 Table 4.3 - PaperPro Core Principle (independent variable) survey responses………... 81 Table 4.4 - PaperPro dependent variable survey responses…………………………….. 81 Table 4.5 - KCF Power Harvester cost estimates………………………………………..87 Table 4.6 - KCF Core Principle (independent variable) survey responses……………...87 Table 4.7 - KCF dependent variable survey responses………………………………….88 Table 4.8 - Innovation Factory IceDozer costs…………………………………………. 96 Table 4.8 - IF Core Principle (independent variable) survey responses………………….96 Table 4.9 - IF dependent variable survey responses…………………………………….97 Table 4.10 - NPD Case Study Survey Results…………………………………………..99
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ACKNOWLEDGEMENTS
I would like to thank Penn State for providing me the opportunity to pursue education
and conduct research in a field of my utmost interest. I also would like to thank the
National Science Foundation for supporting me during this study under NSF Grant No.
DMI-0133923. I am also grateful to my thesis adviser, Dr. Timothy W. Simpson,
Professor of Industrial and Mechanical Engineering, who was always here to answer any
of my questions, to advise me during my research, and to provide me with many
opportunities to strengthen my knowledge through numerous conferences. I also would
like to thank my wife Kate, who was always on my side to support me in this endeavor;
and my parents for encouraging me to pursue my dreams. I am also grateful to Marvin
Weinberger, who gave me the opportunity to co-create the Innovation Factory, which
ultimately lead me to write this thesis. I would also like to thank the Innovation Factory,
PaperPro (Accentra), and KCF Technologies for their openness to share detailed
information on their firms. Acknowledgement would be incomplete without mentioning
Dr. Soundar Kumara, Distinguished Professor of Industrial Engineering and Allen E.
Pearce/Allen M. Pearce Professor, Dr. Richard A. Wysk, Professor and Leonhard Chair
of Industrial Engineering, Dr. Doug Thomas, Associate Professor of Management, Dr.
Steven B. Shooter, Professor of Mechanical Engineering at Bucknell University, and
Marc H. Meyer, Matthew Distinguished University Professor of Management at
Northeastern University who with his encouragement, started me on the path to applying
product platforms to start-ups in 2000.
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CHAPTER 1 INTRODUCTION
1.1 Introduction to New Product Development in Early-Stage Firms
As defined by Krishnan and Ulrich (2001), product development is the transformation
of a market opportunity and a set of assumptions about product technology into a product
available for sale. New product development (NPD) therefore is the activity of defining,
conceptualizing, designing, and ultimately commercializing a product to be introduced
into a new or existing market. Ongoing economic activity due to NPD is not only the
core of established firms, but the main driver for success in a new firm. An early-stage or
start-up company can be defined as a business or organization that is newly created and
begins to operate1. In this investigation, early-stage firms are further defined as those that
are less than ten years old and have, or are currently, developing a physical product to sell
in the marketplace. Entrepreneurial activity has been shown to contribute to innovative
activities, competition, economic growth and job creation (Carree and Thurik, 2003).
According to a 2004 Venture Impact study, 10% of the U.S. Gross Domestic Product
(GPD) is directly related to new venture creation, and perhaps more importantly, over
20% of research and development (R&D) in the U.S. is performed by firms with under
500 employees (this has risen from 6% in 1984) (Global Insight, 2004). The hallmark of
new firms is innovative products or services, but unfortunately most do not sustain
themselves long-term. According to Census Bureau data, approximately 50% of new
firms do not survive past four years (Headd, 2003). Unfortunately, the risks associated
with NPD are great, not only for established firms but for the nascent start-up.
1 http://dictionary.cambridge.org/define.asp?key=start.up*1+0&dict=P
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1.2 Motivation for the Research
Successfully launching new products gets more difficult every year. Firms are being
forced into smaller market niches while cost pressures and price competition are fierce.
Meanwhile, time-to-market is continually being compressed. Additionally, forecasting
the exact specifications and potential sales volumes of new products is becoming more
difficult than ever (Ogawa and Piller, 2006). Taking the amount of resources start-up
companies spend on new product development and their short lifecycles into
consideration, new product development is a risky proposition. In many cases, products
have only six months to prove themselves in the marketplace (Schneider, 2002). In a
recent study, the Product Development and Management Association found that
approximately 40% of all new products and services ultimately fail (Adams, 2004).
Often, well-designed, innovative products fail in the marketplace, and this can have a
serious impact on large firms let alone start-ups.
There are many factors that contribute to this high failure rate of new products,
including the creation of products that simply do not match consumer needs, unforeseen
competition, and cost overruns during development and launch. Lastly, given the high
number of new product launches per year, it is easy for a new product to get lost in the
‘noise’ of competition and poor marketing (Schneider, 2002). It is clear given the risk
and high product failure rates, that many firms still lack a robust development and launch
process. From the idea itself, to executing a flawless launch, ‘botching’ and any portion
of NPD can have serious ramifications for the firm. Figure 1.1 shows the stock price of
Motorola before and after a poor product introduction (highlighted is their late
introduction of camera phones in 2003). In large companies, missteps can affect
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profitability and stock price. For early-stage companies, missteps can lead directly to
bankruptcy. Figure 1.2 shows a revenue graph of the Innovation Factory, a start-up
formed in 2000. Shown in the figure is very quick growth followed by bankruptcy in
year 4. This is due to several factors, the primary of which was supply chain cost
overruns during volume ramp-up.
Figure 1.1. Motorola NPD problems and the affect on stock price. Photo courtesy of www.finance.yahoo.com.
Figure 1.2. Revenue growth via NPD, then bankruptcy at the Innovation Factory.
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Given the high cost of product development and the failure rates associated with new
product launches, there are two very fundamental aspects for mitigating the associated
risks of commercializing successful products. These fundamentals are (Cooper, 2001):
1. Doing the project right. Based on common success factors among successful
NPD companies, these include cross-functional teams, up-front market
planning and listening to the customer, and early product concept definition.
2. Doing the right projects. Even if a company has an excellent NPD process, if
the wrong product is developed, the product will fail. Product selection and
product planning methodology is essential to a successful product launch and
lifecycle.
Krishnan and Ulrich (2001) divide the development decisions within new projects
into four main categories: concept development, supply-chain design, product design, and
production ramp-up and launch. Cooper’s, and Krishnan and Ulrich’s development
paradigms point to several ‘core’ development methods and principles that are used to
improve the NPD process within established firms. The important question to be asked is
what do Cooper’s fundamentals, Krishnan’s and Ulrich’s decision categories and the
associated ‘core methods and principles’ mean for the new venture? For the start-up,
Gartner (1985) proposed a framework in how start-ups differ. The framework suggests
that start-ups differ in terms of the characteristics of the individual(s) who start the
venture, the organization which they create, the environment surrounding the new
venture, and the process by which the new venture is started. The research investigated
in this dissertation deals with the last point, namely the NPD process used by early-stage
firms. Specifically, the research questions addressed in this dissertation contend with the
5
widely studied methods and tools used to improve NPD within larger firms and their use
and impact within the start-up environment.
The importance of small firms in job creation, technological innovation and in
general economic rejuvenation, is accepted by most economists, management theorists
and even policy makers (Khan and Manopichetwattana, 1989). Given the importance of
innovative new firms on the economy, it is an unfortunate reality that their potential for
failure is so high. Research has been performed to see if there are factors for predicting
firm success, and if these factors can be used to potentially increase ultimate success of
the firm (Carter, et al., 1996; Gartner 1988; Gartner, et al., 1992). What entrepreneurs
‘do’ during venture creation is the primary determinant of venture survival (Gartner, et al.,
1998).
At its basic level, innovation is “a process that begins with an idea, proceeds with the
development of an invention, and results in the introduction of a new product, process or
service to the marketplace” (Edwards and Gordon, 1984). Schumpeter (1939), one of the
original contributors to innovation, outlined two types: 1) entrepreneurial innovation and
2) managed innovation. This dissertation focuses on the former, entrepreneurial
innovation, and potential factors of success resulting from the implementation of NPD
processes and methods. The fundamental aspects of new venture creation and factors of
success have been extensively researched, but not necessarily delving into the NPD
process and methods used. Complex development models are still rare in
entrepreneurship research (Hoang and Antoncic, 2003). Cooper (1993) noted that much
of the entrepreneurship literature has focused on variables that predict new firm
performance. These can include historical behavioral and occupational notions of
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entrepreneurship (Hoselitz, 1951; 1969); however, in the last twenty years the field of
‘entrepreneurial academics’ has arisen that seeks to study the determinants, or the
underlying conditions and processes that govern the success or failure of new ventures
(Sternberg and Wennekers, 2005). These include the works of Cooper (1993), Gartner
and colleagues (1985, 1989, 1998, 2003), and Reynolds and colleagues (1999, 2000,
2001, 2002, 2003). The next several paragraphs review literature relevant to the
individual, environment, and process factors outlined in Gartner’s (1985) framework.
In terms of the behavioral aspect of entrepreneurs, a variable associated with
individual success in business is the personal need for achievement labeled n-Ach
(McClelland, 1961). While n-Ach appears to be a core factor in entrepreneurs, the causal
relationship between it and success has not been established (Khan and
Manopichetwattana, 1989). Miller and Toulouse (1986) showed that n-Ach is not
correlated with innovation in small firms. However, individual factors such as human
capital and environment do have an impact, but these human measures cannot predict
ultimate venture success or failure (Gartner, et al., 1998). Human capital variables
include drive (n-Ach), knowledge, education, skills, and experience (Deakins and
Whittam, 2000). Human capital variables are likely to influence the development of an
idea and the organization of resources (van Gelderen, et al., 2006).
The environment surrounding the start-up can include how it is funded, managed, and
the network to which the firm belongs (van Gelderen, et al., 2006). The network of
external relationships is an important factor in the development of a new firm. In a study
of 60 firms, Lechner, et al. (2006) showed that entrepreneurial networking is as much
about adding new and different relationships as about transforming existing relationships.
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These relationships can include potential technology licensing to free legal advice. In an
in-depth study of 27 firms over a several year period, Gartner, et al. (1998) noted that
entrepreneurs who devoted more effort to 1) working with established suppliers or
subcontractors, 2) analyzing potential new entrants, and who devoted less effort to, 3)
determining the identity of their business, were more likely to start a new venture that
survived.
In terms of the NPD processes for new and established firms, Karakaya and Kobu
(1994) arranged this field of research into five streams, these are:
1) causes of new product success or failure,
2) new product development process,
3) new product development strategy – performance relationships,
4) use of models to measure new product performance, and
5) single-factor focused new product performance analyses.
For the purpose of this review, we emphasize the first three streams. It shall be noted
that Karakaya and Kobi’s organization of literature focuses more on general NPD process
categories rather than the paradigms noted in Krishnan and Ulrich (2001). The first
group (causes of new product success or failure) focuses mainly on new product failure
rates (NPFR). Influential NPFR studies include the Cochran and Thompson (1964),
Booz, Allen, and Hamilton (1968), Nielsen (1971), Crawford (1977, 1979, 1987), Cooper
(1980, 2001), and Cooper and Kleinschmidt (1987). These studies focus primarily on
established firms, not nascent start-ups.
The second group, NPD processes and tools, has been focused on procedures and
methods used. These include many of the resources and methods explained in Chapter 2.
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Influential research includes Clark (1985), Taguchi (1986), Pahl and Beitz (1988), Griffin
and Hauser (1993), Boothroyd, et al. (1994), Otto (1995), Meyer and Lehnerd (1997),
Ulrich and Pearson (1998), Gupta and Krishnan (1999), and Ulrich and Eppinger (2004).
In this research, informal and formal NPD procedures and tools are proposed. Again,
most research is focused on methods and tools for established firms. Finally, the third
group focuses on NPD strategies and performance relationships such as sales and growth
rates. This correlates to Krishnan and Ulrich’s (2001) product strategy and product
development organization paradigms. Research includes work by Cooper (1983, 1984,
1985, 1986), Clark and Wheelwright (1993), McGrath (1995), Ward (1995), Griffin
(1997), and Smith and Eppinger (1997). In terms of NPD strategy and performance
relationships, research includes Crawford (1980), Rinholm and Boag (1987), and Cooper
(2001, 2005). These are again focused on established firms, not start-ups.
As relating to early-stage companies, Meyer and Roberts (1986) investigated the
impact of product newness and corporate strategy on new firm success, as measured via
sales growth. They found an observable relationship in corporate performance and
product strategy, in that those firms who developed a growth-sustaining core technology
were more successful than those that did not. Garter’s (1998) study of 27 firms via Inc.
magazine found that “new ventures that survived focused on customized products or
services, thereby supporting the hypothesis that new ventures pursuing a niche strategy
would be more likely to survive. New ventures that were started in growing industries
were more likely to survive, thus supporting many previous studies (Mac-Millan, et al.,
1987; Merrifield, 1987; Stuart and Abetti, 1987) demonstrating this effect.” What is
absent from existing literature is a bridge between the heavily published NPD process
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paradigms and entrepreneurship research focusing on new venture survival rates and
prediction. It is in this area that this dissertation is focused.
1.3 Research Objectives
There are several high-level research questions that are addressed in the dissertation.
These include the following:
(1) What NPD methods (e.g., phase-gate development processes, adoption of
product platforms, up-front market planning, activity-based cost accounting,
industrial design intensity, etc.) are actually used by start-up firms?
(2) What is the impact of these methods on metrics such as time-to-market,
development duration, return-on-investment (ROI), product margin, and
sales?
(3) Is there any positive interaction between certain NPD methods and product
and firm success?
(4) What is the effect of applying NPD methods on an early-stage development
project versus no previously defined process?
In order to answer these research questions, the research was divided into three parts:
(1) A comprehensive survey of early-stage firms. This includes a 38 question
confidential survey of 35 firms and analysis of results.
(2) In-depth analyses of three start-up firms, which include:
a. PaperPro (www.paperpro.com). PaperPro was founded three years ago
with the launch of the One-Touch™ desk-top stapler. Their series of
products is based upon a proprietary spring-based design that
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decreases staple effort while increasing staple power. The products
are marketed in outlets such as Staples and Office Depot. Sales have
been remarkable, with the company producing revenues of over $60
million in 2005. PaperPro is profitable, and they are diverting all
profits into NPD.
b. KCF Technologies (KCF). KCF is a Pennsylvania State University-
based technology spin-off company developing a unique line of power
harvesting devices that will be used to provide small amounts of
electricity to remote wireless sensors. KCF is in the early stages of
funding and product development. Up-front product platform
planning is being applied to maximize market penetration and reduce
follow-on product development costs through module commonization.
c. Innovation Factory (www.innovationfactory.com). A series of ice
scrapers and snow removal equipment were designed and produced
based on product platform methodology and successfully sold in the
marketplace starting in 2002. Revenue topped $700,000 by the third
season of sales. NPDES will be evaluated against historical case data.
(3) Application of a proposed development framework, New Product
Development Early-Stage (NPDES), to a PaperPro product, the 3000 model
100-sheet stapler. The development process and metrics are compared to the
60-sheet 2000 stapler development.
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1.4 Outline of Dissertation
In the next chapter, a review of NPD methods and tools is conducted with emphasis
on the six ‘Core Principles’ briefly mentioned in this chapter. Chapter 3 outlines and
describes the survey and provides results and analysis. Chapter 4 details the three case
studies and comments on their development processes versus the results found in Chapter
3. Based on the survey analysis and case study information, Chapter 5 proposes an early-
stage new product development process, which is applied to a case study in Chapter 6.
Finally, Chapter 7 gives closing remarks and describes future work.
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CHAPTER 2 LITERATURE REVIEW
2.1. Introduction to New Product Development
New Product Development (NPD) is the activity of defining, conceptualizing,
designing, and ultimately commercializing a product to be introduced into a new or
existing market. The activity of NPD is a process in which resources are committed to an
entity whereby the finished product has a tangible value to the consumer. Items of
tangible value can be a latte from Starbucks, a sedan from Toyota, or the word processing
program used to write these words. The NPD process is an activity requiring resources
from nearly all facets of the firm (Ulrich and Eppinger, 2004). These include sales,
marketing, finance, design, and manufacturing. As mentioned in Section 1.1,
successfully launching new products gets more difficult every year. Given the capital
spent on NPD and new product failure rates (NPFR) of approximately 40% (Adams,
2004), new product development is a risk for established firms, let alone new companies
with scarce resources. It is clear from research and industrial observation that firms with
a better NPD process can produce more successful products more consistently, mitigating
some of the associated risk factors. It is the aim in this chapter to lay the foundation for
extracting several positive behaviors pertaining to NPD, which leads to investigating their
application to the activity of NPD within an early-stage environment.
This literature review is structured in a hierarchal manner. The review begins with an
overview of several factors influencing NPD in the 21st century. These include
globalization, the impact of electronic collaboration, and the use of product platforms.
This review is designed to give a broad ‘global scene setting’ before delving into the
13
specific methods and processes as detailed in Section 2.3. In Section 2.4, the literature
review discusses past NPD research and its relation to entrepreneurship and innovation.
Current entrepreneurship and NPD research is categorized, and an ‘open space’ is defined
where this dissertation is focused. The literature review concludes with a brief discussion
on how the remainder of the dissertation is compiled.
2.2 Factors Impacting NPD in the 21st Century
2.2.1. Globalization
Today, companies such as Black & Decker (B&D) have all but outsourced their entire
product line-up to offshore production facilities. Outsourcing, or the use of outside
suppliers to provide services or products, frequently offers a cost competitive alternative
to performing the required activities in-house (Rainey, 2005). According to Wu, et al.
(2005), outsourcing can be viewed as a strategically important activity that enables an
enterprise to achieve both short- and long-term benefits. These strategic benefits include
focusing on core company strengths such as innovation and design in order to maintain
competitive advantages. Assigning tasks to an outside firm or to another group within
the company may prove effective in accelerating the overall project (Ulrich and Eppinger,
2004). According to Dave Ayers, Vice President for Platforms and Engineering at
Lucent Technologies, “outsourcing has the additional benefit of freeing up engineering
talent to work on new product lines.”2 This allows companies like Apple to continue to
focus on developing the next iPod while not being burdened with direct manufacturing
management.
2 http://www.businessweek.com/magazine/content/05_12/b3925601.htm
14
The total cost of development and production for a firm can be viewed as the sum of
production and transaction costs (Williamson, 1975; 1979). According to Milgrom and
Roberts (1992), there are five attributes of business exchange that are associated with
transaction costs:
(1) the necessity of investments in durable, specific assets;
(2) infrequency of transacting;
(3) task complexity and uncertainty;
(4) difficulty in measuring task performance; and
(5) interdependencies with other transactions.
The largest transaction costs during development are the purchasing of production tooling
(a durable asset, the first of Milgrom and Roberts’ five attributes) and non-recurring
engineering, or NRE. NRE is defined as the cost associated with the design, test and
qualification performed during the development stage of a product (Fowler, 2004). The
costs of the components, assembly, packaging, and supply chain are considered in
production costs. Walker and Weber (1984) have noted that production cost differences
can be more influential in sourcing decisions than transaction cost differences.
The obvious bottom line benefit of outsourcing for domestic U.S. companies are less
expensive direct labor costs, relating directly to lower production costs. These are the
‘low hanging fruit’ of margin improvement, and data shows that there is a substantial
difference between the U.S. and Chinese labor costs for example. According to a U.S.
Bureau of Labor Statistics 2004 commissioned study, the cost of Chinese factory labor in
2002 was $0.64 per hour (city factory workers earn approximately $1.06 per hour while
rural workers can earn as low as $0.33 per hour). This includes both labor and employer
15
contributions to benefits. In 2002, the U.S. average hourly compensation was $21.11,
almost 33 times higher (Coy, 2004). A comparison chart showing the U.S. versus
offshore labor rates is given in Figure 2.1. This impacts individual product and product
family design, as products can be affordably manufactured with low commonality (not
only in design, but also in manufacture). Additionally, low labor rates reduce the need
for design for assembly and automation, as labor can be easily increased during the
assembly process. Overseas, direct labor is not a production constraint from a cost
perspective for many types of products.
Figure 2.1. Compensation for production workers (2002 Hourly Wage, $ U.S.)3.
In terms of tooling for injection-molded parts, it is estimated that tooling built for
volume production is 33% to 50% less than similar tooling constructed in the U.S. or
Europe.4 According to Mold Making Technology,5 offshore tooling buyers focus on
3 http://www.immnet.com/articles?article=2491 4 http://www.psschina.com/faqs.htm#savings. The cost reduction figures noted in the article have been verified by a U.S.-based injection molder that sub-contracts injection molding tools to China (Philadelphia Plastics and Machine Tools). 5 http://www.moldmakingtechnology.com/articles/100302.html
16
initial acquisition costs that are often well below half of the domestic quotes. These
extremely low prices tend to come from Southeast Asian countries and China where labor
costs are also extremely low as shown in Figure 2.1. Companies have been and are
increasing the amount of injection molding and assembly in China for the better part of a
decade.
Additionally, individual components or parts are seeing similar cost differences
between U.S. and Chinese sources, which is resulting in increases in the number of firms
that are outsourcing. Foreign firms are increasingly turning to China to supply parts or
make complete products (Bergmann, et al., 2006). An example of this is Boeing, which
recently signed a deal with Chinese parts suppliers for its new 787 airliner. The 787
sourcing deal is worth more than an estimated $600 million to Chengdu Aircraft
Industrial (Group) Co. Ltd., Hafei Aviation Industry Co., and Shenyang Aircraft
Corporation. The suppliers will not only source small components but also large sub-
assemblies such as vertical fin rudders, wing leading edges, and wing-to-body fairings.6
Over the past several years, Boeing has sourced approximately $500 million in
components to China for its 737 and 757 aircraft. The part-sourcing trend is already in
full swing, with U.S. automotive firms currently sourcing billions of dollars in Chinese
parts (Shenkar, 2004). The trend is accelerating, with firms racing to purchase
components at an estimated savings of up to 25% (Bergmann, et al., 2006). The shift to
offshore manufacturing has also affected product development at early-stage companies,
as evidenced by the firms discussed in Chapter 4.
6 http://www.boeing.com/news/releases/2005/q2/nr_050602g.html
17
2.2.2. E-Collaboration and Globalization
As noted by Reich (1991), “Products are international composites. What is traded
between nations is less often finished products than specialized problem solving (research,
product design, fabrication), problem identifying (marketing, advertising, consulting),
brokerage services, as well as routine components and services, all of which are
combined to create value.” Products can be viewed as the outcome of intense cross-
border collaboration (Lefebvre, 2006). Product development can be characterized by
complex iterative decision making (Ahmed, et al., 2003) and knowledge transfers across
organizations and across borders (Mohrman, et al., 2003). Eppinger and Chitkara (2006)
state that a new paradigm has emerged whereby companies are utilizing engineering
teams dispersed around the world to develop products in a collaborative manner.
Increasingly, this is comprised of the transfer and iterative design of large and complex
design files such as 3D computer-aided-design (CAD) (Krishnan and Ulrich, 2001). E-
mail communication between a U.S. design team and Chinese suppliers illustrating
possible design alterations to a CAD file is shown in Figure 2.2.
Figure 2.2. Email design suggestions. Photo courtesy of FlashPoint Development.
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In order to manage the 3D CAD models such as those shown in Figure 2.2, firms
have implemented product data management (PDM) systems, the aim of which is to store
and maintain information on the product such as technical documentation, bills-of-
material, part classification, etc. (Abramovici, et al., 1997). A PDM system can manage
3D CAD models, 2D drawings and/or CNC (Computer Numerical Control) programs.
As a consequence, each member of the product development team can access product
information and be involved in the product development process (Spur, et al., 1997).
This can also include the use of File Transfer Protocol (FTP) sites, whereby team
members worldwide can download complete 3D CAD assembly files.
E-collaboration in NPD can provide a solution for iterative design and manufacturing
activities that are performed by sharing and reusing information related to product
development processes. E-collaboration tools for cross-border virtual teams in NPD may
generate positive impacts such as shorter product development, error reductions, reuse of
existing design, better cross-functional and cross-organizational cooperation, reduction of
travel cost, etc. (Lefebvre, et al., 2006). As a result, best practice in NPD is rapidly
migrating from local cross-functional collaboration to a mode of global collaboration
(Eppinger and Chitkara, 2006). E-collaboration tools can help designers to build
capabilities for higher development performance by reducing the frequency of late
changes in the product development stage using better decisions at the earlier stages of
the product development process (Thomke and Fujimoto, 2000). Through an empirical
study related to the use of e-collaboration tools, Lafebvre, et al., (2006) show that e-
collaboration tools provide synchronous and more effective communication, which
reduces the information asymmetry between team members and increases the quality of
19
their decisions. From the result of their empirical study, product development time
improvement, manufacturing and product performance, and creativity enhancement are
positive and significant impacts for the e-collaboration tools. Ovalle and Marquez (2003)
propose a generic model for the presentation of the supply chain (SC) based on multiple
trading partners using e-collaboration tools to share critical information and assess the
possible local and global impact on SC performance. They show that the gradual
increments of the information sharing results in positive increases in the local and global
performance of the SC. Furthermore, collaborative planning based on e-collaboration
tools can help to prompt stability in critical variables, the best service levels to end
customers, the smallest required funds, and the highest throughput. Therefore, in global
sourcing and manufacturing environments, NPD will be highly dependent on e-
collaboration tools for building on specialized knowledge across nations, organizations,
and professions to develop customized products for different market segments.
2.2.3. Globalization and Product Platforms
As originally defined by Meyer and Lehnerd (1997), a product platform is “a set of
common components, modules, or parts from which a stream of derivative products can
be efficiently developed and launched.” Ultimately, the core vision and product strategy
of most companies is not to produce one product, but leverage a common product line
architecture into a fully featured array of products and services where each member uses
common technologies, capabilities, and shared physical platform elements (Meyer,
2007). An effective platform can allow a variety of derivative products to be created
more rapidly and easily (Ulrich and Eppinger, 2004). In terms of sourcing globally,
platforming domestically (U.S.) does produce very tangible cost benefits but certainly not
20
enough cost reduction to reevaluate potential sourcing decisions (Marion, et al., 2007).
Because off-shore tooling and part costs are so low, the need for physical product
platforming in consumer products is not often readily apparent to management. Chinese
costs are lower, both in terms of part cost and tooling costs than in the U.S., even when
considering a dedicated platform approach (Marion, et al., 2007). A comparison of U.S.
and Chinese tooling and component costs for two consumer product firms are shown in
Appendix A.
Designing a product platform-based family can increase the non-reoccurring
engineering (NRE) development cost dramatically. It has been estimated that designing a
product platform can cost 2-10 times more than the cost of developing a single product
(Ulrich and Eppinger, 2004). However, products developed from a common architecture
have a positive impact on the average development cost for each successive product
(Meyer, et al., 1997). This is impactful for any firm that desires to introduce a stream of
products from a common architecture within a given generation. But for firms
developing assembled consumer products, if a series of non-platform, uniquely designed
products fit within the project cost and generate the required margins, should a company
go through the added effort and cost of designing a platform or common architecture? Or
rather, the platform can be also considered the internal development process, the totality
of tools and processes used to quickly develop commercialize new products. Although
originally expressed in manufacturing terms but applicable to development, according to
Jiao, et al. (2005) a process platform involves three main aspects: (1) a common process
structure shared by all variants, (2) derivation of specific process variants from the
common structure, and (3) correspondence between product and process variety. As a
21
result of globalization and e-collaboration, the common process structure being shared by
all variants is the development process, with less focus on a common physical structure.
Historically, product platforms have enabled firms to quickly develop a family of
products from a common architecture; however, given the recent and rapid rise of off-
shore manufacturing, tooling is becoming a much smaller percentage of total project cost.
This allows firms to design unique products for unique market segments because the cost
and timing of new tooling is no longer a factor in many cases. Additionally, the wide
availability of low cost standard components and assemblies such as fasteners and motors
is creating an engineering ‘bazaar,’ giving the engineer a wide array of off-the-shelf
solutions that are easily inserted into the product design. As component commonization
becomes less important, this frees up the designer to develop products that meet the
requirements of specific market niches without having to spend the additional time to
develop a physical product platform, particularly in less capital intensive consumer
products. Moreover, the speed and bandwidth of communication and proliferation of
engineering tools (such as solid model CAD files) is transforming the firm’s primary
platform away from physical components and architecture to the new product
development and vendor sourcing process. In effect, one of the firm’s underlying core
technologies – their developmental process platform – is its ability to quickly and
effectively commercialize new products while leveraging the advantages of a global
market place. This has been seen in many successful products including the Apple iPod,
which is designed in California, produced in Asia, and shares few common components
with other Apple products within the iPod family. The rapid expansion of the iPod
product line to include a wide variety of different sizes, functionality, and storage
22
capacities illustrate that the process of developing new products is Apple’s main core
competency, i.e., their platform. However, Apple does have a very well defined product
line architecture, where common subsystems include iTunes software, user interfaces,
design, and packaging. The physical components and associated manufacturing set-up
issues are secondary because these are less impactful to the total project in terms of cost
and timing. Other examples include Black & Decker’s (B&D) power toolkits that share
almost no common components, which is in stark contrast to the heavily platformed
power tools developed by Black & Decker in the 1970’s (Meyer and Lehnerd, 1997).
Due to domestic manufacture, high tooling and labor rates, B&D focused heavily on
common housings, motors, and other components during the 1970’s and 1980’s. Today,
common to both Apple and B&D is a strong supplier network and product development
organization that can quickly create new products that fit specific market needs.
2.3 Global NPD
The integration of the Internet and e-collaboration, 3D CAD, and a global network of
suppliers and manufacturers has allowed companies to develop products at much faster
rates using fewer resources and a virtual development team. This is shown graphically in
Figure 2.3.
Figure 2.3. Venn diagram of the intersection of CAD, Web-based tools, and the global
supplier network.
23
MacCormack, et al. (1998) note that a flexible development process requires that as
development proceeds, changes to the evolving design can be made quickly and at low
cost. Eppinger and Chitkara (2006) state that “a new paradigm has emerged whereby
companies are utilizing skilled engineering teams dispersed around the world to develop
products in a collaborative manner. Best practices in NPD are now rapidly migrating
from local cross-functional collaboration to a mode of global collaboration.” This global
flexibility during development allows the virtual CFT, working within the NPD network
using e-collaboration and constantly ‘pulling-in’ resources when needed, to quickly
change the product design based on feedback from suppliers, potential customers, and
rapid prototypes. Eppinger and Chitkara (2006) outlined the differences of conventional
development versus global development. These are shown in Table 2.1.
Table 2.1. Eppinger and Chitkara’s (2006) NPD comparison.
Firms are leveraging their core technology and process platform within the global
environment to exploit rapidly evolving markets such as digital music players. For the
purpose of discussion, this global NPD (GNPD) process description framework is shown
in Figure 2.4.
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Figure 2.4. Global NPD (GNPD) framework.
The GNPD description framework is arranged so that the firm’s core development
team has access to the firm’s core technology and intellectual property. From this,
product concepts are developed and with management approval, the development process
is started. At this point, virtual cross-functional team members are contracted, and
development of the product is begun in earnest. The virtual CFT works in conjunction
with their global network of component suppliers and manufacturers, designs and refines
the product based on results of testing the rapid prototypes, which are produced from
various worldwide sources (many of which are sourced from the Internet), and finalizes
the design with the outsourced manufacturer.
As mentioned in Section 2.2, a case in which such a process platform framework was
used in developing a product is at Apple. In developing their iPod and working within
their GNPD framework, a virtual CFT led by an outside contractor worked with their
global suppliers to arrange the necessary technology and components. In-house,
25
industrial design was performed and led by Jonathan Ives, as was development of the
iTunes software (one of Apple’s core technology platforms for iPod). Over a twelve
month period, the design was refined with input from the virtual team, suppliers, and
feedback from testing of prototypes (Levy, 2006). For hardware and software, they relied
on the outside firms PortalPlayer and Pixo, integrating their technology and expertise into
Apple’s product development project. Shown in Figure 2.5 is a mock-up of the original
iPod mock-up used in the management approval meeting with Apple CEO Steve Jobs.
Figure 2.5. Apple mock-up at the beginning of the product development phase (Levy,
2006).
The iPod and iTunes service was launched in 2001 and now accounts for
approximately half of Apple’s revenue7. Since its introduction, Apple has continued
leveraging their global supplier network and has refined and updated its model line
several times. Shown in Figure 2.6 is a schematic of the successive generations of iPod’s
introduced since October 2001. The GNPD process platform allows them to quickly
spin-off new products that often share little physical component commonality between
models, such as LCD screen sizes, exterior housings, click wheels, and computer circuit
7 http://money.cnn.com/2006/09/01/markets/spotlight_apple/index.htm
26
boards8,9. For example, the iPod Nano and iPod 30GB do not share exterior housings,
LCD screens, batteries, circuit boards, or click wheels; however, they do share similar
design traits, functionality, software, and docking interfaces; which are all good examples
of Apple’s well-defined product line architecture.
Figure 2.6. Apple iPod generation chart. Example chart courtesy of wikipedia.org.
Apple’s GNPD framework is shown in Figure 2.7. Note their core technology of
design and software was leveraged with a mix out outside firms such as PortalPlayer and
their components suppliers and manufacturers.
8http://www.ipoding.com/modules.php?set_albumName=album13&op=modload&name=gallery&file=index&include=view_album.php 9http://www.ipoding.com/modules.php?set_albumName=album02&op=modload&name=gallery&file=index&include=view_album.php
27
Figure 2.7. Conceptualization of Apple’s GNPD framework.
What is desired by the corporation is a development process that combines the global
process platform with intelligent leveraging of physical components and platform
elements. These ‘best-in-class’ firms (such as Toyota and Honda in the automotive
industry) seek to optimize the NPD process within the global environment while
maximizing their product line architecture and use of core components and modules
where applicable. One key to Honda’s success as an automaker is its ability to leverage
common subsystems globally across different product lines and yet create different styles
with specific features for different tastes and markets (Meyer, 2007).
We have discussed globalization, electronic collaboration, and introduced product
platforms. Each of these disparate paradigms has combined to greatly impact NPD. In
the next section, we discuss the functional aspects of NPD, characterized by Core
Principles that can positively impact the success of a firm’s development initiatives.
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2.4 NPD Core Principles
As discussed in Chapter 1, Cooper (2001) suggests two fundamental aspects
describing the process of developing successful products. These include doing the right
projects, correctly. In Cooper’s (2001) study of firms, it was found that there are
common attributes among firms that develop successful products. These include the use
of cross-functional teams, up-front market planning and listening to the customer (voice-
of-the-customer), early product concept definition, and product portfolio planning.
According to Goldenburg, et al. (2001), previous research on new product performance
has shown that a wide variety of factors influence the outcome of new product
development activities including a combination of strategy, development process,
organizational, environmental, and market factors (cf. Montoya-Weiss and Calantone
1994; Freeman 1982; Virany, et al., 1992; Cooper and Kleinschmidt, 1987; Lilien and
Yoon 1989). In a major study termed Project Sappho, Freeman (1982) and Rothwell
(1985) examined the successes and failures in industrial innovation. Factors that
discriminated success from failure were identified using 43 pairs of success/failure cases.
Dominant factors were (1) understanding of user needs, (2) attention to marketing, (3)
efficient development work, (4) use of outside advice and technology, and (5) seniority of
innovators in their organization. Finally, Ulrich and Eppinger (2004) present five critical
factors, including product quality, product cost, development time, development cost, and
development capability.
Krishnan and Ulrich (2001) divide the development decisions within new projects
into four main categories: concept development, supply-chain design, product design, and
production ramp-up and launch. Figure 2.8 is a NPD hierarchy starting with Cooper’s
29
(2001) fundamentals and migrating through Krishnan and Ulrich’s (2001) four
categories, ultimately pointing to six ‘core’ development methods and principles that
form the basis for later investigation within the dissertation. The justification for the
Core Principles is reviewed in detail in the following sections. These principles serve as
the backbone for research in each chapter as discussed in Section 2.5.
Figure 2.8. NPD hierarchy starting with Cooper’s fundamentals.
2.4.1. Cross-Functional Teams
Increasingly, companies are using cross-functional teams (CFTs) to develop new
products (Barczak and Wilemon, 2003; Adler, 1995; Griffin and Hauser, 1996). CFTs
are being used for their potentially positive impact on cycle time and project performance
(Barczak and Wilemon, 2003; Brown and Eisenhardt, 1995; Takeuchi and Nonaka, 1986;
Wheelwright and Clark, 1992). Corporations that have embraced CFTs and concurrent
engineering principles have routinely demonstrated the ability to reinvent themselves
30
quickly and successfully enter new markets, taking radical ideas from concept through
production with ease (Simpson, et al., 2006).
Traditionally, corporations have employed functional management structures. These
individual ‘fiefdoms’ often have their own R&D Centers, Manufacturing, and Supply
Chain Management organizations. Few information, technology, or business lessons are
shared among the different business units. At IBM, for instance, this type of organization
led to a lack of innovation and response to market shifts, reaching a zenith in 1993, when
corporate losses topped $8 Billion (Meyer and Mugge, 2001). In response, IBM
reorganized itself into cross-disciplined market-facing teams which include marketing,
sales, engineering, manufacturing, and logistics. Since the reorganization, the eServer
line has been developed and launched to critical and sales success. Using common and
preferred parts, there has been a 70-80% reduction in part numbers, and over $700
Million eliminated from IBM’s cost structure since the late 1990’s (Meyer, et al., 2005).
Carbonell and Rodriguez (2006) find that varying levels of technical complexity during
the development process require different types of CFTs. Complex projects such as
automotive development often require co-located individuals working full-time on the
project, while less complex projects are run most effectively when part-time experts are
assembled and managed by a project leader throughout the duration of the project. As
discussed in Section 2.3, for firms developing products in a global environment,
distributed or virtual teams are a necessity. Smith and Reinertsen (1991) propose seven
team formation criteria as determinants for speed during development. These project
team attributes include the following.
1) Ten or fewer members on the team.
31
2) Members volunteer to serve on the team.
3) Members serve on the team from the time of concept development until
product launch.
4) Members are assigned to the team full-time.
5) Members report directly to the team leader.
6) The key functions, including at least marketing, design, and manufacturing are
on the team.
7) Members are located within conversational distance of each other.
Because of the rise and ease-of-use of e-collaboration, conversational distance noted
in Item 7 can now be global. CFTs can foster value added input and communication
from disparate team members, from manufacturing to marketing. Additionally, in
today’s globally distributed environment, the virtual team can quickly resolve potential
issues using e-collaboration tools. However, co-location of the core team is still valuable
as shown by positive industry cases such as development of the Honda Element (Meyer,
2007). It is because of the added communication and flexibility to resolve issues that
CFTs are a Core Principle.
2.4.2. NPD Gated Processes
A large number of companies (over 60% according to Cooper (2001)) developing
complex projects such as airplanes, automobiles, computers, drugs, etc. use some form of
phase-gate or stage-gate development. Essentially, phase-gate (also referred to as Stage-
Gate®) development is a sequential process in which decision points are included in the
product development process. These decision gates are appealing to corporations
because they add management approval during the development process. Passing the
‘gate’ requires that the new product meet a certain parameters or specifications. The
32
underlying organization of each company plays a significant part in the type of stage-gate
approach that each company has adopted. The organizations that have fewer phases to
each stage have cross-functional teams involved throughout the life of the project
(Phillips, et al., 1999).
Because of the large investment required for NPD, phase-gate development allows
companies to halt costly projects that may drift off target during the development process.
A recent example of this at a large firm is the Boeing Sonic Cruiser. The Sonic Cruiser
was unveiled in late 2001 and would fly nearly the speed of sound at no increase in fuel
consumption over conventional jet.10 As the project moved forward into the development
phase, interest from airlines waned, and the concept did not meet initial sales
expectations. Development was halted in 2002, and the project was replaced by the 787
Dreamliner, a super-efficient albeit more conventional jet. By using a phase-gate process,
Boeing averted spending billions of dollars on a potential lackluster product in terms of
sales.
Phase-gate development does have its drawbacks, however. The process inherently
adds a level of bureaucracy that can negatively impact time-to-market. Multiple levels of
management approval, additional paperwork, and project management personnel can
hinder development progress and innovation. For smaller firms and less capital-intensive
projects, the necessity of phase-gate throughout the development process lessens;
however, having the product meet certain targets early in the development process is very
valuable and can ultimately filter out less attractive concepts. For smaller firms, Cooper
(2001) proposes fast track, a simplified gated process. Other modifications to the gated
10 http://www.boeing.com/news/feature/concept/background.html
33
process have been explored, as detailed in Hauser, et al. (2005). These include spiral
development which puts a premium on development speed and overlapping concurrent
development. In a recent study of 72 automotive managers, Ettlie and Elsenbach (2007)
noted that companies adopting modifications to the standard gated process are more
innovative relating to process and are more likely to adopt virtual teaming software tools
(e-collaboration). Some larger firms such as Honda have found that a simplified and
more directed process is appropriate and effective for developing new product lines
(Meyer, 2007). NPD is a complex undertaking, particularly if a limited number of firm
principles are leading virtual CFTs in an attempt to commercialize a new product. A
form of limited phase-gate can provide the necessary structure and management focus on
important deliverables, in order to corral issues throughout development. As such, a
NPD gated process constitutes a Core Principle.
2.4.3. Up-Front Market Planning
In the early stages of NPD, market research planning is a necessity. Unfortunately,
this type of up-front planning is often overlooked. Research suggests that only 26.6% of
businesses successfully execute front-end tasks such as market planning; conversely,
back-end launch activities are executed well by over 40% of companies (Cooper, 2005).
In correlating up-front planning to product success, of those companies that did poor up-
front ‘homework,’ only 31.3% of their products succeeded; while on the opposite side of
the spectrum, 75% of the products launched by companies who did superb up-front
planning were successful (Cooper, 2001). To foster well executed up-front planning
during NPD, an internal product development roadmap that outlines future capabilities
and functionality should be developed (Meyer and Lehnerd, 1997). In order to develop
successful new products and services, corporations must accurately listen to needs and
34
expectations of each market segment. This information, combined with a long-term
product strategy (i.e., a roadmap), can help define segmentation of the target market and
boost ultimate product success. In looking at this competitive landscape, the following
questions should be asked (Gordon, 2004):
- What is the significance of this segment?
- What are the key products?
- What are their volumes, revenue, and profits?
- What is the outlook for the next 5 years?
- What does the company have to do to enter, sustain, and grow in the
segment?
Ultimately, the core vision of the company is not to produce one product, but leverage
a common platform or key components to other market niches (Meyer, 1997). A market
niche can be described as a particular market area where price and performance
requirements are unique. A powerful tool in helping to develop and strategize a NPD
roadmap is the market segmentation grid proposed by Meyer and Lehnerd (1997), which
defines areas and niches in which the product will be sold, to whom, and at what price
points. To cover these market areas, the company’s product platform(s) are then used to
cover the different target segments in the most optimal way possible. An example of a
market segmentation grid is shown in Figure 2.9, which highlights General Motor’s
Cadillac division and their use of the Sigma vehicle platform.
35
Figure 2.9. GM Cadillac market segmentation grid of the Sigma Platform. Photos
courtesy of GM.
Understanding the market, consumer, and competitive landscape is vital for a
successful product and eventual stream of products. The importance of market research
and product planning on firm success make it a Core Principle.
2.4.4. Product Platforms
Market conditions evolved rapidly in the last decade, and research in the area of
product design was adapted to meet new needs. Evolution in the markets brought a
constant change in customer demands and a need for product variety with price levels
matching mass-produced goods. Consequently, variety and customization replaced
standardized products (Siddique, et al., 1998). This shift, mass customization, is defined
as “At its limit, [the] mass production of individually customized good and services”
(Pine, 1993). In order to achieve this, instead of developing products one at a time,
product families have been developed to provide a sufficient variety of products to meet
36
the customer demand while keeping costs relatively low (Simpson, et al., 2006). As
detailed in Section 2.2.3, a product family (or product line architecture) is a group of
related products that share common characteristics (e.g., features, components, and/or
subsystems). Given the limited resources within a firm (large or small), leveraging a core
technology or product platform (component or process) into different market segments in
order to develop a product line is essential. Even though platforms can cost more to
development initially (2-10 times more than a single product (Ulrich and Eppginer,
2000)), because of the efficiency gained in ‘spinning off’ derivatives once the initial
investment is made, product platforms are a Core Principle.
2.4.5. Industrial Design
Corporate identity is derived from the “visual style of the organization,” a factor that
affect’s the firm’s positioning in the market (Olins, 1989). Industrial design determines a
product’s style, which is directly related to the public perception of the firm (Ulrich and
Eppinger, 2004). Industrial design intensity has a positive impact on corporate
performance (Gemser and Leenders, 2001). Industrial design is one of several key areas
critical to new product development that can enhance usability, aesthetics, and corporate
branding. Veryzer (2005) notes that involving industrial designers earlier in the
development process can result in designs that are more innovative, better thought out,
and more complete.
Unfortunately, all too often industrial design is an afterthought, left to the last
stages of a project; however, some of the most successful products and companies have
had design integral from the beginning. Industry examples abound, one of the most
prevalent being the products of Apple. Apple has an internal design team that focuses on
user friendliness, design innovation, and a coherent family look. Apple’s design team has
37
adopted consistent minimalist themes characterized by the iPod across its entire product
line (Rao, 2006). Design such as Apples’ linear white modern look enhances shelf-
appeal, usability, and can add unification or diversification among product families. In a
study performed by Hertestein, et al. (2005), they concluded “that firms rated as having
‘‘good’’ industrial design are stronger on virtually all financial measures (over a seven
year study period). These results provide convincing evidence that good industrial design
is related to corporate financial performance and stock market performance.” Because of
the impact of design on usability, consumer perception, brand building, and potentially
corporate performance, industrial design is another Core Principle.
2.4.6. Cost Modeling and Tracking
Research has shown that 70% of ultimate product cost is determined during the early
stages of design (Duverlie and Castelain, 1999). As such, it is imperative that firms track
and base development decisions on these product and set-up costs. In order to
accomplish this, many firms have shifted to activity-based costing (ABC) systems that
enable product designers to create products with lower indirect and support costs (Kaplan
and Cooper, 1997). Product costs to be taken into consideration include the cost of
materials, tooling, assembly, development, supply chain, communication, NRE, travel,
and management, etc. Cost and margin analysis during development evaluates all
transaction and production costs, including the costs of outsourcing (Ben-Arien and Qian,
2003). Evaluating production costs during product design can provide the designer with
good design guidelines during the decision making process, particularly when these are
linked to a set of production activities (Bras and Emblemsvag, 1995; Yamashina and
Kubo, 2002). ABC fosters an understanding of the relationships between the activities
required to produce products and the resources they consume in a structured way (Park
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and Simpson, 2004; Hundal, 1997; Cooper and Kaplan, 1991). ABC can help the design
team focus on reduction of not only component costs, but costs in the supply chain. It is
this cost focus during NPD that can help a firm conserve resources and potentially foster
faster return-on-investment (ROI) and product margin that make cost modeling and
tracking a Core Principle.
These six Core Principles can form the basis for the NPD process, during which the
CFT faces the challenge of design, development, and launch of a new product in a global
environment. As such, because of the risks of NPD, CFTs and company management
need fact-based tools via the Core Principles that aid in making the right choices in terms
of:
• how can the product concept best meet established and potential customer needs,
• what type of design elements can be added to establish excellent design and brand
building,
• how can the firm best leverage its global NPD process platform,
• what components should be commonized for the physical platform, and
• how should the product be sourced and manufactured within desired margins.
2.5 Chapter Summary
In this chapter, factors influencing global NPD have been reviewed. These include
the use of e-collaboration tools, virtual teams, reduced cost via outsourcing and off-
shoring, and platforms (both process and components). The landscape of NPD is
changing, with firms using distributed global teams quickly commercializing products
that leverage an optimized development process. Research and application of
development methods and tools is ongoing and fostering improvement in product
39
development and performance. This includes activities such as up-front market planning,
CFT’s, cost tracking, and industrial design. As discussed in Section 1.2, academic focus
on entrepreneurial activities is increasing, particularly in the realm of factors predicting
ultimate success of the firm; however, there appears to be a gap in the current research,
namely, links between well-researched NPD topics and the success of the nascent firm.
Quinn (1985) defined innovation as ‘controlled chaos.’ The fundamental aspect to be
investigated in the next chapter is that aspect of control. The question to be asked is what
defines control of the development process within the nascent firm, and can established
NPD methods and tools be applied early-stage firms with any efficacy? As a baseline,
the next chapter surveys 35 firms on the processes and tools used during development,
and attempts to draw correlations between these methods and success. In Chapter 4,
three early-stage firms are investigated within the context of a global environment
defined in Section 2.2 and the NPD methods and tools used as described in Section 2.3.
Based on the survey and in-depth case study, a NPD process is proposed in Chapter 5 and
tested on a real-world development project in Chapter 6.
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CHAPTER 3 SURVEY OF NEW PRODUCT DEVELOPMENT AT EARLY-STAGE
COMPANIES
3.1 Introduction
As mentioned in Chapter 1, according to the U.S. Census Bureau’s Business
Information Tracking Series (BITS), only 50% of new firms survive past four years
(Headd, 2003). For any new firm, this is a daunting statistic (although the common
statistic used has been 75% or higher, this only recently been disproved). New firms
developing tangible products have an additional factor that increases risk, new product
development failure rates. Over the last thirty years, numerous research efforts have been
undertaken to study the new product development process and causes of new product
success or failure (Karakaya and Kobu, 1994). In a review of the literature, there has
been a wide range of study resulting in different percentages of new product failure rates
(NPFR). These have ranged from 37-80%, with a recent study by the Product
Development and Management Association publishing the rate of 40% (Adams, 2004;
Nielsen, 1971; Booz, Allen, and Hamilton, 1968; Cochran and Thompson, 1964). In
three separate studies conducted in the 1970’s and 1980’s, Crawford estimated the NPFR
would be in the 30-40% range. It is interesting to note how close the Crawford estimate is
to the recent PDMA study reviewed in Chapter 2. In relating NPFR and NPD factors for
success, most research has been focused on larger firms, both low and high technology.
As mentioned in Chapter 2, there is some research looking at the effectiveness in small
technology companies (Meyer and Roberts, 1986), but little focusing on physical
consumer products. As discussed, research has shown that the NPD process has a direct
impact on ultimate product success. Unfortunately, based on the high failure rates of new
41
products, many firms still do not have a robust and successful NPD process. For start-
ups, successful NPD is even more important, as they do not have the resources to sustain
themselves through unsuccessful product launches. Unfortunately, there is not an
overwhelming amount of research dedicated to understanding the NPD process within
nascent start-ups and early-stage firms. In a 2004 literature review of Management
Science, Shane and Ulrich noted that from 1994 to 2004, only ten articles were published
that deal with entrepreneurship. Within this context, there are four main sub-themes:
decision making, strategy and performance, organization design, and venture financing.
This chapter focuses on strategy and performance within the start-up as embodied by the
six Core Principles detailed in Chapter 2. Specifically, this pilot study aims to investigate
what methods are being employed by new firms, and if there are any correlations and
interacting factors for ultimate product and firm success.
3.2 Research Focus
Based on the literature review, the area in NPD that has received the most attention
are the methods and processes used by larger firms. Research has demonstrated that
there is correlation between the processes and methods used and ultimate product success
(Cooper, 2001, 2005). This study aims to investigate what methods are being employed
by new and start-up firms, and if there are any correlations and compound factors for
ultimate success of the firm via the NPD processes used.
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3.3 The Analysis Framework and Generation of Hypotheses
The impetus for the study is centered on the new product development process and
company success of early-stage firms. In order to reduce the amount of data gathered and
analyzed, we have identified six Core Principles that represent a comprehensive and
broad model of the most prominently studied NPD topics. The six Core Principles (C1,
C2, etc.) are:
1) use of cross-functional teams (C1),
2) substantial use of up-front product planning (C2),
3) use of a management decision process or stage-gate (C3),
4) consideration of a core technology or product platform (C4),
5) use of industrial design (C5) and, the
6) use of cost modeling and tracking during the development process (C6).
A preliminary illustration of the theoretical framework and hypotheses used to test the
impact of the Core Principles is shown in Figure 3.1. The hypotheses are arranged to first
test individual Core Principles on factors for firm success, then arranged to test
combinations of Core Principles versus the dependent variables. Company success is
expressed in a variety of factors, including if the firm’s product made-it-to-market,
development duration, development cost, return-on-investment (ROI) timing, cumulative
sales, and product margin. A successful firm can be defined as one that commercializes
it products faster, for less cost, resulting in a fast return on initial investment, with high
margins and total sales. These success factors are expressed in the dependent variables.
The dependent variables are:
1) development duration (the timing of initial idea to commercialization),
43
2) development cost (total cost of developing the product),
3) if the product reached the marketplace,
4) cumulative sales over a three year period,
5) the timing for return on the initial investment,
6), internal product profit margin.
Unfortunately, there are no commonly accepted performance measures for new
ventures (McGee and Dowling, 1994); however, research has used time-to-break even
and sales performance as measures (Lechner, et al., 2006). Because the focus this
research is on the development process, NPD success factors such as development
duration and ROI timing were included. Hypotheses H1 – H11 test the individual Core
Principles against the firm success factors. Finally, hypotheses H12 – H16 test
combinations of Core Principles. These include the use of management NPD tools
(cross-functional teams, a formalized process, market research and cost tracking) and
their impact on whether the product made-it-to-market (H12,13), and the use of all six Core
Principles and their significance on whether the product reached commercialization, total
sales, and development duration (H14,15,16). The aim of these hypotheses is to take a
broad overview of the data, with the intent of quickly spotting significant relationships or
significant combinations of relationships. The hypotheses are stated as follows.
H1: There is a positive relationship between the use of cross-functional teams and the
product reaching the marketplace.
H2: There is a positive relationship between the use of up-front market planning and total
cumulative sales .
44
H3: There is a positive relationship between the use of a formal process and the product
reaching the marketplace.
H4: There is a negative relationship between the consideration of a core technology or
product platform and development duration.
H5: There is a negative relationship between the consideration of a core technology or
product platform and development cost.
H6: There is a negative relationship between the consideration of a core technology or
product platform and product margin.
H7: There is a positive relationship between the adoption of a core technology or product
platform and total cumulative sales.
H8: There is a positive relationship between the use of industrial design and total
cumulative sales.
H9: There is a positive relationship between the use of cost accounting during
development and the product reaching the marketplace.
H10: There is a positive relationship between the use of cost accounting during
development and product margins.
H11: There is a positive relationship between the use of cost accounting during
development and return-on-investment.
H12: There is a positive combinatorial relationship between the use of cross-functional
teams, a defined development process, and market research and if the product made-it-
to-market.
45
H13: There is a positive combinatorial relationship between the use of cross-functional
teams, a defined development process, and the use of cost accounting and whether the
product made-it-to-market.
H14: There is a positive combinatorial relationship between the six Core Principles and
whether the product made-it-to-market.
H15: There is a positive combinatorial relationship between the six Core Principles and
total cumulative sales.
H16: There is a positive combinatorial relationship between the six Core Principles and
development duration.
Figure 3.1 is a graphical illustration of the individual hypotheses. This theoretical
framework is designed to test individual and select combinations of the six Core
Principles on firm performance measures. The purpose of the framework shown in
Figure 3.1 is a first step in data mining for relevant NPD processes within the new firm.
Data mining can be defined as “the science of extracting useful information from large
data sets or databases” (Hand, et al., 2001), and is used here as a tool for investigating
significant start-up NPD factors. Examining the data to select comparisons of potential
interest is often called data snooping (Montgomery, 2004). Depending on the outcome
of this data snooping, this would shape further analyses and conclusions.
46
Figure 3.1. Theoretical framework and hypotheses.
3.4 Methods
3.4.1. Sample and Survey Design
The hypotheses were tested using data from a confidential survey of start-up and
early-stage firms. The contact information was gathered from two main sources: one
being contacts of the investigator, and the second and larger contact sample was gathered
from a pre-screened list developed from the Pennsylvania Small Business Development
Center (SBDC) client list. The SBDC is a state-funded organization whose primary
mission is to grow the economy of Pennsylvania by providing entrepreneurs with the
education, information and tools necessary to build successful businesses.11 As a first
step, the potential firms were investigated for size and age. Following Vanderwerf and
11 http://www.pasbdc.org/who/program.asp
47
Brushe’s (1989) recommendations, we restricted the sample firms’ size to less than 10
years old. In order to gauge the in situ NPD process, the database also included firms
with no sales history and in-process development. Additionally, because the aim of the
study is measuring the development process for success, it was important to include
where possible data sources of failure. In all cases, a company principle was contacted.
International Research Board (IRB) approval was granted in August 2006. Once the
database was developed, firms from the SBDC contact list that were at a ‘ground zero’
beginning stage were eliminated. In total, 382 firms and individuals in Pennsylvania
were contacted, with 36 respondents. This represents a response rate of 9.4%. Eleven of
the firms were founded prior to 2001, with the remaining 25 firms being founded from
2002 to 2006. Although geographically limited, this sample covered a wide variety of
product types and firm sizes, making a good initial data set. The 38 question survey was
developed on Zoomerang,12 and was constructed as a confidential, electronic mail (email)
survey that was sent via blind carbon-copy email in August 2006. No follow-up emails
were sent, and no incentives – financial or otherwise - were provided for completing the
survey. The final sample consisted of 35 firms, with one firm being eliminated due to its
“newness.” Complete survey responses can be found in Appendix E.
3.4.2. Explanatory Variables in the Self-Selection Survey
Explanatory variables in the self-selection electronic survey are listed in the following
table. A copy of the blank electronic survey can be found in the Appendix C.
12 http://info.zoomerang.com/
48
Table 3.1. Survey questions and explanation.
ID Explanation
Q1 A five choice question on when the firm was started, beginning with prior to 2001.
Q2 A five choice question on how many employees the firm has, starting with 1.
Q3 This is a pull-down menu selection on the type of product developed.
Q4 A six choice question on how the initial idea was formulated.
Q5 A 1-0 response on whether the product developed made-it-to-market
Q6 A six choice question on if product did not reach market, when did development stop
Q7 A five choice question on the reason the product did not reach commercialization
Q8 A five-point Likert scale assessment on the use of funding sources (1= not used, 5 = extensively used)
Q9 A five choice question on the length of development (a dependent variable)
Q10 A five choice question on first year unit sales (a dependent variable)
Q11 A five choice question on second year unit sales (a dependent variable)
Q12 A five choice question on third year unit sales (a dependent variable)
Q13 A seven-choice question on the primary market in which the product was sold (e.g. retail sales)
Q14 A 1-0 response to whether the product is still on sale
Q15 A five-point Likert scale assessment on the use of teams during development (1= not used, 5 = extensively used) (an independent variable – C1)
Q16 A five-choice question on the type of team members (e.g. full-time versus part time)
Q17 A ten-choice question for the discipline of the team members (e.g. Mechanical Engineering)
Q18 A five-point Likert scale assessment on the use of a formalized process during development (1= not used, 5 = extensively used) (an independent variable – C2)
Q19 A 1-0 response to whether the firm used a management decision gate after initial design and research to more forward with detailed product design and engineering (an independent variable – C2)
49
Table 3.1. Survey questions and explanation - continued.
ID Explanation
Q20 A series of five-point Likert scales assessments of the use of what was evaluated during the decision gate (1 = not evaluated, 5 = extensively evaluated)
Q21 A 1-0 response to whether the firm made last minute design changes based on the evaluation
Q22 A five-point Likert scale assessment of the use of market research during product definition (1= not used, 5 = extensively used) (an independent variable – C3)
Q23 A five choice question on the primary source of market information (e.g. store visits)
Q24 A 1-0 response to whether customer needs were tracked during development
Q25 A 1-0 response to whether the company planned to sell follow-on products at different price points
Q26 A five-point Likert scale assessment on planning to use a common core technology or product platforms (1= not used, 5 = extensively used) (an independent variable – C4)
Q27 A 1-0 response to whether the platform or core technology was implemented (C4)
Q28 A five-point Likert scale assessment on the use of industrial design (1= not used, 5 = extensively used) (an independent variable – C5)
Q29 A 1-0 response to whether the industrial design was performed by a degreed designer
Q30 A 1-0 response to whether the design was performed in-house or was outsourced
Q31 A five-point Likert scale assessment on cost tracking during development (1= not used, 5 = extensively used) (an independent variable – C6)
Q32 A three-choice response on the primary method used to obtain cost estimates (e.g. quotes from suppliers)
Q33 A 1-0 response on whether or not the cost evaluations changed the design
Q34 A five-point Likert scale assessment on what costs were extensively modeled (1= not used, 5 = extensively used)
Q35 A 1-0 response on whether the estimated costs were reflective of actual costs once in production
Q36 A six-choice question on the cost of development (a dependent variable)
Q37 A four-choice question on the duration of investment return (a dependent variable)
Q38 A four-choice question on product margin (a dependent variable)
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3.5 Basic Statistics
As mentioned, survey independent variables (Core Principles) included the use of
cross-functional teams, product platforms, up-front market planning, etc. Dependent
variables (success factors) include development duration, cost, whether or not the product
made-it-to-market, sales history, and product margins. A summary of the descriptive
statistics are shown in Table 3.2, with questions 15, 18, 22, 26, 28, and 31 being main
independent variable responses (the Core Principles). Questions 5, 9, 36, and 37 are the
main dependent variables (if the product-made-it-to-market, development duration,
development cost, ROI timing, and product margins). Independent and dependent
variable responses can be found in Appendix D.
Table 3.2. Descriptive statistics, 35 respondents.
As shown Table 3.2, the sample mean for each independent variable notes that the
surveyed firms did use some level of the Core Principles during development. These are
represented graphically by the radar chart shown in Figure 3.2. The inner axes of the
chart denote relative level of adoption of the Core Principles.
51
012345
C1 (CFTs)
C2 (NPD formal process)
C3 (Market research)
C4 (Platforms)
C5 (Industrial design)
C6 (Cost tracking)
Figure 3.2. Sample mean radar chart of the Core Principles.
As a second step in data analysis, correlation of the independent variables was tested.
Data correlation is shown in Table 3.3.
Table 3.3. Pearson independent variable data correlation. C1 C2 C3 C4 C5 C2 0.488 0.003 C3 0.359 0.542 0.034 0.001 C4 0.234 0.263 0.384 0.176 0.127 0.023 C5 0.315 0.447 0.344 0.335 0.065 0.007 0.043 0.049 C6 0.243 0.326 0.388 0.262 0.496 0.160 0.056 0.021 0.129 0.002 Cell Contents: Pearson correlation P-Value
The data in Table 3.3 shows the independent variables are highly correlated (per the
Pearson correlation, all p-values are well above 0.05). However, although the data are
52
highly correlated this does not imply causation (e.g. greater use of CFT’s causes an
increase in the use of a formalized development process and visa versa). As a next step,
histograms of the independent variables were plotted. As an example, Figure 3.3 is a
histogram of the reported extent of the use of a formalized development process (Core
Principle 2 (C2)) used by the firms.
Figure 3.3. Histogram of Question 18 responses (Likert-type scale).
All independent variables were normally distributed with one being skewed (a
predominance towards considering a core technology or platform, Question 26).
Histograms of all independent variables are shown in Appendix B. Power of the
independent variables (N = 35, distance = 0.5) averaged 0.56. Power analysis for the
independent variables, Hypotheses, and select regressions can be found in Appendix B.
53
3.6 Basic Hypothesis Testing
As a next step in the survey data mining, regression analysis was run using
MINITAB™ 14 on the hypotheses detailed in Section 3.3. A summary of the hypothesis
testing is shown in Table 3.4.
Table 3.4. Hypothesis test results.
Of the individual Core Principle hypotheses, three were supported with significant
results, and one was rejected. Hypothesis 4, or the impact of considering a product
platform (C4 – Q26) or core technology on development duration, was supported. With a
p-value of 0.011, considering adopting a core technology or product platform during
development has a significant impact on increasing development duration (Q9).
Additionally, if a firm considered a platform, they were likely to implement it (coeff.:
0.713, p-value: 0.032) Hypotheses 9 through 11 test the impact of cost modeling and
tracking during development. The use of cost tracking during development has a
54
significant, positive impact on whether or not the product reached the market place (Q5),
with a p-value of 0.002. Cost modeling (Q31) was also shown to have a positive impact
on product margins, with a p-value of 0.055; however, Hypothesis 11 was rejected, with
cost modeling having a significant negative (rather than positive) impact on the time to
ROI.
In looking at the combination of Core Principles, only one of the hypotheses was
supported. The combination of the six Core Principles has a significant positive impact
on development duration, with a p-value of 0.038 and R2 of 28.50% (Q9 is framed as the
longer the development duration, the higher the Likert score). This indicates a significant
combinatorial factor relationship between the use of the Core Principles and how long a
firm takes to develop its products. As a result of this finding, the next step in data
analysis was a factor regression analysis to determine the interaction impact of different
independent variable combinations on the dependent responses. Regression analysis is
detailed in the next section.
3.7 Regression Analysis
Multi-factor balanced ANOVA and Design of Experiments (DOE) was originally
intended to test factor interaction significance. Unfortunately, since most of the
independent and dependent variables have multiple levels, it was quickly determined that
there would not be enough data to balance the input since the survey response level is
relatively small. For example, in testing C1 (Q15, the use of cross-functional teams) and
C2 (Q18, use of a formalized process) using a balanced ANOVA test, this would have
required 25 responses for each level in order for the matrix to balance. Other issues
55
included that fact that the data are primarily qualitative, and not quantitative, in nature.
As such, it was determined that the preferred method for evaluating factor interaction was
through normal regression including the product of the factors. The factors are labeled
C1 (Q15, CFT’s), C2 (Q18, formal development process), C3 (Q22, market research), C4
(Q26, platform consideration), C5 (Q28, use of industrial design), and C6 (Q31, use of
cost modeling/tracking). The regression is an expansion of the hypotheses shown in
Section 3.3. Two factor product regression analysis was run on each Core Principle
combination including the Core Principle combinations tested in Hypotheses H12 – H16.
For Q5, a binary regression model was used, since the response was whether or not the
product made-it-to-market (1 being if the product reached the market, 0 if it did not). A
summary of the factor analysis regression is shown in Table 3.5.
56
Table 3.5. Factor regression results.
57
Table 3.5. Factor regression results - continued.
The regression shown in Table 3.5 was run on all 35 survey firms. A summary of the
significant results are shown in Table 3.6.
58
Table 3.6. Significant factor interaction regression results.
There is a statically significant positive interaction of considering a product platform
(C4) and the use of industrial design (C5) on development duration (Q9), with a p-value
of 0.077. This result is interesting, given the fact that consideration of a core technology
alone produced a significant negative impact on development duration during hypothesis
testing (Hypothesis 4). The interaction between the use of a formalized process (C2) and
industrial design (C5) has a significant positive impact on ROI timing, with a p-value of
0.076. Additionally, the extent of the use of a formalized NPD process with other Core
Principles is also significant. This includes the significant interaction with cross-
functional teams (C1), market research/planning (C3), platform consideration (C4), and
in combination with cross-functional teams (C1) and market research/planning (C3). In
each significant interaction, the combination of Core Principles has a positive impact on
development duration (Q9) and ROI timing (Q37). There was one interaction which
produced a negative impact, the combination of platform consideration (C4) and
industrial design (C5) produced a significant negative impact on product margin (Q38),
59
with a p-value of 0.022. Another significant positive interaction was the use of market
research and consideration of a platform on development duration, with a p-value of
0.025. The most significant results with the highest adjusted R2 values (32.30% and
37.90%, respectively) were the interaction of a formal NPD process (C2) and market
research (C3) individually with the use of industrial design (C5). Both interactions (p-
values of 0.002 and .001) have a significant positive impact on reducing development
duration (Q9).
Several common interactions showed significant results. For example, C5 (use of
industrial design) had common interactions with a number of other Core Principles.
These included considering a platform (C4), use of a formal process (C2), and use of
market research (C3). These common interactions were tabulated from the results shown
in Table 3.6. As such, a three factor analysis was run on several of these combinations to
gauge the interaction impact on the dependent variables. The results of the analysis are
shown in Figure 3.4 and Figure 3.5.
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Figure 3.4. Three factor interactions (C2, C4, C5) and (C2, C3, C5) among all firms.
Figure 3.5. Three factor interactions (C1, C2, C3) and (C3, C4, C5) among all firms.
61
Figures 3.4 and 3.5 illustrate that there is a positive and significant interaction
between different combinations of three Core Principles, and that the resulting interaction
in all cases except C3, C4, C5 on ROI timing results in significant results with a better
adjusted R2 value than the two factor interaction of Core Principles.
3.8 Factor Analysis of Sorted Firms
As a next step in the analysis, the same regression was performed with all “in-
process” firms removed. In-process firms are those that are currently developing their
products and have yet to reach the market. This left 25 firms, both successful and
unsuccessful (success being defined in this case as the product reaching
commercialization). Table 3.7 shows the hypothesis testing of the sorted firms.
Table 3.7. Hypothesis results, sorted firms.
In comparing this to the larger 35 firm sample, which includes firms in the process of
developing their products, several hypotheses were additionally supported. This included
the use of cross-functional teams (C1 - Q15) and the product reaching the marketplace.
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There is a significant relationship (p-value = 0.079) between the use of cross-functional
teams and the product reaching the marketplace, thereby supporting Hypothesis 1.
Additionally, Hypothesis 9 was also supported, with the use of cost tracking during
development having a significant impact on the product reaching the marketplace (p-
value = 0.008). Another difference in this analysis versus the 35 firm sample, was that
Hypothesis 15 was supported, with the interaction of all Core Principles having a
significant (p-value = 0.065) impact on cumulative sales over a three year period (Q10-
12). A summary of the significant factor interaction results can be seen in Table 3.8.
Table 3.8. Significant factor regression results, sorted firms.
An interesting result is the significant negative impact (p-value = 0.056) of the
combination of the use of cross-functional teams, a formalized process, and cost tracking
and the product reaching the marketplace. The interaction of many of the Core Principles
followed the same pattern and significance as the 35 firm sample, particularly the positive
impact on development duration (Q9) and ROI timing (Q37). Figures 3.6 and 3.7 show
the positive interaction of three Core Principles for the sorted firms.
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Figure 3.6. Three factor interaction (C2, C4, C5) and (C3, C4, C5), in-process firms
removed.
Figure 3.7. Three factor interaction (C1, C2, C5) and (C1, C2, C3), in-process firms
removed.
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As with the larger sample, the interaction among three factors has a positive impact
on firm NPD performance versus two factors, as shown by development duration (Q9)
and ROI timing (Q37). The combination produces significant results, with the adjusted
R2 increasing over the two factor interaction. Additionally, in the case of the interaction
between the use of CFT’s, a defined process, and market planning, there is no significant
interaction individually or among two factors; however, interaction between all three has
a positive, significant impact on ROI timing (Q37).
3.9 Multivariate Analysis
In support of the regression analysis, multivariate analysis was used to try to cluster
the Core Principles. As a first step, below in Figure 3.8 is a single linkage dendrogram
showing correlation between the 6 clusters. C1 – C6 are the independent variables.
Figure 3.8. Dendrogram of independent variable clusters.
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The distance measure in Figure 3.8 is correlation. It is interesting to note the
correlation between C2 (formalized process) and C3 (use of up-front market research),
C6 (industrial design) and C7 (cost modeling and tracking) and the relationship between
C1 (cross-functional teams) and C2 and C3. In relating these clusters to regression
analysis, the following results are given in Table 3.9 for all firms.
Table 3.9. Clustered factor regression results.
As with the other regression results, this factor interaction based on clustering
provides similar results. Interaction of Core Principles has a significant positive impact
on development duration (Q9) and ROI timing (Q37). In the next section the implications
of the results are discussed.
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3.10 Discussion
The intent in this chapter is to extend our understanding of how start-up and early-
stage firms are developing their products. Chapter 2 highlighted six Core Principles of
which there is substantial research and literature to support their use and efficacy within
large, established firms. The pilot study here controlled for firm age and focused on
consumer products, resulting in a response of 35 firms. The main ‘take-away’ from this
study is to gauge the extent to which the Core Principles are used within the early-stage
environment, and their impact on firm success. From the basic statistics, one can see that
the sample firms on average use some level of the Core Principles. As a next step in the
analysis, hypotheses were formed to test the level of individual and combinatorial impact
of the six Core Principles on firm success.
There are several important results from the hypothesis testing. One is the fact that
with the exception of considering a product platform or core technology and the use of
cost modeling and tracking during development, no single Core Principle has a
significant impact on factors for company success as they are too highly correlated. The
consideration of a product platform has a negative impact on development duration,
supporting Hypothesis 4. Based on the regression model (Adj. R2 of 15.40%, p-value of
0.011), strongly considering a platform results in a development duration 2.6 times longer
than not considering a platform. This result is in-line with traditional literature, as Ulrich
and Eppinger (2004) note that it can cost 2-10 times more to develop a platform, which
can be inferred that platforms denote higher cost and longer development. However, this
study focused on single consumer products and not a firm’s current or future product line.
This result does not indicate that platforms are ‘bad’ for start-ups. As noted in Chapter 2,
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a platform does take longer to develop, but successive generations of products can be cost
effectively developed. This is essential for the new firm, as it is imperative to quickly
and efficiently develop a stream of new products, leveraging their initial development
investment into a multitude of offerings.
The use of cost tracking and modeling during development produced significant
results, most notably the support of Hypotheses 9 and 10. Cost modeling has a
significant positive effect on the product reaching the marketplace and product margins;
however, cost modeling did not support Hypothesis 11 in both test runs (the total sample
and sorted firms). Cost tracking and cost modeling had a significant negative impact on
ROI timing. This might be due to a greater management focus on accounting, and a more
conservative approach to operations and initial investment payback. In the sorted sample
hypothesis testing, additional significant results were observed. The use of a formalized
NPD process had a significant effect on the product reaching the marketplace. This is an
important result, as it shows that the more likely a start-up is to implement a formal NPD
process, the more likely their product will reach the marketplace. Lastly, the
combinatorial impact of the Core Principles has a significant effect on development
duration. Firms (this is shown in both test cases) that implement the six Core Principles
in some combination are likely to develop their products faster than firms that do not.
Additionally, in the sorted sample test, firms that adopt the six Core Principles have a
significant positive impact on cumulative sales over a three year period. Although not all
combinatorial hypotheses were supported, what is seen is that there is a significant
interaction of the Core Principles on firm success, even if only considering one measure
of success, development duration.
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The hypothesis testing pointed to potential significant interactions of various Core
Principles. Two-factor interaction regression analyses were performed on all
combinations of Core Principles. What was observed is very interesting, and dives
deeper into the development process that showed potential significance as expressed by
Hypothesis 16. Different combinations of Core Principles were shown to have a
significant positive impact on development duration and the timing of ROI. In the 35
firm sample, of the sixteen significant interactions observed, all with the exception of the
negative impact on product margin (Q38), produced a significant impact on development
duration and ROI timing. Of the fourteen results that had a positive impact on the two
dependent variables (Q9 and Q37), seven included an interaction with the use of a
formalized NPD process. This is significant in two ways, the first being that a formalized
process in combination with other Core Principles can speed the development process,
and the second being that different combinations of Core Principles can have the same
impact on at least two measures of corporate success (e.g. development duration and ROI
timing). Even more telling is the three-factor analysis shown in Figures 3.5 and 3.6. In
almost all cases illustrated, the interaction of three Core Principles produces better,
significant results compared to two-factor interaction. This is particularly impactful
because the significant and positive measures of success shown to be the most significant
are development duration (Q9) and ROI timing (Q37). For example, from a regression
model of the interaction of C2, C3, and C5, maximum adoption of the Core Principles
(extensively used versus rarely used) can improve development duration by 66% and ROI
timing by 18%. These two measures are critical for the start-up, as negative cash flow
needs to be stopped as quickly as possible. By getting a product faster-to-market and
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paying back the initial investment more quickly, the better the financial position for the
nascent firm.
The results observed here indicate that it is possible to arrange NPD within the start-
up with different combinations at different levels of adoption to gain a positive impact on
firm success. In essence, the interaction of Core Principles can be viewed as the
combining of molecules to form a ‘polymer chain,’ as different combinations of Core
Principles can work in concert. Another interesting Core Principle factor is the use of
industrial design. In combination with other Core Principles, the use of industrial design
played a significant role in four two factor interaction cases. Additionally, industrial
design negatively effected product margin (Q38). Since a majority of the firms used
outside development resources, industrial design firms may play a role in speeding up the
development process because of their innate experience. Conversely, use of industrial
design may result in more complex and costly products, thereby reducing product margin.
This pilot study indicated several interesting points: 1) firms are using the Core Principles,
2) there is a positive and significant interaction when Core Principles are used together,
and 3) different combinations of Core Principles can produce similar positive impact on
NPD success metrics. In the next two sections limitations of the survey are discussed,
followed by concluding remarks.
3.11 Limitations
This survey is a preliminary study, and as such several limitations are apparent. One
is the total sample size. At 35 firms, the study is small and more data is needed to
support the conclusions. Power analysis was run on the independent variables, and the
average desired sample size was determined to be 86 firms (difference = 0.5, power =
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0.9). Increasing sample size will be a main goal of continued research. All firms were
Pennsylvania-based, and are focused on consumer products. In future surveys, it is the
researcher’s intention to expand the survey geographically and open up the survey to
other industries such as software. Another limitation is that the firm success measures
like product margin, sales, and ROI have other factors that may enhance or impede the
quantitative result. These factors include experience of the management team, level of
funding, geographical area, etc. The survey also did not gather data on founder or
management experience, level of funds raised, level of product complexity, or
technological newness. In future surveys, these factors should be included. Also, this
survey focused on single products, and not a complete product line or successive
generations of products. Investigation into the average cost across a family of products
for a given generation should be included to gauge the impact and ability of a new firm to
leverage its platforms. Another limitation is that the survey was self-selecting, and only
firms that are still in business were profiled. There is also inherent ambiguity in the
Likert-type scale levels. For example, a small team of company founders may not view
or rate themselves as a CFT, but their intrinsic communication and function is naturally
cross-functional. This issue is exacerbated by the fact that the survey did not explicitly
define variables or the Likert-type scales at the beginning of the survey. Again, this
questions some of the utility of the survey results. In future research, a glossary and
specific scale definitions will be included in the survey to increase utility and reduce
ambiguity. Finally, since this is a preliminary study, other survey questions and factors
were not investigated to gauge their influence on the data. This includes the number of
employees, what services were outsourced, etc.
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3.12 Chapter Summary
This chapter sought to better understand how start-up and early-stage firms are
developing their products. What was observed is that nascent firms are using Core
Principles in the NPD process. The most interesting result of the analysis was that there
is no single ‘magic bullet’ of development processes and tools that has an immediate
impact on firm success. With the exception of cost tracking, no single Core Principle has
a significant positive impact on firm success; however, combinations of Core Principles
did have a significant result - primarily on development duration and how quickly the
firm saw a return on initial investment, which for the start-up are two critical metrics for
survival. The most important result from the survey is that different interactions of Core
Principles can have very similar effects on firm success (differing combinations have
similar significance on development duration and ROI). This is important because it
shows that a firm can selectively implement Core Principles when and where needed and
still receive a beneficial result. It is unrealistic that a very small firm will adopt very high
levels of the Core Principles ‘across-the-board.’ What is more likely is that a firm will
have a flexible development process that selectively adopts Core Principles when they are
needed to a level that is appropriate given the needs of the management team. In the next
chapter, a detailed case study of three of the survey firms is given. The intent of the next
chapter is to give a detailed analysis of the real-world adoption of the Core Principle level
and detail the differences and similarities between applications within these three firms.
As a next step, Chapters 5 and 6 propose a NPD framework for start-ups that gives them
the ability to flexibly implement the Core Principles throughout the NPD and
commercialization process.
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CHAPTER 4 CASE STUDIES OF EARLY-STAGE FIRMS AND THEIR
NEW PRODUCT DEVELOPMENT PROCESSES
4.1 Introduction
In Chapter 3, a product development survey analyzed 35 firms and their NPD
processes. Uncovered was a combinatorial effect of the adoption of the Core Principles
and factors for success. Chapter 3 provided a broad overview and analysis of these firms,
with the aim of identifying trends and factors influencing NPD within the early-stage
environment. In this chapter, an in-depth analysis of three early-stage firms is given,
highlighting their engineering and sourcing processes within the global environment, and
to what extent they adopt the Core Principles defined in Chapter 2. To conduct the
research, multiple case studies were used, which is generally considered more robust than
a single case study (Yin, 1994). Case study research involves the examination of a
phenomenon in its natural setting (Halman, et al., 2003). The method is especially
appropriate for explorative research with a focus on “how” and “why” questions
concerning a contemporary set of events (Eisenhardt, 1989). This research seeks to
intimately understand the “how” certain start-ups develop their products. This chapter
provides insights for a proposed NPD process for early-stage firms, which is introduced
in Chapter 5 and applied in Chapter 6.
The purpose of this chapter is centered on data collection and analysis of the applied
Core Principles to the three early-stage firms. Application of the Core Principles is
discussed in detail with respect to each firm’s development process. The chapter
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concludes with a comparison of the similarities and differences between their NPD
processes within the start-up environment.
4.2 Case Study Firms
The three case study firms represent both consumer products and technology-driven
applications. The first case study is PaperPro, designer and marketer of proprietary office
products such as staplers. Their products are designed in the United States and
manufactured in Asia. The second firm discussed is KCF Technologies (KCF). KCF is a
technology firm developing power harvesting equipment for wireless sensors. Their
products are designed and assembled in the United States, and they leverage a network of
low cost global suppliers to develop products that are specifically tailored to customer
requirements. The third firm is the Innovation Factory (IF), marketer of high-end snow
and ice removal tools. All three firms focus primarily on their development process and
their ability to optimize core technology and intellectual property into successive
generations of new products. Because of globalization, their main concern is developing
products that specifically target and exceed market demands within a given market
segment. If common components and platforms can be adopted without being a
hindrance on performance, then they are integrated into the new design; otherwise,
completely new components are designed or specified as needed.
These firms were deemed appropriate because each is new (the oldest was founded in
2000), small in size, and all three utilize a global network to develop and commercialize
their products. As such, the main impetus for their NPD processes is that they produces
quick results for low cost. Firm contact and general characteristics of the three firms is
shown in Table 4.1.
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Table 4.1. Contact and general characteristics of the case firms.
4.2.1. Data Collection
The data collection and analysis was performed over a two-year period and included
two data collection phases. For PaperPro and KCF, the first phase consisted of being a
part of the development team and learning their respective businesses. The investigator
attended management meetings and product development sessions as both an observer
and a participant. For the Innovation Factory, the investigator was able to have access to
all company records and historical information regarding development of the IceDozer.
The second phase was a detailed electronic survey consisting of 30 questions given to
each of the founders. The survey was designed to give insight into each firm’s NPD
process and to what extent the Core Principles were used. This survey was designed as a
more qualitative data collection tool rather than the more quantitative survey detailed in
Chapter 3. The survey questions were as follows:
• How long did it take to develop the product?
• Who participated in its development?
• How much management involvement was there?
• Who lead the development project?
• How much experience did the development team have?
• How much did the development cost?
• How much did tooling cost?
• How much time and money was spent tweaking tooling?
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• How much time and money was spent on prototypes and testing?
• How did the development team communicate?
• What software was used for communication?
• How often were communications?
• Did the team meet in person?
• Were there any problems in translating the design to vendors, etc.(i.e. communication issues)?
• What software was used to design the product?
• What types of prototypes were constructed?
• Was cost modeled during development?
• How was cost modeled?
• Was manufacturing and tooling cost OK’d by management before production?
• Who designed the unit’s appearance?
• Was the core technology a primary focus?
• Did/do you plan on using it (leveraging it) to different products?
• How did outsourcing affect the design?
• Did low labor costs affect design decisions?
• Did you use design for assembly or manufacture techniques?
• How did you determine customer needs?
• How did you turn customer needs into more specific engineering specifications?
• How did you determine selling price?
• What kind of market research did you do?
• Did you develop a product roadmap?
All three case firms participated in the Chapter 3 survey, and results of both surveys
are detailed in the following three sections.
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4.3 Field Study Results: PaperPro
PaperPro (www.paperpro.com) was founded in 2003 with the launch of the One-
Touch™ desk-top stapler. Their series of products is based upon a proprietary spring-
based design that decreases staple effort while increasing staple power. The products are
marketed in outlets such as Staples and Office Depot. The first model introduced was the
1000 model, designed to staple 2-20 sheets of paper. A schematic of the 1000 model
stapler is shown in Figure 4.1.
Figure 4.1. PaperPro original 1000 stapler. Photo courtesy of PaperPro.
The 1000 was developed in 2003 and launched in early 2004. PaperPro’s CEO was
able to contract with an inventor based in Los Angeles, CA. His prior experience
involved the development of staplers and other similar work tools. The inventor’s
patented spring-based heavy-duty construction stapler, the PowerShot®, was licensed to
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Black&Decker in the early 1990’s. The PaperPro development team was based in
Towaco, NJ, Los Angeles, CA, and Taiwan. This is shown graphically in Figure 4.2.
Figure 4.2. PaperPro’s global design and development network.
In terms of their use of the Core Principles defined in Chapter 2, the following were
used during the development of the 1000 stapler.
4.3.1. Cross-Functional Teams (CFTs)
The development team consisted of 1) an inventor with 22 years of development
experience including 10 years with staplers, and 2) a lead engineer with 5 years of
development and manufacturing experience, including 3 years with staplers (he had
worked on the Powershot work stapler). The other core team member was PaperPro’s
CEO, who handled marketing and management. Contracted members of the team
included manufacturing representatives based mainly in Taiwan. The team
communicated daily using email and over the phone. The primary software tools used
for communication were SolidWorks 2003 (CAD program), Microsoft Outlook (email),
and Microsoft Excel (design issues). The team did meet in person during development
and tooling debugging. An organizational chart is shown in Figure 4.3.
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Figure 4.3. PaperPro’s development team.
4.3.2. NPD Gated Process
PaperPro did not use a written formalized process during development. Instead, they
relied on the experience of the development team. It is interesting to note that there was
little management involvement during the project, although moving forward to tooling
development was approved by management in a limited decision gate meeting. In terms
of the NPD process methods used by PaperPro, the process flow in Figure 4.4 describes
the activity. Once the development team was formed and market research performed, the
small core team iteratively designed, tested, and cost modeled the product.
Figure 4.4. PaperPro development process for the 1000 stapler.
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4.3.3. Up-front Market Planning
Some up-front market planning and benchmarking was performed. This included
evaluating the most common staple size in the U.S. and Europe and selecting the
particular staple size. Then, the unit was designed to “fit-in” with traditional stapler
appearance parameters so that is would be recognized as a stapler, and not alienate
potential consumers with an unfamiliar design. The selling price was determined by
placing the 1000 at the top of the selling range because of its uniqueness and
functionality. During development, prototypes were developed and tested side-by-side
with competitive staplers. Opinion of the development team drove design tweaks and
specifications. No formal tracking of customer needs and relating them to engineering
specifications were completed.
4.3.4. Product Platforms
PaperPro launched the 1000 model (2-20 sheets) with the intent to eventually launch
a 15-sheet version and a 60-sheet version. Common components would be used where
applicable, but considering the low cost of tooling and the speed at which new models
could be designed and prototyped, this was not a priority (Marion, et al., 2007). However,
they viewed their patented staple technology as their ‘core technology platform,’ and that
would be the leveraged architecture among their models.
4.3.5. Industrial Design
The look and function of the product was very important to the project. The inventor,
who had designed other consumer products in the past, was responsible for the industrial
design of the stapler. The inventor is not a degree-holding industrial designer.
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4.3.6 Cost Modeling and Tracking
Cost modeling and quoting played a prominent role in development. The inventor
designed the parts to be easily manufactured with cost in mind, and once the CAD files
were complete, vendors quoted the parts. When needed, “tweaks” were made to the parts
to reduce costs in an iterative fashion (e.g. reducing part thicknesses). A summary of the
total development cost, component costs, and sourcing areas can be seen in Table 4.2.
Note that the engineering development cost is very small, only $10,000. This is because
the core development team, including the inventor, worked at no charge for equity in the
project. The $10,000 cost is primarily due to prototypes, which included soft prototype
molds and wire cut metal parts fabricated in Taiwan. It shall be noted that the tooling is
steel, multi-cavity for high volume production.
Table 4.2. PaperPro 1000 costs.
The 1000 model was developed from concept to first shipment in 10 months. This
included 4 months of prototype testing and tool tweaking.
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4.3.7. Detailed Survey Results
As mentioned, PaperPro was one of the 35 firms surveyed in Chapter 3. In terms of
the dependent variables, they were by far the most successful firm surveyed, in both
cumulative sales and product margin. Their product made-it-to-market and was
developed in a short timeframe. A summary of their independent and dependent
variables are shown in Tables 4.3 and 4.4. Also noted is the survey mean and standard
deviation for each question.
Table 4.3. PaperPro Core Principle (independent variable) survey responses.
Table 4.4. PaperPro dependent variable survey responses.
Versus the sample mean, PaperPro was less apt in adopting the six Core Principles
except the use of industrial design and cost tracking during development. In both of those
Core Principles, they were above the sample mean. A radar chart of their relative
adoption of the Core Principles is shown in Figure 4.5. Visually from Figure 4.5, one can
see the relative area Core Principle chart area is less than the sample mean which implies
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that their core team spent its resources on design and cost modeling, implying a very
small, agile team focused on commercialization.
PaperPro Core Principle Chart
0
1
2
3
41
2
3
4
5
6
PaperProSurvey Mean
Figure 4.5. PaperPro Core Principle radar chart.
4.4 Field Study Results: KCF Technologies (KCF)
KCF (www.kcftech.com) is a Pennsylvania State University-based technology spin-
off company developing a unique line of power harvesting devices that will be used to
provide small amounts of electricity to remote wireless sensors. KCF is in the early
stages of funding and product development, working under a Small Business Innovation
Research (SBIR) grant from the U.S. Department of Energy. KCF began their project in
July 2004, and at the time of writing (April 2007) they are testing different prototype
variations at Beta commercial sites. Their core team is located in State College, PA, and
they maximize use of distributed global resources such as Digi-Key13 and rapid surface
mount technology (SMT) manufacturers. They rely heavily on CAD for their electronic
13 http://www.digi-key.com/
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and housing designs and have sourced aluminum injection mold tooling in Wisconsin,
and utilized several day turnaround SMT board population firms in China. This has
allowed them to continually tweak the performance of their power generation and storage,
cutting months out of the design and testing process. According to the project manager,
“KCF’s company model is built on outsourcing. Outsourcing was planned from the
beginning of the SBIR proposal.” Figure 4.6 denotes their global network of suppliers.
Figure 4.6. KCF global supplier network.
4.4.1. Cross-Functional Teams (CFTs)
KCF is a technology-driven firm and is based next to a major U.S. research university.
As such, given their access to low cost student resources, most of KCF’s development
team is co-located. This includes electrical engineering, mechanical engineering, and
software engineering. Their vendors are located across the U.S. and in Asia. KCF’s
team includes 5 internal engineers and 5 university-affiliated resources. In terms of
experience, the team formed by KCF is highly practiced, with an estimated combined
experience: piezo devices (> 100 years combined), product design (~ 50 years combined),
and electrical circuit (~ 50 years combined). The full team meets every two weeks, and
sub-teams such as electrical design meet weekly. The primary form of communication is
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email with attachments such as Microsoft PowerPoint, Word documents, or Excel
spreadsheets. There is a heavy emphasis on project management, driven by the project
manager. The primary product design software used by the team is Pro-Engineer and
SolidWorks. An organizational chart is shown in Figure 4.7.
Figure 4.7. KCF’s development team.
4.4.2. NPD Gated Process
KCF is partially funded by government grants (SBIR). As such, their development
process is more formalized. Management design and review meetings are held bi-
monthly. All team members are present in-person. The KCF NPD process flow is shown
in Figure 4.8. The process flow is similar to PaperPro, but adds another level of
complexity in that concepts are developed, tested, and selected before detailed product
design is initiated.
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Figure 4.8. KCF development process.
4.4.3. Up-front Market Planning
During the initial stages of development, extensive competitive research was
performed. This included surveys of potential customers and a purchased survey of
upcoming market trends. This information was included in initial SBIR reports and grant
requests. Communication with potential customers is ongoing and is constantly shaping
and refining product specifications. From early customer communication, customer
needs were very quickly turned into preliminary engineering specifications. Customer
feedback has also driven price targets.
4.4.4. Product Platforms
KCF has a small team working on product platforms. However, as a result of specific
customer requirements and low cost and quick turnaround of new components (like the
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SMT suppliers in China), KCF is focusing on its core technology, the ability to model
and harvest electrical power at different vibrational frequencies rather than constant reuse
of physical components. The delivery of custom circuits and other components is not as
significant as the engineering resources needed to optimize a particular design.
4.4.5. Industrial Design
Industrial design played a small role in the exterior design of the product, as this is
intended to be an industrial product. The exterior appearance of the product was jointly
designed between the project mechanical engineer and an outsourced industrial engineer.
4.4.6. Cost Modeling and Tracking
Cost modeling and quoting plays a prominent role in the ongoing design effort. Once
design revisions are complete, the CAD model is quoted for fabrication. Cost quotes are
returned, and meetings are held with the design team. High cost components such as the
internal structural stem were targeted for redesign. Quoted cost quantities are usually for
100 and 10,000 units.
A summary of the total development cost, component costs, and sourcing areas can
be seen in Table 4.5. Note the high development cost versus the cost of tooling. KCF is
focusing on its process platform, ensuring it has a robust model of how to develop all
potential customer variants. Their initial model will reach production in CY2007, and it
is expected to take another $375,000 to complete development.
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Table 4.5. KCF Power Harvester cost estimates.
4.4.7. Detailed Survey Results
KCF is completing development of their product currently, and as such they do not
have definitive results in the dependent variables of the survey, other than projection on
development duration and cost. However, as shown in Table 4.6, they have placed a high
value on the Core Principles, as evidence by their implementation being much greater
than the sample mean.
Table 4.6. KCF Core Principle (independent variable) survey responses.
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Table 4.7. KCF dependent variable survey responses.
KCF’s radar chart of their implemented Core Principles is shown in Figure 4.9. Note
the difference in area between their implementation and the sample mean. Due to their
technology-driven development and adherence to SBIR guidelines, KCF has a well
defined process that places a strong emphasis on methodology.
KCF Core Principle Chart
0
1
2
3
41
2
3
4
5
6
KCFSurvey Mean
Figure 4.9. KCF Core Principle radar chart.
4.5 Field Study Results: The Innovation Factory (IF)
The Innovation Factory (www.innovationfactory.com) was founded in 2000. A series
of ice scrapers and snow removal equipment were designed and produced based on a
product platform methodology and successfully sold in the marketplace starting in 2002.
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The company filed for bankruptcy in 2004 as a result of the cost of sales and lack of
investment after the high-volume ramp-up in year three, and was purchased in 2005. The
Innovation Factory continues to market the IceDozer family and thus far, over 130,000
units have been sold in outlets such as Herrington Catalog, QVC, Brookstone, and
Amazon.com. The development of their IceDozer project was completely virtual. The
IceDozer is shown in Figure 4.10.
Figure 4.10. The Innovation Factory IceDozer.
The co-founder of the company headed the design effort over six months in 2001.
Industrial Design was performed in Los Angeles, CA and 3D CAD was done in Atlanta,
GA. The manufacturer was sourced using MFG.com14 and became an integral member
of the product team as soon as preliminary CAD was developed. The entire team would
communicate through email, fax, and teleconference. Once per week, the team leader
would have a teleconference with all team members. Refinements and comments on the
design were quickly sketched and sent to all team members via email. At no time during
design and development did the team meet in-person. Figure 4.11 shows a sample of the
design comments sent during a team meeting held in June 2001.
14 http://www.mfg.com/
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Figure 4.11. Design comments from virtual team meeting.
During the third year of operation, the Innovation Factory had high-volume injection
molds produced in China at a substantial savings and had them shipped to Philadelphia,
PA. Due to the short selling cycle and close proximity to distribution centers (DC’s),
domestic manufacture was chosen over off-shore sources. The Innovation Factory’s
virtual development resources are shown in Figure 4.12.
Figure 4.12. The Innovation Factory’s virtual development resources.
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4.5.1. Cross-Functional Teams (CFTs)
The only internal contact during development of the IceDozer was one of the
founders; as such, the entire development team was virtual. This included engineering,
manufacturing, industrial design, prototype and component vendors. At no time during
development did the entire team meet in-person (Shooter, et al., 2007). The teams project
manager had 5 years of design and development experience, the mechanical engineer had
15 years of experience, the CAD designer had 5 years of modeling experience, and the
industrial designer had 10 years of experience. The main forms of communication were
email, phone, and fax. As mentioned, the team ‘met’ weekly via phone conferences to
discuss design iterations. CAD was modeled using SolidEdge, but design changes were
communicated through the sending of scanned electronic pictures (JPEGS) over email.
The core team is shown in Figure 4.13.
Figure 4.13. Innovation Factory core team organization chart.
4.5.2. NPD Gated Process
The Innovation Factory used a limited development process, although no formal
written process was used. The virtual team ‘met’ once per week via teleconference
where objectives and milestones were discussed. Management discussions regarding
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continuing development were performed at several stages during development, although
management involvement other than the co-founder was limited. A schematic of the
Innovation Factory’s development process is shown in Figure 4.14. The Innovation
Factory first steps included a detailed market investigaton and intellectual property search.
Their process then followed an iterative pattern that like KCF, included a concept
development phase before investing into detailed product design.
Figure 4.14. IF development process.
4.5.3. Up-Front Market Planning
During the initial stages of development, extensive competitive research was
performed. Competitive products were tested, and this was juxtaposed against feedback
from potential retail buyers and customers. The founders performed Web-based searches
and in-store visits to identify competitors. This drove retail and manufacturing costs
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targets, as well as establishing basic engineering specifications. In addition, a 600
respondent survey was performed via potential customers, which helped shape product
design attributes. From this survey, a list of 5 core customer needs were developed and
used as a guide throughout the development process. The customer needs were:
1) the product must be easy-to-use and ergonomic,
2) include a blade that contours to the windshield,
3) include a front plow that keeps ice and snow from the user’s hands,
4) be rugged and robust, and
5) cost no more than $3.00 USD to manufacture.
Mock-ups of several sizes were constructed and given to several people to informally
gauge opinion.
4.5.4. Product Platforms
The IceDozer was designed from the outset with product platforms in mind. Since
development resources were constrained, a bulk of development timing was spent on the
IceDozer blade. This core technology was eventually used on a multitude of line
extensions. As explained in Shooter, et al. (2007), engineering design was focused on
making the core blade technology flexible from a modular attachment standpoint, with
the inclusion of several ‘hardpoints’ on which several different types of handles could be
attached. Market segmentation planning was used during early development, with the
ultimate aim of developing a series of products based on the scraping blade. Meyer and
Lehnerd’s (1997) market segmentation grid for the Innovation Factory is shown in Figure
4.15. Note the vertical leveraging of the IceDozer Mini and comprehensive reuse of the
FlexiBlade platform.
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Figure 4.15. Innovation Factory market segmentation grid.
4.5.5. Industrial Design
Industrial design played a prominent role throughout the project, from function to
color schemes. A degreed industrial designer was ‘on-call’ throughout the duration of the
project, and was an integral part of the core CFT. After market research was performed,
17 industrial design concepts were developed and evaluated by the core team. Three top
candidates were chosen, and the top candidate was selected in May, 2001. The three top
designs are shown in Figure 4.16.
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Figure 4.16. IceDozer industrial design concepts.
4.5.6. Cost Modeling and Tracking
Cost modeling played a role in the design but was not central. The main product
focus was form and function, followed by manufacturability in order to develop a
premium product. From experience of the design team, parts were designed to be easily
manufactured without injection molding pulls and no fasteners (all parts would be snap-
fit per design for manufacture (DFM) guidelines). During development, the parts were
posted on MFG.com to obtain initial piece price estimates and tooling quotes. Once a
vendor was selected and the CAD was completed, final cost quotes were given by the
vendor. Where possible, tweaks were made to reduce costs such as reducing plastic part
wall thicknesses. During phone meetings, general estimates were given to try to meet the
$15.00 retail price. A summary of the total development cost, component costs, and
sourcing areas can be seen in Table 4.8. Note that the development cost is greater than
the tooling cost. The Innovation Factory tools for initial launch were aluminum single
cavity tools fabricated in Madison, IN. Concept through production took approximately 9
months.
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Table 4.8. Innovation Factory IceDozer costs.
4.5.7. Detailed Survey Results
Like PaperPro and KCF, the Innovation Factory was one of the 35 firms surveyed in
Chapter 3. In terms of the dependent variables, they were one of the most successful
firm’s surveyed, in time-to-market, development cost, and cumulative sales over a three
year period. A summary of their independent and dependent variables are shown in
Tables 4.9 and 4.10. Also noted is the survey mean and standard deviation for each
question.
Table 4.9. Innovation Factory Core Principle (independent variable) survey responses.
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Table 4.10. IF dependent variable survey responses.
Compared to the sample mean, the Innovation Factory had a substantially greater
adoption of the Core Principles. They placed a strong emphasis on CFT’s, market
planning, platforms, and industrial design. A radar chart of their relative adoption of the
Core Principles is shown in Figure 4.17. Visually from Figure 4.17, one can see the
relative area Core Principle chart area is greater than that of sample mean. This implies
that the Innovation Factory followed a more detailed process than the sample mean, with
application of the Core Principles influencing decisions during development; with a
particular emphasis on marketing, design, and developing a product family. This ties into
the Innovation Factory’s business plan of developing a high-end brand focused on winter
tools.
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Innovation Factory Core Principle Chart
012345
1
2
3
4
5
6
IFSurvey Mean
Figure 4.17. Innovation Factory Core Principle radar chart.
4.6 Discussion
The objective in this chapter was to explore in detail how several early-stage
companies developed and are developing their products, and specifically what methods
are being used in a real-world setting. The chapter was structured in a manner similar to
the literature review, in that a broad global framework of the firms was discussed,
followed by a deeper dive into application of the six Core Principles. Finally, each firm’s
survey results from Chapter 3 were reviewed.
In Table 4.11 is a summary comparing the development processes and tools. Note the
similarity between all three case study firms in terms of the development structure
independent variables. Also included in Table 4.11 is a description of their performance
metrics, including development duration, cost, and sales.
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Table 4.11. NPD Case Study Survey Results.
All three case study firms had/have a very small development team bolstered by
outside development resources, which include industrial design, mechanical design, and
manufacturing. Both PaperPro and the Innovation Factory’s products made-it-to-market
in less than a year, with the development being led by single individuals within the
corporation. KCF is slightly different: being a SBIR-funded technology organization
based near a university, they have the luxury of having their development team co-
located. All other resources at KCF are outsourced. It is interesting to note how similar
these three firms are in their approach to NPD as Apple and their iPod. Even though the
case firms are early-stage, perhaps Apple’s development process is more entrepreneurial
than most large firms?
The second phase of the case study was an in-depth investigation to the extent to
which the Core Principles were applied. All three used virtual CFTs, performed some
form of market research, considered a process and component platform, applied industrial
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design, used cost modeling, and had some level of management gate approval during
development. Even though all three firms had no succinctly defined process, all did
follow a process, albeit informally. This was shown in each of the firms’ NPD process
flow charts. Even though their processes varied in complexity, their overall NPD
processes had similarities, from the concept to final design process and a final
management gate approval. All three NPD processes are somewhat similar to Cooper’s
(2005) fast track method. In terms of their adoption of the Core Principles, a radar chart
of all three firms versus the sample mean is shown in Figure 4.18.
Case Study Core Principle Chart
012345
1
2
3
4
5
6IFPaperProKCFSurvey Mean
Figure 4.18. Case study radar chart.
Even though all three case firms applied some aspect of the six Core Principles, each
applied them differently, combining them in a fashion as to produce their tailored
‘polymer’ development chain. Figure 4.19 shows the Core Principle interaction at all
three firms.
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Figure 4.19. Case study Core Principle interaction.
PaperPro, the most successful firm in the survey, applied them less than a nearly as
successful Innovation Factory (from zero to three years). The take away from this,
supported by the analysis in Chapter 3, is there is not a single level of Core Principle
adoption that is singularly optimal for development. There is a combinatorial impact, but
one combination is not significantly better than others because of the totality of factors
such as those explained in Gartner’s (1985) framework (e.g. experience of the founders,
the environment, etc.). Given a particular set of ‘ingredients’ (i.e., the Core Principles),
firms can adopt the right ‘recipe’ as needed. As discussed in Chapter 3, in essence firms
can combine different levels of Core Principles to form a particular development
‘polymer chain’ that can have a positive impact on success factors such as development
duration and ROI timing.
Alternatively, if one can imagine the Core Principle radar chart as a spider web,
certain firms may have greater focus on some Core Principles, pulling the web in that
direction, but still maintain an effective surface area without breaking the web. This is
illustrated with PaperPro, who placed a greater emphasis on industrial design and cost
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tracking versus the other principles. Their emphasis is a direct result of their internal
need for a very functional product designed to be sold at high-volume retail. The
Innovation Factory placed the greatest emphasis on market planning, industrial design,
and product platforms. Their strategy was developing a high-end brand, which could be
easily leveraged to other sister products at low cost. KCF works in a structured SBIR
technology development environment, and their heavy adoption of the Core Principles
lends itself to the required project management. The model of a ‘web’ of principles
acting in concert during NPD, with varying levels of application could be a very powerful
management tool to early-stage firms. What is needed is additional research to identify
patterns and possible predictors for firm success.
4.7 Chapter Summary
The impact of e-collaboration and globalization on NPD has been great. Tools such
as widespread use and commonization of 3D CAD, high-speed internet, and Web-based
tools have allowed firms to focus on core technology and strengths, like design and
technology, rather than on component sourcing and manufacturing. From the three case
study firms, we have seen that designs can quickly be created by virtual product teams,
tested, revised, and released for production using global resources that are not only low
cost but provide results extremely quickly. This has enabled established firms like Apple
the ability to develop and commercialize new iPod models seemingly every few months.
One of their core technologies (i.e. their process platform) is their ability to leverage their
global network of components and manufacturers, together with their design team, in
order to launch new products at a very fast pace.
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Additionally we have investigated three early-stage firm’s detailed Core Principle
adoption and found that all three at least at some level adopted the Core Principles. Also,
the adoption of the Core Principles was applied via a somewhat consistent, albeit
informal NPD gated process structure. The three case studies illustrate that a flexible
development NPD process framework could be developed and tested, providing the firms
with flexibility in applying Core Principles within their specific development “polymer
chain.” The final goal in this chapter was to set the stage for Chapter 5, in which a NPD
gated process for early-stage firms is proposed and then applied to a third generation
PaperPro stapler in Chapter 6.
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CHAPTER 5 A SIMPLIFIED NEW PRODUCT DEVELOPMENT
PROCESS FOR EARLY-STAGE FIRMS
5.1 Introduction
As explained in Chapter 2 and studied in Chapter 3, there are some common
attributes among firms that develop successful new products. These include the use of
cross-functional teams, up-front market planning and listening to the customer (voice-of-
the-customer), product platforms, industrial design, and cost tracking during development.
Six Core Principles were defined in Chapter 2 and include:
1) C1: the use of cross-functional teams, either in-house or virtual,
2) C2: the use of a defined NPD process that includes management decision
gates,
3) C3: substantial investment in up-front market planning and research,
4) C4: leveraging core technology in the form of product platforms,
5) C5: the use of industrial design for functionality and branding, and
6) C6: the use of activity-based cost planning during development and launch.
In Chapter 3, a comprehensive survey of 35 early-stage firms was performed with
relation to the adoption of these Core Principles and potential correlation between levels
of adoption and success. It was found that there is a positive correlation between
different combinations of these Core Principles and a company’s success such as the
product reaching the marketplace, development duration, ROI, and cumulative sales. The
adoption of the Core Principles in certain combination was significant, and as such the
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purpose in this chapter is to introduce a new NPD process that highlights the Core
Principles within an easy-to-use, step-by-step process that can be applied within an early-
stage environment.
A key aspect in proposing a NPD process for early-stage firms is to balance flexibility
with the benefits of a defined process. Chapter 4 described in detail elements of three
firms and their NPD processes. Shown were their differences in level of Core Principle
adoption but also similarities in their approach and overall development process
framework. As demonstrated by the firms in Chapter 4, some firms such as KCF require
a more defined process for SBIR-funded initiatives, while firms such as PaperPro can
rely on their innate experience, thus relaying less on aspects such as a strict process or
detailed market research. As detailed in Chapter 2, a widely used NPD process strategy
in large firms has been the adoption of a ‘gated’ process (Cooper, 2001). Essentially,
phase-gate development is a sequential process in which decision points are included in
the product development process. These decision gates are appealing to corporations
because they add management approval during the development process. Passing the
‘gate’ requires that the new product meet certain parameters or specifications. These
gating factors can be performance targets, projected ROI, cost, etc. Generally, larger,
more complex organizations adopt the high-phased approach; however, as evidenced by
IBM, larger firms seem to be moving away from complex high-phased development
procedures (Meyer and Mugge, 2001). For early-stage companies, a low-phased approach
is prudent given their smaller cross-functional team-based development. By using a
modified gate system, companies can maximize innovation up-front, select winning
concepts, and progress through the development cycle quickly. In the next section we
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introduce a simplified process that encompasses the six Core Principles within a gated
structure, while maintaining flexibility and adaptability for the early-stage firm that will
allow it to adopt the right ‘recipe’ or ‘polymer chain’ combination of Core Principles to
increase its chances for success. The chapter concludes with a short discussion and
summary introducing the next chapter in which NPDES is applied to a case study at
PaperPro.
5.2 New Product Development Early-Stage (NPDES) Process
A modified development process can be readily applied to start-ups and
entrepreneurial firm’s new products without adding unproductive and restrictive
bureaucracy. As explained in Chapter 2, Cooper (2001) proposes a simplified fast-track
Stage Gate® process for less complex projects. Ulrich and Eppinger (2004) propose a
generic process which includes six phases, including 1) planning, 2) concept
development, 3) system-level design, 4) detail design, 5) testing and refinement, and 6)
production ramp-up. Within their proposed six-phase process are tasks and
responsibilities of the key functions within the organization. Their proposed process is
comprehensive and tailored for larger organizations. The limitations of their process are
that it is very much tailored toward engineers, and is not necessarily an easy step-by-step
guide for the entrepreneur unfamiliar with the NPD process. What is needed is a very
simple process that teases out the most important aspects of generic development systems
like Ulrich and Eppinger’s, maintaining focus on the Core Principles as described in
Chapter 2 and studied in Chapters 3 and 4. A schematic of the proposed NPDES low-
phased gate system is shown in Figure 5.1, which is a simplified version of Cooper’s
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(2001) fast-track process, with three distinct stages/phases instead of five, and two
decision points instead of three. Cooper’s “idea screening and go-to-development” gate
is combined into Decision Gate Point 1. Additionally, Cooper’s “idea generation,
scoping, and building the business case stages” are combined into Phase 1 of NPDES for
simplicity and truncation of the planning process. The three phases are 1) product
planning, 2) product design, and 3) final design/launch. Within each phase, the activities
required to complete the phase are listed. The “product concept tunnel” is shown in grey
(triangle), with concept selection being performed during Step 10. The intent is to
maximize company focus on product planning before any concepts, and substantial
investment in design, is made.
Figure 5.1. Proposed NPDES low-phased gate development process.
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By applying the Core Principles via the NPDES process, it is expected that firms will
develop more successful and innovative products at lower costs and shorter development
cycles, while increasing revenue and profit margins – ultimately increasing the likelihood
of long-term survivability.
NPDES is segmented into 3 Phases that contain 15 succinct steps. Each step has a
deliverable attached to it, such as development of a market segmentation grid or sketches
of industrial design concepts as described in Section 5.3. The phase-gate decision points
fit within the NPDES process as shown in Figure 5.1, and include two decision gates that
are situated at the end of Phases 1 and 2, respectively. In terms of the Core Principles
(C’s), their integration into NPDES is highlighted in Figure 5.2. The Core Principles are
integrated into the development process by being attached to certain deliverables. For
example, market research (C3) and product platform planning (C4) are integrated into
Steps 4 and 5. The deliverables attached to those steps are market research data (e.g.
focus groups, in-store visits, competitive product analysis) and development of a product
platform roadmap (market segmentation grid, etc.). The three NPDES Phases can be
readily applied to the SBIR phase process, which mandates three phases: 1) feasibility
studies and funding up to $100,000; 2) development for up to 2 years in amounts up to
$750,000; and 3) commercialization which requires private sector and non-SBIR funds15.
Many of the deliverables in NPDES can be included in the submitted SBIR proposal and
subsequent progress reports, such as team formation and background, market research,
market potential, potential for intellectual property, work and budget plans, and design
updates.
15 http://www.sba.gov/aboutsba/sbaprograms/sbir/faq/sbir_sbir_faq.html
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Figure 5.2. Relationships between NPDES and the Core Principles.
As mentioned, the overall process is designed to increase the time and detail spent on
up-front product planning and concept development, then truncate development time
once the concept is selected. Because development will be cross-functional, consistent,
and fast acting, the product can be brought to market quickly once approved in Gate 1.
The NPDES process is a modification of existing NPD processes, optimized for the
early-stage environment. As illustrated by the significant factor combination interactions
of the Core Principles in the 35 firm survey, and the detailed investigation of three firms
in Chapter 4, what is apparent is that a firm can deploy a development process tailored to
their individual needs and market requirements. Different combinations of Core
Principles can be integrated with similar potential for increasing NPD success. As such,
NPDES is arranged to exploit this, by allowing a firm to ‘plug-an-play’ different steps and
Core Principles where and when needed. This allows a company to implement a tailored
process, with the Core Principles interacting to form a custom development ‘polymer
chain.’ It is this flexibility that differentiates NPDES from other NPD processes such as
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Cooper’s fast-track. In a start-up environment, certain firms may need to apply different
levels of Core Principles throughout NPD. In Chapter 4, the three case firms each
applied levels of Core Principles differently, depending on a variety of factors including
development team experience, target market, and type of organization. The hierarchy of
NPDES via the Chapter 3 survey and Chapter 4 case firms is shown in Figure 5.3. Above
the total NPDES process are examples of Core Principle interaction from the Chapter 3
survey. Below the total process is a NPDES depiction of the case firm’s (PaperPro, the
Innovation Factory, and KCF) development processes. The intent is to illustrate the Core
Principle combination and the ability of NPDES to be selectively tailored to a particular
start-up.
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Figure 5.3. NPDES hierarchy via Chapter 3 survey and case study firms.
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As shown in Figure 5.3, PaperPro’s and the Innovation Factory’s adoption of the
Core Principles as shown via the NPDES steps were very different, but they still had quite
similar success as shown by the survey dependent variables discussed in Section 4.6.
PaperPro’s smaller, more experienced development team lead by an inventor needed a
less formal process, which can be accommodated by using NPDES. This included
emphasis on market research, design, and cost modeling. Because of the experience of
the inventor and their focus on a very specific product niche, they eliminated steps such
as market segmentation, application of design tools, and concept ideation. KCF, working
in a more “open-water” SBIR-funded research initiative, adopted the total process. The
Innovation Factory, working on a simple yet high-end consumer product, did not rely
heavily on design tools or cost modeling. Based on the team’s experience and project
scope, firms can selectively choose which steps are appropriate for their project. It is
recommended that firms with no prior NPD experience go through the entire NPDES
process.
5.3 Steps in NPDES
The following subsections detail the total NPDES process steps and tools.
Step 1 - Form Initial Idea
This is the initial concept, product, and market idea. This can be the result of
individual inspiration, group ideation, or a competitive response to existing and future
products. Goldenburg, et al. (2001) found that successful products tend to involve a
solution to a customer problem. Those that are developed in isolation by an inventor, or
products that tend to mimic a popular trend from other products were generally
unsuccessful.
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Step 2 - Form Cross-Functional Team
Once the idea is formed, a cross-functional team (CFT), consisting of both internal
and external members should be formed. The team should remain intact from Steps 2 to
15. Corporations that have embraced CFTs and concurrent engineering principles have
routinely demonstrated the ability to reinvent themselves quickly and successfully enter
new markets, taking radical ideas from concept through production with ease (Meyer and
Mugge, 2001). For firms developing products in a global environment, distributed or
virtual teams are a necessity (Eppinger and Chitkara, 2006).
Step 3 - Define Product
This step is a precursor to the development of customer needs and ultimately product
specifications. Ulrich and Eppinger (2004) define this step as “defining the scope of the
effort.” Product definition can be a very general list of goals. An example for a start-up
is the development of the Innovation Factory IceDozer, in which several initial goals
were developed during this phase, which included preliminary specifications on pricing,
ergonomics, and function (Shooter, et al., 2006).
Step 4 - Perform Market Research
Market research is performed during this step, including competitive analysis, market
sizing and segmentation. This step can entail gathering raw data from potential
consumers through focus groups and surveys on simple tasks such as Internet searches
and in-store visits.
Step 5 - Develop Market Segmentation Grid and Product Road Map
To foster well executed up-front planning during NPD, an internal product
development roadmap that outlines future capabilities and functionality should be
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developed (Meyer and Lehnerd, 1997). In order to develop successful new products and
services, corporations must accurately listen to needs and expectations of each market
segment. Developing a market segmentation grid can define the current market space
and allow early definition of the product and product platform architectures. The
roadmap outlines derivative products from the platform, and develops an internal
guideline for future variations. Because of limited resources in early-stage firms,
leveraging a product platform via a product roadmap may in fact be more impactful for a
start-up than the use of these tools at larger firms.
Step 6 - Investigate Intellectual Property (IP)
Using internal or external resources, a patent search should be performed to gauge the
potential of new intellectual property. A Provisional Patent may be filed at this time to
hold a potential filing date for a utility or design patent. Step 6 is the end of Phase 1, and
is the first of two ‘go or no-go’ decision points in the NPDES process.
Decision Gate 1
This is the first decision gate where in the development team - with input from
management - can collectively decide on whether to terminate project or perform
additional research on Steps 1-6.
Step 7 - Develop Customer Needs
Customer needs are the attributes a customer desires in a product. As stated by Ulrich
and Eppinger (2004), “the process of identifying customer needs is an integral part of the
larger product development process and is most closely related to concept generation,
concept selection, competitive benchmarking, and the establishment of product
specifications.” In developing a list of customer needs, raw data on product features is
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captured. This can be culled from focus groups, surveys, or in-person interviews. An
example of developing customer needs is given in Section 4.5.3. This step is tied with
Step 4 and can include the use of Quality Function Deployment methods.
Step 8 - Implement Design Tools
Product and platform design tools are applied as needed at this step in order to begin
to define product and platform architectures, and ultimately the products and product
platform where applicable. As a first step in developing product platform architecture
and final specifications, the initial product concept can be decomposed via an Energy-
Material-Signal (EMS), or function diagram. The functional diagram or function
structure is a representation of an electromechanical system consisting of the inputs to the
system, outputs from the system, and internal sub-functions within the system (Pahl and
Beitz, 1996). As an extension to function diagrams, EMS models functionally
decompose the design problem to identify energy, material or signal flows that are
harmful or insufficient (Ogot, 2005).
Construction of the functional diagram often begins with a “black box” model of the
system where the system inputs and outputs are determined. Then each flow is traced
through the system to map out the internal functions or sub-functions of the product (Pahl
and Beitz, 1996). Ulrich (1995) defines product architecture as the scheme by which
functional elements of the product are arranged into physical components and by which
the components interact and can be mapped. Product architecture can be developed by
defining this mapping of functional and physical elements with consideration to interface
specifications between components or modules. EMS is a tool that can help map these
elements and is particularly useful when developing a module-based platform. It should
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be noted that the EMS diagram can form the basis of innovative design solutions using
tools such as TRIZ. TRIZ, or the Theory of Inventive Problem Solving, is a design tool
that can solve design contradictions in a methodical manner using inventive solutions
(Terninko, 2000). Marion, et al. (2006) proposed using the EMS diagram as a way to
identify platform and mass customized elements during the early stages of product design.
Using EMS can effectively group platform elements and modules before detailed design
is begun, aiding the designer in creating well-defined interfaces between modules,
subsystems, and the platform.
Step 9 - Ideate Concepts with Industrial Design
Step 9 is the development of many concepts that have the potential of fulfilling the
list of customer needs. Industrial design is applied, and starts to define the “look and
feel” potential of the product(s). For example IDEO, a successful product development
firm, uses team brainstorming to develop up to 150 visual sketches of ideas in 30 to 45
minutes (Thomke, 2007). Industrial design determines a product’s style, which is directly
related to the public perception of the firm (Ulrich and Eppinger, 2004).
Step 10 - Select Concepts
Based on results from Step 9, concepts are evaluated and rated on their ability to meet
customer needs. This step can include a selection matrix, as proposed by Ulrich and
Eppinger (2004), or based on quality function deployment (QFD) and the resulting
analysis of customer need and product attribute ratings (Chan, et al., 1999).
Step 11 - Initiate Detailed Product Design
Step 11 is the design and engineering of the product(s) and the platform. Depending
on the product, this can include mechanical, electrical, and software design. Design tools
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as described in Sep 8 can be applied. Typically this step involves computer-aided design
(CAD) and can include several rounds of prototyping.
Step 12 - Perform Cost Modeling
Research has shown that 70% of ultimate product cost is determined during the early
stages of design (Duverlie and Castelain, 1999). As such, it is imperative that firms track
and base development decisions on these product and set-up costs. In order to accomplish
this, many firms have shifted to activity-based costing (ABC) systems that enable product
designers to create products with lower indirect and support costs (Kaplan and Cooper,
1997). Product costs to be taken into consideration include the cost of materials, tooling,
assembly, development, supply chain, communication, non-reccurring engineering
(NRE), travel, and management, etc. ABC margin analysis during development
evaluates all transaction and production costs, including the costs of outsourcing (Ben-
Arieh and Qian, 2002).
In this step, the largest transaction cost during development, namely, the purchasing
of production tooling, and the estimated cost of production are evaluated. Walker and
Weber (1984) have noted that production costs differences can be more influential in
sourcing decisions than transaction cost differences. Several evaluation tools can be used
in this step, including piece price estimates, margin analysis, and commonality indices to
aid in design and ultimately sourcing decisions (Marion, et al., 2007).
Decision Gate 2
Based on the outcome of the cost modeling analysis, the project can move forward or
be halted, pending cancellation or redesign. This is the second and final decision point in
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the proposed NPDES process. This step is essential for the start-up, as it can inhibit
spending large amounts of capital on potential lackluster products.
Step 13 - Define and Refine Product Specifications
Product specifications are intended to mean the precise description of what the
product has to do. Other terms for these specifications include “product requirements” or
“technical specifications” (Ulrich and Eppinger, 2004). These are typically used as a
guide for developing the exact function and attributes of a given product as the design is
finalized and transferred into production.
Step 14 - Finalize Design
The product design is finalized, prototyped, tested, and readied for production. As a
last step before initiating production, the product design is completed. This includes any
final design modifications after the results of testing or feedback regarding production
cost estimates. A series of pre-production samples may be initiated during this time to
further continue lifecycle testing or gauge initial sales reaction.
Step 15 - Initiate Tooling Development and Prepare for Launch
Production, tooling, and the supply chain are set-up during this step. Testing
continues, and the company is readied for launch. It is expected that the actual set-up
costs are similar if not improved from the cost modeling performed in Step 12.
5.4 Discussion
In this chapter, a simplified but comprehensive NPD process was proposed for early-
stage firms, NPDES. The complete process consists of three phases, fifteen steps, and two
decision gates. In order to further simplify the process from other limited development
processes such as Cooper’s fast-track, the number of gates was reduced and emphasis
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was put on up-front planning, concept development, and engineering design tools. The
impetus for the design of the NPDES process was simplicity and straightforwardness for
easy application within the often chaotic start-up environment. As shown in Chapter 3
and Chapter 4, firms adopting a combination of the Core Principles have a significant
relationship to success factors such as development duration and ROI timing. As shown
in the Chapter 4 case studies, firms can have much different levels or combinations of
adoption of the Core Principles and still be successful. NPDES was arranged such that a
firm can adopt the Core Principles and NPDES process steps to a level where they deem
appropriate. For example, a firm might have a limited number of team members and
focus less on market planning and more on industrial design based on the product. The
proposed process allows this kind of flexibility and does not dictate nor limit the level
and type of Core Principle adoption, allowing the firm to develop a customized
development ‘polymer chain.’ Because the process is simple and straightforward, the
layout of the NPDES intentionally does not include aspects of concurrent processes and
spiral development. However, it should be noted that some of the steps in fact can occur
concurrently. In future work, variations of the process may include concurrent steps.
5.5 Chapter Summary
Very little research effort has been directed towards the process by which early-stage
firms develop products. NPDES was developed to give chaotic start-up firms a structure
to follow during the develop process. In the next chapter, NPDES is applied throughout
the development of a consumer product to test its efficacy. The step-by-step application
and results are discussed along with limitations and future opportunities.
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CHAPTER 6 CASE STUDY: PAPERPRO APPLICATION OF NPDES
PROCESS
6.1 Introduction
In Chapter 5, a simplified NPD process tailored for start-up and early-stage firms was
proposed to give the new firm a flexible ‘plug-and-play’ structure and management guide
while highlighting steps that include the Core Principles discussed in Chapter 2 and
surveyed in Chapter 3. In this chapter, NPDES is applied to PaperPro, one of the firms
surveyed in Chapter 3 and one of the three firms examined in Chapter 4. As noted in
Chapter 4, PaperPro used a very limited development process for their initial stapler
models, and one that was not formally deployed. PaperPro was also less apt to adopt the
Core Principles during development of their initial products than the sample mean.
However, PaperPro did use some combination of the Core Principles throughout
development, and their use of industrial design and cost modeling was greater than the
sample mean. PaperPro was by far the most successful firm surveyed in Chapter 3, and
combined with their lower than sample mean adoption of the Core Principles, made them
an ideal candidate for the trial adoption of the complete NPDES process. In this chapter, a
case study is presented in which development of a completely new PaperPro stapler is
performed using the NPDES process. The process was applied from the onset of the
project through the start of production tooling. The chapter includes a step-by-step
description of the adoption of each step and corresponding Core Principles. Results are
discussed in Section 6.3 along with limitations and future research opportunities in
Section 6.4, and the chapter concludes with a brief summary.
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6.2 Stapler Example
6.2.1. Case Company Background
As discussed in Chapter 4, PaperPro (www.paperpro.com) was founded in 2003 with
the launch of the One-Touch™ desk-top stapler. Their series of products is based upon a
proprietary spring-based design that decreases staple effort while increasing staple power.
The products are marketed in outlets such as Staples and Office Depot. Their family of
current (500, 1000, 2000, and 2100) and future staplers (1250, 3000) is shown in the
market segmentation grid in Figure 6.1.
Figure 6.1. PaperPro family of staplers. Photo courtesy of PaperPro.
PaperPro has a small development team consisting of two engineers working at their
headquarters in Newtown, PA. As discussed in Chapter 4, the development of their
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initial products such as the 1000 2-20 sheet stapler was lead by an inventor located in Los
Angeles, CA. The inventor has over twenty years of experience in developing tools such
as the Black & Decker PowerShot heavy-duty construction stapler and holds several
patents. In 2005, PaperPro decided to greatly increase their product offerings. Given the
inventor’s limited resources, they decided to contract outside design firms for the first
time. One of their desired line extensions was a very high capacity stapler, a 100-sheet
model. In developing this product, PaperPro contracted a product development firm
located outside of Philadelphia, PA near their headquarters. During the initial design
phases, the core team would meet weekly, and communicate daily using electronic mail
(e-mail). The 3000 model stapler was developed using the NPDES process from project
kick-off until manufacturing tooling was completed.
6.2.2. Application of NPDES to the PaperPro 3000
Development of the 3000 stapler began in April, 2005 with a project kick-off meeting
between the contracted development firm and PaperPro’s management. In this meeting
the project goals were discussed, along with proposed timing and the NPDES process.
Application of the NPDES process on the 3000 project was followed step-by-step and is
discussed in the remainder of this section.
Step 1 - Form Initial Idea
The initial idea for the 3000 stapler was for an ‘executive’ model of PaperPro’s
existing 2000 60-sheet capacity stapler. Internally, the initial project was termed the
2100.
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Step 2 - Form Cross-Functional Team
The development team consisted of both internal and external resources. A graphical
representation of the team is shown in Figure 6.2. The project was managed by the
contract development firm, with overriding decision making coming from PaperPro’s
Vice President (V.P.) of New Product Development (NPD). All development resource
allocation (industrial design, CAD, rapid prototyping) was performed by the contract
development firm. The primary form of communication between team members was
email and telephone.
Figure 6.2. PaperPro 3000 development team.
In terms of team experience, PaperPro’s V.P. of NPD was a mechanical engineer with
six years of design experience and had been involved in the development of the original
PaperPro 1000 model. PaperPro’s engineer was a newly hired employee with little prior
design experience. The engineering firm’s project and design manager was a mechanical
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engineer with eight years of design experience. The firm engineer was a mechanical
engineer with over 20 years of design experience. Both CAD designers had ten or more
years of the experience. The industrial designer was a fresh graduate, with less than a
year of working experience. It shall be noted that all members of the contracted
development team had no prior experience developing office or construction staplers.
Step 3 - Define Product
As mentioned, the project started out as the 2100 executive model. The mission of
the product was to be 1) priced competitively, 2) look high quality AND different, 3)
have a PaperPro family resemblance, 4) not look like anything on the market but be
recognizable as a stapler, and 5) have superior functionality. The 2100 was planned to be
a line extension of the existing 2000 60-sheet stapler. The 2100 would essentially use
similar or the same internal components, with a different cast metal exterior. It was
estimated that the sheet capacity, due to the stiffer housing, would increase to well over
70 sheets. Concomitantly, initial product planning was being performed on a larger 100-
plus sheet platform, internally dubbed the 3000. Since 100 sheets would necessitate a
different staple, sheet capacity tests commenced using the 2000 stapler as a base.
Step 4 - Perform Market Research
Market and competitive research was performed early in the project. This included
feedback from PaperPro’s existing customers and sales representatives gauging potential
pricing and features. Figure 6.3 shows some of PaperPro’s competitors. Samples of each
stapler were purchased and evaluated.
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Figure 6.3. PaperPro competitors. Photos courtesy of Staples.com and Swingline.
Step 5 - Develop Market Segmentation Grid and Product Road Mapping
At the time of 2100/3000 development, PaperPro was investing heavily into new
products for new market segments. One tool that was used heavily in planning meetings
was the market segmentation grid (Meyer and Lehnerd, 1997). This allowed the team to
graphically discuss how models would leverage into different price points and sheet
capacities. PaperPro’s market planning grid is shown in Figure 6.4.
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Figure 6.4. PaperPro market segmentation planning grid.
Step 6 - Investigate Intellectual Property (IP)
The basis for PaperPro’s IP is a proprietary double-action lever and spring release
mechanism. Mechanical energy is exerted on an internal spring via a lever, which in turn
releases a staple striker. With the 2100 and 3000 models, it was specified that this
mechanism would be used, keeping all products under the same IP protection ‘umbrella.’
Additionally, in terms of design IP, the front edge of PaperPro’s 500 and 1000 staplers
meets the work surface in a smooth, flush manner. PaperPro’s management wanted to
keep this design element intact.
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Decision Gate 1
One of the main criteria discussed during Gate 1 was whether or not a rapid firing
mechanical stapler would be able to penetrate 100-plus sheets. There are 120 sheet
staplers, but these require 35+ pounds of handle force to slowly press a staple through the
sheets. Since the PaperPro mechanism ‘fires’ the staple into the paper, there was concern
that this was a ballistics problem, and at the beginning of the project it was not certain a
staple leg could sustain such an impact. During the initial project phases, a 2000 stapler
was tested with various types of staples (some with longer legs, others with thicker gage
steels). The results of the testing were promising. Figure 6.5 shows results of testing the
2000 stapler on 100 sheets, using the 60-sheet 2000 high capacity staple. The stapler
penetrated and did not deform during penetration. The concern was that the staple would
begin to deform as it continued entry and continued compression of the 100 sheets. This
was not the case, as testing proved that it was in fact possible to rapid fire a staple into
100 sheets of paper.
Figure 6.5. PaperPro 100 sheet testing with the 2000.
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Also during this management review the project status of developing two similar
products simultaneously (2100 and 3000) was discussed. Very preliminary industrial
design concepts were presented to the CEO and the PaperPro core team. One of the
concepts presented was a ‘heritage’ look, designed to be a larger, more substantial
version of the existing design themes, captured the CEO’s attention. On-the-spot, he
made an executive decision to immediately stop development of the 2100 model and
concentrate all resources to develop the 100-sheet 3000 model. The ‘Heritage’ model is
shown in Figure 6.6.
Figure 6.6. ‘Heritage’ industrial design chosen by the CEO.
Step 7 - Develop Customer Needs
Now that the project direction was resolved, and preliminary testing results allowed
the project to pass Gate 1, a list of customer needs was developed. The needs were based
on specifications of their existing staplers and PaperPro core team input on aspects like
stapler effort and target cost. The customer needs list is shown in Figure 6.7.
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Figure 6.7. Customer Needs, 3000 stapler.
Step 8 - Implement Design Tools
As a basis for product design, PaperPro stipulated that all CAD be performed to the
latest SolidWorks revision level, which during development was the 2005 and 2006
versions. All team members were required to upgrade to the same software revision level.
Next, a file transfer protocol (FTP) site was established, with password access given to all
team members. Note that these tools are examples of e-collaboration and virtual team
organization as discussed in Chapter 2. All CAD files for the 3000 were stored on this
site, with file revisions being categorized by date. There were several design tools and
methods used during the project. The tools are described in detail during Step 11. These
included the following:
• SolidWorks 2005 and 2006 for all solid modeling
• COSMOS finite element analysis for SolidWorks
• Goodman fatigue analysis where appropriate
• Microsoft Excel (used for project management and analysis)
• EMS diagrams for detailing areas of structural weakness
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Step 9 - Ideate Concepts with Industrial Design
Industrial design was used extensively during the project. At this stage in the project,
after the CEO decided his preference was the ‘Heritage’ design, the development team
developed a series of concepts that accentuated certain design features, including the
front lip that is one of PaperPro’s important design features and intellectual property.
These designs were used as ‘thought starters’ and design guides, much in the way
concept cars are used to gel design concepts in the automotive industry. The sample
concepts are shown in Figure 6.8.
Figure 6.8. ‘Heritage’ design variations.
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Step 10 - Select Concepts
At a core development team meeting in early May 2005, PaperPro’s management
picked the Heritage Uber Fusion Curves design as the overall design guide. Industrial
design would again be performed during Step 11 to modify the shape in terms of this
design guide. In terms of engineering, as a result of the positive testing results from the
2000 60-sheet stapler, it was decided by the development team that the existing
mechanism could be reused, but scaled appropriately to handle over 100 sheets. It was
reasoned that this would be a less risky approach as the existing mechanism was already
in-use and proven reliable. In addition, the existing architecture was covered by
PaperPro’s intellectual property. Meetings were held in mid-May 2005 on the
appropriate scaling, which is shown in Figure 6.9.
Figure 6.9. Scaling the 3000 stapler.
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The development team decided that the best scale size would the 10.10” by 5.87”
silhouette shown in Figure 6.9. The existing 2000 stapler is shown as the 8.6” by 5.00”
silhouette.
Step 11 - Design Product
Product design began in earnest at the end of May 2005. As a starting point, the new
3000 model was based on the existing 2000 CAD models. All components such as the
base, handle, and housing were scaled to the new outer dimensions shown in Figure 6.10.
Critical to the function of the stapler is the main power spring, which is a pre-loaded leaf
spring that undergoes a deformation via a handle actuated lever. At its maximum rise,
the lever releases the main power spring which drives a striker into the staple and through
the paper. The main power spring is shown in Figure 6.10 as the highlighted, curved
horizontal line.
Figure 6.10. Main power spring.
The other major components are labeled in Figure 6.11. These include the lever,
handle, main power spring, and striker.
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Figure 6.11. 3000 section denoting major components.
A first step in the scaling was to quantify the output force of the main power spring.
As a control, the 2000 power spring was analyzed using COSMOS finite element analysis
(FEA).16 The CAD spring was then thickened to gauge the impact on the FEA output
force result. Concurrently, the force needed to staple through 100 sheets of 20lb. weight
paper was investigated using existing staplers and results from FEA, with the hope of
being able to quantify the amount of spring force needed. A spring force curve was then
developed as a design guide. The force-capacity curve shown in Figure 6.12. Based on
this graph and the FEA testing, an initial series of spring shapes and thicknesses was
designed.
16 http://www.solidworks.com/pages/products/analysis.html
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Figure 6.12. Spring force curve.
Next, the lever and striker were investigated for robustness and scaled appropriately.
This included lengthening and strengthening the lever, and adding material to the striker.
The revised 3000 CAD, a scaled-up version of the 2000, was completed in July 2005. A
comparison between the 2000 and 3000 designs is shown in Figure 6.13.
Figure 6.13. Comparison of the 2000 and initial 3000 design.
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After the initial design and analysis were completed, a design review was held in
early August and the prototypes were constructed in China. These include SLA parts and
stamped components made exactly to the CAD file. It took approximately 4 weeks to
receive the prototypes, and testing commenced in September 2005 on the initial
prototypes. The initial prototype housing was a clear plastic stereo lithography (SLA)
model (in order to view action of the mechanism). After several firings, the SLA housing
began to fail due to the high internal forces of the unit. Over 80 sheets were stapled, and
this verified the use of a new heavy-duty staple, the 23-13 (longer staple legs for 100
sheets and a thicker gage steel). After a day of testing, the design team concluded to
immediately kick-off CNC machining of a bronze housing. This would better simulate
the structure of the production unit, which would utilize cast zinc housings. The CNC
machined housing was received two weeks later in October 2005. Unfortunately, the unit
was not dimensionally correct and had to be re-machined in State College, PA. In mid-
November testing began on the improved bronze housing model.
Testing on the bronze model proved very useful: 82 sheets were successfully stapled
and crimped; however, the prototype uncovered several design flaws. The first was the
striker. The striker failed via shear after only 45 cycles. In addition, the handle effort
was high and the stapler had a large amount of recoil. An Excel-based list was developed
to track issues and resolution. The issue list is shown in Figure 6.14.
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Figure 6.14. 3000 issue list.
At this point in the process, an EMS diagram (Design Tool) was developed to aid in
spotting potential issues with the design. Issues (highlighted by the zig-zag lines) are
shown in Figure 6.15. These include striker fatigue strength, and handle effort. The
EMS diagram was used to identify interaction of different components and potential
detrimental (or positive) impact.
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Figure 6.15. 3000 EMS diagram.
A Goodman fatigue analysis was done to show that the striker was insufficient to
handle the required stresses. A full team project meeting was held in November 2005 to
review the testing and next steps. The next steps included 1) redesigning the striker
thickness to be double that of the existing version (Goodman analysis showed this to be
well within the expected lifecycle range), 2) increase the main power spring force by
10%, 3) investigate and modify handle and lever to reduce effort, 4) have a rapid
prototype casting made to make the third testing round as close to production reality as
possible, and 5) make final industrial design changes to transform the design to allude to
the Heritage Uber Fusion Curves concept.
The analysis was completed, and the CAD models were modified to reflect the
changes. The rapid prototypes were completed in January 2006. As with the bronze
housing, the zinc casting prototype had to be post-machined in State College, PA.
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Testing on the third round was completed in the end of January 2006. The improved
double thick striker did not fail, and 93 sheets were successfully stapled. The handle
force was now at 17 pounds. Based on prototype testing and review of the CAD models
by the PaperPro core team, it was decided to clean up any additional issues with the
design and complete it for the hand-off for tooling construction. The post-revision three
issues are detailed in Figure 16.
Figure 6.16. February 2006 design clean-up.
A 4th and final machined housing was constructed in China for tested during tooling
construction.
Step 12 - Perform Cost Modeling
Cost modeling was used extensively during development. This included
manufacturer cost estimates for each component quoted at each prototype revision. In
addition, parts were often quoted to vendors outside of their current supply chain for
comparison. In June 2006, PaperPro changed the striker design to be slightly thinner due
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to high cost. A Goodman fatigue analysis found that it should be acceptable, but the
outside design team recommended continuing with the original double thickness design,
based on testing and analysis done in January 2006.
Decision Gate 2
In early March 2006, a management decision meeting was held to kick-off tooling for
the 3000. It was felt by the team that further time and cost developing and testing non-
production level prototypes was not advancing the project, rapid advancement would
instead come by tweaking samples from the production tooling.
Step 13 - Define and Refine Product Specifications
The functional specifications of the finished product were unchanged from the initial
Customer Needs listed in Step 7. These targets remained constant and are still
challenging, particularly the cycle life of the striker. For each individual part,
specifications of material, finish, and color were developed and input into the solid model
file parameters. An example of the 3000 BOM specifications is shown in Figure 6.17.
Figure 6.17. 3000 component BOM.
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In support of the CAD files and associated BOM information, PaperPro’s
manufacturer was given dimensioned drawings to be used as a guide during tooling
construction and debugging.
Step 14 - Finalize Design
As a result of tooling samples, the design continued to be refined throughout the
remainder of 2006. An example of feedback between manufacturing and design can be
seen in Figure 6.18.
Figure 6.18. Tooling sample issues, noting larger than expected striker track gap.
Step 15 - Initiate Tooling Development and Prepare for Launch
As of April 2007, final production tweaks are being made to the design for
introduction later in the year. Figure 6.19 show an issue list (both manufacturing and
design issues) that is used to track manufacturing tooling issues by PaperPro’s core team.
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This document is dated from August 2006. Denoted in the issue list are a description of
the issue, the potential solution, and what feature would be changed in the control
SolidWorks file.
Figure 6.19. Tooling sample issue list.
The main design issue during tooling debugging was striker failures. The striker
continued failing at approximately 2,500 cycles, well below intended specification. The
contracted design team was asked for input to resolve the issue and they recommended
their original double thickness striker as was originally designed before cost issues
necessitated the redesign. Some design modifications to the striker were undertaken,
improving life to over 5,000 cycles. Given the expected lower usage rate of the 100-
sheet stapler, PaperPro management decided a 5,000 cycle life was sufficient. It is
projected that the 3000 stapler will reach the market in mid-2007. A photograph of a
production sample is shown in Figure 6.20.
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Figure 6.20. PaperPro 3000 production sample.
6.3 Discussion
The 3000 project took 14 months from inception until tooling was initiated. This
included three rounds of prototype construction and testing. During this time, weekly
project meetings were held to review program progress, either in-person or via phone
conversation between team members. Daily design emails were exchanged and design
updates on the FTP site were viewed daily. The total cost of development, including
PaperPro’s internal resources and prototypes has been approximately $125,000. The cost
of high-volume injection molded tooling was approximately $120,000. A graph of costs
by month is shown in Figure 6.21.
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Figure 6.21. 3000 monthly development costs.
Noted in Figure 6.21 are the three major rounds of testing and design modification.
Note that the spikes in development costs are directly related to CAD engineering hours,
which were the largest project cost. A breakdown of the outside engineering firm project
costs is shown in Figure 6.22.
Figure 6.22. 3000 project cost breakdown.
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As mentioned, CAD work accounted for most of the man-hours input on the project.
The 484 CAD hours are the total engineering time spent working on the solid modeling
software package, including both new design work and revisions based on feedback from
prototype testing and analysis. The second largest expense was the creation of U.S.-
based prototypes. All Chinese prototypes were created by the manufacturer at no cost to
PaperPro.
In this chapter, a simple NPD process was applied to an early-stage firm’s new
product development initiative. The simplicity of the NPDES process aided in the
acceptance of the process and gave PaperPro a step-by-step guide to follow throughout
development. Management reviews and milestones were tied directly to the steps and
phases. During development, some issues arose that were not directly related to the
process. These included long wait periods between prototypes made in China and testing
in the U.S. As shown in Figure 6.21, these ‘lulls’ essentially stopped the project.
Although during this time other critical steps such as industrial design refinement and
cost quoting occurred, the delays were none the less impactful. Another issue during
development was CAD efficiency. As noted in Figure 6.22, CAD accounted for 75% of
the development cost. The root of this is the actual time the designer spends in front of
the CAD program. A ‘faster,’ more efficient designer could have a significant impact on
the speed at which a project is completed, and cost. In fact, during the 3000 project, a
second designer was added to speed development during the third design revision. A
topic for further study could by a survey of the impact of CAD efficiency on total project
cost and effectiveness among a wide variety of firms and industries.
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In terms of the process, it was effective: the product was developed from concept to
tooling kick-off in 14 months at a cost of approximately $125,000. Considering the unit
is expected to generate at least $500,000 in revenue per year, the return-on-investment
(ROI) will be quick. Another critical aspect of NPDES was the two decision gates. These
helped shape the project greatly, including focusing only on the 3000 model in Gate 1
and optimizing the design for cost constraints in Gate 2. In addition, the focus on ABC
cost analysis throughout the process helped guide design decisions and material choices.
Unfortunately, the focus on cost actually has delayed the project in the final stages prior
to commercialization as a result of the striker failures. Due to the cost of this coined part,
PaperPro management decided to reduce the thickness and reduce cost. As such, the part
ended up not having sufficient strength to meet the original lifetime cycle demands.
The 3000 was PaperPro’s first project developed with a defined process by an outside
firm. Their first series of staplers was developed by an expert inventor working with the
CEO who handled marketing, and the V.P. of NPD who handled manufacturing sourcing
and issues. This very small team created the first series of staplers very quickly, from
concept to commercialization in under a year at a cost of approximately $100,000. As
detailed in Chapter 4, PaperPro used a more limited development process with focus on
design and cost tracking in development of the 1000 series stapler.
In comparing the 3000 development to a similar project, the 2000 60-sheet stapler
was developed by the inventor, using SolidWorks in 2004. The mechanism (which was
used as the basis for the 3000) was based on the inventor’s staple gun patent from the
1990’s (used in the PowerShot® construction stapler). CAD work took approximately 1
month by the inventor’s estimates. It should be noted that the inventor is quite skilled at
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SolidWorks, and as seen in the 3000, CAD efficiency can have a large impact on
development duration. Testing and prototyping of the 2000 was less efficient than CAD,
and in-fact similar to the cycles seen in developing the 3000. The inventor remarks on the
2000 project, “the testing was a long process, several months of receiving samples and
testing here. It was unexpectedly difficult to get right. The testing is ongoing for
continuous improvement.” In the end, it is very difficult to compare an expert versus
novices during development of the 3000 project; however, it can be presumed that
without a process such as the complete version of NPDES, the novice (in terms of
staplers) contract development team could not have produced the product. The product
needed definition, process structure, design, testing, etc., and simply put the development
team needed to quickly learn how the staple mechanism functioned. As such, much
effort was put into learning the science behind the mechanism, and how to optimize it for
large sheet capacities. Analysis models of the lever and mechanicals were developed to
help guide design, whereas the inventor works off of intuition and experience. According
to Ulrich and Eppinger (2004), recreating existing knowledge can be more time
consuming than involving an expert on the project. In developing the 3000, the team
initially contacted the inventor, but his input was not extremely helpful as he approached
design through experimentation, prior knowledge, and trial and error. The intent of this
discussion is not to add insight into the novice-expert argument, but to highlight the
possible impact this factor had on the design of the 3000. It shall be noted that Ball, et al.
(2001) argue that a fair portion of expert designers’ problem-solving knowledge may be
viewed as fairly ‘routine’ in nature, in that familiar kinds of problems will often have
readily retrievable solutions or well established precedents (Oxman, 1994). This
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certainly was the case in the inventor’s development of the 2000 stapler, and faster
development over the 3000 model.
The application of NPDES seems to have been positive, particularly given the
complexity of the project and lack of direct stapler experience of the development team.
It is difficult to say whether the process was better than the more informal process used
by the inventor, but again it is like comparing novices to experts. This highlights an
important issue, namely, the efficacy of the method and how to validate it, as this is only
a ‘snap-shot’ application to one firm. Frey and Dim [29] have noted that medical
validation techniques may have a substantial impact on validating engineering methods,
and they may be implemented in future projects. Two options for validating NPDES as
more data is obtained are careful collection and analysis of in situ field data as the
process is introduced and used by different firms, and defined ‘clinical trials’ where and
when applicable. What is clear though is that the Core Principles used during
development and having clearly defined decision gates helped manage a complex and
often frustrating project. The NPDES process has the potential to do well in ‘open water’
development projects where a very simple structure can help guide the project as it moves
along the development path and can foster an as needed adoption of the Core Principles.
6.4 Chapter Summary
The NPDES process was successfully applied to the 3000 stapler at PaperPro, and it
gave the development team a structured process to follow even when encountering
unknown development problems and complexity. It also gave the firm’s management
team a focused forum to decide on further development and direction for the project. In
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addition, the focus on cost helped direct the development team resulting in a product that
surpassed its cost targets. What is uncertain is comparing the NPDES process and
gauging relative success. In future work, the NPDES process will be applied to a wide
variety of early-stage firms, and data will be collected to validate its efficacy or lack there
of. The project described here was an initial trial, and it is clear more work is needed to
define metrics for its success (or failure). In the next chapter, we summarize the
contributions of the research and comment on future directions.
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CHAPTER 7 CONCLUSIONS AND RECOMMENDATIONS
In this dissertation, a comprehensive survey and analysis of early-stage firms was
performed. This survey showed that many larger firm NPD methods and principles have
a significant impact on firm success such as development duration and return-on-
investment (ROI) timing. Additionally, the dissertation provided an in-depth case study
of three early-stage firms, highlighting their development processes within the context of
six core development principles (Core Principles). Finally, a simplified NPD process
tailored for early-stage firms was proposed and tested using a real-world development
project. This chapter summarizes the survey results, case studies, and the proposed
process. The chapter concludes with recommendations for further research involving
additional development of the survey database and NPDES process, along with comments
on potential sources for validation.
7.1 Contributions
The main objective in this research was to study the new product development
process within start-up and early-stage firms to develop an understanding of potential
best practices, and propose a process that can be used by firms to increase their adoption
of the six Core Principles. In support of this objective, three main goals were posed and
met. These included establishing a small database of early-stage firms that was used as a
basis for analysis. Secondly, an in-depth case study on three firms was performed over a
two-year period. Finally, as a culmination of the research, a new product development
process for early-stage firms was proposed and applied during development of a new
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consumer product. These three supporting objectives are summarized in Sections 7.1.1,
7.1.2, and 7.1.3, respectively.
7.1.1. Survey and Analysis of NPD within Early-Stage Firms
As detailed in Chapter 3, a comprehensive survey of 35 early-stage firms was
developed and analyzed. This included information on firm age, size, and descriptive
independent and dependent variables that outlined the NPD process and related success
of the firm. The data was analyzed using various statistical methods and several
important observations were made. As a first general observation, all 35 firms were/are
using some level of the six Core Principles, although the adoption level varied greatly
between firms. Another observation is that besides the use of cost tracking during
development, no single Core Principle had a positive impact on firm success (defined as
the firm’s product reaching the marketplace, development duration, development cost,
cumulative sales, return-on-investment timing, and product margin). However, there are
significant, positive interactions of combinations of Core Principles on firm success,
including development duration and return-on-investment timing. Lastly, and most
importantly, different combinations of Core Principles can provide a similar positive,
significant impact on firm success. This is important for the start-up, which can
selectively implement required Core Principles during the development process for a
positive impact, without having to implement a rigorous and potentially bureaucratic
development process.
7.1.2. Detailed Case Studies of NPD within Early-Stage Firms
As a follow-on to the overall analysis of 35 firms in Chapter 3, an in-depth case study
of three survey firms was performed. Working intimately with the firm’s principles, the
151
investigator was able to obtain detailed information on how, and to what extent, the Core
Principles were adopted within each firm. Information on exactly how the development
occurred throughout the process was obtained and analyzed. The main contribution in
this chapter was a clear understanding of how different firms adopt differing levels of
Core Principles based upon a variety of factors, from team experience to the type of
industry in which they are involved. What is apparent is that there is no one “best”
combination of Core Principles; instead, a certain level of interaction depending on their
adoption can produce a positive impact on a firm’s new product development
performance within the context of the different firm’s unique development ‘polymer
chain.’
7.1.3. NPD Framework for Early-Stage Firms
As a culmination of the research garnered in Chapter 3 and 4, a new product
development process for early-stage firms was proposed in Chapter 5. New Product
Development Early-Stage (NPDES) is a simplified and flexible process that can be used as
a team guide throughout the development process to aid in the adoption of the Core
Principles. The process is designed to be flexible and customizable, yet provide structure
throughout development without being a burden. NPDES includes two management
decision gates, with the aim of reducing potential costly projects from being incorrectly
‘green-lighted.’ The process is divided into three main phases: 1) Product Planning, 2)
Product Design, and 3) Final Design and Launch. There is heavy emphasis on the
implementation of the Core Principles, including the formation of a cross-functional team,
market research and planning, and the two formal decision gates. Additionally, there is
focus on the exploitation of core technology and product platforms, implementation of
152
industrial design, and the use of ABC cost tracking throughout the development process.
NPDES was arranged to give firms the ability to focus on select Core Principles given
their particular situation. For example, an industrial product may stress industrial design
less, but focus more on potential proliferation of a core technology. This gives them the
flexibility to develop a Core Principle ‘plug-and-play recipe’ that best meets their needs.
The process was applied to an actual consumer product in 2005 and 2006. Although
difficult to validate given the sample size of one, it appears that the process was effective,
particularly given the fact that the development team began a complex project without
any prior knowledge of the firm’s technology or product line. Several interesting
engineering research questions arose during the implementation of the process, including
the importance of CAD during the development. Future work will further validate the
process and investigate these corollary items in more detail.
7.2 Limitations of the Research
There are several limitations of this research. The first is the sample size of the survey.
Considering the number variables and potential combinations of Core Principles, it would
be desirable to have hundreds of firms to analyze, rather than 35. A large sample will
better justify and validate the analyses and conclusions. Next, product platforms are one
of the Core Principles, but the survey gathered data on single products, and not an entire
generation of products. Gathering data on an entire product family and the average
development cost per product will provide a clearer picture on the benefit of product
platforms for the early-stage firm. Limitations also include the potential for issues with
self-selection within the survey itself and user ambiguity impacting usefulness of some of
153
the questions. In additional research, these survey limitations will be addressed. Another
limitation is the application of the proposed development process. NPDES was only
applied to one firm, and it is difficult to draw conclusions on its efficacy based on a
single case study. Additionally, since the product was developed by a different team
under different circumstances, conclusions drawn from comparing development of
PaperPro’s original staplers to the 3000 are difficult to validate.
7.3 Recommendations for Future Research
The intent of the dissertation was to provide a broad study of new product
development processes within early-stage firms. As such, each chapter was designed to
be an outline for future research that bridges both business and engineering. Of equal
importance in the development process are business strategy and technical tools. Going
forward, it is the hope of the researcher to establish a comprehensive program where both
the business and technical aspects of early-stage new product development are
investigated. This will include the following.
Database and Analysis of Early-Stage Firms: Chapter 3 served as a preliminary study of
start-up and early-stage firms. As noted in the limitations section of Chapter 3, what is
needed is a larger, more comprehensive sample to analyze. This will include seeking
data from other sources, including SBIR-funded start-ups, venture capital funded firms,
and angel network funded firms. Additionally, the survey will be modified to include
more descriptive questions on leadership, management experience, business environment,
market, network relationships, product complexity and technological newness. The
154
objective is to develop better predictive models on firm success via adoption of the six
Core Principles.
In Situ Case Studies: Chapter 4 provided detailed information on several start-ups. As a
next step, more firms will be studied, with a particular emphasis on the Core Principles,
the impact of globalization, and technical tools such as CAD. It is the hope of the
researcher to extensively detail not only the process, but also Gartner’s (1985) other main
attributes such as environment, experience, etc. The research objective is to quantify the
firm’s development ‘polymer chain’ with the aim of identifying patterns within the
adoption of Core Principles and ultimately develop processes and models that may aid in
developing a Core Principle implementation strategy.
NPDES: The proposed process in Chapter 5 is an initial effort in developing a
development process for start-ups. What is needed is further validation of the process,
with application on additional firms including other industries such as software and
services. The process may also be optimized to have better flexibility of adopting Core
Principles based upon the models as they are refined from additional case studies. This
may include changing the structure of the process, to include more concurrent and spiral
development engineering processes.
7.4 Closing Comments
Innovations and new technology, commercialized by start-ups will be increasingly
important in the 21st century, not only for economics but for the environment.
Particularly in the U.S., we must continue to capitalize on our current lead in fostering the
environment and funding of new firms and technologies. Critical to the
155
commercialization of new products and services are product and firm success rates. The
risks associated with new product development are great, and even greater for the start-up
firms with limited resources to absorb failure. Research for established firms has been
ongoing for decades, resulting in new theories and methods that have decreased
development duration and increased product success. Unfortunately, new product
development research is lacking for newer firms. The research detailed in this
dissertation is a preliminary study in the hope of developing a comprehensive research
program on how start-ups develop products and services, what development principles
are the most valuable, and how can firms use their development process to increase
ultimate success of the product and firm. The investigator has developed a database of 35
firms, shown significant impact of the Core Principles on development success, and
proposed a development process for early-stage companies. In a global view, what was
shown is that start-ups use similar Core Principles as large companies, and in
combination they have a significant impact on certain metrics for firm success. If start-
ups optimize their adoption of the Core Principles within a flexible process, there is
potential to greatly increase product and firm success.
156
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APPENDICES Appendix A.1. – Black & Decker (B&D) Firestorm tooling estimates.
Appendix A.2. – Summary of cost of goods sold (COGS) for B&D Firestorm Toolkit – Chinese Manufacture.
Appendix A.3. - Summary of COGS for B&D Firestorm Toolkit - U.S. Manufacture.
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APPENDICES Appendix A.4. – PaperPro tooling estimates.
Appendix A.5. – Summary of cost of goods sold (COGS) for PaperPro staplers – Chinese Manufacture.
Appendix A.6. - Summary of COGS for PaperPro staplers - U.S. Manufacture.
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APPENDICES Appendix B.1. – Independent variable histograms.
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APPENDICES
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APPENDICES
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APPENDICES Appendix B.2. – Power analysis.
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APPENDICES Appendix C. – Early-Stage NPD Survey Page 1.
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APPENDICES Early-Stage NPD Survey Page 2.
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APPENDICES Early-Stage NPD Survey Page 3.
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APPENDICES Early-Stage NPD Survey Page 4.
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APPENDICES Early-Stage NPD Survey Page 5.
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APPENDICES Early-Stage NPD Survey Page 6.
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APPENDICES Early-Stage NPD Survey Page 7.
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APPENDICES Early-Stage NPD Survey Page 8.
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APPENDICES Early-Stage NPD Survey Page 9.
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APPENDICES Appendix D.1 – Early-Stage NPD Survey raw data, independent variables.
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APPENDICES Appendix D.2 – Early-Stage NPD Survey raw data, dependent variables.
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APPENDICES Appendix E. – Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
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APPENDICES Early-Stage NPD Survey total data sample.
VITA
Tucker J. Marion is currently a University Fellow completing requirements for a
Ph.D. in Industrial Engineering at the Pennsylvania State University. In addition, Tucker
currently teaches product realization courses in the Penn State Masters of Manufacturing
Management (MMM) program. He is a Mechanical Engineering graduate of Bucknell
University and holds a Masters in Technology Management from the University of
Pennsylvania and Wharton School. Tucker has held numerous positions at Ford Motor
Company and Visteon Corporation. Since 2000, Tucker has been heavily involved in the
start-up community, co-founding the Innovation Factory in 2000 and founding FlashPoint
Development in 2004. Tucker has headed the design and development efforts for
numerous consumer products. He will continue to be at the intersection of academia and
industry when he begins a tenure-track faculty position at Northeastern’s new School of
Technological Entrepreneurship, establishing a research program in technology
entrepreneurship, product development, innovation, and design.
