ProductInnovation
SungJoo Bae
AssistantProfessorOperationsandTechnologyManagement
SchoolofBusinessYonsei University
AttributesofFiveDevelopmentProjects
StanleyToolsJobmasterScrewdriver
RollerbladeIn‐lineSkate
HPDeskjetPrinter
VolkswagenNewBeetleAutomobile
Boeing777Airplane
Annualproductionvolume(units/year)
100,000 100,000 4million 100,000 50
Saleslifetime(years) 40 3 2 6 30Price(US$/unit) 3 200 300 17,000 130MPartnumbers(parts) 3 35 200 10,000 130,000Developmenttime(years)
1 2 1.5 3.5 4.5
Internaldevelopmentteam(peaksize)
3 5 100 800 6,800
Externaldevelopmentteam(peaksize)
3 10 75 800 10,000
Developmentcost(US$)
150,000 750,000 50M 400M 3B
Productioninvestment
150,000 1M 25M 500M 3B
(Source: Ulrich & Eppinger)
NewProductSuccessFactors
• Developingasuperior,differentiatedproductwithuniquebenefitsandsuperiorvaluetothecustomers
• Havingastrongmarketorientationthroughoutthedevelopmentprocess
• Gettingsharp,earlyproductdefinitionbeforedevelopmentbegins
• Qualityexecution(completeness,consistency,andproficiency)ofactivitiesinthedevelopmentprocess
• Havingthecorrectorganizationalstructure(multifunctional,empoweredteams)
• Providingthesharpprojectselectiondecisions• Topmanagement:specifyingnewproductstrategyand
providingneededresources• Speedtomarket
(Cooper, 1996)
NewProductDevelopmentProcess
DesignActivities:
• Considerproductplatformandarchitecture
• Assessnewtechnologies
• Investigatefeasibilityofproductconcepts
•Developindustrialdesignconcepts
•Buildandtestexperimentalprototypes
• Generatealternativeproductarchitectures
•Definemajorsubsystemsandinterfaces
• Refineindustrialdesign
• Definepartgeometry
• Choosematerials
• Assigntolerances
• Completeindustrialcontroldocumentation
• Reliabilitytesting
•Lifetesting
•Performancetesting
• Obtainregulatoryapprovals
• Implementdesignchanges
• Evaluateearlyproductionoutput
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
MarketingActivities:
• Articulatemarketopportunity
• Definemarketsegments
• Collectcustomerneeds
• Identifyleadusers
• Identifycompetitiveproducts
• Developplanforproductoptionsandextendedproductfamily
• Settargetsalespricepoints
• Developmarketingplan
• Developpromotionandlaunchmaterials
• Facilitatefieldtesting
• Placeearlyproductionwithkeycustomers
(Source: Ulrich & Eppinger)
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
ManufacturingActivities:
• Identifyproductionconstraints
• Estimatemanufacturingcost
• Assessproductionfeasibility
• Performmake‐buyanalysis
• Definefinalassemblyscheme
• Settargetcosts
• Definepiece‐partproductionprocesses
• Designtooling
• Definequalityassuranceprocesses
•Facilitatesupplierramp‐up
• Trainworkforce
• Refineassemblyprocesses
• Beginoperationofproductionsystem
(Source: Ulrich & Eppinger)
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
Productplanning isanactivitythatconsiderstheportfolioofprojectsthatanorganizationmightpursueanddetermineswhatsubsetoftheseprojectswillbepursuedoverwhattimeperiod
Whichproductdevelopmentprojectswillbeundertaken? Howdothevariousprojectsrelatetoeachotherasaportfolio Timingandsequenceoftheprojects?
(Source: Ulrich & Eppinger)
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
1. Definethescope2. Gatherrawdatafromcustomers(interviews,focusgroups,observation)3. Interprettherawdataintermsofcustomerneeds4. Organizetheneedsintoahierarchyofprimary,secondary,andtertiaryneeds5. Establishtherelativeimportanceoftheneeds6. Reflectontheresultsandtheprocess
(Source: Ulrich & Eppinger)
IdentifyCustomer
Needs
EstablishTarget
Specification
GenerateProduct
Concepts
SelectProduct
Concepts
TestProduct
Concepts
SetFinal
Specification
Plan Downstream Development
Benchmark Competitive ProductsPerform Economic Analysis
Build and Test Models and Prototypes
Definingthescope(MissionStatement)
(Source: Ulrich & Eppinger)
MissionStatement:ScrewdriverProject
ProductDescription • Ahand‐held,powerassisteddeviceforinstallingthreadedfasteners
KeyBusinessGoals • Productintroducedinfourthquarterof2006• 50%grossmargin• 10%shareofcordlessscrewdrivermarketby2008
PrimaryMarkets • Do‐it‐yourselfconsumer
SecondaryMarkets • Casualconsumer• Light‐dutyprofessional
Assumptions • Hand‐held• Power‐assisted• Rechargeablebattery
Stakeholders • User,retailer,salesforce,servicecenter,production,legaldepartment
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
IdentifyCustomer
Needs
EstablishTarget
Specification
GenerateProduct
Concepts
SelectProduct
Concepts
TestProduct
Concepts
SetFinal
Specification
Plan Downstream Development
Whatarespecifications?‐ Customerneedsareexpressedinthe“languageofthecustomers.”‐ Specificationsarethelanguageofthemanufacturer/serviceprovider‐ “Measurabledetailofwhattheproducthastodo”‐ Productrequirements
(Source: Ulrich & Eppinger)
TargetSpecification
(Source: Ulrich & Eppinger)
Foryourclassprojects,measurablemetricmaynotexist.Inthiscase,justdescribethespecificationofthefinalproduct/service/businessmodelintermsoffeaturerequirements
NewProductDevelopmentProcess
Planning ConceptDevelopment
System-levelDesign
Detail Design
Testing &Refinement
ProductionRamp-up
IdentifyCustomer
Needs
EstablishTarget
Specification
GenerateProduct
Concepts
SelectProduct
Concepts
TestProduct
Concepts
SetFinal
Specification
Plan Downstream Development
Whatarespecifications?‐ Customerneedsareexpressedinthe“languageofthecustomers.”‐ Specificationsarethelanguageofthemanufacturer/serviceprovider‐ “Measurabledetailofwhattheproducthastodo”‐ Productrequirements
(Source: Ulrich & Eppinger)
ConceptClassificationTree
(Source: Ulrich & Eppinger)
• Divisionoftheentirespaceofsolutionsintoseveraldistinctclasses
• Identificationofindependentapproachestotheproblem
• Pruningoflesspromisingbranches
• Refinementoftheproblemdecompositionforaparticularbranch
ConceptCombinationTable
nceptCombinationTable:waytoconsidercombinationsofsolutionfragmentssystematically
SelectionofProductConcepts
• ThegoalofconceptselectionisNOTtoselect thebest concept
• ThegoaloftheconceptselectionistoDEVELOP thebestconcept
• Combineandrefinetheconceptstodevelopbetterones
• SelectionMethods– Externaldecision– Intuition– Multivoting– Prosandcons
KeyPoints• Capture“what”not“how”• Trytomeetcustomersinuserenvironment
• Collectvisual,verbal,ortextualdata• Propswillstimulatecustomerresponses• Interviewsaremoreefficientthanfocusgroups
• Interviewstakeholdersandleadusers,notjustaverageusersifpossible
• Lookforlatentneeds
HowdidSamsungwork?• Internal(Domestic)Market‐base• Risk‐takingLate‐comerStrategy
– Largeinvestment+Timelydecision• Brand‐imagerevamping
– SponsoringOlympics+Largead‐campaign• FocusonExecution(Qualitymanufacturing)
– LongexperienceofOEMmanufacturing– Price,quality,customersatisfaction
• Radicalorganizationalchanges+Reorientation– Theroleofleadership
• InvestmentinR&D– OverseasDesignandR&DCenters
• DesignOrientedProductDevelopment– Separateentity:SamsungCorporateDesignCenter&Value
Innovation Program (VIP) Center
esignOrientedProductDevelopmentDesignconcept:“thin”and“glossy”inanorganicdesignthatmadetheTVseemtobeofonepiece– front,backandstand
VIPCenter:Developedtheproductconcept‐ Emotionandlifestyle‐ Roomdecoration‐ Picture&Soundetc.(functional)
EngineeringChallenges1.Slimmer,Glossythroughout2.Speakerholes3.Highglossyfinish
Solution:• Reducingthesizeofprintedcircuitboard• Integratedframe( k h l h