What organizational structures and processes do managers use to oversee new-product development

An organizational structure defines how activities such as

task allocation , coordination supervision aredirected towards the achievement oforganizational aims

Many companies use customer-driven engineering to develop new products, incorporating customer preferences in the final design

Some rely on internal changes to develop more successful new products.

Budgeting for New-Product Development

finance as many projects as possible, hoping to achieve a few winners.

spend what the competition spends.

decide how many successful new products they need and work backward to estimate the required investment

Mostly 3 strategies are followed

StageNumber of Ideas

Pass Ratio

Cost per Idea Total Cost

1. Idea Screening 64 1:4 $1,000 $64,000

2. Concept Testing 16 1:2 20,000 320,000

3. Product Development 8 1:2 200,000 1,600,000

4. Test Marketing 4 1:2 500,000 2,000,000

5. National Launch 2 1:2 5,000,000 10,000,000

$13,984,000

Organizing New-Product Development

CROSS-FUNCTIONAL TEAMS

relieved from other duties and given a budget , time frame and a informal workplace

Divide the innovation process into stages , with a gate at the end of each

The project leader , working with a cross-functional team, must bring a set of known deliverables to each gate before the project can pass to the next stage.

STAGE-GATE SYSTEMS