Re-Thinking the Product Development Funnel - Abilaisbm.peachnewmedia.com/EdutechResources/resources/bytopicid/192… · 28.09.2010 · 1 ©2010 Applied Marketing Science, Inc. Re-Thinking

©2010 Applied Marketing Science, Inc. 1

Re-Thinking the Product Development Funnel

Gerry Katz

ISBM Webinars | September 28, 2010

http://isbm.smeal.psu.edu/


My Objectives for Today

• Review some of the best known graphical depictions of the New Product Development Process

– How they have evolved over time

– Their strengths and weaknesses

• Propose a new one

– How it differs from previous funnels

– The steps needed to get through the funnel


About AMS

Co-founded in 1989 by Prof. John Hauser of the MIT Sloan School of Management

• Co-author of the landmark papers, “The Voice of the Customer”

(1993) and “The House of Quality” (1988)

• Co-Director of MIT’s Center for Innovation in Product Development

(CIPD)

More than 400 marketing science engagements

• Voice of the Customer (VOC), Quality Function Deployment (QFD),

Web-Based Brainstorming and Ideation, Concept and Prototype

Evaluation, Conjoint Analysis

• Training and coaching


The Evolution of theProduct Development Process


Source:

Urban and Hauser

“Design and Marketing

of New Products” (1980)


Source:

Urban and Hauser




Source:

Urban and Hauser




Source: Cooper

“Winning at New Products”

(1986, 1993, 2001)



Source: Wheelwright & Clark

“Revolutionizing Product Development” (1992)



Source: McGrath

“Setting the PACE in Product Development” (1992)



Source: MIT Center for Innovation in Product

Development (CIPD, 2005)


Poll Question #1

Does your company use a standardized New Product Development Process, and if so, which of these does it most resemble?

1. No standardized process

2. Cooper: Stage-Gates®

3. Wheelwright and Clark

4. McGrath: PACE

5. MIT: CIPD


A Few Observations . . .

1. All of the funnels are horizontal !!

2. All begin with the idea or concept, usually preceding the entry point of the funnel

3. All seem to gloss over or minimize the Fuzzy Front End


A New Funnel for theProduct Development Process


A New, New Product Development Funnel

Discovery

Definition

Design

Development

Delivery

What needs must we satisfy?

What specifications should we build to?

How can we satisfy these needs?

How should we describe our solutions?

What solutions do we invest in?

Which features should we include?

How much will people pay for them?

Can we produce it, sell it, and make money with it?

What’s the opportunity?

Who’s the customer?

What are their problems?


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch


“The Fuzzy Front End”


Navigating Our Way Through the Funnel


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




The Purpose of Using Secondary Sources

• Get smart inexpensively

• Don’t reinvent the wheel

• Piece together facts that nobody else has quite pieced together yet

– “Connect the dots”


Market Research Using Secondary Sources

– Internal sources

– Publications

– Syndicated / industry studies

– Internet resources


Internet Sources: Search Engines

• Google.com

• Bing.com

• AltaVista.com

• Excite.com

• Ask.com

• Go.com (Yahoo search)

• Northern Light – business oriented

• OneKey.com

– (A kid-safe Google search)


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Ethnography / Contextual Inquiry

Advantages

What they say vs. what they do

Can observe the customer actually using

product or service – accomplishing jobs /

tasks

Understand the customer’s environment

Persuasive power of snapshots and video

Disadvantages

– Interviews are time intensive and costly

– Finding customers willing to have you

observe them in the workplace

– “Hawthorne Effect”, especially involving

safety


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




On-Line Communities

Goes by many names:

– Social Networks

– Communities of Interest

– Communities of Enthusiasts

• Very good for problem identification

• Less good as a source of new ideas

• Easier for B2C, harder for B2B


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Some Interesting Numbers…

According to the PDMA’s 2004 Comparative Performance Assessment Study (CPAS) of 416 firms engaged in NPD:

– Almost 50% of all companies in the study now use VOC methods …

– … on about half of all their new product development initiatives

– Voice of the Customer is one of the strongest differentiators between the “best” performers and the “rest”

Source: Product Development & Management Association Foundation


More Interesting Numbers…

According to an article by Bob Cooper and Scott Edgett in the March 2008 issue of PDMA’s Visions Magazine:

In a study of over 160 companies, asking for managerial evaluations of 18 different sources for insight and discovery for new products and services:

Most Effective – VOC Techniques:

• Ethnography

• Customer Visits

• Focus Groups

• Lead User Analysis

Least Effective – Open Innovation Techniques:

• Partners and Vendors

Less Well Than Expected:

• Disruptive technologies

• Communities of enthusiasts

Source: PDMA Visions Magazine, March 2008


So, let’s go talk to some customersand ask them what they want!



What the Voice of the Customer Is Not…

• Any kind of market research

• Demanded or desired solutions and features

• Customer-provided technical specifications

• Opinions of industry luminaries or so-called experts

• Anecdotes from sales or tech support


What the Voice of the Customer Is…

• A complete set of customer wants and needs

• Expressed in the customer’s own language

• Organized by customers into a hierarchy

• Prioritized by customers for relative importance and current performance / satisfaction




Using Importance and Performance to prioritize the needs

High

Low

Mod

Low Mod High

Imp

ort

an

ce S

co

re

Performance/Satisfaction Rating

Focus Areas

Hidden OpportunitiesOver-

Emphasized

Minimum

Requirements


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Customer Needs

Interactions

Performance Measures

Planning Matrix

Prioritization

Benchmarks

Target ValuesCorrelations

QFD Helps Translate Needs into Specs


Poll Question #2

Which of the following research techniques are a common part of your company’s New Product Development process (check as many as apply)?

1. Secondary Source research

2. Ethnography

3. On-Line Communities

4. Voice of the Customer (VOC)

5. Quality Function Deployment (QFD)


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Ideation to Develop New Concepts• Internal brainstorming

+ Inexpensive, fast, and confidential

- Isolated and subject to politics and cynicism

• External brainstorming

+ Allows “outside the box” ideas from people who use the product or service

+ Creates goodwill among customers

- More costly and risks falling into the hands of the competition

- Intellectual property issues

• Traditional brainstorming

+ Dedicated attention from participants for the duration of the meeting

- Expensive to involve geographically dispersed participants

- Traditional limitations of group activities (e.g., free-riders, bullies, etc.)

• Online brainstorming

+ Relatively inexpensive to conduct; no geographical boundaries

+ Allows for privacy and permits discrete management of disruptions

+ Time delay in interaction; more time for careful thought (“soak time”)

- Risk of competitive espionage if external participants are not chosen wisely


Poll Question #3 and #4

When your company uses formal brainstorming / ideation techniques, which of these is most common?

Q. 3

1. Internal brainstorming

2. External brainstorming

3. Both about equally

Q. 4

1. Face-to-face brainstorming

2. On-line brainstorming



A Recent Academic Source


Traditional brainstorming methods have limitations:

– Participant personalities and politics tend to complicate the

brainstorming process.

– In face-to-face sessions, participants often get defensive

about their own ideas.

– The “Free-rider” problem is difficult to overcome.

– Bringing all participants to a central location is inconvenient

for participants and expensive for companies.

– Single-session format prevents extended feedback;

participants have a limited amount of time in which to think of

or respond to ideas.

Background and Theory


• Traditionally, ideation participants have been incented in two ways:

– Participants are rewarded based on their individual contribution

– Participants are rewarded based on the group’s collective output

• Neither incentive scheme is ideal.

– Rewarding participants based only on their individual contribution

ignores the important collaborative aspect of ideation.

– But rewarding participants based only on the group’s collective

output encourages “free-riding”.

The most useful ideas are those that stimulate

others to build upon them

Individual vs. Group Incentives


1. Move the ideation process to the web.

• Anonymity removes all personalities and politics from the process.

• Don’t need to co-locate the participants.

• The process can be carried out asynchronously, allowing for

extended thought.

2. Reward participants based not only on their own individual

contributions, but on the impact of their contributions on others.

• Participants are rewarded based on the ideas they contribute and

the number of times their ideas are built upon by others.

Make it fun!

The Solution?


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Definition: What is Concept Testing?

Concept Testing:

A mid-stage NPD research activity that helps establish proof of an idea’s functional and commercial viability

The Goal:

Determine whether we have something here, and if not, what needs to be reworked to improve our odds?


Concept Testing answers these questions:

Do customers understand the concept?

What about this concept do customers like or dislike?

Do customers believe that the concept is viable?

How might customers want to use this product or service?

How likely is it that customers might want to buy it?


Concept Testing cannot answer these questions:

How large is the market for this product?

How many units will we sell?

How much will people pay?

Is the product technically viable?

How will competitors respond to the product’s introduction?


The First Decision: Qualitative or Quantitative?

• The case for qualitative research

– Concept requires detailed explanation

– Limited or expensive population to recruit

– Primary goal is diagnostic

• The case for quantitative research

– Concept can be conveyed via common media

– Target population can be easily found and recruited

– Primary goal is evaluative

• The case for both

– Strong need for both diagnostic and evaluative information

– You have sufficient time and money!


Poll Question #5

When your company does concept testing, which of these is the most common method?

1. Qualitative concept testing

2. Quantitative concept testing



Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




What is Conjoint Analysis?

Conjoint Analysis is:

• A market research technique used to measure customer

preferences for specific features and attributes in products and

services

• Underlying assumption: Customers’ overall value or utility for a

product is a weighted sum of the value of each of its parts

Utility = C0 + C1X1 + C2X2 + … + CnXn

• Conjoint Analysis forces people to make trade-offs between

specific attributes and features

• Its name comes from “Considered Jointly” because it usually

involves a comparison of one product with another


Why Use Conjoint Analysis?

Conjoint Analysis is particularly useful for:

• Evaluating “non-continuous” variables

• Evaluating price sensitivity

– How much is a given feature worth?


Key Terms and Concepts

Attributes

• Also known as “Features”

– Body Style

– Miles per Gallon

– Price

Levels

• These are the possible values each feature can have

– SUV, Minivan, Sedan, Sports Car

– 4 mpg, 12 mpg, 25 mpg, 50 mpg

– $20,000, $30,000, $50,000


The Conjoint Task

• Respondents are asked to rank, rate, or choose among sets of products which are made up of various combinations of attributes and levels

• By rotating through various combinations of the attributes and levels, we can derive the relative importance and value of each attribute and level


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Product Testing

An almost identical process to concept testing, except that it occurs after actual use of the product or service

• Alpha testing

• Beta testing

• Gamma testing


Discovery

Definition

Design

Development

Delivery

Ideation Concept

Development

Concept

Eval

Feature

Trade-Off

Prototype

Eval

Needs

Assessment

Target

Definition

Define

Specifications

Secondary

Sources

Exploratory

ResearchEthnography

Online

Communities

Positioning

&

Launch




Summary


Strengths

– More detail, more emphasis on the Fuzzy Front End

– Ideation has now been put in its proper place

– It’s vertical !!

Caveats

– Deliberate emphasis on market research

– Little detail on Product Launch


Questions and Answers?To Receive a Copy of any of our extensive publications on Product and Process Innovation, please visit: www.ams-inc.com/npd/articles.asp

Feel free to contact me:

Gerry Katz

781-250-6303

[email protected]

We invite you to attend one of our upcoming public training courses. Our next one will take place on November 9-10 in Chicago.

Thank You!

http://www.ams-inc.com/npd/articles.asp



mailto:[email protected]



Documents

Re-Thinking the Product Development Funnel - Abilaisbm.peachnewmedia.com/EdutechResources/resources/bytopicid/192… · 28.09.2010 · 1 ©2010 Applied Marketing Science, Inc. Re-Thinking