New Product & Services

NYU Spring 2007NYU Spring 2007Professor – David GoldsmithProfessor – David GoldsmithAmit WellnerAmit Wellner

Why do we need NPDP?

• “With a poorly defined product and project, R&D engineering and design people waste considerable time seeking definition, often recycling back several times as the project parameters change” (R. Cooper, “Winning at new Products”).

• “Quality of execution of the predevelopment steps is closely tied to product financial performance. Successful products have about 75% more person days devoted to the predevelopment activities than do failures” (R. Cooper, “Winning at new Products”)

Mission, Vision, Goal

Define: Vision, Mission, and Goal of the company

NP&S full cycle

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

Idea screen

G2

Raise Capital

G3

Product & Market redness

G4 G5

Financial Review

MissionVisionGoal

Support andMeasures (S6)

G6

End of life

Idea Generating

• Objective:– Gather ideas form various sources

• Activity:– Idea bank website– Rewards for selected ideas– Awareness campaign– Brain storming

• Members:– Cross company employees

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

IdeaIdea GenerationGeneration

G2

G3 G4 G5

Idea screening criteria – Gate 1

• Objective:– Filter ideas generated periodically

• Activity:– Ideas fit the mission, vision and goal– Rate and select ideas based on business value– Set time frame

• Members:– Innovation group– Strategic group

Market Research (S1)

G1G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5

Market ResearchStage 1

• Objective:– Market research

• Activity:– Build a team– Assessment: market, technical, and financial – If new proposition formulates – revert them to

Idea Generation Stage• Members:

– Target Innovation group comprised of: project leader, marketing, business development, technology architecture

Market Market Research (S1Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5

Gate 2

• Objective:– Defining the market margins assess profitability– Market projection

• Activity:– Filters: Technology, Legal & Marketing– Risk assessment

• Members:– Strategic group– Risk analysis– Legal– Chief technology

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2G2

G3 G4 G5

Business Proposal – Stage 2

• Objective:– Intense research and business case/ scenario

• Activity:– Build a business case– Deep market analyst– Competitive analysis– If new proposition formulates – revert them to

Idea Generation Stage• Members:

– Target Innovation groupMarket

Research (S1)

G1

Business Business Planning (S2)Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5

Raise Capital – Definition Gate 3

• Objective:

Assess risks and benefits of investment

• Activity:

1. Determine whether the idea remains commercially viable after planning

2. Create a demo (if possible)

3. Get the money – critical phase

• Members:

– Strategic group

– Senior management

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3G3 G4 G5

What would happen if…

1. Hotmail - acquired by Microsoft (MSFT) in 1998 for about $400 million

2. Skype - acquired by eBay (EBAY) in September 2005 for $2.6 billion

3. MySimon - acquired by CNET (CNET) in 1999 for $700 million4. Lycos - acquired by Terra Networks for $4.6 billion in 20005. Netscape - acquired by AOL (TWX) in 1998 for $4.2 billion6. GeoCities - acquired by Yahoo! (YHOO) in 1999 for $3.56

billion7. Excite - acquired by @Home in 1999 for $6.7 billion ($394 per

user!) 8. AOL - merged with TimeWarner in 2000 9. Broadcast.com - acquired by Yahoo! in 1999 for $5 billion

($710 per user )

Development & Marketing Stage 3

• Objective:– Develop the product

• Activity:– R&D - Start developing the product– Marketing

• Find potential client.• Partners• Set pricing

– Legal • Write patent• Contract – with partners

• Members:– Product development team: Product manager, Marketing

manager and Product technology manager– Legal department

Market Research (S1)

G1

Business Planning (S2)

Development & Development & Marketing (S3)Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5

Product & Market redness - Gate 4

• Objective:– Is the product consist with the definition at Gate 3?

• Activity:– Check:

• Product• Market• Financial state

• Members:– Strategic groupMarket

Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4G4 G5

Testing - Stage 4

• Objective:– Test and validate the project– Prepare for launch

• Activity:– Test product: error fixing in development– Customer endorsement– Test market (Trial sell)– Financial analysis– Develop the operation plan and the market launch

plan• Members:

– QA team– Sale & marketing

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

TestingTesting(S4)(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5

Gate 5

• Objective:– Business evaluate

• Activity:– Financial and market review

• Members:– Senior management

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch (S5)

Idea Generation

G2

G3 G4 G5G5

Stage 5

• Objective:– Get ready…

• Activity:– Create campaign– Advertising company

• Members:– PR and marketing– Product development team

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

PreparePrepare to launch (S5to launch (S5)

Idea Generation

G2

G3 G4 G5

Launch

• Objective:– Deploy product

• Activity:– Customer support– Client feedback– Find new features

• Members:– Operation– Product Manager

Market Research (S1)

G1

Business Planning (S2)

Development & Marketing (S3)

Testing(S4)

Prepare to launch(S5)

Idea Generation

G2

G3 G4 G5

Pro and cons for Stage gate process

AdvantagesAdvantages Disadvantage Disadvantage Structural process Time consuming

Control point, Go/Kill. Save money and time Bureaucracy

Increase successes rate Missing rewarded plan

Risk control. Customer feedback

Set time frame Bottle neck

Revenue oriented – “Don’t fall in love in your dreams”

Adjustment to new standards

Gatekeeper is not involved in the stage before

Does not fit for upgrades \ maintenances

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