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 New product development – A challenging task

 Why new product development? – relevance?

 Firm that don’t respond to the challenges of globalization find

themselves obsolete

 New Product Development - Costly activity

› E.g., Exubera Vs. Januvia
› The continued urge to develop new and better ways to treat diabetes
created opportunities for biotech firms to work and invest on the
research.
› Drug innovations are Exubera, and Januvia
› Exubera failed in the market where as Januvia proved to be a star
product.
› As mentioned by The New York Times (n.d.), Januvia was being
prescribed 25 times more than Exubera (April 2007).

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  Innovation is an ongoing process!!

 Upgrade production techniques and

marketing methods to remain
competitive

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  New-to-the-world products
 New product lines
 Additions to exiting product lines
 Improvements in/ revisions to existing products
 Repositionings
 Cost reductions

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  Within the firm
 Outside the firm

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  It’s the process of encouraging and
enabling employees to develop new
product ides and to follow them through
commercial profitability.

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  Innovative
 Proactive
 Controlled risk taking
 Driven by opportunity seeking

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 Innovation - creating something new and making it
useful.
Proactivity - doing something before others do it.
Controlled risk taking - combination of knowing
what the risks really are, taking moderate risks in
which the worst case is survivable, and finding
ways to manage the risks to increase the chances
of success while reducing the consequences of
failure.
Opportunity seeking - actively looking for
opportunities and constantly evaluating how
attractive prospective opportunities are.

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 a. the opportunity must be kept firmly in
mind
b. producing a successful design involves
combining established technology with
recent technology
c. must get the innovation into the
market

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  Minimize using resources that are at
risk
 Gather information to run one or more
“experiments”
 Results can be assessed and revised for
product launch success
 Change the rules of the market

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  Hire people comfortable acting as
Entrepreneurs
 Direct appropriate activities
 Remove impediments
 Provide incentive

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  Ability to persistently pursue a passion
 Comfort with trying new things,
making mistakes and learning from
them
 Bias for action

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  A range of incentives needs to be
considered
 Award the incentives for doing the
right things
 To reinforce the desired activity,
provide the rewards soon enough after
the actions occur

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 Innovation means to introduce new things to
existing realm and array of things or to render
resources (Drucker, 1985)

 Innovation -‘the means by which the entrepreneur

either creates new wealth-producing resources or
endows existing resources with enhanced potential
for creating wealth’ (Drucker, 1998)

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1. Launch of a new product or a new species of already known
product;
2. application of new methods of production or sales of a product (not
yet proven in the industry);
3. opening of a new market (the market for which a branch of the
industry was not yet represented);
4. acquiring of new sources of supply of raw material or semi-finished
goods;
5. new industry structure such as the creation or destruction of a
monopoly position.

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  Types of Innovation
1. Product
2. Process
3. Marketing
4. Organizational/ Business-Model

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 Traditional industries
› Meat packing
› Prior to the 1870 cattle's were shipped live by
road from Midwestern stockyard to different
part of country.
› cattle were slaughtered and the meat was
sold to local butcher
› Swifts New business model -> cattle were
slaughtered and were transported in
refrigerated freight cars.
› This has reduced cost and improved quality
of final product.
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  Razor-razor blade model -> revenue
model
 Involves pricing razors inexpensively but
aggressively marking up the
consumables (razor blades).

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  Internet has enabled traditional industries
to adopt a more modern approach
 E.g DVD rentals and Netflix, torrent
downloads

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 Competitiveness is the capacity of nations, organizations, and
people to accomplish superior outputs and generally outcomes,
particularly, to add value, via the same or less of inputs (Carayannis
& Gonzalez 2003).
 Creativity and innovation in manufacturing sector are enablers of
technological effort and leads to industrial development. These
factors further increase competitiveness and lead to sustained
development (Carayannis & Gonzalez 2003).
 Innovation is considered as an essential driver of competitiveness
(Schumpeter )

Creativity is having the ideas, and innovation is its application

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 THE CASE OF DIGITAL CAMERAS
› innovation can lead to reduction in the prices of products
 THE CASE OF APPLE COMPANY
› IPhone considered to be the start of revolution and
innovation at its supreme
› the success of the company utmost to its capability to
innovate and being the first to introduce new products
› innovative possibilities of new products but also brings
better quality for existing products than its competitors
 THE CASE OF GOOGLE
› innovation -continuous process for the company
E.g. Google TV, Google Buzz, Google Replay, Priority inbox,
Google wave, and calling phone from Google Gmail
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  It measures how efficiently production inputs, such as labour
and capital, are being used in an economy to produce a
given level of output.

 Innovation also denote new and better ways of doping what

has been done before!
› E.g. designing products that can be produced more efficiently.
 Methods? Marketing? Distribution?
 ↑Innovation → ↑productivity

 Productivity is considered a key source of economic growth

and competitiveness.

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  New product → ↑ satisfaction to
customers → ↑co.s competitive position

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  New product development creates
value for the customer
 Top management determines
innovation strategy to utilize

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  Providing a range of incentives needs to
be considered
 Award the incentives for doing the right
things
 To reinforce the desired activity, provide
rewards soon enough after actions occur

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 “Developing and marketing new products is a costly venture that
entails commitment and risk”. Do you agree with the statement?
Explain with the help of an example/ case.

 Research indicates that approximately one third of all industrial

products that reach the market fail during the introductory stage.
What could be the major causes of product failure? Explain with the
help of the case on drug innovations discussed in class.

 What have you learnt from the case on drug innovations for treating
diabetes. Explain the critical elements (questions that must be
considered) for new product development and success.

 Why is new product development is considered as a challenging

task? Explain the importance/ relevance of new product
development.

 Explain different categories of new products. Explain the different

sources of new products idea generation.

 What is intrapreneurship? How can firm foster (make successful)

intrapreneuring activating in the firm.
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 Explain how innovation can lead to economic growth/ prosperity?
Explain your answer with the help of proper chain of events.

 What is innovation? What are the different types of innovations?

Explain the types and also give examples.

 What triggers the necessity to innovate? Explain the relationship

between competition, innovation and competitiveness. Make use of
examples.

 Discuss the cases of digital cameras, Apple, and Google in

relevance to innovation and competitiveness.

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 The new product development process
begins with an unsatisfied need
› Thus the innovation that creates new users
and new markets should be directed
towards an application i.e.
1. Specific
2. Clear, and
3. Carefully designed

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 New product development process
involves three questions covering:
1. Market criteria
2. Technology criteria
3. Financial criteria

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 An atmosphere that encourages Risk-
Taking
 Every Product Should have a Champion
 Centralized Versus Decentralized R&D

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 New Product Committee
 Task Force
 New Product Development Deparment
 Product Manager
 The Venture Team

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 Idea Generation
 Idea Screening
 Idea Evaluation
 Preliminary Business Analysis
 Product Development and Testing
 Formal Business Planning
 Commercialization

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