Week 3 Opportunity and Product Planning(1).pptx

Opportunity Identification & Product Planning

EMGT- PRODUCT DESIGN AND DEVELOPMENT

The information that appears in many of these slides is based on support materials that accompany the primary text books for this course:

• Product Design and Development, 5th edition, by Ulrich and Eppinger

• SMC Systems Engineering Primer & Handbook 3rd edition, by Space & Missile Systems Center U.S. Air Force

• Sources for other information are cited where appropriate.

Important Notes

Product Design and Development

1. Introduction2. Development Processes and Organizations3. Opportunity Identification4. Product Planning5. Identifying Customer Needs6. Product Specifications7. Concept Generation8. Concept Selection9. Concept Testing10. Product Architecture11. Industrial Design12. Design for Environment

13. Design for Manufacturing14. Prototyping15. Robust Design16. Patents and Intellectual Property17. Product Development Economics18. Managing Projects



• It is an idea for a new product.• It’s a product description in embryonic form, a newly

sensed need, a newly discovered technology, or a rough match between a need and possible solution.

• It is an hypothesis about how value might be created.

• Example:– Opportunity pursued by FroliCat following a brain

storming session.

What is an opportunity?


• Opportunity pursued by FroliCat following a brain storming session– This is an example of an

opportunity that includes a possible solution concept, which is typical for efforts focused on identifying opportunities for new products in a well defined category like cat toys.

What is an opportunity?

Excerpted from http://www.perpetualkid.com/frolicat-sway-magnetic-cat-toy.aspx


• Two dimensions that are particularly useful to categorize opportunities.– The extent to which the team is familiar with the solution likely

to be employed (knowledge of the technology )– The extend to which the team is familiar with the need that the

solution addresses (knowledge of the market)

Types of Opportunities

EMGT- PRODUCT DESIGN AND DEVELOPMENTTypes of Opportunities

• Horizons 1,2 and 3 represent increasing levels of risk, reflecting different types of uncertainties.

• Example:– In need to launch a product

within a year, FroliCat avoided Horizon 3 opportunities. It focused on its existing customers and existing needs as it wished to build success with the ‘bolt’ cat toy.

– It sought a next generation solution for the existing need to entertain cats, and thus focused on Horizon 2 opportunities.


Tournament Structure of Opportunity Identification

• Opportunities vary widely in value; however that value is plagued by uncertainty.

• Selecting a subset from a set of opportunities (opportunity identification process) with just a few best ones coming to fruition is the process of innovation tournament.

Opportunity Identification Process

ProductDevelopment Process

Innovation Tournament



PlanningConcept

DevelopmentSystem-Level

DesignDetail

DesignTesting andRefinement

ProductionRamp-Up

Opportunity Tournament

Exceptional Opportunities


ProductDevelopment Process



• Example:– The opportunity

identification tournament structure used by FroliCat, starting with 50 opportunities and eventually resulting in one chosen to go into full product development.



• Opportunity identification process can be divided into 6 steps:1. Establish a charter.2. Generate and sense many opportunities.3. Screen opportunities.4. Develop promising opportunities.5. Select exceptional opportunities.6. Reflect on the results and the process.


Step 1: Establish an Innovation Charter

• The innovation charter articulates the goals – growing revenues from existing customers, – filling a hole in a product line, – entering new market segments– creating a new product related to an area of personal interest– establishes boundary conditions for an innovation effort.

• Charters are closely analogous to the mission statement for a new product.• Example:

– The charter for FroliCat effort was “to create a physical product in the cat toy category that we can launch to the market within about a year through our existing retail sales channel”

– The main restrictions in this charter: • Emphasis on physical goods instead of software or services.• Focus on the cat toy category.• Preference for opportunities that would not require investments of calendar time.• Desire to take advantage of the company’s existing relationships with retailers.

• The charter requires resolving a tension between leaving the innovation problem unconstrained, and specifying a direction that is likely to meet the goals of the team and organization.


Step 2: Generate and Sense Many Opportunities

• Based on a survey, “about half of innovation opportunities are generated internally to an organization and about half are recognized from customers and other external sources”.

• Fortunately, this daunting task of identifying opportunities is made much easier through the application of some structured techniques which we outline here.


Step 2: Generate and Sense Many Opportunities

• Follow a personal passion.• Compile bug lists.• Pull opportunities from capabilities. (Use VRIN –

Valuable, Rare, Inimitable, Nonsubstituable)• Study customers.• Study implications of trends.• Imitate, but better.• Mine your sources.

Techniques for generating opportunities


Step 3: Screen Opportunities

• Goal is to eliminate unlikely opportunities to result in value creation and to focus on worth full opportunities for further investigation.

• The process must be relatively efficient, even at the expense of perfect accuracy.• Two methods of effective approaches to screening:

– Web based surveys:• The participant don’t know the author of each idea. So, the votes are

based on the quality of the opportunity, not on the originator.• In our experience we need at least 6 independent judgment and

preferable more than 10 to make reliable decisions.– Workshops with “multi-voting”:

• Each participant presents a single slide, page, flip chat sheet of one or more opportunities to the group.

• The group of raters multi-vote on the opportunities.• By this method you avoid influencing the voting decisions with information

about how others have voted.


Step 3: Screen Opportunities

• Example:– The FroliCat team developed 50 raw opportunities as a

result of 6 individuals working independently and in brain storming sessions.

– The team identified 7 opportunities worthy of further development, by aggregating the individual judgments of the team members including both product designers and marketing designers at FroliCat.


Step 4: Develop Promising Opportunities

• The goal is to resolve the greatest uncertainty surrounding each one at the lowest cost in time and money.

• This can be done by listing the major uncertainties regarding the success of each opportunity, the tasks you could take to resolve the uncertainties and the approximate cost of each task followed by performing the tasks that resolve the most uncertainty at the lowest cost.

• Example:– The FroliCat team explored 7 opportunities from step 3 and selected 3

opportunities for further development. The further development tasks were to build functional prototypes and test them with cat and cat owners, create packaging concepts, test their appeal with consumers and complete financial analysis based on manufacturing cost and price points.


Step 5: Select Exceptional Opportunities

• Enough uncertainty should be resolved in order to pick the exceptional few opportunities that warrant a significant investment in product development.

• One specific approach used within established companies is Real-Win-Worth-It (RWW) method, developed originally by 3M.

• The method summarizes the following three questions: Is the opportunity real? – market size, potential price, technology

availability, likelihood of delivering the product in the required volume at the required cost.

Can you win this opportunity? Can you establish a sustainable competitive advantage? Can you patent or brand the idea? Are you more capable of executing it than competitors?

Is the opportunity worthy it financially? Do you have resources? Are you confident that the investment will be rewarded with appropriate returns?


Step 5: Select Exceptional Opportunities• The RWW criteria applied to “Swinging ball” opportunity for FroliCat.


Step 6: Reflect on the Results and the Process

• The FroliCat team pursued the swing ball opportunity and developed a product for sale which was named the “Sway”.

• It was launched through major retailers such as ’Amazon’.• The market success is not the only success criterion for the process.

• Some questions to be considered are: How many of the opportunities identified came from internal sources vs.

external sources? Did we consider dozens or hundreds of opportunities? Was the innovation charter too narrowly focused? Were our filtering criteria biased, or largely based on the best possible

estimates of eventual product success? Are the resulting opportunities exciting to the team?

Product Design and Development

1. Introduction2. Development Processes and Organizations3. Opportunity Identification4. Product Planning5. Identifying Customer Needs6. Product Specifications7. Concept Generation8. Concept Selection9. Concept Testing10. Product Architecture11. Industrial Design12. Design for Environment

13. Design for Manufacturing14. Prototyping15. Robust Design16. Patents and Intellectual Property17. Product Development Economics18. Managing Projects

TextbookEMGT- PRODUCT DESIGN AND DEVELOPMENT


The Product Planning Process

• The product plan identifies the portfolio of products to be developed by the organization and the timing of their introduction to the market.

• The product planning process takes place before a product development project is formally approved, before substantial resources are applied, and before the larger development team is formed.

• It is an activity that considers the portfolio of projects that an organization might pursue and determines what subset of these projects will be pursued over what period of time.



An example of a product plan listing products to be developed and indicating the time frame for each

• The product plan identifies the portfolio of projects to be pursued by the development organization

• This plan divides projects into 4 categories: New platforms, Derivatives of existing platforms, product improvement and fundamentally new products.



Four types of Product Development Projects

1. New product platforms:– It involves a major development effort to create a new family

of products based on a new, common platform.– Example: The Xerox Lakes project, aimed at the development

of a new, digital copier platform is an example for this type of project.

2. Derivatives of existing product platforms:– These extend an existing product platform to better address

familiar markets with one or more new products.– Example: To develop a new copier based on an existing light

lens (not digital) product plat form is an example of this project



Four types of Product Development Projects

3. Incremental improvements to existing products:– It only involves adding or modifying some features of

existing products in order to keep the product line competitive.

– Example: A slight change to remedy minor flaws in an existing copy of product is an example of this type of project.

4. Fundamentally new products:– It involves radically different products or production

technologies and may help to address new and unfamiliar markets. It involves more risk and long term success depends on what is learnt through these important projects.

– Example: The first digital copier Xerox.


The Product Planning ProcessThe Process

• First, multiple opportunities are prioritized and set of promising projects are selected.

• Resources are allocated to these projects and they are scheduled.

• Once projects have been selected and resources allocated, mission statement is developed for each project.

• The formulation of a product plan and development of a mission statement therefore precede the actual product development process.

Step 1: Identify Opportunities

• Opportunity identification process can be divided into 6 steps:1. Establish a charter.2. Generate and sense many opportunities.3. Screen opportunities.4. Develop promising opportunities.5. Select exceptional opportunities.6. Reflect on the results and the process.

Step 2: Evaluate and Prioritize Projects

• This step involves selecting the most promising projects to pursue.

• The 4 basic perspectives useful in evaluating and prioritizing opportunities for new products in existing product categories:1. Competitive strategy.2. Market segmentation.3. Technological trajectories.4. Product platforms.


• An organization’s competitive strategy defines a basic approach to markets and product with respect to competitors.

• Several strategies such as– Technology leadership:

• Great emphasis on basic research on development of new technologies and deployment of these technologies through product development.

– Cost leadership:• Competes on production efficiency, either through economies of scale, use of superior

manufacturing methods, low cost labor or better management of the production system.

– Customer focus:• The firm works closely with new and existing customers to assess the changing needs

and preferences. This may lead in a broad product line featuring high product variety.

– Imitative:• It involves closely following trends in the market, allowing competitors to explore which

new products are successful for each segment. The firm quickly launches new products to imitate the successful competitors whenever viable opportunities have been identified.

1. Competitive Strategy


• Dividing a market into segments allows the firm to consider the actions of competitors and strength of firm’s existing products with respect to each well defined group of customers.

• Example: product segment map showing Xerox B&W digital products and competition in three market segments: personal, workgroup and department machines.

2. Market segmentation


• The key product planning decision is when to adopt a basic new technology in a product line. Technology S-curves are a conceptual tool to help think about such decisions.

• The S-curve illustrates the basic important concept: Technologies evolve from initial emergence when performance is low, through rapid growth in performance based on experience and finally approach maturity when some natural technology limit is reached and technology may become obsolete.

3. Technological trajectories

Light-LensTechnology

DigitalTechnology

Time

Cop

ier

Per

form

anceExample:

Technology S-curve illustratingXerox belief when digitalCopier technologies were just emerging and would improveProduct performance in coming years


• It is a set of assets shared across a set of products. Components and sub assemblies are often the most important of these assets.

• To create a technology road map, multiple generations of technologies are labeled and arranged along a timeline.

4. Product platform planning

• The technology road map can be augmented with the timing of projects and projects that would utilize these technological developments (Also known as product-technology road map).


Evaluating fundamentally new product opportunities

• Example: This technology road map shows the life cycles of several digital photocopying technologies and identifies which technologies would be used in each product.

• For the Lakes platform, Xerox selected technologies for critical functions that could be extended to the higher speeds and color capability required of its derivative products.


Evaluating fundamentally new product opportunities

• Some investment are necessary to periodically rejuvenate the product portfolio. Some criteria for evaluating fundamentally new product opportunities:– Market size (units/year X average price).– Market growth rate (% per year).– Competitive intensity (no. of competitors and their strengths).– Depth of the firm’s existing knowledge of the market.– Depth of the firm’s existing knowledge of the technology.– Fit with the firm’s other products.– Fit with the firm’s capabilities.– Potential for patents, trade secrets or other barriers to

competition.– Existence of a product champion within the firm.


Balancing the portfolio

• Wheelwright and Clark (1992) plots the portfolio of projects along two specific dimensions: the extent to which the project involves a change in the product line and the extent to which project involves a change in production process. This mapping is called product-process change matrix.

The size of the circles Indicates the relative cost of the development projects.

Step 3: Allocate Resources and Plan Timing

• Aggregate planning helps an organization make efficient use of its resources by pursuing only those projects that can reasonably be completed with the budgeted resources.

• Estimating the resources required for each of the projects in the plan by month, quarter, year forces the organization to face the realities of finite resources.

• Estimates of required resources in each period can be compared with available resources to compute an overall capacity utilization ratio as well as utilizations by resource types.

Resource allocation


Resource allocation

This spreadsheet uses units of person-years, although smaller time units are commonly used in practice.


Project timing

• Determining the timing and sequence of projects, called pipeline management must consider the factors:– Timing of product introductions:

• Generally the sooner the product to market the better.

– Technology readiness:• The robustness of the underlying technologies plays a critical role in

planning process.

– Market readiness:• The sequence of product introductions determines whether early

adopters buy the low end product and may trade up or they buy the high end product offered at a high initial price.

– Competition:• The anticipated release of competing products may accelerate the

timing of development projects.


• The set of projects approved by the planning process, sequenced in time, becomes the product plan.

• Product plans are updated on a periodic basis, perhaps quarterly or annually.

• The plan may include a mix of fundamentally new products, platform projects and derivative projects of varying size.

The Product plan

Step 4: Complete Pre-Project Planning

• The team formulates a detailed definition of the target market and the assumptions under which the development team will operate, known as mission statement.

Lakes Project Mission Statement

Product Description· Networkable, digital machine with copy, print, fax, and scan functionsKey Business Goals· Support Xerox strategy of leadership in digital office equipment· Serve as platform for all future B&W digital products and solutions· Capture 50% of digital product sales in primary market· Environmentally friendly· First product introduction 4thQ 1997Primary Market· Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)Secondary Markets· Quick-print market· Small ‘satellite’ operationsAssumptions and Constraints· New product platform· Digital imaging technology· Compatible with CentreWare software· Input devices manufactured in Canada· Output devices manufactured in Brazil· Image processing engine manufactured in both USA and EuropeStakeholders· Purchasers and Users· Manufacturing Operations· Service Operations· Distributors and Resellers

Mission Statement


Step 4: Complete Pre-Project Planning• The team formulates a detailed definition of the target market and the assumptions under which

the development team will operate, known as mission statement.Lakes Project Mission Statement

Product Description· Networkable, digital machine with copy, print, fax, and scan functionsKey Business Goals· Support Xerox strategy of leadership in digital office equipment· Serve as platform for all future B&W digital products and solutions· Capture 50% of digital product sales in primary market· Environmentally friendly· First product introduction 4thQ 1997Primary Market· Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)Secondary Markets· Quick-print market· Small ‘satellite’ operationsAssumptions and Constraints· New product platform· Digital imaging technology· Compatible with CentreWare software· Input devices manufactured in Canada· Output devices manufactured in Brazil· Image processing engine manufactured in both USA and EuropeStakeholders· Purchasers and Users· Manufacturing Operations· Service Operations· Distributors and Resellers

Step 4: Complete Pre-Project Planning

Staffing and other pre-Project planning activities

• It generally addresses project staffing and leadership.

• Budgets are also generally established during pre-project planning.

• For fundamentally new products, budgets and staffing plans will be for the concept development phase of development only. This is due to high uncertainty. More detailed planning occurs if the concept is developed further.


Step 5: Reflect on the results and the process

• Suggested questions at the final step of the planning and strategy process to assess the quality of both the process and the results: Is the opportunity funnel collecting an exciting and diverse set of product

opportunities? Does the product plan support the competitive strategy of the firm? Does the product plan address the most important current opportunities facing the

firm? Are the total resources allocated to product development sufficient to pursue the

firm’s competitive strategy? Have creative ways of leveraging finite resources been considered, such as the use of

product platforms, joint ventures and partnerships with suppliers? Does the core team accept the challenges of resulting mission statement? Are the elements of the mission statement consistent? Are the assumptions listed in the mission statement really necessary or is the project

over constraint? Will the development team have the freedom to develop the best possible product?

How can the product planning process be improved?• This early stage is the time to remedy the known flaws, lest they become more

severe and expensive as the development process progresses.

Documents

Week 3 Opportunity and Product Planning(1).pptx