Reengineering the New Product Development Process - CiteSeerX

Omega, Int. J. Mgmt Sci. Vol. 24, No. 4, pp. 425-441, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All rights reserved S0305-0483(96)00007-2 0305-0483/96 $15.00 + 0.00

Pergamon

Reengineering the New Product Development Process: A Framework for Innovation and Flexibility in High Technology Firms M K MALHOTRA

V GROVER M DESILVIO College of Business Administration, University of South Carolina, Columbia, SC 29208, USA (Received 23 November 1994; accepted after revision 9 Febuary 1996) In response to an increasingly global and competitive environment, reenglneering of fundamental cross functional processes is being actively pursued by corporatiom. This is particularly true in those industries which evolve rapidly. The flexibility to adapt to changing market needs and develop innovative products in such an environment is quintessential to success. This would make new product development arguably one of the moot critical cross functional process. Traditionally, this process has involved ine•cient sequential processing of information and plans between functional specialties. We propose a conceptual framework in this paper that facilitates innovation, flexibmty, and an understanding of the reenglneering of this product planning process. In particular, we consider the case of high technology firms in the semiconductor and telecommunications industry, which demands a high degree of product innovation. We propose that achieving innovation and flexibmty would require a considerable degree of planning and coordination through the various phases of development. This cunrdlnation is required not only across functional groups, but also across the hierarchical levels in the organization. Top level management support through a product champion, and proper interfacing with the external environment and the target market are essential components of such a planning process. The proposed framework is initially developed based on information elicited from an expert engaged in the product planning and development process at a large progressive telecommunications firm. The framework is then refined and finally presented based on feedback from five experts in the high technology electronics industry, and also evaluated in the context of prescriptive literature in the reengiueering and innovation areas. The information and conceptual content of the framework presented in this paper can facilitate better planning, formation, and organization of crnss-functianal work teams and groups that may be involved in the product development process. Implications of the framework for strategic product planning and its impact on the manufacturing function within a firm are also discussed. Copyright © 1996 Elsevier Science Ltd Key words--new product development, innovation, reengineering, technology, industry, frameworks

1. I N T R O D U C T I O N

decades and have become increasingly bureaucratized and inflexible over the years. They are now being reengineered in an attempt to achieve dramatic improvements in performance. This re-conceptualization of the business process goes beyond Taylorian approaches which were

N U M E R O U S COMPANIES are now undergoing significant restructuring and downsizing in response to competitive pressures. A fundamental unit of such change is the business process. Many business processes have been in place for 425

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based on task decomposition and functional specialization. They involve discontinuous thinking in response to the quality and innovation needs of today's environment [14]. In order to secure and sustain competitive advantage in the face of intense competition and a rapidly expanding global market, continuous product innovation and flexibility are necessary [12]. This would imply that new product development is arguably one of the most important processes in today's organization. More than $50 billion are spent each year in designing new products or improving old ones, with more than 50% of a firm's dollar volume typically coming from products introduced within the last 10 years [20]. In addition, Kekre and Srinivasan [17] have shown, in an analysis of over 1400 business units, that a broader product line leads to a higher market share as well as to increased profitability. The motives for the creation of new products may include fulfilling the needs of new market segments, improvement of existing product lines, or the replacement of existing non-profitable product lines with new ones. At times, new product development may also be aimed at enhancing the corporate image. For example, to broaden its appeal in networking and desktop, HewlettPackard is planning to unveil a host of new products and back them with aggressive pricing. Similarly, in addition to cellular telephones, AT & T has gained a foothold in advanced microchips, computer software, electronic mail, pocket communicators, and videophones [18]. Traditionally, new product development processes have been linear in nature, involving sequential hand-offs between functional areas such as R & D, manufacturing and marketing. These processes might involve translation from one functional language to another, politics of resource ownership, and functional sub-optimization rather than global optimization. Many of these processes are mired in formalized procedures, formats, and specifications that are followed without question, thereby inhibiting innovation. Corrective actions taken during the process, due to market or engineering changes, often involve backtracking across functional boundaries through a maze of bureaucracy - thereby driving up costs, increasing delays, and creating inefficiency. Poor communication between functions might lead to overcorrections

or undercorrections that reinforce the problems. At the time these processes were put into place, organizational priorities were growth and control. Sequential specialization was the best way to achieve these priorities. It is our contention here that with today's needs for flexibility and innovation, past paradigms will not work. There is a need to increase product development speed, reduce cost, and maximize windows of opportunity. Many companies enforce solutions that involve single loop learning that occurs within the existing structural parameters, as opposed to double loop learning[l]. For instance, a marketing problem will require a marketing solution, or a lead time problem will be typically solved through tightening of the distribution channel. Such solutions usually provide marginal benefit, since they emphasize functional boundaries rather than the interfaces between boundaries, thereby retaining many of the past problems. What is needed is a paradigm shift. A new product development paradigm, based on interactions between functional areas and oriented towards innovation and flexibility, is needed to facilitate competitiveness in the global economy. This paper presents a conceptual framework for such an approach. We first present the fundamental components and structure of our conceptual framework, along with the delineation of four important phases in a product's development. This framework was derived through a sequence of 18 interviews with a product development manager involved in the design and re-conceptualization of the product development process at a large telecommunications firm. It was subsequently modified on the basis of feedback from a panel of five experts who have extensive experience as product development managers/ consultants in the progressive high technology electronics industry. We consequently present and discuss the modified framework, which, based upon the collective experience of these experts, is generalizable across firms that face a similar dynamically changing environment. It is normative in nature, since it possesses greater external validity than what is followed at just a single case firm. We also point to similar practices that are consistent with and supportive of our framework in several other innovative firms in the high technology sector of the economy. Finally, we provide evidence for

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evaluating the framework based on a review of prescriptive literature in reengineering and innovation areas. 2. PRODUCT INNOVATION FRAMEWORK There are five basic tier groups involved in our model of product development, and these are schematically represented in Fig. 1 and Fig. 2. Figure 1 shows each group and its fundamental relationship with the other groups. The rays connecting the tier groups are representative of the assumed responsibilities that one group has to another, and the information that must be transferred between them. This schematic represents the viewpoint that the on-going process of product development is not a linear process, but one which requires constant change and reconsideration of the product as it proceeds through each phase of development. The concept of simultaneous engineering, where each functional group is involved in the development process throughout a product's development, supports such a non-linear process. The timing relationship in the product innovation process of our conceptual model is best shown in Fig. 2, where four cooperative triads are presented. Each of the four cooperative triads represents a different phase in the evolution of the product, during which three of the five tier groups are directly involved with each other. The product management group represents the interests of all five tier groups. What may be inferred from Fig. 1

Target Customer

(IV)

/

Product Design

Product Management

(i)

Product Marketing

(VIII)

Product Manufacturing

Fig. 1. Product developmentframework.

Target i Customer

(I)

.- Product Marketing

Product F6~sibi/ily

Management

Target . Customer

L (IV)

Product Design

Product Management

Manufacturing

(VI)

Deign

Product Men~mnt

Product II Manufacturing

~ (VIII)

Product Marketing

Fig. 2. Cooperative Triads of the product development framework.

and Fig. 2 is the necessity to have a cohesive and synergistic approach to the product development process. The Inception Triad, consisting of the Product Management, Target Customer, and Product Marketing groups, is involved in either the initial introduction of the product concept to the target customer, or in the reception of a new product concept from the target customer. This phase of product innovation considers the initial relationship of a company with its customer, the determination of a desired basic product feature list, an assessment of market acceptance and pricing, and volume and packaging considerations. The Feasibility Triad consists of the Product Management and Target Customer groups, but requires the Product Design group rather than

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the Marketing group to determine the feasibility of a new product idea and its design. This phase is intended to determine if, in trying to fulfill the new product's feature list, success will be impeded by any design factor constraints present. Such constraining factors may include availability of applicable technology, limited access to essential 'raw' materials or reasonable substitutes, budgetary constraints, acquisition of design tool technologies, and the experiential level of present design personnel. Once it has been determined that the product feature list may be fulfilled, perhaps after a reasonable adjustment has been requested and accepted, the next phase in product development requires that the Product Manufacturing group become involved in the product's development. The Realizability Triad consists of the Product Management, Product Design, and Product Manufacturing groups. Although the previous triad has determined the feasibility of the product, the existing manufacturing facility must be consulted to ascertain whether the product can actually be made. As obvious as this may seem, factors affecting production of a product are not solely limited to capabilities of an existing plant. Factors such as plant capacity (including volume and scheduling considerations) and technical expertise (including familiarization with the type of product and relevant product support aspects) do not necessarily determine success in an innovation oriented company. Consideration must also be given to a manufacturing plant's ability to quickly adapt to a changing environment associated with product development. Thus an intra-company network must exist between design, manufacturing, and marketing to support quick response and transfer of information. This is unlike traditional processes where group mentality and functional roles may impede an understanding of the entire process, and lead to delays and possibly costly mistakes. One means by which various group members may gain a better understanding of each of the supporting group roles would be for a company to organize temporary sharing internships among the various groups. The last phase of product development considers the packaging and transport of the final product through the distribution channels for eventual sale to the customer. Packaging,

transport, and warranty/repair factors must be considered here. The Product Management, Product Manufacturing, and Product Marketing groups make up the Distributing Triad. The Marketing group often dominates this Triad simply because of its expertise in knowing how to reach the customer through the advertising and distribution channels. It is necessary however, for the Marketing group to understand any existing limitations that the Manufacturing group may have regarding the packaging and transport requirements. It may sometimes become necessary to expand manufacturing capability in order to overcome these constraints, or to seek an outside agency or firm to provide such services.

3. THE PRODUCT DEVELOPMENT GROUPS There are essentially four functional groups that may be found within a firm which focus upon fulfilling the target customers' needs. The role that these groups play include representing and introducing the product to the market, designing the product to meet the requirements specified by the market, manufacturing and distributing the product, and coordinating the product's development from its inception through completion. These groups are named as the Product Marketing, Product Design, Product Manufacturing, and Product Management groups in our proposed conceptual framework. Each group possesses unique characteristics, fulfills a different role, and discharges different responsibilities in the process of new product innovation.

3.1. Marketing group The marketing group of any organization must fulfill at least two functions and responsibilities those of representing the firm, and those of representing the customer. It thus has a dual focus. The marketing group is the direct representative for the company, and the primary channel by which the customer may attain its product needs. Therefore it facilitates a symbiotic relationship between a company and the target customer. Through the marketing group, a company learns about its target customer base including information about market trends, desirable product features, and success potential -

-


of the new product. The target customer on the other hand learns of a company through its contact with the firm's marketing group. There are at least two different approaches from which the target market needs can be fulfilled. In the first approach, the Marketing group serves as the surrogate target customer, and helps the company in developing a product that it perceives will fulfill the needs of the target customer. Quinn [24] suggests that the target customer is missing in 30-40% of cases. The perception of the market requires those involved in product development to make assumptions about the goals, wants, and needs of the end user. Such assumptions can be founded on market research and demographic studies. The other approach that may lend itself to fulfilling target market needs is the one in which the customer specifies the product requirements directly to the product developer. Caution must be exercised here because the customer is also basing their needs upon certain assumptions. The target customer may not fully understand, or be completely aware of, a preferred solution to their problem. Considerable time and money may be spent, in hindsight, for things that should have been considered early in the design phase. An example of this may be human-factors issues such as styling, physical interface, or standardization considerations. This is clearly a case where the Marketing group may lend considerable help in the design process. In either of these approaches, it is necessary to validate the assumptions made about the target customer before proceeding down the path of product development. Validation of these assumptions may be done by the company's marketing group, an outside marketing consulting firm, or by directly interacting with the end user of the proposed product. This process of ascertaining information about the end customer needs, and seeking to identify how the product will fulfill those needs, should be re-evaluated throughout the course of the product's development. The actual initiation of product development should occur only after the features of a new product are comfortably understood. It must be stressed here that although this decision is clearly subjective, there is a point reached in all development processes beyond which a continual effort to get the product specified to an exacting degree up front not only causes delay in the product's

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development, but also delays its introduction to the market place. A company involved in new product development must be willing to accept and adapt to risk and uncertainty to some extent. Companies involved in product innovation that try to project the market needs, tend to be more of a market driver willing to accept more risk in their capital expenditures than a company that tends to 'listen' to the market. The latter type of company would tend to be averse to risk and a latecomer to the market. The marketing groups of these companies may be more involved in monitoring the trends and reacting to the market needs, rather than creating a need in the market place. Regardless of what motivates a firm dedicated to product innovation, the final target is clearly the customer. In fulfilling the needs which are specific to the targeted customer, introduction of a new product improves a firm's chances for success in the market. The most widely used media for information exchange, including television, radio, and periodicals impact upon the target base at only a superficial level. The most significant impact on the customer is made through the product being delivered. Superior product design and quality is the key to success, both in revenue generation and market perception of the company. The marketing group must ensure that the final product's design is of utmost quality and workmanship, and fulfills the consumer's expectations and needs. Understanding what the customer wants, and designing a good program for the new product's introduction provides a good platform from which to launch. Motorola's customer-focused product planning is a systematic attempt to put the voice of the customer into initial product design and planning, and is representative of similar efforts in the high technology industry aimed at incorporating customer preferences into new product designs [9]. The marketing group also plays a pivotal role in screening new product ideas. Once the screening process has determined a favorable position toward the continuation of a product's development, a new product's marketability must be further examined. Factors such as market timing, product usage and utility, technical feasibility, and product life cycles must be considered. Along with concept testing,

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product testing, technical feasibility studies, and test marketing, the marketing group must also be involved with profitability analysis. Profitability analysis must take into consideration manufacturing fixed and variable costs, R & D expenditure payback, sales forecasting, sales promotion, product distribution and advertising, and if necessary, additional expenditures for product improvement.

3.2. Design group The primary responsibility of the design group is to develop a product that fulfills the consumer's needs. If the firm is of a type that expects the customer to specify the end product's specifications, the design group should take the opportunity to clarify what the customers need, and to consider any problems which may arise in fulfillment of the product's requested features. This is particularly true if the design is being done for one unique customer as opposed to for mass markets. The design group is able to consider the proposed product specifications before proceeding with the design by involving itself directly with the target customer. The process of going through a 'wish-list' of desired product features gives time for the target customer and the design group to consider the product's design and manufacturing feasibility. It may even be possible for the design group to provide a prototype working model. This will allow the customer to better understand whether all issues have been considered, even though this model may not be capable of fully providing all the features requested. If the firm is an innovator, then the firm has made some assumptions about the consumer's needs. In these cases it would be necessary for the design group to directly interact with the firm's marketing group. As was stated earlier, the marketing group for this type of organization would seek to identify the market's needs and validate any assumptions through marketing research and demographic studies. Once the necessary information has been passed between the marketing group and the design group via some internal information feedback system, it should be possible to reasonably understand the basic requirements and feature set that must be incorporated into the product's working model. A study at six major US electronics companies reveals that customer and user needs assessment

is a particularly critical aspect of product definition[2]. Hence change to a product definition during design and development must be managed carefully. Once the design and marketing groups are satisfied that the product specifications and feature list match those of the target market, the design group enters into realizability studies. These studies consider if the resources available to the company are capable of meeting the needs of the product's design. The availability of existing technologies, and if necessary, the cost of developing new subsystem technologies must be considered here. The research and development activities of the firm can be especially helpful in providing the needed information or developing these new technologies.

3.3. Manufacturing group Probably the most difficult consideration which management must face is the large outflow of capital needed to support the initial production of a new product. Though payback ratios, return on investment, or return on asset calculations are often made, it is important to understand that there is generally a considerable time delay between the initial introduction of a product and the reduced costs available through economies of scale. As most new product introductions are often labor intensive and may consist of specialized components, the design group must maintain design simplicity and limited sub-component assemblies to keep costs of production to a minimum. It is the entire product development team's responsibility to ensure that the initial prototype models do not contain unnecessary features that may over-complicate product design or product manufacturing. While preserving the creativity that is cherished by the design group is important, lack of attention to process details that facilitate efficient manufacturing of the product can lead to costly redesigns and lengthen the overall product development leadtime. Compatibility with the current manufacturing processes, plant layouts, skill levels of the manufacturing employees, long term capacity, and the dominant existing process design should be kept in mind when addressing trade-offs between adopting radically different products or incrementally augmenting existing product designs.

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Limiting the application of new design techniques or new technologies solely because of production limitations may result in losing ground in the market and any edge over competitors. Obviously a designer must take into consideration a production facility's ability to manufacture the designed product. However, not moving forward with an innovative design concept can only spell disaster in the long-run, especially in the high technology industry. Consequently foresight in planning for testability and manufacturability greatly reduces the potential need for product redesign. Though at first the initial product will require rebuilding and design reconsideration, the establishment of a feedback process between the manufacturing and design groups increases the likelihood that the cost of the new product will be reduced along with attaining higher quality. In order to promote these goals, the paging products division at Motorola begins modifying an existing facility to accept the new product as soon as design work for it begins. Motorola shapes the product design and factory design to match, and produces the lowest systems costs by taking into account variables such as yielded quality, cost of materials, and value-added labor [15]. Product features that are critical to marketing the product, and which aid in its delivery and distribution to the final customer, must often be built by the manufacturing group. Thus information related to product demand, industry standards, packaging, and distribution system design must be considered. The industrial engineers within the Manufacturing Group must assess production cost and price margin requirements. This data can be shared and co-ordinated with the Marketing Group, along with understanding how the Manufacturing Group can fulfill the service and product requirements of the customer in order to achieve product success. A good working relationship between these two groups during the product development process can also guarantee that the Manufacturing Group knows the current status of the market's needs, and that the Marketing Group clearly understands manufacturing capacity and schedule requirements and limitations. 3.4. Product management group

The product development group serves to implement the corporate strategy, which defines

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the product development objectives. This group must be involved in all stages of a product's development from its initial inception through product testing, product introduction to market and, finally, target market distribution. The product development group must ensure that the corporate goals are being considered and followed within the realm of product development. This includes monitoring all the related groups for any diversion from this focus, and ultimately delivering the finished goods to the marketplace in a timely fashion. Through an efficient use of product development teams, Compaq has been able to introduce new products in 6 to 8 months instead of 18 months and at much lesser cost. The central role of Product Management in product innovation is evident from its involvement in each of the four phases of product development. In particular, the product development group can play a pivotal role in the screening process. The screening process should include the marketing, R & D, and manufacturing groups prior to the initiation of product development. This process must consider the corporate strategy and other factors such as the operational compatibility, financial viability, competitors' market position, and corporate resource and personnel limitations. Although the overall product concept may be marketable, these considerations may impede success. As shown schematically in Fig. 1, Product Management is central to coordinating the dissemination of information among differing groups and actively participating in a product's development. In some instances, it may be necessary for the members of Product Management to work as the 'devil's-advocate' in that they may need to fulfill the role or express the concerns of a group that may not be present in any one of the Cooperative Triads. More importantly though, Product Management must seek to provide and maintain an environment that is conducive to an innovative spirit within the organization and supportive of the needs of each tier group during a product's development. Above all, members of the Product Management group must be committed to new product innovation. This commitment includes support by means of capital expenditures, motivation, recognition of all those involved in the product's development, and respect for other groups' opinions. Product Management must consider

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the company's objectives and focus on how a new product investment may divert resources from the normal product line or services provided by the company. The underlying question must be whether the new product endeavor can fulfill the fundamental company objectives. However, too much preoccupation with return-on-investment would be short sighted, and would imply the necessity for reevaluation of corporate strategic direction. Though not a determinant of success, Product Management must also formulate a planned schedule that provides a guideline for product development's process cycle. The schedule outline can be used to monitor the product development progress, and to estimate as closely as possible the date of market introduction. Shrivastava and Souder [26] describe ten principles of managing the new product innovation process that may be considered essential requirements of a Product Management Group. This group must possess an ability to systematically select the best projects and the most cost-effective method of management, pay close attention to internal transfer of technology, allocate corporate resources efficiently, and eliminate disharmony between R & D and Marketing. Innovative projects should not be controlled with traditional budget techniques, nor should they be managed with classical organizational approaches only. 4. PRODUCT DEVELOPMENT PERSONNEL CHARACTERISTICS So much preoccupation may be given to the process of product development, that it is quite easy to overlook some fundamental issues regarding personnel characteristics. In considering the different personalities within a product development team, it is best to understand that no unique formula exists for the type of people that one must have in each group. Beyond the obvious necessities such as each member's educational achievements, professional capabilities, and focused career aspirations, there is a need to achieve some understanding about the psychology of those involved in product development. Though broad generalizations can lead to gross error, it seems plausible that certain types of people are drawn toward differing aspects of the product development process. Based on the feedback from the panel

of experts and our own personal observation, typically there are four personality types involved in the product development process - innovators, developers, introducers, and coordinators. In focusing on only these four personality types here, one can see that many other alternatives are also possible. The innovator group personality focuses upon idea generation and the 'selling' of creative concepts and their specification. They tend to be close to the market, take pleasure in the application of the newest of technologies, and are self driven. They also tend to have short attention spans, and can follow a product's development up to the point where they are given sufficient proof of the product's possibility. It requires the next personality type to 'see-it-through' and get the job done. The developer personality type, though possessing the same capable talent as an innovator, has a tendency to be a problem solver. They apply the existing resources available to them. This personality type may be capable of working within many different domains in the development process, encompassing, in the telecommunications industry, such disciplines as hardware, software, firmware (software written into a programmable device), systems, and human factor design. While involved with hardware design, the developer's considerations include manufacturing concerns, testability, component availability, cost issues, and understanding of production technologies. The software developer must consider designs constrained by available hardware, and may even need to be versed in software/hardware interface techniques. The human factors designer must not only work within the hardware and software domains, but must also be able to interact effectively with marketing personnel and the end-user. The developers must be capable of working within a design as well as a production environment. Capable of carrying a design from inception to completion, these people can pick up and finish the design where the innovator may have left off. The introducer acts as a liaison among the innovators and developers, the marketing personnel, and the end-customer. It is the introducer's responsibility to produce and introduce prototype models of the product, which may include traveling to a client's location and managing a product demon-


stration. Finally, the coordinator acts as an intra-disciplinary intermediary among the differing design groups and organizational layers within a firm. Should disputes arise between differing personality types, it may be necessary for the coordinator to resolve them so as to allow a congenial attitude among those involved in the design process. These personality types can potentially exist within any of the four product development groups discussed previously, though some are better suited to a specific group and thus more likely to exist within it. The design group is more likely to have the innovator and developer personality types, while the product development group responsibilities can be discharged more readily by the coordinators and developers. Introducers would be more valuable within the marketing and manufacturing groups. The latter could also contain the developer personality type. Clearly the disciplines necessary to successfully work in the new product development team requires a diverse set of skills. New product development personnel should have broad based backgrounds in manufacturing, design, test-marketing, sales, finance, project management, customer relations, statistics, and possibly psychology and sociology. Although it is not possible for any one person to possess such a vast array of talents, it is not improbable to find people that possess at least two or more of these relevant backgrounds. The availability of such personnel within the firm is also dependent upon the firm's career development policies. 5. COMMUNICATION LINKAGES IN THE NEW PRODUCT DEVELOPMENT PROCESS The intra-company communication linkages indicated by roman numerals in Fig. 1 and Fig. 2 represent the information exchange that must be maintained among the five tier groups involved in product development. It is important to note that the information transferred among these groups may change during different phases of development (Cooperative Triads of Fig. 2), even though the basic relationship between them essentially remains the same. Constant review during each phase may identify changes that necessitate return to a previous triad for review and consideration. A

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continuously evolving and improving product requires this type of intra-company relationship. Table 1 summarizes different communication linkages contained within our product development framework, the co-operative triads or phases of product development within which these linkages exist, and the functions and responsibilities discharged with each type of communication link. It is easy to see from Table 1 that the product development process is a non-linear one, as several groups come together to share information and promote product development during different stages of its evolution. For instance, Product Marketing plays an important role in both initiating the product as well as finally distributing it in the market place. These communication linkages also foster the notion of concurrent engineering, whereby several different product development groups simultaneously engage with one another to define, design, manufacture, and distribute a new product. The focus of the Inception Triad is to determine a product feature list that will best describe the functions to be performed by the product, how these functions shall be performed by the product, and an overview of where it will be used. Interface with existing product lines may also need to be considered. Marketing research may be considered, as well as the product's evaluation and introduction techniques to be applied. In understanding the customer base, it must be determined for whom, and for what purpose is the product specifically targeted? Is there a wide range of applications or end users, and is there a focus on any specific demographic parameter that is temporary? Finally, it must be ensured during the inception phase of development that unrealistic promises are not made to the customers with respect to the needs and requirements placed upon the existing design, manufacturing, and distribution capabilities of the firm. The focus of the Feasibility Triad is to determine if the product to be designed and produced is at all feasible with either existing technologies or the level of expertise available within the Product Design group. The most notable consideration here is whether the company can feasibly provide the product with the desired features within the management specified budgetary constraints. In the event that drastic changes are required, it may be

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necessary to return to the initial phase of inception. The focus of the Realizability Triad is to determine if the product specified during the Feasibility stage can be produced by the existing manufacturing facilities available at the company. Factors such as manufacturing modernization, possible capital expenditures, currently available stock of raw materials, future vendor capabilities in supporting the supply of raw materials and components needed for the new products, and limitations of the existing plant capacity must be considered. Sometimes a manufacturing facility may have enough capacity, but the existing personnel may not have the needed skill in applying new manufacturing techniques, or utilizing new equipment acquired to support the new product lines. The latter factor will necessitate personnel mobility and, if necessary, further training. It is also the responsibility of the entire product development team to ensure that the production facilities are completely supported in the process of manag-

ing a product's initiation and entrenchment into the production facility. Maintaining a cooperative and synergistic attitude among group members is essential in meeting this objective. Once the successful development of a new product has been completed, the next phase of product innovation must be concerned with the marketing and distribution of the product to the Target Customer. This Distributing Triad phase must focus on introduction of the new product to the market with utmost care, so as to ensure that the market's perception of the product is carefully developed. It has been shown that new-product managers can double their chances of success when they match a new product with the right sales force and distribution system [23]. Decisions associated with packaging, distribution, decentralized or centralized inventory control, and customer support are germane to developing the correct perception and expectations in the marketplace. Supporting customer demand ultimately entails managing a close relationship between production capacity, dis-

Table 1. Communication linkages in new product development framework Communication Linkages

Co-operative Triad(s)

Functions and Responsibilities

Target Customer-Product Marketing (I)

Inception

• Determine product parameters, features, and price levels • Evaluate ascriptive and descriptive characteristics of customer base • Identify key demographic variables that critically impact new product introduction

Product Marketing-Product Management (II)

Inception Distributing

• Monitor and regulate return on investment (ROI) considerations • Align product definition, selection, and distribution decisions with the firm's corporate strategy • Match product manufacturing and distribution lead time with target customers' needs and expectations

Target Customer-Product Management (nl)

Inception Feasibility

• Provide final approval of preliminary product schedules, investment, and product feature list • Ascertain degree of customer support, product warranty, and repair services to be provided

Target Customer-Product Design (IV)

Feasibility

• Obtain specific justification as well as details for various product features and design characteristics

Product Design-Product Management (V)

Feasibility Realizability

• Provide liason help internally when the target customer base does not possess the expertise needed to interact directly with the product designers • Differentiate between the 'needed' and 'desired' list of product features

Product DesignProduct Manufacturing (VI)

Realizability

• Implement and manage the transfer of designs to manufacturing, whereby unnecessary design-product bottlenecks and redundancies are eliminated • Enslave design support systems like CAD/CAM to both designers and manufacturers • Foster flexibility in quickly and expediently turning around innovative product designs into product models for test markets

Product Manufacturing-Product Management (VII)

Realizability Distributing

• Resolve potential scheduling problems with the existing product lines • Maintain an adequate new product supply to support customer demand and enhance the new product's perceived value

Product Manufacturing-Product Marketing (VIII)

Distributing

• Determine final package design contingent on how the distribution channels are going to store and market the product • Evaluate the impact of promotional and advertising campaigns on manufacturing and distribution systems' capacity


tribution channel efficiency, and promotional activities chosen to instigate customer demand. 6. EVALUATION OF THE FRAMEWORK

It is proposed that the framework pictorially depicted in Fig. 1 and Fig. 2 and discussed above represents a paradigm shift from the traditional linear product development processes. However, the quality of the prescriptions made should be subject to evaluation. One level of evaluation can be made based on the reengineering front. If the proposed process is indeed representative of radical change over a traditional sequential process, what is the extent to which it conforms to the recently founded prescriptions of reengineering? A high level of conformity might indicate that the fundamental direction of change is consistent with re-conceptualization demands from today's environment. The proposed framework also purportedly facilitates a greater degree of innovative behavior and ultimately greater product innovation. This contention can be evaluated through a direct comparison with prescriptions from the multi-disciplinary field of organizational innovation. The diversity of empirical work in this field has been succinctly summarized by innovation theorists and shows remarkable consistency. Here, a high level of conformance might indicate that following the normative tone of this framework would lead to product innovation. Finally, the thrust of the framework has been derived through evidence initially obtained from a representative of a single, albeit progressive, corporation. To provide evidence of external validity, feedback on the framework was solicited from five experts in the high technology industry. This feedback was incorporated in the prior discussion. In the spirit of reengineering, attempts were made throughout the discussion to describe logical ways for various tasks to be accomplished in order for the development process to reach desirable goals. However, some aspects of the feedback obtained alerts us to potential contingencies and caveats that might arise in a practical setting.

6.1. Reengineering prescriptions While scientific empirical studies on reengineering of business processes are limited due to the newness of the phenomenon, there have

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been a number of case studies examined by prominent academics and consultants. These cases have provided insight into some general prescriptions for successfully changing processes in order to compete effectively in an environment that rewards flexibility and innovation. These prescriptions are listed in the first column of Table 2 along with the corresponding citations. The last column of the table describes how the proposed framework conforms to the prescriptions. The fundamental premise of reengineering is discontinuous thinking which refers to breaking away from old rules, structures and assumptions that underlie existing processes. The framework proposed here represents such contemporary thinking in progressive corporations that recognize the need for a paradigm shift. The normative tone is deliberate, with the recognition that the framework can be tempered with reality in actual implementation settings. It also reflects a heavy emphasis on cross-functional coordination, a basic tenet of reengineering. The focus on coordination and communication linkages as an integral part of the framework fosters a global view-point and reduces the chances of functional sub-optimization that plagues traditional processes. Hammer [14] recommends that processes be organized around outcomes rather than tasks. The basis of the triads presented is a specific set of outcomes. For instance, the focus of the inception triad is to determine a product feature list that best describes the product. The groups within this triad, Target Customer, Product Management and Product Marketing, reflect the expertise to accomplish that outcome. This enables functions to participate in a process where the outcome is visible, as opposed to performing a specialized function to a portion of some incomprehensible overarching process. Further, the framework indicates evolution through triads based on information exchange rather than standardized protocol. This evolution is facilitated by having common personnel in diverse roles within different triads. Such continuity reduces chances of parochialism prevalent in the very notion of 'hand offs'. It also reduces the chance of the process becoming stagnated by having different triads merely collect and process information passed to them from the prior phase. For instance, consider a sequential processes in which the Product

Davenport and Short [6]; Hall et al. [13]; Cypress [5]

Hammer [141 Hammer [14]

Remove delays during hand-offs between functional areas

Minimize functions that just coUeet and process information passed by other functions

Forge links between functions while activities are in process rather than after they are completed

Davenport and Short [6]; Davidson ]7]

Involve the customer of the process on the team

Hammer [14] Hammer [14]; Davenport and Short [6] Davenport and Short [6]; Scherr [25]

Have those using the outputs involved in the process

Broaden the vision of personnel involved

Have a process coordinator/owner

Pertmanel

Davis [8]; Hall et al. [131; Scherr [25]; Cypress [5]

Evaluate customer value and drive process based on this value

Castom~r foem

Hammer [14]; Davenport and Short [6] Hammer [14]; Hall et al. [13]

Organize processes around outcomes, not tasks

Straeam~

Hall, Rosenthal and Wade [13]; Hammer [14]

Processes should be a product of discontinuous thinking

Reference(s)

Product development framework

Product Management is key coordinator of the entire process

Coordination across functions is facilitated through recruiting of multiple personality types and broader cross-functional understanding

Within each triad, personnel responsible for outputs closely interact with those using the outputs

Direct customer involvement proposed throughout the front end of the process (Inception and Feasibility Triads) where it can make significant difference

Process target clearly defined as the customer even before the inception phase

No final consolidating process; functions coordinate during the process itself

Both collection and processing of information is done concurrently, and based on interaction between functions

Phases coordinated through common personnel

Organization is around triads which are defined by specific outcomes and responsibilities

Basic premise of framework

Framework conceived without a prior process as a basis

Table 2. Congruence of Framework with Reengineering Prescriptions

Processes should involve cross functional coordination

Premise

Prescription

I

t~

o~


Design group hands a blueprint to Product Manufacturing which in turn collects and processes it without debate or interaction. In fact, due to the way traditional processes have evolved, the need for interaction is reduced by high degrees of formalization of procedures. Such a structure lacks both flexibility and ability to innovate. Any changes could lead to costly mistakes in the final product. The alternative structure presented here requires Product Manufacturing and Product Design to interact so that design bottlenecks are eliminated. It can also expedite design transfer and increase ability to handle contingencies. Also, the coordination within triads, each of which represents parallel activities, eliminates the need for a final assimilating process where outputs of independent groups are consolidated. Another set of prescriptions for reengineering are related to the customer. Redesigned processes should be driven by detailed knowledge of customer needs. The sequence of triads and continuing exchange of information between different groups in the framework emphasizes this focus. It has been repeatedly stressed that detailed customer analysis should precede product development. More importantly, customer involvement in both inception and feasibility phases, i.e., early in the process, can make a real difference to the product that ultimately develops. Moreover, the triad approach can accommodate proxy representation of customers through Product Marketing and even Product Management. Finally, the personnel that actually use the outputs of a process should be involved in that process. This is true for the overall process represented in our framework, with the customer as a part of the triads. However, even within each triad, there are definitive input/output relationships. For instance, in the inception triad, the Target Customer provides inputs to Product Marketing; in the realizability triad Product Manufacturing uses outputs from Product Design. These input/output relationships represent symbiotic group interactions and are far different from specialization and scale dictating the need for functions to separate, and produce outputs without involving the people using those outputs. Effective performance of duties in the proposed model is contingent upon effective interaction, which in turn depends on the degree to which a common

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language can be spoken between groups. A basis for this common language is a broader understanding of individual roles within the process. This would include an understanding of cross-functional attributes and ideally a holistic understanding of the complete process. One major facilitator of this is the Product Management Group. Reengineering gurus recommend that process coordinator(s) be established to manage the process across functions. In this framework, Product Management would be that group. It would be responsible for coordination of information across groups, being a proxy information source for any group absent in a triad and ensuring smooth transitions within and across triads. 6.2. Innovation prescriptions

A second set of prescriptions can be used to evaluate the propensity of the framework to facilitate product innovation. Some key authors have discussed these prescriptions, which have been summarized in the first column of Table 3. As with the reengineering prescriptions, these are not mutually exclusive, but collectively define an environment conducive to innovation. Perhaps the most consistent recommendations in the innovation literature are regarding the structures that facilitate innovation. The organic structures characterized by diversity of pooled skills, informal communication, and broad multi-disciplinary skills facilitate innovative behavior in organizations. Such structures provide the latitude to interpret ideas using diverse frames of reference. The proposed new product development framework epitomizes these structures by encouraging personnel with diverse skills to interact and examine alternate ways to achieve the goals for each triad. Consistency of groups across triads enables continuity of innovative ideas. For instance, a suggestion by a customer during inception, while not pursued at that stage can be picked up in a later triad if new information indicates a need to reevaluate. Top management support is critical to innovation and also critical to new product development. Top management can set the tone for innovative behavior by rewarding innovative ideas and setting up structures that facilitate innovation. While this is a contingency in our framework, the idea of an active process owner

Cooper [4]; McGinnis and Ackelsberg [22]; Takeuchi and Nonaka [28] Van De Ven [30]; McGinnis and Ackelsberg [22]; Strebel [27]

Internal company communication and coordination among groups should be encouraged

Innovation and flexibility require redundancy among functional groups

Van De Yen [30]; Takeuchi and Nonaka [28]

A holistic viewpoint is necessary to promote innovation

In novation must be market driven, with the focus on the most demanding customers for ideas

Knight [19]; Van De Ven [30]; Utterback [29]; Quinn [24]; Zirger and Maidique [31]

Drucker [10]; Utterback [29]; Van De Yen [30]

Innovation must be attempted by evaluating distinctive competencies and strategies of the firm

Driver

Van De Yen [30]; McGinnis and Ackelsberg [22]; Knight [19]; Maidique [21]

Top level management support must be present, especially in complex environments

Management

Quinn [24]; Shrivastava and Souder [26]; Bingham and Quigley [3]; Van De Yen [30]; Takeuchi and Nonaka [28]; McGinnis and Ackelsberg [22]

Reference(s)

Product development framework

Customer information drives process and customer is involved directly or indirectly in all triads

Inter functional triads and an active process management group promotes holistic understanding

Overall corporate strategy defines objectives of the process and provides direction for each triad. Competencies of individual functions accounted for during the interactions

Top management support is critical to success. Product Management can eefectively solicit and communicate that support in a fashion consistent with corporate objectives

Diversity of roles played by the functional groups in different triads. Broad cross functional understanding encouraged

Communication and coordination within and across triads is the essence of this framework

Diverse sets of skills reflected in triads, bonded by a well directed focus

Table 3. Congruence of framework with innovation prescriptions

Innovation should be promoted through a self organizing team approach which combines diverse skills from key areas within the firm

Strnetm'e

Prescription

2

I

g~

t~

oo


can effectively solicit and communicate the support of top management. Top management should state and communicate corporate strategy to define the specific objectives of each triad and consequently the strategies for individual groups in the triads. The communication between people who understand the market, the technologies involved, the manufacturing capabilities, etc. allows self-motivated evaluation of organizational competencies, thereby promoting innovation within those competencies. However, the holistic approach afforded by members of Product Management for a given corporate strategy might reveal areas where there is a need to invest in or expand existing competencies. Senior members of this group might have the political clout to potentially champion product innovations throughout the process. As indicated earlier, this framework involves customers directly or indirectly through all triads. Studies have indicated that 60-80% of important and successful innovations are in response to market needs [19, 24, 29, 31]. The investment in product innovation is too high to relegate customer interaction solely to the back end of the process. This framework appropriately reflects the sequence in which the customer comes first in the process and technology comes second.

6.3. External validity From the prior discussion, we have evidence to indicate that the conceptual framework appropriately reflects elements of successful reengineering and innovation. The framework developed and presented in this paper was validated and modified based on a feedback by a panel of five experts in the high technology electronics industry. ~ This industry values new product innovation and short lead times by using progressive product development processes [23]. Each panel member had at least a Master level degree in Engineering, and had spent an average of 13.4 years in new product ~These experts were professionals/consultants with firms such as American Telephone and Telegraphs (AT & T), Motorola Corporation, and Bell Research Labs. It should be noted however, that their view was solicited based on their expertise in the area of new product development. The framework is presented here as a normative view and does not describe the process in any of these organizations.

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design and development. The panel members were requested to contribute their insight into the validity and appropriateness of the proposed conceptual framework. Specifically, they were asked to respond to the following set of questions: 1. Do you agree with the framework? 2. Has anything related to product innovation, design and development been omitted? 3. Are the recommendations implicit in this framework sound? The panel members were requested to indicate their open-ended views and comments on an earlier version of the framework presented. In general, all panelists strongly concurred with the fundamental conceptual aspects of the framework. Most prescriptive feedback was incorporated into the preceding framework discussion. The panelists strongly endorsed many of the suggested guidelines in the framework. For example, one panelist experienced "mandatory exchange of engineers between production and development (design) for periods up to one year" so that they could get a broader understanding of the process. Another indicated that the framework reflects what is "occurring in industry" and that the non-linear representation is necessary due to a "dynamic and evolving marketplace". It must be understood here that the exact implementation of this framework may differ from one firm to another, and be dependent to some extent on the operational environment of the firm under consideration. For example, one panelist commented that "There is a lot of reliance on the Product Management team. Yet in reality this is one of the main problem areas". This viewpoint was supported by another panelist who commented that "It has been my experience that Product Managers are among the weakest technical people in the company. Developers mistrust and disrespect them because of their lack of knowledge and understanding". Another panelist said: "The Product Management organization is the center of your framework, but plays a role substantially different to that described in our company. In my corporation they have financial responsibility for the product, including funding most phases of a product's inception. Often a Project Management organization is funded by Product

440


Management to perform the high level planning, organizing, monitoring and controlling necessary to provide the intra-company communication you have noted". Several panelists expressed opinions regarding the role of Product Marketing. One panelist commented: "The Product Marketing organization is given much more responsibility than I have seen ...... This may be related to a more reactive form of marketing that I have experienced .... but they do not have financial responsibility and have less interaction with Product Manufacturing". One panelist felt that in a technology company, many developers are jealous of Marketing because it is a "softer place compared to manufacturing and yet has greater advancement potential". Another indicated that quite often a Product Marketing Group tries to "modify product specification midcourse - - and then development cost and time constraints help freeze specifications, to everyone's delight". Yet another panelist strongly felt that "marketing should observe customer and product design groups work out product features since they need the technical knowledge to communicate meaningfully". Overall, the five panelists felt that the revised framework presented here is conceptually accurate in capturing the new product development process in high technology firms. Through the feedback reported here, they did outline the problems that are likely to arise when the framework is actually operationalized. Implementation specifics can thus vary and account for contingencies across firms. Differences in implemented versions of this process would of course lead to differing degrees of success and outcomes for the new product development projects. Such an observation also suggests that if the process outlined in this article is well followed and implemented, new product development can become a source of competitive advantage for firms in the market place. 7. CONCLUSION While there is no dearth of literature on new product development, the authors believe that much of the prior prescriptive work is integrated in this contemporary framework of new product innovation. The discussion illustrates and comprehensively lists the issues and factors that

must be considered during the product development process. For managers involved in product development and who clearly see the need for a paradigm shift as suggested in this paper, the richness of the discussion can provide definitive guidelines for action. For instance, practical considerations such as desirable personnel characteristics, the roles of different groups as they work towards triad objectives, and the specific information exchanged between groups in the various triads, can facilitate the implementation of the framework. The thrust of our framework is also consistent with what many firms are doing today to compete more effectively in the marketplace. Apart from the company examples listed in the paper, an empirical survey of 31 firms shows that approximately 60% of the firms use multifunctional teams and customer involvement to accelerate new product development [16]. Our framework explicitly recognizes and promotes the importance of these two issues. The implications of this framework for the manufacturing function are that it must get involved in the product planning and development process early in the planning phase, either directly or through a liaison in the product management group. Such a notion has also been advocated and supported by Gerwin [11], who suggests that the manufacturing group can give other functions a more informative knowledge base and bring useful cost and production time estimates to the table during the planning process. Consistent with our framework, he also recommends that a manufacturing representative should work with the marketing group and foster inter-personal relationships that can facilitate the process of concurrent design. However, in order to contribute meaningfully, the manufacturing function would need to establish credibility upstream in the planning process by doing a good job of its conventionally assigned responsibilities. In order to remain competitive, the manufacturing group must also apply the newest of manufacturing techniques and technologies. Insofar as these new applications may affect the design and marketing aspects of product design, manufacturing must convey the relevant information to the design and marketing groups. Product innovation is thus a 'living' process in a sense that growth is facilitated by a careful monitoring/matching of the product's external environment and internal


design and manufacturing capabilities, and nurturing it to survive to maturity. This becomes especially critical in light of the fact that about 46% of all new product development costs go to failures [23]. The i m p o r t a n t p o i n t to consider with the new p r o d u c t d e v e l o p m e n t f r a m e w o r k presented here is that the process o f p r o d u c t i n n o v a t i o n should reflect a new p a r a d i g m reflective o f the need to effectively reengineer processes a n d i n n o v a t e in a n e n v i r o n m e n t where the basis o f c o m p e t i t i o n is changing. P r o d u c t d e v e l o p m e n t is n o t a static linear process b u t a process by which all the p a r t i c i p a n t s m u s t work in t a n d e m a n d in a cohesive, symbiotic m a n n e r . M o s t i m p o r t a n t l y , it is necessary to realize that p r o d u c t i n n o v a t i o n m u s t proceed in a d y n a m i c , circular fashion whereby it should be possible a n d necessary to frequently consider the p r o d u c t design's status. K n o w i n g the status o f a p r o d u c t ' s development, a n d its relative position with respect to the four triads, w o u l d help in e n s u r i n g a timely c o m p l e t i o n of a high quality reliable product. Such a n o u t c o m e can n o t only i m p r o v e a firm's profitability, b u t in m a n y cases provide a new lease o f life a n d direction for the future.

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tra, Department of Management Science, College of Business Administration, University of South Carolina, Columbia, SC 29208, USA.