OIIS Lecture 6: Managing New Product Development Processes

Goals of New Product Development (NPD)

-        Maximizing product fit with customer needs

-        Minimizing the development cycle time

-        Controlling development costs

These goals often conflict (e.g. more fit = more time & cost).

 Customer needs in NPD

Innovation must be customer-focused, not just tech-driven.

Technological advances ≠ always better if they ignore customer value.

First-mover advantages & disadvantages

✅ Advantages: tech leadership, asset pre-emption, switching costs, anticipation.

❌ Disadvantages: free-riders, uncertainty, tech shifts, inertia.

Waterfall vs Agile Development

Waterfall development:

Linear, predictable, but inflexible.

Pros: Clear milestones, easy to manage, good for well-defined projects

Cons: Inflexible to change, longer delivery time, late testing phase

 

Agile development:

Iterative, flexible, but less predictable

Pros: Flexibility, faster delivery, customer involvement throughout

Cons: Less predictability, requires frequent stakeholder engagement

 

Key trade-offs Waterfall vs Agile Development

Structure vs. Flexibility: Waterfall offers structure; Agile adapts to change

Planning vs. Iteration: Waterfall is front-loaded with planning; Agile continuously

iterates

Project Fit: Waterfall works for clear, unchanging requirements; Agile suits evolving,

complex projects

Practical Tips for Startups

Uitleg: Focus op MVP, korte sprints, kleine teams, goedkope tools, klantfeedback en continue verbetering.

Kernboodschap: In kleine teams draait Agile om snel leren met beperkte middelen.

 Interdependence of goals

R&D, marketing & production goals depend on each other.

➡ Coordination is key for NPD success.

Sequential vs. Partly Parallel NPD process

Sequential → slower but lower rework.

Parallel → faster but riskier.

➡ Trade-off: speed vs. accuracy.

escalating commitment

People keep investing in losing actions due to sunk costs.

➡ Lesson: sometimes best strategy = quit.

Process control tools in NPD: avoiding escalating commitment.

• Stage-Gate: Go/kill decisions. Helps avoid this. 

• QFD (House of Quality): Align R&D, marketing, production.

• Design for Manufacturing: Early manufacturability check.

Risk control: FMEA: Failure modes and effects analysis

RPN = Severity × Occurrence × Detection.

➡ Highest RPN = biggest priority om risicos aan te pakken.

Tracking NPD performance

Project: time, budget, success ratio.

Org: patents, ROI, % sales from new products.

➡ “Meten is weten.” — gebruik indicatoren om innovatie te sturen.

Senior managers in NPD

✅ Allocate resources, speed communication.

❌ Can cloud judgment, limit criticism.

 Involving suppliers & customers in NPD

Suppliers → faster, higher quality.

Customers → co-creation, better fit.

➡ Involve whole value chain.

Managing NPD teams

-        Team size:
large teams often more capable but more administrative costs & communication problems
social loafing when size increases, individuals feel they will not receive full credit for contribution  efforts decrease

-        Team composition:
cross-functional teams: diversity vs. homophily

-        Team leadership
Different teams have different leadership needs
Leadership affects team learning and innovation

-        Team administration
Project charter: missions and goals

Contract book: basic plan to achieve goals

NPD systems:

-        Computer-aided design (CAD) systems

-        Computer-aided manufacturing (CAM) systems

Automate design & production → faster & better innovation.

How AI transforms NPD

1. Idea generation → market data

2. Concept testing → simulations

3. Design → generative tools

4. Launch → forecasting

5. Risk control → predictive analytics

   ➡ AI = faster, smarter NPD.

Managerial implication of AI in NPD

AI boosts speed, accuracy, adaptability, supporting NPD goals of fit, speed, cost.

Managerial goals of the NPD process. Objective

1⃣ Maximize fit with customer needs

2⃣ Minimize development time

3⃣ Control development costs

Managerial approaches to NPD. Objective

Use Waterfall (structured) or Agile (flexible) methods.

Apply Stage-Gate, QFD, and FMEA to improve coordination, speed, and risk control.

Avoiding escalating commitment in NPD

Use process control tools (e.g. Stage-Gate) for go/kill decisions.

➡ Stop failing projects early — don’t keep investing because of sunk costs.