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Technology Evaluation
While many of us can think of a new idea, as individuals we usually do not think about or know what it takes to develop a new product and introduce it successfully into the marketplace. While many of the established larger technology companies can take advantage of their current knowledge of the marketplace and relationships with existing customers, new technology companies must build these from the ground up.
In order to increase the probability of success, many companies follow a structured analytical and planning process for developing an idea into a new product. This process is called the New Product Process. The New Product Process contains "stages" within which work is completed and "screens" at which the results of the work and progress are continually evaluated. While following such a process appears to take more time and resources than an "ad hoc" or entrepreneurial approach, the benefit of the process is the higher probability of success that results from the systematic learning that takes place throughout the process.
The following diagram shows a generic New Product Process. Many companies may elect to customize the process, but in essence, the diagram shows many of the key steps. Depending on the industry and the company, development managers may elect to undertake certain steps earlier or delay them to a later stage. In some industries, for example, regulatory requirements also play a key role.
There are two major streams of activity: technical development and business development. A company may start with several ideas at the same time; by applying the following process, it can ensure that the best ideas will survive. While cancelling new product ideas can be costly at later stages, managers must also take into account the cost of failure (e.g., introducing a bad product).
A New Product Process
At any of the screens, if the product fails to meet both the technical and the business requirements for approval, either work on the preceding stage should be continued and refined until the requirements are met, or product development should be stopped. The following table is a detailed explanation of the New Product Process diagram.
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Development
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Technical Activities
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Business Activities
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Go/No-Go
Decision I
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- Technical concept defined
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- Product fits within business plan
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Stage 1
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- Develop demonstration prototype
- Estimate development and production costs
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- Preliminary market assessment (market size, growth)
- Competitive assessment (market share)
- Unique product features
- Competitive advantages
- Magnitude of investment required
- Amount of time required for introduction to market
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Go/No-Go
Decision II
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- Technical feasibility demonstrated
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- Business feasibility demonstrated
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Stage 2
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- Prepare development project plan
- Determine required resources
- Prepare preliminary test plans
- Production feasibility
- Plan transfer to manufacturing
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- User needs analysis
- Development of project definition and justification
- Development and production costs
- Detailed market assessment (size, growth, trends, market share)
- Detailed competitive analysis
- Technology/product valuation
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Go/No-Go
Decision III
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- Development plan accepted
- Development resources available
- Manufacturing plan accepted
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- Business case completed
- Positive business case
- Significance of the product demonstrated
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Stage 3
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- Prepare detailed test plans
- Prepare detailed manufacturing plan including manufacturing cost
- Produce pre-production units for testing
- Develop product
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- Product definition and design refinement
- Initial user testing
- Detailed market planning (product definition, price, promotion, sales, distribution, etc.)
- Limited test marketing
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Go/No-Go
Decision IV
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- Pre-production units completed
- Manufacturability demonstrated
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Stage 4
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- Perform full technical and functional testing
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- Detailed user testing with many users
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Go/No-Go
Decision V
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- Technical requirements met
- Full functionality demonstrated
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Stage 5
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- Detailed production planning
- Set-up production
- Set-up technical support
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- Design packaging
- Prepare product roll-out
- Set-up customer service
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New Product Launch
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- First production run completed and verified
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Stage 6
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- Customer support and sales
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