Managing Product Launch

Transcription

1 1 Managing Product Launch Operations Management for New Ventures Need for project planning Speed in Product Launch Lower responsiveness Technology lock-in Higher costs Early-mover advantages Market position Network effect Economies of scale Market entry timing

2 2 Stage Gates of the NPD process MWG: Think big act small Balance of technology development, product development and business strategy The 1st minimum winning game MWG is the product-market position that a high-tech startup can reasonably plan to achieve within a month time horizon. Limited enough to be vigorously pursued with the company s available financial and human resources Big enough to provide a solid foundation for defining the MWG for the next 2-3 years Based on Burgelman Jouko & Karjalainen Siegel, , California Management Review

3 3 Rovio s NPD process Customer Involvement during NPD Coviello & Joseph 2012

4 4 Production Ramp-up Phase & NPD Start of production The satisfaction of initial objectives in terms of Output volume, Cost & Quality Time-to-market The development time of a new product Time-to-volume Time to reach full production volume Time-to-payback Reaching the initial financial goals Roles of the production function 1 Laboratory Realising new market and product-related potential Develop new manufacturing processes and production configurations (experiment with new materials, technologies) Requires specialised expertise and ability to take risks Map out what a company s core competencies are to be in future Prototype production To be able to assist product development in developing and testing products. Demonstrates new opportunities the production function may capitalize on Work with prototypes may supersede ordinary production activities Readiness to select processes and collate these in established production systems Based on Johansen & Jouko Riis Karjalainen (2005) 2018

5 5 Roles of the production function 2 Ramp-up production Ability to establish a production system rapidly Ability to fulfil spur-of-the-moment orders with special specifications Temporary set up for the establishment later transferred The actual process may be conducted with external suppliers Benchmarking production A smaller-scale, though competitive production function Retain knowledge and competencies with regard to quality, opportunities for improvement and cost structure used to develop and evaluate the external partners Full-scale production Globally competitive, formidable reliability and productivity Based on Johansen & Jouko Riis Karjalainen (2005) 2018 Technological Complexity (revisited) 2004 Canatu 2014 Autumn 2014 Gold & Green Spring 2016

6 6 From Kitchen to Industrial Scale Embryonic phase Ideation & experimenting starting in Fall 2014 Raw materials and proof of manufacturability Founded in April 2015 Prototype manufacturing: A small facility in Lauttasaari, Helsinki User tests (blind tastings), publicity Test launch in Jan : Set up and start production in a larger facility in Järvenpää Continuous need to increase capacity and output Paulig Group, a large Finnish Food Company acquires 51% About Gold & Green Technology Food science Nutritional qualities of oats + faba beans + yellow peas Processing technology Finding the right composition texture, taste, Challenges of processing grain proteins Patented production method: The oats are sheared and heated under the right conditions & mixed with the legumes (bean, pea) Completely mechanical, no chemicals or additives Manufacturing technology Production technology from China (small equipment manufacturer) Basically standard machines and materials but non-standard ways of using some machines (ideas from processing of soya)

7 7 Building the Production System Right timing Successful introduction Hype Process development First old machines Testing different mixes and machines Acquire similar but larger machines Every machine tested (two engineers as process developers) Tested 17 different mixers (designed to meat; with meat different capacity) 2 months to optimize the machines in order to ensure quality Automation between production steps The Chase Increasing capacity and output to meet the demand Ten-fold increase Larger scale operations Reveals the amount of manual work, e.g. in packaging Learning curve: Time to make a palette 1 day 10 minutes Reqruiting 30 people in one month Including production manager Three shifts Overload of top management team Incl. negotiations with Paulig Quantity Time But without partner: 5 years to reach what has been achieved in 2 years Production volume

8 8 Growth Prospects At the moment, Gold & Green Foods employs round 50 persons in production, sales, marketing and administration in Finland. Manufacturing for the Finnish Market In future, focus our efforts on creating new technologies, and at the same time apply the existing technology to new products All of the newly introduced packages are manufactured from recycled PET bottle material. Paulig Group Expansion to Nordic markets Available in Sweden in Sep 2017 Constructing a new manufacturing plant in Sweden to be opened Spring 2018). Needs cold transportation Location of production sites Härkis Nofu Oy 2010 pea product for professional kitchens) too expensive Trials with faba bean Verso Food 2014 Consumer product of faba bean: breakfast cereal target customers did not find granola Domretor as a manufacturer of the products Härkis product to be used like ground meat Success 10-fold growth in 2016 (up to 2 M ) 3-fold growth expectation for 2017 (up to 6 M ) Härkis Oy together with Domretor 10 M investment in a new factory (2018)

9 9 The First Product Performance How new ventures can complement their resources and experience with supplier investment, to build positional advantages for their first product and increase marketplace performance? Reputation (liability of newness) Cash flow from operations for further growth Song, Song, and Di Benedetto (2011), Resources, supplier investment, product launch advantages, and first product performance Theoretical Framework o Resource-based view o Business value is created from unique combinations of resources and capabilities eventually, through the transactions made with the use of resources (DaSilva & Trkman, 2014) o Not only does a firm need to attain resources but it also needs to convert those resources into positional advantages [intermediate outcome] o How a new venture would use the resources of the supplier strategically, throughout the production and product launch, to complement its limited marketing and R&D resources Resources Combination Positional advantage Performance

10 10 The Conceptual Model About the Research Design 771 new ventures (43 % of the original sample of 1778) from diverse industries Telephone and wireless communication equipments, consumer electronics, games & toys, computer & software products, and household related products First product = unit of analysis 711 products (496 launched vs 215 killed) Data from several sources and the first 3 years of the NV Performance: self-reported gross margin [%], sales growth [%] Test and correction for biases Multiple models tested

11 11 About the nature of the responses Respondent s opinion on specified items Items adopted from previous research (comparable) Development of own scales by case studies Scale from 0 to 10 Stongly disagree Strongly agree Never Always Very poor Excellent Factor analysis Intended items measure the same phenomenon (factor loadings) Supplier Specific Investment The major suppliers production system tailored to produce items to the NV The major suppliers have spent significant resources to ensure the specifications of their suppliers fit well with the NV s production capabilities The product of the NVrequires highly specialized tools and equipment from our major suppliers The NV has some unusual technological standards for the product, which have required extensive adaptation by the major supplier s production system

12 12 Supplier Involvement in Production In designing our manufacturing facilities In developing our production plans In determining our production scheduling In deciding our product launch timing In starting-up of full-scale production Obtain major supplier s specific investment for the first product Impacts product innovativeness and supplier involvement in production major suppliers must be integrated into production decisions to increase efficiency and timeliness of production and efficient manufacturing, and can therefore help the new venture overcome potential production Jouko problems Karjalainen 2018 Product availability Product Launch Quality Sufficient inventory available for launch Pricing Appropriateness of the pricing level (based on cost management) Promotion Discounts, trade shows, event Advertising Product distribution On-time delivery, quick response

13 13 Product & Market Product innovativeness Relied on technology which has not been used in this industry before One of the first of its kind introduced into the market Highly innovative totally new to the market Market potential Many potential customers for the product Potential customers had a great need for this class of product Size of market ($) is very large for this product The market for this product is growing very rapidly Unexpected Results R&D and marketing budgets do not increase product innovativeness Size of founding team & prior start-up experience of founders lead to lower product launch quality High quality launch is more important than a highly innovative first product

14 14 Moderation by Market Potential Moderation: Under specific conditions, the association between two variables becomes stronger Supplier involvement in production is always good for first product performance regardless of the market potential. (H7b not supported) If market potential is low, a highly innovative first product does not improve product margin & sales growth (decreases when market potential is very low) Market Potential and Product Launch Quality Product launch quality is important when market potential is higher