School of Business Yonsei University. Product Innovation. Sung Joo Bae. Assistant Professor Operations and Technology Management

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1 School of Business Yonsei University Product Innovation Sung Joo Bae Assistant Professor Operations and Technology Management

2 What we will do today Product Innovation Bang & Olufsen Samsung s Approach

3 Attributes of Five Development Projects Stanley Tools Jobmaster Screwdriver Rollerblade Inline Skate HP Deskjet Printer Volkswagen New Beetle Automobile Boeing 777 Airplane Annual production 100, ,000 4 million 100, volume (units/year) Sales lifetime (years) Price (US$/unit) , M Part numbers (parts) , ,000 Development time (years) Internal development ,800 team (peak size) External development ,000 team (peak size) Development cost 150, ,000 50M 400M 3B (US$) Production investment 150,000 1M 25M 500M 3B (Source: Ulrich & Eppinger)

4 New Product Success Factors Developing a superior, differentiated product with unique benefits and superior value to the customers Having a strong market orientation throughout the development process Getting sharp, early product definition before development begins Quality execution (completeness, consistency, and proficiency) of activities in the development process Having the correct organizational structure (multifunctional, empowered teams) Providing the sharp project selection decisions Top management: specifying new product strategy and providing needed resources Speed to market (Cooper, 1996)

5 New Product Development Process Design Activities: Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Consider product platform and architecture Assess new technologies Investigate feasibility of product concepts Develop industrial design concepts Build and test experimental prototypes Generate alternative product architectures Define major subsystems and interfaces Refine industrial design Define part geometry Choose materials Assign tolerances Complete industrial control documentation Reliability testing Life testing Performance testing Obtain regulatory approvals Implement design changes Evaluate early production output

6 New Product Development Process Marketing Activities: Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Articulate market opportunity Define market segments Collect customer needs Identify lead users Identify competitive products Develop plan for product options and extended product family Set target sales price points Develop marketing plan Develop promotion and launch materials Facilitate field testing Place early production with key customers (Source: Ulrich & Eppinger)

7 New Product Development Process Manufacturing Activities: Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Identify production constraints Estimate manufacturing cost Assess production feasibility Perform make buy analysis Define final assembly scheme Set target costs Define piecepart production processes Design tooling Define quality assurance processes Facilitate supplier rampup Train workforce Refine assembly processes Begin operation of production system (Source: Ulrich & Eppinger)

8 New Product Development Process Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Product planning 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 time period Which product development projects will be undertaken? How do the various projects relate to each other as a portfolio Timing and sequence of the projects? (Source: Ulrich & Eppinger)

9 New Product Development Process Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Identify Customer Needs Establish Target Specification Generate Product Concepts Select Product Concepts Test Product Concepts Set Final Specification Plan Downstream Development Benchmark Competitive Products Perform Economic Analysis Build and Test Models and Prototypes 1. Define the scope 2. Gather raw data from customers (interviews, focus groups, observation) 3. Interpret the raw data in terms of customer needs 4. Organize the needs into a hierarchy of primary, secondary, and tertiary needs 5. Establish the relative importance of the needs 6. Reflect on the results and the process (Source: Ulrich & Eppinger)

10 Defining the scope (Mission Statement) Mission Statement: Screwdriver Project Product Description A hand held, power assisted device for installing threaded fasteners Key Business Goals Product introduced in fourth quarter of % gross margin 10% share of cordless screwdriver market by 2008 Primary Markets Do it yourself consumer Secondary Markets Assumptions Stakeholders Casual consumer Light duty professional Hand held Power assisted Rechargeable battery User, retailer, sales force, service center, production, legal department (Source: Ulrich & Eppinger)

11 Raw Data from the Customers (Source: MIT s Product Design and Development Course Material)

12 Number of Analysts (Source: MIT s Product Design and Development Course Material)

13 Customer Data into Interpreted Needs (Source: Ulrich & Eppinger)

14 Some Guidelines for Need Interpretation (Source: Ulrich & Eppinger)

15 Exercises: Need Translation (Source: MIT s Product Design and Development Course Material)

16 Exercises: Need Translation (Source: MIT s Product Design and Development Course Material)

17 Hierarchical List of Needs (Source: Ulrich & Eppinger)

18 New Product Development Process Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Identify Customer Needs Establish Target Specification Generate Product Concepts Select Product Concepts Test Product Concepts Set Final Specification Plan Downstream Development What are specifications? Customer needs are expressed in the language of the customers. Specifications are the language of the manufacturer/service provider Measurable detail of what the product has to do Product requirements (Source: Ulrich & Eppinger)

19 Target Specification For your class projects, measurable metric may not exist. In this case, just describe the specification of the final product/service/business model in terms of feature requirements (Source: Ulrich & Eppinger)

20 New Product Development Process Planning Concept Development System-level Design Detail Design Testing & Refinement Production Ramp-up Identify Customer Needs Establish Target Specification Generate Product Concepts Select Product Concepts Test Product Concepts Set Final Specification Plan Downstream Development What are specifications? Customer needs are expressed in the language of the customers. Specifications are the language of the manufacturer/service provider Measurable detail of what the product has to do Product requirements (Source: Ulrich & Eppinger)

21 Five step Concept Generation Method (Source: Ulrich & Eppinger)

22 Example of Problem Decomposition (Source: Ulrich & Eppinger)

23 Five step Concept Generation Method (Source: Ulrich & Eppinger)

24 Solutions to Sub Problems (Source: Ulrich & Eppinger)

25 Concept Classification Tree Division of the entire space of solutions into several distinct classes Identification of independent approaches to the problem Pruning of less promising branches Refinement of the problem decomposition for a particular branch (Source: Ulrich & Eppinger)

26 Concept Combination Table ncept Combination Table: ay to consider combinations of solution fragments systematically

27 Selection of Product Concepts The goal of concept selection is NOT to select the best concept The goal of the concept selection is to DEVELOP the best concept Combine and refine the concepts to develop better ones Selection Methods External decision Intuition Multivoting Pros and cons

28 ncept Generation, Selection, & Testing

29 Concept Screening & Scoring Concept Screening + Better than 0 Same as Worse than Concept Scoring

30 Key Points Capture what not how Try to meet customers in user environment Collect visual, verbal, or textual data Props will stimulate customer responses Interviews are more efficient than focus groups Interview stakeholders and lead users, not just average users if possible Look for latent needs

31 Case: Bang & Olufsen

32 n User Use Environment Form Function

33 Samsung s Recent Success Source: HBS case on SEC

34 How did Samsung work? Internal (Domestic) Market base Risk taking Late comer Strategy Large investment + Timely decision Brand image revamping Sponsoring Olympics + Large ad campaign Focus on Execution (Quality manufacturing) Long experience of OEM manufacturing Price, quality, customer satisfaction Radical organizational changes + Reorientation The role of leadership Investment in R&D Overseas Design and R&D Centers Design Oriented Product Development Separate entity: Samsung Corporate Design Center & Value

35 Solution: Reducing the size of printed circuit board Integrated frame sign Oriented Product Development Design concept: thin and glossy in an organic design that made the TV seem to be of one piece front, back and stand VIP Center: Developed the product concept Emotion and lifestyle Room decoration Picture & Sound etc. (functional) Engineering Challenges 1. Slimmer, Glossy throughout 2. Speaker holes 3. High glossy finish