Innovation Strategy Management Lecture 11

Programme Part 1 – The basis of Innovation Part 1 – The basis of Innovation Part 2 – Innovation and New Product Development Part 2 – Innovation and New Product Development Part 3 – Innovation and Technology development Part 3 – Innovation and Technology development Part 4 – Innovation and Intellectual Property Part 4 – Innovation and Intellectual Property Part 5 – EU Green paper of Innovation Part 5 – EU Green paper of Innovation Part 6 – Innovation policies in different countries Part 6 – Innovation policies in different countries

Part 2 Innovation and New Product Development

Lecture 11: Managing the new product development team II Organizational structures and the use of teams Organizational structures and the use of teams The marketing R&D interface The marketing R&D interface High attrition rate of new products High attrition rate of new products

Organizational structures and the use of teams Teams and project management Teams and project management Functional structures Functional structures Matrix structures Matrix structures Corporate venturing Corporate venturing Project management Project management Reducing product development times through computer-aided design (CAD) Reducing product development times through computer-aided design (CAD)

Functional company organization

Functional company: diversification by product with centralized function

Matrix structure at ICI

Matrix structures Provision of additional channels of communication Provision of additional channels of communication Increase in informal communication channels Increase in informal communication channels Increase in information loads Increase in information loads Increase in diversity for individuals Increase in diversity for individuals

The marketing/R&D interface The main barriers to an effective R&D/marketing interface have been found to be related to The main barriers to an effective R&D/marketing interface have been found to be related to perceptual,perceptual, cultural,cultural, organizationalorganizational and language factorsand language factors (Wang, 1997).

High attrition rate of new products Product failuresProduct failures ReasonsReasons

As new product projects evolve and progress through each stage of development, many will be rightly cancelled or stopped for a wide variety of reasons. The failure of a product idea to be developed into a product is not necessarily a bad thing. It may save the company enormous sums of money. As new product projects evolve and progress through each stage of development, many will be rightly cancelled or stopped for a wide variety of reasons. The failure of a product idea to be developed into a product is not necessarily a bad thing. It may save the company enormous sums of money.

Product failures

Reasons for new product failure 1 Product offers nothing new or no improved performance 2 Inadequate budget to develop ideas or market the product 3 Poor market research, positioning, misunderstanding consumer needs 4 Lack of top management support 5 Did not involve customer 6 Exceptional factors such as government decision 7 Market too small, either forecasting error with sales or insufficient demand

Reasons for new product failure 8 Poor match with companys capabilities, company has insufficient experience of the technology or market 9 Inadequate support from channel 10 Competitive response was strong and competitors were able to move quickly to face the challenge of the new product 11 Internal organizational problems, often associated with poor communication 12 Poor return on investment forcing company to abandon project 13 Unexpected changes in consumer tastes/fashion

Functional approach to cross-functional back to functional