Organizing New product Development

Companies handle the organizational aspect of new product development in several ways. Many companies assign responsibili0ty for new product ideas to product managers. But product managers are often so busy managing existing lines that they give little thought to new products other than line extensions. They also lack the specific skills and knowledge needed to develop and critique new products. Kraft and Johnson & Johnson have new product managers who report to category managers. Some companies have a high level management committee charged with reviewing and approving proposals. Large companies often established a new product department headed by a manager who has substantial authority and access to top management. The department’s major responsibilities include generating and screening new ideas, working with the R&D department, and carrying out field testing and commercialization.

3M, Dow and General Mills often assign new product development work to venture teams. A venture is a cross functional group charges with developing a specific product or business and a “skunk works” setting. Skunk works are informal workplaces, sometimes garages where entrepreneurial teams attempt to develop new products.

Cross functional teams can collaborate and use concurrent new product development to push new products to market. Concurrent product development resembles a rugby match, with team members passing the new product back and forth as they head toward the goal. Using this system, the Allen Bradley Corporation (a maker of industrial controls) was able to develop a new electrical control device in just two years, as opposed to six years under its old system.

Cross functional teams help to ensure that engineers are not just driven to create a “better mouse trap” when potential customers do not really need or want one. Some possible criteria for staffing cross functional new product new product venture teams include:

Desired team leadership style and level of expertise: The more complex the new product concept, the greater the desired expertise.

Team member skills and expertise: new venture teams for Aventis, part of a pharmaceutical, agricultural and chemical conglomerate, contain people with expertise in chemistry, engineering, market research, financial analysis, and manufacturing.

Level of interest in the particular new product concept: Is there interest or, even better a high level of ownership and commitment (a “concept champion”).

Potential for personal reward: What motivates individuals to want to participate in this effort?

Diversity of team members: This includes race, gender, nationality, breadth of experience, depth of experience, and personality. The greater the diversity, the greater will be the range of viewpoints and decision making potential.

New product development is a major component of a firm’s product policy. It is not enough if existing product lines are appraised properly, products are positioned effectively and the brand decisions taken wisely. For higher levels of growth, a firm has to look beyond its existing products.

In an age of scientific and technological advancements, change is ubiquitous phenomenon — change in food habits, change in comforts and conveniences of life, change in social customs and habits, change in expectations and requirements. Any business has to be vigilant about these changes taking place in its environment.

People always seek better things – better products and services, more convenience in products, more fashion and more value for money. A business firm has to respond to these dynamic requirements and these responses take the shape of new products and new services. Through such responses, the firm updates itself and stays closer to the consumer.

New products become necessary from the profit angle too. Products that are already established often have their limitations in enhancing the profit level of the firm. It thus becomes essential for business firms to bring in new products to replace old, declining and losing products. New products become part and parcel of the growth requirement of the firm and in many cases new profits come only through new products.