ProductInnovation

SungJoo Bae

AssistantProfessorOperationsandTechnologyManagement

SchoolofBusinessYonsei University

Whatwewilldotoday…

• ProductInnovation• Bang&Olufsen• Samsung’sApproach

AttributesofFiveDevelopmentProjects

StanleyToolsJobmasterScrewdriver

RollerbladeIn‐lineSkate

HPDeskjetPrinter

VolkswagenNewBeetleAutomobile

Boeing777Airplane

Annualproductionvolume(units/year)

100,000 100,000 4million 100,000 50

Saleslifetime(years) 40 3 2 6 30Price(US$/unit) 3 200 300 17,000 130MPartnumbers(parts) 3 35 200 10,000 130,000Developmenttime(years)

1 2 1.5 3.5 4.5

Internaldevelopmentteam(peaksize)

3 5 100 800 6,800

Externaldevelopmentteam(peaksize)

3 10 75 800 10,000

Developmentcost(US$)

150,000 750,000 50M 400M 3B

Productioninvestment

150,000 1M 25M 500M 3B

(Source: Ulrich & Eppinger)

NewProductSuccessFactors

• Developingasuperior,differentiatedproductwithuniquebenefitsandsuperiorvaluetothecustomers

• Havingastrongmarketorientationthroughoutthedevelopmentprocess

• Gettingsharp,earlyproductdefinitionbeforedevelopmentbegins

• Qualityexecution(completeness,consistency,andproficiency)ofactivitiesinthedevelopmentprocess

• Havingthecorrectorganizationalstructure(multifunctional,empoweredteams)

• Providingthesharpprojectselectiondecisions• Topmanagement:specifyingnewproductstrategyand

providingneededresources• Speedtomarket

(Cooper, 1996)

NewProductDevelopmentProcess

DesignActivities:

• Considerproductplatformandarchitecture

• Assessnewtechnologies

• Investigatefeasibilityofproductconcepts

•Developindustrialdesignconcepts

•Buildandtestexperimentalprototypes

• Generatealternativeproductarchitectures

•Definemajorsubsystemsandinterfaces

• Refineindustrialdesign

• Definepartgeometry

• Choosematerials

• Assigntolerances

• Completeindustrialcontroldocumentation

• Reliabilitytesting

•Lifetesting

•Performancetesting

• Obtainregulatoryapprovals

• Implementdesignchanges

• Evaluateearlyproductionoutput

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

MarketingActivities:

• Articulatemarketopportunity

• Definemarketsegments

• Collectcustomerneeds

• Identifyleadusers

• Identifycompetitiveproducts

• Developplanforproductoptionsandextendedproductfamily

• Settargetsalespricepoints

• Developmarketingplan

• Developpromotionandlaunchmaterials

• Facilitatefieldtesting

• Placeearlyproductionwithkeycustomers

(Source: Ulrich & Eppinger)

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

ManufacturingActivities:

• Identifyproductionconstraints

• Estimatemanufacturingcost

• Assessproductionfeasibility

• Performmake‐buyanalysis

• Definefinalassemblyscheme

• Settargetcosts

• Definepiece‐partproductionprocesses

• Designtooling

• Definequalityassuranceprocesses

•Facilitatesupplierramp‐up

• Trainworkforce

• Refineassemblyprocesses

• Beginoperationofproductionsystem

(Source: Ulrich & Eppinger)

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

Productplanning isanactivitythatconsiderstheportfolioofprojectsthatanorganizationmightpursueanddetermineswhatsubsetoftheseprojectswillbepursuedoverwhattimeperiod

Whichproductdevelopmentprojectswillbeundertaken? Howdothevariousprojectsrelatetoeachotherasaportfolio Timingandsequenceoftheprojects?

(Source: Ulrich & Eppinger)

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

1. Definethescope2. Gatherrawdatafromcustomers(interviews,focusgroups,observation)3. Interprettherawdataintermsofcustomerneeds4. Organizetheneedsintoahierarchyofprimary,secondary,andtertiaryneeds5. Establishtherelativeimportanceoftheneeds6. Reflectontheresultsandtheprocess

(Source: Ulrich & Eppinger)

IdentifyCustomer

Needs

EstablishTarget

Specification

GenerateProduct

Concepts

SelectProduct

Concepts

TestProduct

Concepts

SetFinal

Specification

Plan Downstream Development

Benchmark Competitive ProductsPerform Economic Analysis

Build and Test Models and Prototypes

Definingthescope(MissionStatement)

(Source: Ulrich & Eppinger)

MissionStatement:ScrewdriverProject

ProductDescription • Ahand‐held,powerassisteddeviceforinstallingthreadedfasteners

KeyBusinessGoals • Productintroducedinfourthquarterof2006• 50%grossmargin• 10%shareofcordlessscrewdrivermarketby2008

PrimaryMarkets • Do‐it‐yourselfconsumer

SecondaryMarkets • Casualconsumer• Light‐dutyprofessional

Assumptions • Hand‐held• Power‐assisted• Rechargeablebattery

Stakeholders • User,retailer,salesforce,servicecenter,production,legaldepartment

RawDatafromtheCustomers

(Source: MIT’s Product Design and Development Course Material)

NumberofAnalysts

(Source: MIT’s Product Design and Development Course Material)

CustomerDataintoInterpretedNeeds

(Source: Ulrich & Eppinger)

SomeGuidelinesforNeedInterpretation

(Source: Ulrich & Eppinger)

Exercises:NeedTranslation

(Source: MIT’s Product Design and Development Course Material)

Exercises:NeedTranslation

(Source: MIT’s Product Design and Development Course Material)

HierarchicalListofNeeds

(Source: Ulrich & Eppinger)

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

IdentifyCustomer

Needs

EstablishTarget

Specification

GenerateProduct

Concepts

SelectProduct

Concepts

TestProduct

Concepts

SetFinal

Specification

Plan Downstream Development

Whatarespecifications?‐ Customerneedsareexpressedinthe“languageofthecustomers.”‐ Specificationsarethelanguageofthemanufacturer/serviceprovider‐ “Measurabledetailofwhattheproducthastodo”‐ Productrequirements

(Source: Ulrich & Eppinger)

TargetSpecification

(Source: Ulrich & Eppinger)

Foryourclassprojects,measurablemetricmaynotexist.Inthiscase,justdescribethespecificationofthefinalproduct/service/businessmodelintermsoffeaturerequirements

NewProductDevelopmentProcess

Planning ConceptDevelopment

System-levelDesign

Detail Design

Testing &Refinement

ProductionRamp-up

IdentifyCustomer

Needs

EstablishTarget

Specification

GenerateProduct

Concepts

SelectProduct

Concepts

TestProduct

Concepts

SetFinal

Specification

Plan Downstream Development

Whatarespecifications?‐ Customerneedsareexpressedinthe“languageofthecustomers.”‐ Specificationsarethelanguageofthemanufacturer/serviceprovider‐ “Measurabledetailofwhattheproducthastodo”‐ Productrequirements

(Source: Ulrich & Eppinger)

Five‐stepConceptGenerationMethod

(Source: Ulrich & Eppinger)

ExampleofProblemDecomposition

(Source: Ulrich & Eppinger)

Five‐stepConceptGenerationMethod

(Source: Ulrich & Eppinger)

SolutionstoSub‐Problems

(Source: Ulrich & Eppinger)

ConceptClassificationTree

(Source: Ulrich & Eppinger)

• Divisionoftheentirespaceofsolutionsintoseveraldistinctclasses

• Identificationofindependentapproachestotheproblem

• Pruningoflesspromisingbranches

• Refinementoftheproblemdecompositionforaparticularbranch

ConceptCombinationTable

nceptCombinationTable:waytoconsidercombinationsofsolutionfragmentssystematically

SelectionofProductConcepts

• ThegoalofconceptselectionisNOTtoselect thebest concept

• ThegoaloftheconceptselectionistoDEVELOP thebestconcept

• Combineandrefinetheconceptstodevelopbetterones

• SelectionMethods– Externaldecision– Intuition– Multivoting– Prosandcons

onceptGeneration,Selection,&Testing

ConceptScreening&Scoring

ConceptScreening+Betterthan0Sameas‐ Worsethan

ConceptScoring

KeyPoints• Capture“what”not“how”• Trytomeetcustomersinuserenvironment

• Collectvisual,verbal,ortextualdata• Propswillstimulatecustomerresponses• Interviewsaremoreefficientthanfocusgroups

• Interviewstakeholdersandleadusers,notjustaverageusersifpossible

• Lookforlatentneeds

Case:Bang&Olufsen

gn

Function

FormUser

UseEnvironment

Samsung’sRecentSuccess

Source: HBS case on SEC

HowdidSamsungwork?• Internal(Domestic)Market‐base• Risk‐takingLate‐comerStrategy

– Largeinvestment+Timelydecision• Brand‐imagerevamping

– SponsoringOlympics+Largead‐campaign• FocusonExecution(Qualitymanufacturing)

– LongexperienceofOEMmanufacturing– Price,quality,customersatisfaction

• Radicalorganizationalchanges+Reorientation– Theroleofleadership

• InvestmentinR&D– OverseasDesignandR&DCenters

• DesignOrientedProductDevelopment– Separateentity:SamsungCorporateDesignCenter&Value

Innovation Program (VIP) Center

esignOrientedProductDevelopmentDesignconcept:“thin”and“glossy”inanorganicdesignthatmadetheTVseemtobeofonepiece– front,backandstand

VIPCenter:Developedtheproductconcept‐ Emotionandlifestyle‐ Roomdecoration‐ Picture&Soundetc.(functional)

EngineeringChallenges1.Slimmer,Glossythroughout2.Speakerholes3.Highglossyfinish

Solution:• Reducingthesizeofprintedcircuitboard• Integratedframe( k h l h