Product innovation process

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 This article is part of the Bachelor design guide; the original version can be found at page 21.

Contents

The basic structure of the product innovation process

In a modern industrial company the design of a new product is not an isolated activity. Apart from the product design, plans have to be drawn up for the manufacturing process, the layout of the factory, the distribution, the sale and sometimes even for a whole production and sales organization. Product design is part of a more comprehensive process called the product innovation process (or product development process). In short, product innovation is the development of a new business activity around a new product.

Figure 1: The basic structure of the product innovation process.
Figure 1: The basic structure of the product innovation process.[1]

The product innovation process roughly consists of the following stages:

  1. Product planning
  2. Strict development
  3. Realisation

In the product planning stage, a product policy is formulated, and new product ideas are generated. A proper policy formulation consist of the proclamation of goals and the formulation of strategies. In product development the product-market strategy (or product-market scope) is one of the main strategies. This strategy lays down the kinds of products the company is going to develop, and which markets it is going to address. In the next phase, someone has to come up with the idea for a new product. As one has to look intentionally for new product ideas, we call this phase idea finding. The idea-finding process will bring one or more promising ideas. In the Strict Development stage, the product is designed; this is the stage called the product design process. In the Realisation stage, the product is manufactured, distributed and used[1].

Figure 2: Four stage product innovation model.
Figure 2: Four stage product innovation model.[2]

The structure of the innovation process as presented so far implies a logical sequence of steps. J. Buijs introduced a four stage innovation model based on the assumption that the product innovation process is similar to a (experiential) learn­ing process [2]. Coming up with new products and services is the answer of a company on its changing competitive environment. The four-stage product innovation model consist of:

  1. Strategy formulation (i.e. policy and strategy formulation).
  2. Design brief formulation (i.e. idea finding).
  3. Product development (i.e. strict development).
  4. Product launch and use (i.e. realisation).

Product innovation process according to Roozenburg and Eekels

Figure 3: Model of the product innovation process.
Figure 3: Model of the product innovation process.[1]

Product planning

The first part of the innovation process is called product planning. In this phase it is decided which product will be developed and when. In larger companies product planning does not concern one product, but an assortment of products (the product mix or product portfolio.) The link between product planning and strict development is formed by the idea for a new business activity (or new business idea) and a new product idea. Finding fertile product ideas is not only a matter of creative generation, but also of proper selection and, therefore, of the recognition of favourable opportunities. To accomplish this one needs criteria. These ought to be derived from the company’s product policy, which should be worked out before idea finding begins. A new product idea is the basis of the assignment for product designers, and the start of the strict development phase.

Product policy

A policy covers two things: goals and strategies. A strategy is the way one plans to realize one or more goals. Policy gives direc­tion and continuity to the behaviour of an organization, but without laying it down into detail. Policy also provides for the evalu­ation of that behaviour in retrospect. Companies do have all kinds of policies: investment policy, R&D policy, personnel policy, sales policy, etc. Almost all policy sectors have elements that are important to the development of a new product. The sum of all these product-oriented elements is called the product policy. The most important strategic components - the kinds of products a company wants to manufacture and the functional markets it wants to cultivate – are known as the product-market strategy. In addition the product policy states objectives in the form of criteria for the assessment and selection of product ideas.

Idea finding

How does a company find its new product ideas? Simply stated, this comes to:

  1. Keeping informed about markets and consumer needs (external research, opportunities and threats).
  2. Investigate the strengths and weaknesses of the company (internal investigation).
  3. Getting inspired by those studies and generating new product ideas.
  4. Selecting the most promising product ideas and formulating them into an assignment for further development.

In search of new product ideas it is wise not to search at random, but to first border the areas in which one wants to be active. In the innovation literature these areas are called search fields. A search field is a strategic idea of future activities of a company, which is based on knowledge of external opportunities and awareness of internal capabilities (strengths). Idea finding has much in common with exploration. Its success depends on the activity itself, but also strongly on luck and chance. The product policy directs the idea-finding process and provides normative information for making choices in that process.

Strict development

In this phase of product development the idea for a new business activity ought to be worked out into detailed plans for the product, the production and the distribution. These plans are developed with a new product idea as point of departure, and it is very important that they are properly attuned to one another. In the strict development of a product idea exploration is much more dependent on the methodological and intelligent approach of the study.

The technical development process

The goal of manufacturing is the production of a number of products according to a particular design. This goal is the material goal of the product development process. The idea for a new business activity includes a first formulation, still rough and provi­sional, of this goal in the form of the product idea, together with a statement about the expected number of items to make. In the technical development process the material goal is worked out, and the means of production are developed. Technical devel­opment is an iterative or spirally proceeding process. The designs for the product and its production grow in successive cycles from vague ideas to concrete plans.

The commercial development process

A company which does not make a profit cannot last in the long run. Therefore, product development ought to fulfil a business economic goal as well as a material goal. Contrary to the material goal (a product’s function), which is worked out during the process of product development, the business economical goal is given prior to the development process, as part of the product policy. Which role does this goal play in product development? Answering this question brings us to the area of marketing. To calculate the profit, one must know what the development, production, distribution and sale of the new product costs, and which numbers one plans to sell at a certain price. To calculate the costs of manufacturing, most of the data can be derived from the technical designs. The data about the expected sales, the planned selling price and the sales costs (distribution, advertisement and so on) are to be taken from the marketing plan. Central to the marketing plan are the so called marketing mix decisions, about (the nature of) the product, the price, the distribution (the place) and the promotion.

Product innovation process according to Buijs

Figure 4: Model of the product innovation process.
Figure 4: Model of the product innovation process.[2]

J. Buijs developed a more detailed model of the product innovation pro­cess consisting of 17 steps in a given order [2]. This model puts more emphasis on the first phase of the product innovation process, the Strategy Formulation (or product planning). For explaining product innovation in relation to the corporation, its brands and the kind of new product the company should develop, a very detailed description of the first stage of the innovation model is used.

Figure 5: Model of the product innovation process.
Figure 5: Model of the product innovation process.[2]

The strategy formulation stage is then subdivided into five activities:

  1. Analysis of the present situation, which leads to the strategic situation of the company
  2. Internal analysis
  3. External analysis
  4. Search area generation
  5. Search area evaluation
  6. Search area selection

Based on an analysis, the strategic situation of the company is formulated. The strategic need for innovation is made explicite by estimating the future corporate situation when no strategic changes are made. During the internal analysis, the strategic strengths, the core competences are defined. In the external analysis, the competitive environment is analysed and the oppor­tunities and threats are made explicit. Search areas are strategic ideas for innovation and potential new business opportunities. A search area is a combination of a strategic strength with an external opportunity. During search area evaluation, the strategic innovation ideas are checked with the outside world by interviewing experts, looking at patents, observing potential clients/ us­ers, etc. In search area selection, a definite choice is made. The selected search areas form the starting point for the next phase: design brief formulation.

Circular chaos: the Delft innovation model

Figure 6: Model of the product innovation process.
Figure 6: Model of the product innovation process.[2]

Inspired by this circular model of the four-stage innovation model, the lineair and sequential 17-step model was also adapted. Product innovation processes are intended to help companies to design and introduce new product, which customers are willing to buy and use. Therefore, in product use the innovation process ends, but at the same time forms the starting point of a new product innovation process. Visualising the innovation process as a circular model suggests that there is neither begin­ning nor end, which is true in the sense that introducing a new product on the market will lead to reactions from competitors. This in turn will cause the original innovating company to start the next new product innovation process to regain its competi­tive advantage.

References

  1. ↑ 1.0 1.1 1.2 Roozenburg N. and Eekels J. (1998) Product Design: Fundamentals and Methods, Wiley, Chichester, 2nd ed.
  2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Buijs J. (2003) Modelling Product Innovation Processes: from Linear Logic to Circular Chaos, Creativity and Innovation Manage­ment, vol. 12 (2), pp. 76 - 93.
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