Best practice in product development is a dynamic target. Not only are new
practices being developed and refined but the differences in organisations
demand the tailored application of these practices. There are eight basic
principles and four basic stages in product development which are true for all
companies, all projects and at all times. But the company philosophy,
knowledge, skills and assets change; and these changes cause changes in the
types of product innovations and the activities in product development.
Successful companies recognise that product development is an important
strategic issue that demands constant attention. There is a need to evaluate the
product development performance and the product development success rate
(product development efficiency and effectiveness), and then combine this
evaluation with the company’s strategic direction to determine and organise
improvements in both the effectiveness and efficiency in the future. This is not
simple because creativity and criticism are two opposing thought processes.
Creativity, vital to product innovation, goes into the unknown and makes
mistakes; the product development evaluation looks for mistakes and criticises
them. Emphasis on mistakes leads to conservative product development;
emphasis on creativity leads to wild product development; the successful
companies intertwine the creativity and the evaluation in the project.
Product development is unique to the company and is related to the
company’s history, philosophy and knowledge, but the company’s position
relative to the best practice in the related industry and market is an indicator of
the company’s past and present product development effectiveness and
efficiency. From this evaluation can be built up strategic plans for improving
product development. As shown in Fig. 8.1, product development effectiveness
and efficiency are improved together to give the strategic product success
8
Improving the product development
process
indicated by the company top management. Product development effectiveness
and efficiency are inextricably linked.
8.1 Key messages
There is no single recipe for successful product development. During the
previous chapters, a number of basic principles were identified which are
common to all successful product development as shown in Table 8.1.
8.1.1 Link to overall business strategy
‘Doing the right things’ must always be central to any product development
effort. The product development strategy must be in harmony with the overall
business strategy. It should both receive and provide direction to the business
strategy. The balance of reactivity to proactivity will depend on the nature of the
organisation and its overall goals.
Fig. 8.1 Evaluating and improving product development.
Table 8.1 Basic principles of product development
Link to overall business strategy
Balanced product development portfolio
Clearly defined product development strategy
Appropriate systems and processes for project management
Appropriate human and physical resources
Committed and supportive organisational climate
Understanding the consumer, customer, market and society
Improving the product development process 349
8.1.2 Balanced product development portfolio
The business goals and strategy should define the key criteria to be used in
preparing the product development portfolio. These include:
? degree of novelty or newness;
? level of technology;
? target market;
? level of risk;
? desired return on investment;
? time frame.
Preparing a balanced portfolio of new product development, consistent with
business aims, is a critical part of product development management.
8.1.3 Clearly defined product development strategy
The product development strategy should provide:
? total clarity about the relationship between the portfolio of product
development projects and the overall business strategy;
? clear definition of the portfolio of new product development projects relative
to business selection criteria;
? indication of the costs and timeframes involved to achieve the desired
outcomes of the portfolio;
? indication of the resources required to achieve the desired outcomes – what
resources are required internally and what should be out-sourced.
The product development strategy is linked to, and indeed is the basis for, the
tactical strategy that organises the product development programme and the
individual product development projects. In a number of companies there is
often a communication blockage between the product development strategy and
the tactical strategy that determines the work of the designers, engineers,
marketers, production and other personnel involved in the project. This can
reduce both the effectiveness and efficiency.
8.1.4 Appropriate systems and processes for project management
Having decided on what things to do (the portfolio), it is important to have the
appropriate systems and processes to support individual projects –‘doing things
right’. There are four clearly identified basic stages in the PD Process – product
strategy development, product design and process development, product
commercialisation, product launch and evaluation. But there are differences in
the activities, decisions and outcomes in the different projects, although there
are significant ones that occur in many projects.
Although the PD Process is important to the successful completion of projects
on time, in budget and in line with the initial target, it would be wrong to force
all projects into a standard process. The PD Process is unique to the company,
350 Food product development
level of innovation, and the level of technological knowledge. The company can
design different PD Processes for product improvements and major innovations,
for consumer products and industrial products, and also make some changes
between product development projects (de Brentani, 2001). The chance and
costs of product failure can also cause the company to make changes in
activities; for example, the low cost of project failure may lead to significant
short cuts in market analysis and business analysis. The choice of activities also
depends on the company’s level of risk. If the company is not afraid to live with
product failures, it may omit many activities; if the company does not want to
risk product failure, it will include activities that increase its knowledge of the
technology and the market. In creating both new products and new services, a
platform-based approach can be used, which relates directly to the design of
systems and PD Processes (Meyer and DeTore, 2001).
8.1.5 Appropriate human and physical resources
All the best systems and processes can be worthless without the right resources.
People, above everything else, make product development successful. Knowl-
edge of technology, market, consumer, product development activities and
decision making, and the skills to use this knowledge in practice are the basis of
successful product development. Capable and committed people, who are able to
work in teams, across functional boundaries, will make systems and processes
work for them. Systems and processes will rarely change people. There is a need
to recognise the tacit knowledge of individuals and teams, as well as the
knowledge bases both within and outside the company. Most important is the
ability of the individual and the team to create new knowledge during the project.
8.1.6 Committed and supportive organisational climate
Perhaps the most important aspect of all in determining successful product
development is the organisational climate. Historically, this has received
relatively little attention in the product development literature and yet it has the
potential to have the greatest impact on product development outcomes. Climate
includes:
? clarity of direction;
? management commitment;
? team commitment;
? flexibility;
? standards;
? rewards.
The decision making by top management at the beginning and throughout the
project must be timely and based on knowledge; from this the project
management and the team need to see clear directions which are not changed
without further knowledge and discussion.
Improving the product development process 351
8.1.7 Understanding the consumer, customer, market and society
If the needs, wants, attitudes and behaviour in the target market and in the
society in general are not identified and understood, and then interwoven into
product development practice, then product failure can occur either in the short
or long term. The food industry has a history of introducing innovations over the
years that cause suspicion by the general public and the consumers, so that food
regulations are used to control the product. The immediate customer, whether
industrial user or retailer, needs to be integrated into the PD Process from the
initial stages of developing the product concept to the final evaluation after
launch. In developing new consumer products and indeed in all food product
development, the final consumer who buys and eats the food is an integral part
of product development.
8.2 Evaluating product development
Conducting a post-development review of a specific product development
project and a regular review of the product development programme, is a very
good way of learning what is excellent, all right and bad in the company’s
product development. For the product development project, the initial product
strategy needs to be compared with the final total product in the market; the final
product characteristics with the consumer needs and wants; the efficiency of the
product development project with the overall implementation of the launch. For
the product development programme, some important measures are:
? ratio of major innovations to incremental products;
? key differentiating factors in products and services;
? number of new products in a time period;
Think break
The authors have summarised what they identify as the basic principles of product
development from the preceding seven chapters.
1. Do you agree with their list? Have you identified any other basic principles?
Would you drop some of their basic principles?
2. Compare with other principles in the literature, e.g. Cooper and Kleinschmidt’s
(1995) factors found to drive new product success.
3. For your own company, list the basic principles for product development at the
present time.
4. How have these principles changed in the past and how do you predict they will
change in the future?
5. List the basic principles for product development for your company for the next
decade.
352 Food product development
? programme complexity – the size of the programme and the interrelationships
between projects;
? commercial constraints on the programme;
? company pressures on the programme.
In recent years there has been an increasing interest in developing methods for
evaluating product development. For example, the assessment tool and
methodology (ATM) of Barclay et al. (2001) measures the complexities and
newness of a product and relates them to the PD integrating activities and process.
Clark and Wheelwright (1993) developed a method for auditing the individual
project. Cooper and Kleinschmidt (1995) developed a tool aimed at identifying the
firm’s critical success factors in product development. It had two sets of measures
for the product development programme: programme profitability and programme
impact on the company. They separated companies using these measures into:
? high-impact technical winners with highest product success rate and % sales
from new products, but not so high profitability
? dogs with poorest performance on all measures
? solid performers with highest profitability and second highest product
success rate, lower % sales from new products than high-impact technical
winners
? low-impact performers with mediocre product success rates and low impact
of new products on company sales.
There have been the general industry comparisons described in Chapter 1, for
example Griffin (1997), which have useful measures and results to compare with
your company’s results.
This comparison of the company’s product development effectiveness and
efficiency with those of other companies or of the industry in general is known
as ‘benchmarking’. Benchmarking the company’s current practices against the
latest findings in the literature and through comparison with other companies is
an essential part of overall product development management. The application
of best practices to our specific situations and the on-going measurement of
performance ensure a basis for continuous improvement.
8.2.1 What is benchmarking?
Benchmarking is a process of continuous evaluation to achieve a competitive
advantage. It measures a company’s products, services and practices against
those of its best competitors or other acknowledged leaders in their fields. It can
be a specific area such as the benchmarking of the new product concept against
the competing products (Rudolph, 2000), the company’s technology against the
most technically advanced company, the company’s innovation strategy against
technology predictions. But mostly there are multiple measures in benchmarking.
Benchmarking can be at different stages of the product development project,
for the overall product development project and the product development
Improving the product development process 353
programme. There can be short-term and long-term benchmarking; for the short
term, Hultink and Robben (1995) identified product-level measures such as
speed-to-market, launched on time, development cost; in the long term,
customer acceptance (met revenue goals, market share goals and unit sales
goals, percentage of sales by new products) and financial performance (attaining
goals for profitability, margins, return on investment). Four factors were equally
important for short-term and long-term success: customer satisfaction, customer
acceptance, meeting quality guidelines and product performance level. Finally
benchmarking must be related to possible improvements; there is no point in
extensive benchmarking in areas where the company or personnel cannot make
improvements because of lack of people, knowledge and assets. Benchmarking
and continuous improvement need to be linked. Zairi’s (1998) comment is worth
remembering when benchmarking
the impact of its application is more for changing attitudes and
behaviours and raising commitment through better education, awareness
and inspiration from model companies. Benchmarking is perhaps the
best means for servicing the human asset by continuously supplying
new ideas to sustain superior performance levels.
Over recent years benchmarking has become a fashionable tool for many
organisations. Like many such tools, one has to question the rigour and
objectivity with which many benchmarking exercises are carried out and, in
turn, the value that is captured from these exercises. Benchmarking is not a tool
(the many methods suggested for benchmarking are tools), but it is a method of
increasing knowledge and skills of all people involved in product development
from the top management to the junior team member, so that product
development is more effective and efficient.
8.2.2 Basic steps for benchmarking product development
There are some basic steps in benchmarking, shown in Fig. 8.2, which need to be
followed to maximise the return on any investment in benchmarking (Zairi,
1998; Czarnecki, 1999; Barclay et al., 2001).
Clearly define the benchmarking objectives
Before beginning a benchmarking study, the organisation should be clear on what
the subject is to be; what are the desired outcomes; who will use the results; and
how will the results be used to benefit the organisation in the future. It is all too
easy to embark on wide-ranging data collection, which, in the end, provides very
little useful information for the organisation and its specific requirements.
Determine the sources of benchmarking data
The benchmarking can be internal and using internal data sources, but usually
the comparison is with companies within the specific industry or in industry in
general. Sources include the following:
354 Food product development
? Published materials. Case studies, industry surveys and research into R&D
management methodology and practices provide an excellent source of
primary data. These materials can also be used to prepare a list of potential
benchmarking partners.
? Databases. For example those prepared by the Industrial Research Institute
(IRI) in the USA, provide an excellent source of information on level of
spending on R&D, number of R&D employees, number of patents granted,
etc. Regular summaries of these data are presented in the Journal of Research
– Technology Management.
Fig. 8.2 Basic steps in benchmarking.
Improving the product development process 355
Identify companies and individuals that can act as benchmarking partners
This partnership can range from an infrequent exchange of general information
about company operations and practices to regular meetings where details
relating to company practices are shared with a common aim of improving the
overall practices of both partners. It is important not to be limited to similar
companies in the selection of partners. Look to the best practices, wherever they
occur. The object is to learn from the leaders, those with world-class operations
and techniques.
Form a benchmarking team
Although an individual can conduct a benchmarking study, a team effort will
usually get a better return. Involving a cross-section of people with different
skills and organisational responsibilities will provide benefits not only in the
capture of the information but it will also enable greater acceptance and more
rapid assimilation of best practices into the organisation.
Determine, design and execute the data collection process
There are various ways of collecting benchmarking information, including
telephone interviews, postal surveys, face-to-face meetings and desk-top
research. Clearly, the type of information required, the level of detail and the
available budget will determine the methodology. The best approach is probably
to start with the relatively simple desk research to provide the background
material and further clarify the critical information required from surveying or
from face-to-face meetings.
Analyse and implement the findings
Very often there will be a number of valuable findings from the study. It is
important to prioritise these and to focus on the implementation of a manageable
few. Commitment and support from senior management is an important starting
point. It is also essential that besides showing that these are ‘best practice
initiatives’ there must also be clear evidence to all who are involved in the
implementation that there is real benefit to their business.
It is important in setting up a benchmarking or assessment system that it
should be (Barclay et al., 2001):
? relevant to the users’ needs;
? fairly comprehensive;
? capable of a variety of approaches;
? both educational and action-oriented;
? capable of being used in total or selectively;
? able to ‘force’ the development and implementation of action plans.
In other words, set up a system that does not overwhelm with information, but
gives the knowledge needed to lead to product development improvement. In
Box 8.1 is shown the development of benchmarking in the New Zealand Dairy
Board, which shows some methods that can be used in benchmarking the total
356 Food product development
Box 8.1 The New Zealand Dairy Board (NZDB)
experience
1993 An audit of the NZDB by the Boston Consulting Group (BCG)
required for statutory reasons and covering all parts of the business.
The major recommendations for R&D focused on the improvement of
the product development process in achieving greater speed to market
and greater success rates.
1994 Development of a phase-gate process for product development and
implementation across all parts of the organisation.
1995 Consolidation of PD Processes with increased emphasis on ‘doing
things right’.
1996 Recognition that future gains in R&D effectiveness would most likely
come from ‘doing the right things’ in addition to ‘doing things right’.
1997 A small cross-functional benchmarking team was formed initiating a
three-pronged approach:
? Decision practices. An internal survey of the performance and
areas for improvement against key decision practices required for
‘best practice’. The decision practice framework was defined by
the Strategic Decision Group (SDG) in California (see Matheson &
Matheson, 1998). Analysis of the survey data by SDG pointed to a
number of specific areas for improving the decision practices that
lead to ‘doing the right things’.
? ProBE survey. Developed by Robert Cooper and Scott Edgett at
the Product Development Institute Inc. (Ontario, Canada). An
internal survey designed to evaluate product development perform-
ance against 11 critical success factors was used to identify areas
of strength and weakness relative to industry average results and
those of the top 20% of firms in the Product Development Institute
database.
? Secondary data. A range of published materials including annual
reports, management journals, the Industrial Research Institute
(IRI) R&D database were used to provide background information
on industry and individual company performance.
? A set of prioritised initiatives, centred around ‘doing the right
things’ was recommended. These focused on linking R&D to
business strategy including technology planning and portfolio
management.
? Implementation of these initiatives was begun.
1998 A second BCG audit of the NZDB confirmed most of the
recommendations of the internal benchmarking team and endorsed
their implementation.
Improving the product development process 357
product development in a company. This benchmarking development shows in
sequence the aims of firstly product development efficiency (doing things right)
and then product development effectiveness (doing the right things); and also the
use of different evaluation methods and different consultants. The important part
in benchmarking is to choose the correct measures or metrics.
8.3 Innovation metrics
Increasingly we are being required to justify the expenditure on innovation. How
effective is it? Does it meet the organisation’s objectives? What is the return on
the investment? There is very little doubt that justification of expenditure on
innovation is necessary, just like any other element of organisational
expenditure. But all too often the measures that are used only provide
information about past performance. They contribute very little to our
understanding of why that level of performance was achieved; to our
improvement of innovation practices; or to our prediction of the future value
of our current innovation efforts.
Box 8.1 (continued)
1999 A further benchmarking study was started with Arthur D. Little,
focusing on the use of metrics to track R&D performance. The scope
of the project was widened to include all parts of the innovation
process and not only R&D. A suite of metrics was developed based on
lagging, real-time, leading and learning indicators. These metrics
were implemented in the business units of the NZDB.
Think break
The NZ Dairy Board is a large company and is able to employ a range of consultants.
If you were a small or medium-sized company:
1. Discuss the ways you could measure product development effectiveness and
efficiency.
2. How would you select and use suitable methods of benchmarking product
development for your company?
3. How could you identify the essential product development activities, outcomes
and decisions for the successful business performance of new products?
4. How could you design suitable product development processes for your
company?
358 Food product development
Firstly, what do we mean by measures and metrics? Measurement applies to
anything that has a quantifiable characteristic; a metric is a quantifiable
characteristic, which one can measure against (Dimancescu and Dwenger,
1996). Metrics such as ‘new sales ratio’ (contribution derived from new
products/services), ‘R&D intensity’ (spend on R&D as a percentage of sales)
and ‘number of patents granted’ provide some insight into an organisation’s
innovation performance, but it is historical. Greater benefit can be achieved
from having a range of metrics that provides both forward and backward looking
information. Static metrics are data gathered only after the event has occurred;
dynamic metrics are real-time data feedback usually related to a goal.
Barclay et al. (2001) suggested process metrics for internal efficiency;
business metrics and customer metrics for external effectiveness as shown in
Fig. 8.3. Arthur D. Little (personal communication) proposed a metric suite
based around the timing of the information and on specific areas of focus. They
suggested that metrics be designed with a framework of time and the holistic
dimension.
8.3.1 Timing of information
Metrics can be measured at different times in the product development project
and programme. They can be on information from past projects, or from the
present project or they can be predicted for the future product development
performance, as shown in Table 8.2.
Fig. 8.3 Product development project and programme metrics.
Table 8.2 The time of using metrics in product development
Lagging metrics provide information on past performance.
Real time metrics provide information on the current performance.
Leading metrics provide information on the likely future performance.
Learning metrics provide information on the rate at which an organisation is improving
its performance.
Improving the product development process 359
Learning metrics or motivational metrics translate business objectives into
meaningful and motivating measures that teams can work against. A specific
performance gap may have been identified, and then the goal is to gradually
reduce it over time. For example, in initial production runs with a new product,
rejections usually lie between 10 and 20%, then the aim is to gradually reduce
this until it lies near the level of standard production which is 1%; or it could be
the time to market for a new product which may be 24 months and the aim is to
reduce this gradually to 15 months. A reasonable time frame for these reductions
needs to be set (Dimancescu and Dwenger, 1996). Metrics are meant for
continuous improvement of product development performance; historic data
may set a basis but it is the continuing measurement during the development of
the project and the programme that give the more useful metrics.
8.3.2 The holistic dimension
Metrics can be applied to all areas of the product development programme and
the project:
? Strategy. Is innovation aligned with business objectives, strategy and vision?
? Process. Do the innovation processes support successful execution and
outcomes?
? Resources. Are the desired level of resources being applied to innovation?
? Culture and organisation. To what extent does the culture, climate and
organisational structure support innovation?
Examples of metrics within the Arthur D. Little framework for analysing the
product development programme are shown in Table 8.3.
Table 8.3 Examples of innovation metrics in the product development programme
Lagging Real time Leading Learning
Strategy Contribution
from new
products/services
% of growth
targets met
through
innovation
Value of
portfolio
Increase in
revenues from
new products
Process Number of
patents per year
% milestones
on time
Forecasted
project
completion time
Reduction in
breakeven time
Resources R&D spending as
% of sales
% outsourcing Forecast
resource
allocation
Changing
demand for
specific
capabilities
Company
culture
Client survey
feedback
Number of
ideas logged
Innovation
climate surveys
Change in critical
climate
dimensions
360 Food product development
8.3.3 Metric selection criteria
The set of innovation metrics should be selected according to the specific needs
of the organisation. In selecting measures, they must be economical to collect,
understandable to the people who are going to use the results, learning focused,
externally focused, actionable, broad in scope and accomplish the stated
objectives (Czarnecki, 1999). Innovation metrics should be regularly reviewed
and changed as the direction and priorities of the organisation change. Some
basic criteria for metric selection are:
? use a matrix approach, selecting a few metrics from throughout (as shown in
Table 8.3);
? support the weakest link in the current innovation systems;
? emphasise real time or leading measures where possible;
? select metrics for which results point directly to actions;
? focus on simple and obvious measures that clearly support business
imperatives;
? select those that are easily measured consistently over an extended period.
Some pitfalls for choosing metrics are predominance of short-term, financial,
efficiency, economy and functional measures. It is important to select metrics
not only because data are easy to find and they are within the capability of the
benchmarking team and the understanding of top management. Metrics must
also be relevant to the improvements to be made.
8.3.4 Integrating innovation metrics into the business
The application of innovation metrics will be successful only if they are ‘bought
into and truly owned’ by the business or business unit. All members of the
business management team must see the benefits from the metrics, both to
themselves and to their business unit. There are four steps in this integration:
Think break
Study Fig. 8.3 and Table 8.3.
1. For benchmarking product development programmes, what differences in the
final analysis would you expect from using the metrics in Fig. 8.3 and the lagging
metrics in Table 8.3?
2. In what product development situations would it be more useful to use lagging,
real time, leading and learning metrics for product development programme
benchmarking?
3. A number of metrics have been suggested for product development projects.
What do you think would be the more useful metrics for your company C177 for
improved products, for major changes and for radical innovations?
Improving the product development process 361
identifying the growth gap, defining the innovation programme to meet the
growth gap, defining an appropriate set of metrics for each project, measuring
and tracking performance over time.
Step 1: Identify the growth gap
The first, and most important, step in the application of innovation metrics is at
the strategic level where the required contribution from innovation is defined
against future business targets:
? What is the total business growth aspiration?
? How much of this growth will come from organic growth?
? How much can be expected from mergers and acquisitions?
? What is the value of the innovations currently in the pipeline?
? What is the growth gap that must be filled by new innovation?
This is illustrated in Fig. 8.4.
Step 2: Define the innovation programme to meet the growth gap
Determine the value and timing of the current innovation portfolio to ensure that
it provides the required contribution to meet the growth gap. The total
innovation portfolio value is made up of the sum of contributions from all
innovation projects.
? What innovation projects are planned?
? What is the time of delivery of these projects?
? What is their predicted revenue and earnings before interest and tax (EBIT)?
? What is the total predicted value of the current innovation portfolio?
? Does this value meet the growth gap aspirations? If not, what further
innovations are required?
Fig. 8.4 Identifying the growth gap.
362 Food product development
If satisfied with the current innovation portfolio value, use this value and the
schedule of realisation of the value as a leading metric.
Step 3: Define an appropriate set of metrics for each project
A set of leading and real time metrics should be defined and used to measure the
progress of individual projects.
? Define the individual contribution of each project to the total. This becomes a
key target for a leading metric for the project.
? Define a set of real time metrics and targets for each project. These might
include milestones on time, expenditure against budget, etc.
Step 4: Measure and track performance over time
Lagging metrics should be used to measure past performance. This should be
compared with the predicted performance as indicated in the leading metric
targets. If the overall innovation portfolio is on target then the innovation
contribution to the growth gap will be achieved.
? Use lagging metrics such as current return from products developed over the
last five years to measure past performance.
? Compare this performance to the targeted performance required to meet the
growth gap.
? Study the underlying reasons for differences between what is achieved and
the target. Learn from past mistakes and successes and apply this learning to
improvement in the overall innovation practices.
Over recent years a great deal of time and effort has been focused on the
improvement of new product development (NPD) management. Not only are we
seeing an abundance of research literature on the subject but we are also seeing
significant emphasis on the management of research and development activities
as a senior management function in many companies.
Think break
Consider your company:
1. Step 1. Identify the growth gap.
2. Step 2. Define the innovation programme to meet the growth gap.
3. Step 3. Define an appropriate set of metrics for a project for an incremental
product, and for an innovation.
4. Step 4. How would you measure and track performance over time?
Improving the product development process 363
8.4 Striving for continuous improvement
It is no longer enough to have a creative group of product developers. Success
comes from having a fully integrated NPD function, supported by first rate
practices and processes, and focused on the business goals of the company. This
is illustrated in Fig. 8.5. For the total company product development function,
the business strategy is connected to the product development programme which
is interrelated to the individual product development projects. Benchmarking
can signify changes to the business strategy and this is then transferred to the
product development programme and to the individual product development
projects. Or the benchmarking study may have been on individual projects and
the results are recognised in the business strategy, or in the product development
programme which is transferred to the product development projects.
Continuous improvement based on benchmarking is an interactive process. It
is directly connected with the basic parts of the PD Process with the specific
standards for decisions, outcomes, activities and techniques being set by
different levels of management, but interconnected. There must be focus on the
effects on the market and also on teamworking and general company
cooperation in product development.
8.4.1 Steps in continuous improvement
The information and knowledge gathered during the benchmarking exercise
have to be converted into efforts that will result in improved product
Fig. 8.5 A fully integrated NPD function.
364 Food product development
development performance. Four important steps are (Codling, 1996):
1. Communicate benchmark findings.
2. Adjust goals and develop corrective improvement plan.
3. Implement the corrective improvement plan.
4. Review progress and calibrate.
Communication is important if cooperation and indeed commitment to the
proposed changes by individuals, teams and management are to be built. The
relation of the benchmark results to the proposed future changes in the
product strategy, the product development programme and the individual
projects need to create a vision for the future of product development in the
company. There needs to be the opportunity for self-assessment and
discussions by all involved in product development to build up the improve-
ment plan. The plan is not an edict from top management on the verdict of
outside consultants, it is the working together of management and key
individuals in product development to create the change in product
development. The time frame for the changes and how people will be
involved in the changes need to be communicated.
Goals for the product development strategy, programme and individual
projects are usually changed or at least adjusted by benchmarking. In particular,
the new decisions and outcomes at the various stages in the product development
project and for the overall project need to be identified by both top management
and the project managers. These outcomes are going to be the goals for the
activities in the product development project, and will affect the choice of
activities and techniques. The activities and techniques are also going to be
changed by the product development efficiency benchmark results, and by the
resources made available by top management for the changes. There are two
ways of improving performance (Barclay et al., 2001):
? Refinement change: product development is treated as a business process
and is continuously reviewed and refined.
? Radical change: a major shift in PD activities and process usually prompted
by poor results or a shift in strategy and/or market.
If the refinement change is followed continuously and wisely, the radical change
which is costly in resources, people and time, can be avoided.
Implementation is not easy. The action plans need to include descriptions of
the proposed action, time scale for introduction, resources required and
available, knock-on effects in other areas of product development and in the
functional departments, measures of performance of the change, expected
outcomes (Coughlan and Brady, 1995). But most important, is to identify the
key people and to have them cooperate in developing the action plan and putting
it into practice. The management has to recognise the complete plan, identify the
staffing and how the changes are to be guided.
Reviewing the progress is important. This means reviews undertaken at
recognised intervals not just at the end. Is the plan stalled because of resistance
Improving the product development process 365
by team members, lack of resources, lack of knowledge or lack of cooperation
between the product development team and the functional departments? Are the
changes being introduced too fast so that people do not understand what is to be
achieved and how to achieve? The benchmarks set to measure the progress need
to be achievable with the time and resources available. There will be
fundamental differences between projects, and they cannot be set common
benchmarks such as reducing the time by six months – easy to achieve in an
incremental product development project, often impossible in a major
innovation. There needs to be opportunity to make changes to the action plan,
if the short-term benchmarks are not being achieved and there is no hope of
attaining the long-term benchmarks. Product development is new and creative,
so it is not always possible to predict accurately in the action plan.
8.4.2 Product development project
The product development process and its decisions, outcomes, activities and
techniques are going to be improved from the results of the benchmark study.
The milestones in the project need to be set, and then followed in the project to
see if they have been accomplished partially or completely. The targets for the
later stages and the whole project may need to be reviewed as the project
proceeds through the various stages, because of the new knowledge and
achievements in the early stages. The benchmark metrics are accepted into the
project and used during the project, and adjusted if necessary. For example, in
past projects, the product quality may have been identified as low because of
poor packaging and storage properties; this means more creative and controlled
package design together with more extensive storage tests, and metrics of
packaging quality such as improving reject level on the production line or in
distribution, and lengthened storage life of the new product. In putting the
benchmark improvements into practice, the most important factor is to have the
cooperation and commitment of the multifunctional team. This means their
ownership of the project goals, cooperation across the team and good team
leadership (McDonough, 2000), as well as the resources and knowledge to make
the changes, and top management support. Self-assessment of team members is
the most important basis for product development improvement; there can be
comparison between projects in the company, and also with other companies as
shown in Box 8.2. In the large company, it can be between different projects,
and in small companies working in ‘clusters’, it can be between the member
companies of the cluster group. It is important to have self-assessment in
company projects before cooperating with other companies. A difficulty is in
identifying suitable companies for the comparison, gaining access to these
companies’ information at a useful level of detail, and deriving useful guidance
for the company’s product development from this comparison (Coughlan and
Brady, 1995).
366 Food product development
8.4.3 Product development programme
In improving the whole product development programme, a new innovation/new
product strategy needs to be formulated and a plan to achieve it developed. This
is a much more fundamental change to the company’s product development. It is
Box 8.2 Self-assessment and benchmarking product
development in five Irish firms
The main objectives of the study were:
? establish benchmarks of current practice in the management of the product
development process in five manufacturing firms drawn from differing
industries in Ireland;
? increase awareness of areas of choice in the management of product
development among manufacturing firms in Ireland with a view to
improving their management of the product development process.
Each company selected two recent product development projects for
assessment. Each project illustrated development in different situations or
different approaches to development. The projects represented different
degrees of product change and manufacturing process change. Six of the ten
projects fell into the category of incremental or derivative projects, four of
the projects were platform or next-generation projects.
The self-assessment and benchmarking approach consisted of three generic
phases: data gathering and initial self-assessment; communication of insights
both within and between the firms; development and discussion of action
plans. All three phases required the active participation of up to ten staff
members in each firm, drawn from the product development projects under
review.
Arising out of the research each firm identified a range of performance
limiting practices in its development process, which had caused schedule
delay or cycle time extension through:
? insufficient up-front technology planning and development,
? reacting to short-term resource shortages,
? accepting productivity limiting practices,
? inadequate product and product line planning,
? allowing requirements to float,
? reliance on major versus incremental changes.
The issues were concentrated in the areas of market focus, teamworking,
transfer of manufacturing, leadership, resourcing and performance evalua-
tion.
Source: After Coughlan and Brady, 1995.
Improving the product development process 367
important not to set the achievement levels so high that the company and the
individuals cannot achieve them in a reasonable time with the present or agreed
expanded assets. Goals need to be reasonably flexible, to allow for adjustment as
the new programme proceeds and for any environmental or internal company
changes. Programmes are often organised for 3–5 years, but future predictions
up to 10 years should be made. There is a need for constant monitoring of the
programme benchmarks, and making changes when necessary. The product
development programme is a dynamic organisation and must allow controlled
(but not wild) changes. The corrective improvement plan needs to monitor/
check/review the impact of the product development programme changes on the
outcomes and the critical product development success factors.
Learning from the projects is important and their benchmark data need to be
incorporated into the product development programme so that continuous
improvement of the efficiency and effectiveness of the programme can occur.
The natural tendency in a company is to go forward into the next project without
reviewing the product development programme to see what can be improved.
The knowledge must be absorbed into the company through the product
development programme. Organisational and individual learning are the
outcome of benchmarking projects and the knowledge learnt must not be lost.
Learning from product development projects is one of the most difficult things
that a company can do.
There are two objectives in programme improvement: to be better at
designing new products and processes, and continually to build and improve the
company’s procedures, processes, leadership skills, techniques and methods in
order to do things faster, more efficiently and with higher quality (Clark and
Wheelwright, 1993). Building the development capability is also another
important objective.
8.4.4 Product development and business strategies
The company’s top management needs to have an increased awareness of the areas
of choice in product development management and the performance limiting
practices in the company. It has to know not only how to modify the business and
product strategies in response to changes in market and competitive actions; but
even more important to act proactively through its own diagnosis of the need for
change in technology or/and consumers. Management also knows from its own
examination of the company as to how the company is performing in product
development, who are the key individuals on which the product development is
based, but it needs to also identify the knowledge and lack of knowledge in the
company, and the financial and other resources needed. When top management has
to introduce consultants and make drastic changes, then it knows that its
management of product development has been poor. By continuous improvement
integrated throughout the company, management can prevent this happening.
A company, and indeed an industry, can choose its own improving standard of
development through the four levels of PD practice (Coughlan and Brady, 1995):
368 Food product development
Lowest level: Product development is not managed and encouraged.
Basic procedures, management and motivation are in place.
C35
Product development is managed and encouraged as a key
objective for the firm.
Highest level: ‘World-class’ development performance is the norm.
8.5 References
BARCLAY, I., DANN, Z. & HOLROYD, P. (2001) New Product Development: A
Practical Workbook for Improving Performance (London: Butterworth-
Heinemann).
CLARK, K.B. & WHEELWRIGHT, S.C. (1993) Managing New Product and Process
Development (New York: The Free Press).
CODLING, S. (1996) Best Practices in Benchmarking (Houston: Gulf Publishing
Co.).
COOPER, R.G. & KLEINSCHMIDT, E.J. (1995) Benchmarking the firm’s critical
success factors in new product development. Journal of Product Innova-
tion Management, 12, 374–391.
COUGHLAN, P. & BRADY, E. (1995) Self-assessment and benchmarking product
development in five Irish firms. Journal of Managerial Psychology, 10(6),
41–47.
Think break
You have now read eight chapters on product development.
1. What are the most important factors that you have identified to improve product
development effectiveness in your company?
2. What are the factors that you have identified to improve product development
efficiency in your company?
3. If your company does not conduct benchmarking of individual development
projects, do you know why it does not? How might your company overcome
hindrances and stumbling blocks to make project benchmarking a standard tool?
4. How does your company create and store technical knowledge from previous
projects, to make it available for present and future projects?
5. How does your company create and store customer/consumer knowledge from
previous projects to make it available for present and future projects?
6. How does your company improve product development? Can the method of
doing this be changed to bring product development to a higher level?
7. What is the overall standard of product development in your company?
8. How can the standard be raised?
Improving the product development process 369
CZARNECKI, M.T. (1999) Managing by Measuring: How to Improve Your
Organization’s Performance through Effective Benchmarking (New York:
Amacom).
DE BRENTANI, U. (2001) Innovative versus incremental new business services:
different keys for achieving success. Journal of Product Innovation
Management, 18, 169–187.
DIMANCESCU, D. & DWENGER, K. (1996) World-class New Product Development:
Benchmarking Best Practices of Agile Manufacturers (New York:
Amacom).
GRIFFIN, A. (1997) Drivers of NPD Success: The 1997 PDMA Report (Chicago:
Product Development & Management Association).
HULTINK, E.J. & ROBBEN, H.S. (1995) Measuring product success: the difference
that time perspective makes. Journal of Product Innovation Management,
12, 392–405.
McDONOUGH, E.F. (2000) Investigation of factors contributing to the success of
cross-functional teams. Journal of Product Innovation Management, 17,
221–235.
MATHESON, D. & MATHESON, J. (1998) The Smart Organisation: Creating Value
Through Strategic R&D (Boston, MA: Harvard Business School Press).
MEYER, M.H. & DETORE, A. (2001) Perspective: creating a platform-based
approach for developing new services. Journal of Product Innovation
Management, 18, 188–204.
RUDOLPH, M.J. (2000) The food product development process, in New Products
for a Changing Marketplace, Brody, A.L and Lord, J.B. (Eds) (Lancaster,
PA: Technomic).
ZAIRI, M. (1998) Effective Management of Benchmarking Projects (Oxford:
Butterworth-Heinemann).
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