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Alpha Test
Pre-production product testing to find and eliminate the most obvious design defects or deficiencies, usually in a laboratory setting or in some part of the developing firms regular operations, although in some cases it may be done in controlled settings with lead customers. See also beta test and gamma test.
Autonomous Team
A completely self-sufficient project team with very little, if any, link to the funding organization. Frequently used as an organizational model to bring a radical innovation to the marketplace. Sometimes called a tiger team.
B Benefit
A product attribute expressed in terms of what the user gets from the product rather than its physical characteristics or features. Benefits are often paired with specific features, but they need not be.
Beta Test
An external test of pre-production products. The purpose is to test the product for all functions in a breadth of field situations to find those system faults that are more likely to show in actual use than in the firms more controlled in-house tests before sale to the general market.
Bottom-Up Budgeting
A budgeting methodology that focuses first on expenses (the bottom part of a financial statement) and other outflows of monies, then evalauate what income is needed to break even and/or make a profit. In contrast to the top-down budgeting technique.
Brainstorming
A group method of creative problem-solving frequently used in product concept generation. There are many modifications in format, each variation with its own name. The basis of all of these methods uses a group of people to creatively generate a list of ideas related to a particular topic. As many ideas as possible are listed before any critical evaluation is performed. Breakthrough Highly significant or dramatic invention or improvement in performance, achieved through consistent, focused, and synergistic efforts.
Budget
A plan for the future expressed quantitatively (usually in amounts of money) that covers a specific period of time (normally one year).
Champion
A person who takes a passionate interest in seeing that a particular process or product in fully developed and marketed.
Co-Creation
A form of market or business strategy that emphasizes the generation and ongoing realization of mutual firm-customer value. It views markets as forums for firms and active customers to share, combine and renew each others resources and capabilities to create value through new forms of interaction, service and learning mechanisms. It differs from the traditional active firm passive consumer market construct of the past.
Concept
A clearly written and possibly visual description of the new product idea that includes its primary features and consumer benefits, combined with a broad understanding of the technology needed. Concept Generation The processes by which new concepts, or product ideas, are generated. Sometimes also called idea generation or ideation. Concept Map A concept map is a diagram showing the relationships among concepts. They are graphical tools for organizing and representing knowledge.
Concept Testing
The process by which a concept statement is presented to consumers for their reactions. These reactions can either be used to permit the developer to estimate the sales value of the concept or to make changes to the concept to enhance its potential sales value.
Conflict
A condition in which one team member perceives that another has frustrated, or is about to frustrate, a condition of his. Results due to miscommunication between people with regard to their needs, ideas, beliefs, goals, or values.
Conflict Management
Involves acquiring skills related to conflict resolution, self-awareness about conflict modes, communication skills, and establishing norms for managing conflict to increase productivity of the team.
Conjoint Analysis
A market research technique in which respondents are systematically presented with a rotating set of product descriptions, each of which contains a rotating set of attributes and levels of those attributes. By asking respondents to choose their preferred product and/or to indicate their degree of preference from within each set of options, Conjoint Analysis can determine the relative contribution to overall preference of each variable and each level. The two key advantages of conjoint analysis over other methods of determining importance are: 1) the variables and levels can be either continuous (e.g. weight) or discreet (e.g. color), and 2) it is just about the only valid market research method for evaluating the role of price, i.e. how much someone would pay for a given feature.
Contingency Plan
A plan to cope with events whose occurrence, timing and severity cannot be predicted.
Convergent Thinking
A technique generally performed late in the initial phase of idea generation to help funnel the high volume of ideas created through divergent thinking into a small group or single idea on which more effort and analysis will be focused.
Core Capabilities
A set of differentiated skills, complementary assets, and business processes that provide the basis for a firms competitive capacities and sustainable advantage. Also called the core competencies.
Critical Path
The set of interrelated activities that must be completed for the project to be finished successfully can be mapped into a chart showing how long each task takes, and which tasks cannot be started before which other tasks are completed. The critical path is the set of linkages through the chart that is the longest and determines how long a project will take.
Cross-Functional Team
A team consisting of representatives from the various functions involved in product development, usually including members from all key functions required to deliver a successful product, typically including marketing, engineering, manufacturing/operations, finance, purchasing, customer support, and quality. The team is empowered by the departments to represent each functions perspective in the development process.
Customer
One who purchases or uses your firms products or services.
Customer Need
Problems that a product, service, or program solves and the functions it performs. See also Product Needs.
Cycle Time
The length of time for any operation to be completed from the start. In the new product development sense, it is the length of time to develop a new product from an early initial idea for a new product to initial market sales. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within the company. Generally considered the time from idea selection to commercial launch.
Delphi Process
A technique that uses iterative rounds of consensus development across a group of experts to arrive at a forecast of the most probable outcome for some future state.
Diffusion Model
The process of how new products get adopted as an interaction between users and potential users. The model is widely used in forecasting, especially product forecasting and technology forecasting.
Discontinuous Innovation
Previously unknown products that establish new consumption patterns and behavior changes. Examples include microwave ovens and the cellular phones. Disruptive Technology A disruptive innovation is an innovation that disrupts an existing market. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.
Divergent Thinking
Technique performed early in the initial phase of idea generation that expands thinking processes to generate, record and recall a high volume of new or interesting ideas.
Dyad Team
A team of two people, normally from R&D and Marketing functions, that conducts customer visits to learn about potential consumer and product needs.
E Elapsed Time
The time on a calendar that it takes to complete a project activity, from start to finish. For example, the elapsed time for a normal work day may be 10 hours, including 8 hours of real time, plus commuting and lunch time. See related definition of real (project) time, where in comparison to elapsed time, an actual work day is 8 hours.
F Fast Follower
A firm or organization that is adept at improving existing technologies through incremental innovation in both product and process technologies. Often offers a product or pricing advantage over the first-to-market competitor. Feature(s) The solution to a consumer need or problem. Features provide benefits to consumers. The handle (feature) allows a suitcase or briefcase to be carried easily (benefit). Usually any one of several different features will be chosen to meet a customer need. For example, a carrying case with shoulder straps is another feature that allows a suitcase or briefcase to be carried easily.
Financial Statement
A formal record of the finances of a company or other entity.
First to Market
The first product to create a new product category or a substantial subdivision of a category.
Fixed Costs
Periodic expenses of a firm which remain unchanged regardless of the level of output or sales.
Focus Group
A qualitative market researchtechnique where 8 to 12 market participants are gathered in one room for a discussion under the leadership of a trained moderator. The discussion focuses on a consumer problem, product, or potential solution to a problem. The results of these discussions cannot normally be projected to the general market.
Forecast
A prediction, over some defined time, of the success or failure of implementing a business plans decisions derived from an existing strategy.
G
Gantt Chart A horizontal bar chart used in project scheduling and mana gement that shows the start date, end date and duration of tasks within the project.
Gatekeepers
The group of managers who serve as advisors, decision-makers and investors in a Stage-Gate process. Using established business criteria, this multi-functional group reviews new product opportunities and project progress, and allocates resources accordingly at each gate. This group may also be called a Product Approval Committee or Portfolio Management Team.
GIGO (Garbage In, Garbage Out) A term historically referring to computer processing and a pun on the accounting term FIFO (first in, first out). Computers will process nonsensical data and produce nonsensical answers. In New Product Development, the term of Garbage In, Garbage Out more specifically refers to poor information data input to the NPD Process will produce poor results.
Heavyweight Team
An empowered project team with adequate resourcing to complete the project. Personnel report to the team leader and are co-located as practical.
Innovation
A new idea, method, or device. The act of creating a new product or process. The act includes invention as well as the work required to bring an idea or concept into final form.
Innovation Strategy
The firms positioning for developing New Technologies and Products. Intellectual Property (IP)
Information, including proprietary knowledge, technical competencies, and design information, which provides commercially exploitable competitive benefit to an organization.
Invention
A new composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived in which case it may be a radical breakthrough
J K Kick-Off Meeting
The first official meeting of a group of people who will be working together on the new product development project. The agenda will usually include introductions, developing the mission statement, describing the new product, and roles and responsibilities of team members. An outcome of the kick-off meeting is the Product Innovation Charter (PIC).
Killer Variables
External factors, also known as show stoppers, beyond the companys control that would block product development no matter how attractive the New Product Development project is in terms of all other factors. Examples of Killer Variables include patent infringement, obsolescence, availability of supplies, or safety, health, and environmental concerns. Knowledge Management (KM) Sometimes abbreviated as KM, Knowledge Management comprises a range of strategies and practices used in an organization to identify, create, represent, distribute, and enable adoption of insights and experiences. Such insights and experiences comprise knowledge, either embodied in individuals or embedded in organizational processes or practice.
L Lead User
Users for whom finding a solution to one of their consumer needs is so important that they have modified a current product or invented a new product to solve the need themselves because they have not found a supplier who can solve it for them. When these consumers needs are portents
of needs that the center of the market will have in the future, their solutions are new product opportunities.
Lean Manufacturing
A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, value is defined as any action or process for which a customer would be willing to pay.
Lightweight Team
New product team charged with successfully developing a product concept and delivering to the marketplace. Resources are, for the most part, not dedicated and the team depends on the technical functions for resources necessary to get the work accomplished.
Line Extension
A form of derivative product that adds or modifies features without significantly changing the product functionality.
M Market Research
Information about the firms customers, competitors, or markets. Information may be from secondary sources (already published and publicly available) or primary sources (from customers themselves). Market research may be qualitative in nature, or quantitative.
Market Segmentation
Market segmentation is defined as a framework by which to sub-divide a larger heterogeneous market into smaller, more homogeneous parts. These segments can be defined in many different ways: demographic (men vs. women, young vs. old, or richer vs. poorer), behavioral (those who buy on the phone vs. the internet vs. retail, or those who pay with cash vs. credit cards), or attitudinal (those who believe that store brands are just as good as national brands vs. those who dont). There are many analytical techniques used to identify segments such as cluster analysis, factor analysis, or discriminate analysis. But the most common method is simply to hypothesize a potential segmentatio n definition and then to test whether any differences that are observed are statistically significant.
Mission Statement
A mission statement is a formal, short, written statement of the purpose of a company or organization. The mission statement should guide the actions of the organization, spell out its
overall goal, provide a sense of direction, and guide decision-making. It provides the framework or context within which the companys strategies are formulated.
Network Diagram
A graphical diagram with boxes connected by lines that shows the sequence of development activities and the interrelationship of each task with another.
New Market
A company offers its products to a new market where the product had not been previously offered.
NPD Process
A disciplined and defined set of tasks and steps that describe the normal means by which a company repetitively converts embryonic ideas into salable products or services.
New-to-the-Company
A new product project in which the product is a new category entry for the firm, but the category is not new to the consumer.
New-to-the-World
A good or service that has never before been available to either consumers or producers. The automobile was new-to-the-world when it was introduced, as were microwave ovens and pet rocks.
New Use
A new product project which seeks to position an original product in a new market without substantially changing the original product.
O
Open Innovation
Firms that utilize open innovation combine internal and external ideas to develop new technologies, and they utilize internal and external paths to market. Open innovation stresses a paradigm shift from closed innovation (where all R&D and marketing is conducted in-house) in that not all good ideas must be developed within the firms own boundaries.
Platform Strategy
A top-down planning approach to maximize market leverage from common technologies and applications. A platform strategy allows management to focus on the key decisions at the right time and enables product derivatives to be launched rapidly and consistently.
Portfolio
Commonly referred to as a set of projects or products that a company is investing in and making strategic trade-offs against.
Portfolio Management
A business process by which a business unit decides on the mix of active projects, staffing and dollar budget allocated to each project currently being undertaken.
Post-Launch Review
This review takes place after the new product has been introduced to the marketplace and after sufficient commercial experience has been gained to allow reasonable judgments concerning probable market receptivity and manufacturing/technology performance.
Product Launch
The process by which a new product is introduced into the market for initial sale.
Product Manager
The person assigned responsibility for overseeing all of the various activities that concern a particular product. Sometimes called a brand manager in consumer packaged goods firms.
Product Needs
Products that customers have identified they need or that technologists believe they can produce as a result of their technologies. Product needs are derived by merging both market pull and technology push. Products involve the application of technologies to solve problems of customers. Roadmaps also depend on the technologists forecast of product capabilities that our customers maynot be aware of. In some cases, a roadmap addresses a need for which there is no current product.
Product Pipeline
The scheduled stream of products in development for release to the market.
Product Protocol
A signed document, containing a record of the points on which agreement has been reached between negotiating parties preliminary to a final treaty or contract. The agreement indicates how customer needs will be translated to engineering design parameters.
Project Management
The set of people, tools, techniques, and processes used to define the projects goal, plan all the work necessary to reach that goal, lead the project and support teams, monitor progress, and ensure that the project is completed in a satisfactory way.
Fine-tuning resource deployment smoothly for projects during ramp-up, ramp-down, and midcourse adjustments.
Prototype
A physical model of the new product concept. Depending upon the purpose, prototypes may be non-working, functionally working, or both functionally and aesthetically complete.
R Radical Innovation
A new product, generally containing new technologies, that significantly changes behaviors and consumption patterns in the marketplace.
Risk Management
The process of identifying, measuring, and mitigating the business risk in a product development project.
Risk Tolerance
The level of risk that a project stakeholder is willing to accept. Tolerance levels are context specific. That is, stakeholders may be willing to accept different levels of risk for different types of risk, such as risks of project delay, price realization, and technical potential.
Roadmapping
A graphical multi-step process to forecast future market and/or technology changes, and then plan the products to address these changes.
S
Sales Forecast Projection of achievable sales revenue, often based on historical sales data, analysis of market surveys and trends, and salespersons estimates. Also called sales budget, it forms the basis of a business plan because the level of sales revenue affects many aspects of commercialization of a new product. Scenario Planning A tool for envisioning alternate futures so that a strategy can be formulated to respond to future opportunities and challenges. Also known as What-If Analysis.
Scope Creep
Refers to uncontrolled changes in the scope of a project. This phenomenon can occur when the scope of a project is not properly defined, documented, or controlled. It is generally considered a negative occurrence with significant effects on the triple constraint of budget, schedule, and quality. Scorecard or Project Scorecard An evaluation mechanism, normally in the form of a questionnaire, that specifies success criteria that project stakeholders will use to rank and prioritize new product projects to satisfy innovation strategy requirements. Often included in portfolio management and especially useful for innovation programs in the fuzzy front end where financial metrics are not yet available. Speed to Market The length of time it takes to develop a new product from an early initial idea for a new product to initial market sales. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within a company.
Sponsor
An informal role in a product development project, usually performed by a higher-ranking person in the firm who is not directly involved in the project but who is ready to extend a helping hand, if needed, or provide a barrier to interference by others. Stock Keeping Unit (SKU) Warehousing item that is unique because of some characteristic (such as brand, size, color, model) and must be stored and accounted for separate from other items. Each SKU is assigned a unique identification number (inventory or stock number). New Product Development projects often add SKUs to existing product inventories by product line extensions or by commercializing new products in the market. Strategic Alignment The process that ties new product strategy to new product portfolio planning.
Strategic Balance
Balancing the Portfolio of development projects along one or more of many dimensions such as focus vs. diversification, short vs. long term, high vs. low risk, extending platforms vs. development of new platforms.
Sunk Costs
A cost that has been incurred and cannot be reversed. Also referred to as stranded cost.
Sustaining Technology
Originally termed by Clayton Christensen in The Innovators Dilemma. In contrast to disruptive technology, sustaining innovations do not have a drastic effect on the market or product uses. Sustaining technologies may be transformational or continuous (incremental improvements). SWOT Analysis Strengths, Weaknesses, Opportunities, and Threats Analysis. A SWOT analysis evaluates a company in terms of its advantages and disadvantages versus competitors, customer requirements, and market/economic environmental conditions.
T
Team (Teamwork) A group of persons who participate in the new product development project. Frequently each team member represents a function, department, or specialty. Together they represent the full set of capabilities needed to effectively and efficiently complete the project. Team Leader The person leading the new product development team. Responsible for ensuring that milestones and deliverables are achieved, but may not have any direct authority over project participants. Technology Roadmap A graphic representation of technology evolution or technology plans mapped against time. It is used to guide new technology development for or technology selection in developing new products.
Top-Down Budgeting
Starts with estimating and budgeting of revenues and other income first. The budget is then completed with expenses. Called top-down since it resembles the top portion of an income statement (see financial statements). Contrast with bottom-up budgeting.
Trade-Off Analysis
A type of study that measures users utility scales for various attributes of a given product category. Given the determinant attributes, and the utility scale for each, one can assemble the perfect product, putting in an optimized set of attributes that yields in total the greatest value to the marketplace. Sometimes called conjoint analysis.
Triple Constraint
The combined constraints of meeting schedules and project deadlines, staying within a prescribed budget, and meeting the quality and performance specifications for a project.
V
Values Any principle to which a person or company adheres with some degree of emotion. It is one of the elements that enter into formulating a strategy. Value Proposition A short, clear, and simple statement of how and on what dimensions a product concept will deliver value to prospective customers. The essence of value is embedded in the tradeoff between the benefits a customer receives from a new product and the price a customer pays for it. Variable Costs Periodic charges incurred by a company that are in sync with, or change more or less proportionally to, production output levels or sales revenues.
Variance Analysis
Allows managers to see whether sales, production, and manufacturing costs are higher or lower than planned and why actual sales, production, and costs differ from the budget or plan. Vertical Integration A firms operation across multiple levels of the value chain. In the early 1900s, Ford Motor Company was extremely vertically integrated, as it owned forests and operated logging and wood finishing and glass-making businesses. They made all of the components that went into automobiles, as well as most of the raw materials used in those components. Virtual Team Dispersed teams that communicate and work primarily electronically may be called virtual teams. Vision An act of imagining, guided by both foresight and informed discernment, that reveals the possibilities as well as the practical limits in new product development. It depicts the most desirable, future state of a product or organization. Voice of Customer (VOC) A process for eliciting needs from consumers that uses structured in-depth interviews to lead interviewees through a series of situations in which they have experienced and found solutions to
the set of problems being investigated. Needs are obtained through indirect questioning by coming to understand how the consumers found ways to meet their needs, and, more important, why they chose the particular solutions they found. Voice of Technology (VOT) Voice of Technology (VOT) is a reporting protocol for Research and Development (R&D) staff to analyze new and emerging technologies for senior management. For more details see M. Bruce Lynes article in Research Technology Management (November-December 2003).
W
Work Breakdown Structure (WBS) A work breakdown structure (WBS) in project management and systems engineering, is a tool used to define and group a projects discrete work elements in a way that helps organize and define the total work scope of the project. WBS elements may be products, data, services, or a combination of these. WBS provides the necessary framework for detailed cost estimating and control along with providing guidance for schedule development and control. Additionally, the WBS is a dynamic tool and can be revised and updated as needed by the project or program manager.
X Y
Year-On-Year Budgeting
Method for creating a budget that assumes incremental changes to a budget already existing for a prior period.
Z
Zero-Based Budgeting
Method for creating a budget that starts with no funds for the period under consideration.