An introduction to New

Product Development (NPD)

New products: Managing

Innovation within firms

New Product DevelopmentManaging Innovation within firms

Learning Objectives
Identify the factors organizations have to manage to
achieve success in innovation
Explain the dilemma facing all organizations
concerning the need for creativity and stability
Recognize the difficulties of managing uncertainty

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Pearsons Uncertainty Map

High

3. Applications
engineering

1. Exploratory
research

4. Combining
market
opportunities

2. Development
engineering

Uncertainty
about output

High

Low
Uncertainty about process
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Managing Uncertainty- Pearsons

Uncertainty Map
Provides a framework for analyzing and
understanding uncertainty and the
innovation process
Divides uncertainty into two separate
dimensions:
Uncertainty about ends(what it eventual target of
the activity or project)
Uncertainty about means(how to achieve this
target)

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Pearsons Uncertainty Map

Quadrant 1
High degree of uncertainty and ends
Ultimate target is not clearly defined and how to achieve
is not clear
Exploratory research
E.g. University research laboratory

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Pearsons Uncertainty Map

Quadrant 2
The end or target is clear
E.g. Commercial opportunity may have been identified
but means has not be established
Different technologies or different approaches to try to
achieve the desired product
Additional approaches may be uncovered along the way
Considerable uncertainty about prcised how company
will achieve its target
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Pearsons Uncertainty Map

Quadrant 3
Uncertainty regarding ends
Attempts to discover how technology can be most
effectively used
Application engineering
New materials fall into this area

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Pearsons Uncertainty Map

Quadrant 4
Area of the most certainty
Situation dominated by improving existing products or
creating new products through the combination of a
market opportunity and technical capability
Speed of development is often the key to success
Minimal new technology with focus on the appearance of
the product
E.g. Nokia with new designs rapidly into market
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Organization characteristics that

facilitate the innovation process
1. Growth Orientation
2. Vigilance and external links
3. Commitment to technology and R&D intensity
4. Acceptance of risks

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Organization characteristics that

facilitate the innovation process
5. Cross functional cooperation and coordination within
organization structure
6. Receptivity

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Organization characteristics that

facilitate the innovation process
8. Space for creativity
9. Strategy towards innovation
10.Diverse range of skills

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Organizational structures and

innovation
1. Formalization

Inverse relationship between formalization and innovation

Formalization of procedures will result in a decrease in
innovative activity
But will a decrease in procedure and rules lead to an increase
in innovation?

2. Complexity of organization

Complexities refers to the number of professional groups or

diversity of specialists within the organization.
e.g. Hospital Doctors, Nurses, Wide range of Specialist
Good supply: Complex distribution all over country but not wide
range of highly qualified professional groups

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Organizational structures and

innovation
3. Centralization

Refers to the decision making activity and location of power

Fewer levels of hierarchy are required
Lead to more responsive decision closer to the action

4. Organization size

Economic and organization resources e.g. Employees and

scale of operation
20 employees differs significantly in terms of resources from
and organization of 200 or 2000 employees

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Establishing an innovative environment

and propagating this virtuous circle
Attraction of
creative people

The
organizations
reputation for
innovation

Organizational
encouragement
of creativity and
innovation

High morale and

retention of
creative people

Development of
innovative
products

Motivates people
within the
organization and
reduces
frustration
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A willingness
within the
organization to
accept new ideas

Establishing an innovative environment

and propagating this virtuous circle
1.

Reputation of the organization

2.

Reputation takes year to develop

Strongly linked to overall performance
Factors: 1) recent product launches, 2) Success of the programs 3) High level
of expenditure on R&D

Attraction of creative people

3.

Creative organization attract creative people

Top scientist will seek employment with those companies which have a
reputation or innovation and scientific excellence

Organization encourages creativity

Creativity has to be supported with actions and resources rather than just lip
services
Build an environment that tolerates errors and mistakes
Successful new ideas need to be rewarded in terms of publicity involved

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Establishing an innovative environment

and propagating this virtuous circle
4.

Development of innovative products

5.

Genuine improvements compared with products currently available

Success in current market place that leads to further success

A willingness to accept new ideas

6.

Many organization suffer from inability to implement changes and new ideas
It is important that it is carried through to completion

Increased motivation and reduced frustration

7.

Individual contribution to the overall performance of the business

Good ideas that are constantly overlooked will lead to increased frustration

High Moral and retention of creative people

All preceding activities will help contribute to increased moral

A rewarding and enjoyable working environment will help retain creative people
Reinforce the companys innovative capabilities

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Tutorial
1. Discuss the main organizational characteristics
that facilitate the innovation process?
2. Explain the key individual roles within the
innovation process and the activities they
perform.

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