New Product Development
Volume 17, Number 3 Article by Ganesh N Prahbu and Rishikesha T Krishnan September, 2005
New Product Development: Discussion :
In seeking to understand the complexities of the new product development (NPD) process, IIMB Management Review invited representatives from Indian industry and academia to review the emerging opportunities in NPD in India, successful NPD initiatives, strategies for the development of new products, product development structures and processes within organisations and across partnering organisations, product development capabilities, and the issues and challenges in the commercialisation of new products. The panel also discussed how and why new product development in India differs from that in the rest of the world.
Prof Ganesh Prabhu pointed out that possibilities for new product development exist in two areas in India where there is potential to gain high margins by creating differentiated products with more features, and where high volumes can be gained by creating good, cost effective products for mass consumption in urban and rural markets. Indian firms have a higher chance of success in the second area. However, we must ensure tight control on the price-performance equation; products must be robust to withstand the ground realities, be easy to use and repair, and should lend themselves to innovative modes of financing.
Prakash Virkar, Divisional Head, Beverages Innovation, Hindustan Lever Research Centre, outlined the strategy of new product development from an FMCG perspective. Other than the stage gate process and the use of project management tools, the company operates in autonomous multi-functional brand teams. Consumer trends and insights are key to profitable growth. Products must support the functional and emotional benefits offered by the brand. Product differentiation along social values such as environmental sustainability and recyclability is becoming important. A Rs 100 billion company such as HLL has special company filters for new products, such as the minimum size of the opportunity, among others.
The uniqueness of the new product development process in the online software industry according to Dr Prasad Ram, Chief Technology Officer, Yahoo! R&D, India, lay in building software products that embody significant technologies, but offering them as services over the web as opposed to the more traditional `selling' of the product. Developing new global services in this space requires innovation both technology and market based; focusing on a comprehensive product strategy, and providing scaleable engineering and operations. Traditional software researchers would rarely encounter the problems of scale, network integration needs, and the internationalisation requirements that Yahoo! faces with over 400 million users and offering over 150 software products in 26 countries.
A niche in new product development that the government sector could enter and pursue aggressively would be the design, development and production of small aircraft in India, opines Dr T S Prahalad, Consultant, National Aerospace Laboratory (NAL). There is a tremendous potential of connectivity to smaller towns and the aerospace programmes of the last thirty years have provided the basic expertise, know-how and infrastructure. However, the challenges ahead include evolving management strategies to build synergies and co-ordinate between R&D organisations, government establishments and private industry, ensuring funding and more active private industry participation and providing leadership with passion.
While there are mature tools available for managing design and production, what is missing in the market are tools that can manage the process of planning how to make a product. It is this lacuna that companies like Ranal hope to fill through templates of collaborative process planning, according to S Vijay Babu, Vice President, Ranal Group. Using an example from the automobile industry, he illustrates how one could go through the details of producing variants of products, even estimating their costs, without actually getting into production. Apart from the cost benefits and reduction of time to market, this enables information flow, transparency and the establishment of best practices and templates.
Part of IISc's programme on product design and research on Design and CAD tools, Prof B Gurumoorthy of the Mechanical Engineering Department, pointed out that our shortcomings in the new product design space include poor product definition, requirements that keep changing on the fly, poor time estimation, inability to refine and optimise the first design, poor need identification with a willingness to work around the design rather than change it, inability to make the transition from prototype to manufacture, from version 1 to version 2 and to replicate and scale up our crafts. SMEs seem unable to afford the right tools and manpower. However, there are opportunities galore for India, especially for designs with a large analysis content. But, we must successfully marry our creativity with formal product development techniques, introduce design content in our curriculum and increase the number of technology demonstration projects.
The culture of an organisation can often be the deterrent to new product development, as Prof L Prasad of IIMB illustrated. Calcutta-in-the-summer organisations are bogged down with single loop learning, a political entourage and a high learning disability with workers who are prone to inertia and group think. Whereas Paris-in-the-spring organisations thrive on an empowering professional order and double loop learning and they channelise people's energies constructively.
Steering the discussion after the individual presentations, Prof R T Krishnan asked, given the complexity of the new product development process and the compulsions of competition, how did organisations deliver products on a continuous basis? Yahoo! had a Market Innovation Group to take up marketable ideas and deliver products within a specified deadline. HLL focused on implementation, linking strategic vision to individual targets while keeping the interdependent approach. Other issues discussed included the handicaps faced by small companies when it came to bridging the gap between prototype and large scale manufacture, the potential of IT in product design, and the scope for growth in user-centred design.
Reprint No 05307a