Mike Saren Refraining the Process of Marketing, University of ...

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Marketing, University of Development: from. Stirling, Scotland, UK "Stages" Models to a. "Blocks" Framework. The traditional view of the process of new product ...
Journa! of Marketing Management, 1994, I'D, 633—643

Mike Saren

Refraining the Process of

Department of

NeW ProduCt

Marketing, University of D e v e l o p m e n t : f r o m Stirling, Scotland, UK " S t a g e s " M o d e l s t o a "Blocks" Framework The traditional view of the process of new product development (NPD), which is often prescribed as a series of activity "stages", is critically reviewed. A number of problems are identified with this and other approaches to NPD as accurate representations of the process, such as their concentration on intra-firm aspects and their ordered and sequential structure. The paper argues for an alternative approach, based on variable "blocks" of NPD activities, which also takes account of external organizations' involvement in the process.

Introduction It is now clear that our view of the new product development process has changed significantiy from that of the intra-firm "activity-stage" model proposed 25 years ago by Booz, Alien and Hamilton (1968). This approach, which is still wdely used and found in many marketing textbooks, represents the NPD process as a sequential series of stages, through which fhe embryonic new product progresses from idea generation to final commercialization (e.g. Fig. 1). Although subsequent models of this type have been substantially refined and modified, incorporating— inter alia—detailed sub-stages, departmental functions and decision points, a number of serious problems with this approach have become apparent.

Criticisms of the "Stages" Approach 1. Recursii'e Processes

The normative model suggests that the product development process is linear and sequential, whereas in practice it is more likely to be iterative and recursive (Saren 1984). For example, following test marketing there may be further engineering development work fo improve product functions and then a reassessment of the commercial viabOity of the product. Thus, the "stage" of commercial evaluation may actually occur at several points in the process, not only between "screening" and "product development". The assumption of a sequential progression without feedback loops and recurring tasks is unrealistic. Coirespondence to be addressed to: Department of Marketing, School of Management, University of Stirling, Stirling FK9 4LA, Scotland, UK. 0267-257X/94/070633+11 $08.00/0

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© 1994 The Dryden Press

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Idea generation

Screening

V Commercial evaluation

V Product development

Test marketing

Connnercialization

Figure 1. The new product development process. 2. Simultaneous Processes

The pressure to reduce "time to market" has led many companies to pursue simultaneous activities within new product development, rather than the "relay race" or "pass the parcel" approach suggested by the stages models. Takeuchi and Nounaka (1986) cite examples of multi-disciplinary product development teams in Honda, Canon and Fuji-Xerox, evoking the metaphor of the game of rugby, where the team progresses as a unit, passing the ball back and forth. They represent the process as a set of overlapping phases, rather than the series of highly structured stages of the traditional models. Other authors have proposed the idea of "parallel processing". Crawford (1991) argues that all the major functions, such as research engineering and marketing, should be involved in the development from the start and throughout the process. Hart and Baker (1992) go further in proposing a "multiple convergent processing" model. They argue that this additional emphasis on the need for the separate tasks to converge or meet at several points is required to ensure the common direction and integration of the parallel functions' activities. 3. More Attention to Early Stages

Empirical studies of the NPD process have emphasized the performance of the early pre-deveiopment activities as a pre-requisite for success (Biemans 1992). As

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Cooper's (1988) study demonstrates, ". . . it is these early stages where success and failure are largely decided". But the vf&Y in which an idea emerges from a vague, incomplete notion in the mind of one person to a well defined, form.al organizational objective, to which considerable resources and actiwties are committed, is an exceedingly complex phenomenon (Kanter 1983; Burgelman and Sayles 1986; Conway and McGuinness 1986). The recent literature provides little evidence (and more grounds for doubt) that these early steps in product development are realistically captured by the "Idea generation—Screening—Evaluation" format. For example, McGuinness's studies of both small and large high-technology firms (1990) found that: "The way ideas progressed was more patterned and systematic than was generally realised . . . ideas themselves seemed to go through identifiable stages as they progressed from an idea to a full-blown concept for a nevf product." McGuinness proposes several additional stages including "problem definition" and "intensive search", in which the latter gathers technical and market information and, significantly, it is driven by the former. He also argues that a distinct "screening" stage is problematical: "Screening was found to be something of a continuing informal process that was very effective and did more than just screen, it also refined and improved the product concept."

4. External Activities A number of studies have pointed to the variable initiation and functional locus of product development activities in terms of "manufacture-active" vis-a-vis "customer-active' paradigms (Von Hippel 1978; FoxaO 1984, 1988). If in some cases external organizations, such as customers or suppliers, can play a key role, then a further fundamental criticism of the normative model is that it focuses solely on the internal development process within the company. Modern, innovative firms are now operating within complex "technology networks" (Johansson and Mattson 1987), which have also been described as "technology chains" (Clarke et al. 1988), "filieres" (Malsot 1980) and "Gesellshaften" (Tonnies 1887). It is within such contexts that new product development often occurs. The more radical and novel the new product is to the innovating firm, the less likely that it wOl possess "in-house" all the necessary knowledge, technology, market contacts, expertise and people required to perform all the NPD activities by itself. It is not surprising then that researchers are finding more cases where the complete NPD process comprises activities and initiatives on the part of several organizations with, for example, collaborative R&D, contracted-out research, customer and/or supplier involvement in development and testing. Some have proposed in the light of this that, in contrast to the normative model, the process

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should be viewed in terms of networks, both within and extending beyond one single company (Hakansson 1987; Biemans 1992; Hart and Baker 1992). 5. Technical and Organizational

Variations

Most new products fail—and thus the corollary is that successful NPD is exceptional. It may be that any theoretical formula or empirical recipe for the NPD process is therefore non-generalizable. By its nature, innovation tends to be unique and chaotic (Schon 1967; Quinn 1985). The search for a single eclectic model may itself be misleading. Companies certainly appear to go about developing new products in many different and idiosyncratic ways. It is to be expected that the complexity, timescale and organization of NPD will vary enormously according to the type and novelty of the technologies involved. The development of anti-AIDS and anti-cancer drugs is very different from the development of optical character recognition devices, even though all aim to produce radical, "discontinuous" technological innovations. The contrast with FMCGs is even more marked. Furthermore, companies pursue NPD by different means—even within the same industry, using the same technologies, serving the same markets. In biotechnology for instance, some firms have a centralized R&D laboratory, others are decentralized; some contract out to external R&D organizations, some engage in many joint development and collaborative R&D ventures; others retain as much as possible in-house (Daly 1985). Is it not unlikely that different structures do not require different processes? One authoritative researcher in this field has identified seven distinct types of NPD processes from a large empirical survey of firms (Cooper 1983). Kanter (1983) concludes that no two innovations follow the same path from idea to commercialization—even within the same company. Other Approaches to NPD There are some alternative approaches in the literature which avoid breaking down the process into stages. A common taxonomy of NPD models, which is used as a structure for discussing the various types (Biemens 1992; Hart and Baker 1992), identifies five different categories (Saren 1984) 1. 2. 3. 4. 5.

Department-stage models Activity-stage models Decision-stage models Conversion process models Response models.

To update this list another category should now be added: i.e. 6. Network models. The "stage" models (1-3 above) all suffer from the criticisms discussed earlier. Conversion process models (4 e.g. Schon 1967) depict the process as the transformation of inputs such as functions, resource, knowledge into outputs in terms of new products, processes and methods. However, the operations and detail of the NFD process itself are unspecified, represented as an epistemological "black box".

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Response models (5) focus on the organizational response to change, which innovation incurs. They present the decision to adopt or reject a new product proposal as the outcome of an organizational change process viewed from a behavioural, "stimulus-response" perspective (e.g. Becker and Whisler 1967). As such, they concentrate solely on the early steps of NPD, ignoring those parts of the process after a proposal has been accepted for development. Network analysis of the NPD process (6) is a more recent and potentially exciting proposition, which also avoids the problems encountered by the "stages" models (Biemens 1992; Hart and Baker 1992). Hakansson (1987), an authority on the network approach, applies this analytical perspective to a case-study of technical and product development within the meta! drill network. He explains its application to NPD as follows: "The network perspective means focusing on relationships between actors, activities and resources. In the network perspective a specific product becomes a question of relationships. It itself constitutes a relationship between certain activities, resources and actors. A product is produced through certain transformation and transaction activities—and is consumed through others . . . In this way product development becomes a network issue in terms of how the new product will affect the activities, the resources and thereby the relationships between the actors." [italics added] Thus, by taking the relationships, linkages and transactions during the NPD process as the unit of analysis, the key "dimensions" of the network can be identified and monitored longitudinally. It constitutes a "model" of the process as a complex, variable set of relationships between activities and actors, both across and within organizations. This approach is very useful for analysing individual cases of NPD by mapping out changing roles of the actors and the dynamic structure of the network, but it says little about the activity and resource inputs themselves, which at least the stages models do describe.

The Need for a New? Approach These six types of models provide separate conceptualizations of the same phenomenon. They focus on different aspects of the NPD process because the authors have a different purpose in mind. Most of the models were developed as a basis for examining specific features, such as: factors associated with success, methods of reducing time to market, the role of the product champion, the source initiation, the role of relationships and netwrorks. As it has been noted elsewhere, they were not developed primarily as an accurate general description of the process (Saren 1984; Biemens 1992). But this is precisely what is required—a general framework that enables us to accurately segment, locate and describe what occurs during the new product development process. This was provided by the Booz, Allen and Hamilton (1968) activity stages model, but, as we have seen, our knowledge and thinking about the process has moved on a long way since then. The task is to develop a general

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descriptive framework that overcomes the problems with the basic truncated stages approach, yet which is sufficiently flexible to be used as a basis for analysing the process in terms of activities, functions, decisions, information flows, inputs and outputs, internal and external actors, or as a complex network of relationships. If may be that we can adapt and integrate aspects of the various conceptual approaches in order to take account of the limitations of the original activity-stages model. The following short case of new product development is used to illustrate how such a framew^ork might be developed. Case Example of NPD The firm in this example is a traditional UK company which had achieved market leadership in high-quality inspection equipment. It began to decline in the mid1970s and was acquired by a larger manufacturer in 1984. At that time the firm's product range was technologically outdated and the market segments in which it had concentrated were declining in value terms at 18% p.a. The new managing director, after consultation with Group HQ, decided to undertake a modernization programme of the entire product range. Staff were assigned to study new technologies with fhe potential to form the basis of a new product range and to research possible new (to the firm) markets which the company could enter. The external search produced a "map" of the metrology market and a number of potential technological developments in various stages of completion. The decision as to which to pursue was predominantly technology driven in that the new products—a range of advanced measurement devices—incorporated a combination of developments in computing, electronics, optics and laser technologies (all of which were new to fhe firm). But, they were targeted at the same metrology market as the existing mechanical products, and with the eventual aim of replacing them. The invention of the basic device and the technological development of the prototype had been conducted by a university engineer in his own spin-off company, who hade been "discovered" during the technology search initiated earlier. Because this firm had very limited capabilities in these technologies—no skilled staff, no suitable manufacturing equipment, no distribution or sales expertise— critical consideration and some considerable management time was devoted to the selection of the means of acquiring the required technologies, and—linked to this—the method and source of manufacturing. The implementation of the chosen product innovation was complex for fhe management of the firm, involving relations with Group management, negotiation with the inventor, suppliers and legal representatives, technical development and, more critically, control of the manufacturing process, and managing the organizational and staffing implications of the adoption of the innovation. Implications of the Case In this example the process of new product development is indeed more complex, less clearly structured, more recursive and more opportunistic than the normative "stages" approach suggests. Furthermore, the development activities are not purely internal to the company—the external inventor/manufacturer plays a key

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Promotional/ advertising development

Figure 2. New product development process—activity Mocks, —f Sequence of development; 0 Internal functional stage;