[MUSIC] This is the first module that we will begin to talk about the process by which new products and services can be developed. So when we develop a new product development service, development process, there are different stages associated with getting the product from the fuzzy end of developing the idea to ultimately launching the product into the marketplace. And the number and the details of those stages may change, based upon the type of product or service that you're developing. So we'll talk more about the generic process and a recommended process that you might want to consider. But you should think of this as a valuable tool that you can develop into the process that best fits your needs. Now, one of the reasons that we want to have a more systematic and routine process of looking at developing new products is we know that based on previous research, firms and individuals that follow such a process, increases the chances of it being successful. Now based upon previous research, we know that the number of ideas that you start out with very seldom end up as a successful product. Now this is based upon some research in an article in a Journal of Product Innovation Management that says, that in roughly among all the products and projects that they looked at where they examined over 300 new fuzzy ideas in the beginning, only one ended up being successful. That's a 66% success rate in terms of once that product has launched into the marketplace. Now, the longer we keep the product into the marketplace and looking at product that eventually will not be successful, the more costly it is to you in terms of your development costs. And depending upon the type of product you're talking about. The product development process might take anywhere from a year to five years. And that allow us the opportunities because you've wasted time on focusing on products that thought would be successful. But you could have evaluated earlier to determine that the chances of success is not as high. So how can we help improve our chances of success? Well, most of us when we are thinking about a new product idea, we have numerous ideas based upon the problem that we've identified. That problem that we've identified may create a number of different concepts, or may lead to a number of different concept, and we used a trial and error approach. So that concept, we develop a prototype, the prototype doesn't quite work, and we start over again. So this is a process of invention. Where we're in the lab, or in our garages, or in our offices trying to come up with an idea that we think is marketable, that we think is potentially successful. But along the way, unless we get that actual physical product, we don’t really know what that product would consist of, in terms of its ability to solve customer’s problem. So this funnel starts out with a number of different ideas, but you’re looking for that one idea that will be most successful. So the stage-gate process is one process that has been adopted by many firms and organizations and individuals as a way of evaluating products along the process as it's being developed. And there are different stages where you're getting information about how the consumer feels, how marketable the product might be. The technical requirements for the product and even the economic feasibility of the product. And that gate is the decision point in which you decide to move forward or not based upon information that you're getting in. So for example that stage one at the fuzzy frontend where we have numerous ideas that we're trying to evaluate. We have a gate to help narrow down the number of ideas that will be more likely to be success than others. So if we start out with ten, maybe we can narrow it down to five with that initial gate to evaluate the technical market and the economic feasibility of the product. Then moving on stage 2, we may gather additional information by asking customers, our potential customers about the product. And then allow them to give us feedback to determine if we could go on to the next stage, and the next stage. Now a number of stages that you have is a function of the type of product. The more complex the product, the more likely you're going to have multiple gates to evaluate the information that you get. The more complex solving the customer need is, the more likely the process will be long. An example would be in pharmaceuticals, where you're developing a new pharmaceutical solution to a medical problem. The process now only requires the approval by the technical people you have in your organization but also by the government. So the government may play a role at certain stages. So you have to decide first what is the idea that you want to evaluate but have a standardized process for evaluating those ideas as we go through the product development process of launching the product into the marketplace. So as I mentioned before, there are two components that are important when you're creating your process. If you don't want to use the generic one, think in terms of what type of information that you want. In terms of the market, in terms of the economic feasibility, and in terms of the technical requirements for the product. That would determine how many different stages that you have. And the gate is the point at which you will review that information to determine whether it's worthwhile to continue the product development, to continue the investment in the project that you made. Should you terminate the project and start over in terms of the development process? So you have complete control over how many stages and how many gates. The idea is that you want to have as much information as possible to make an informed decision about whether it's marketable, whether it's technically feasible, and whether it's economically feasible. So this is information that you've seen before in terms of firms and organizations that followed the new product development process. And you can look at these in terms of three levels, the top performing firms. Those are the firms that generally have the most sales and the most products, most profits, and the most successful product launches. You have those that get caught in the middle. They may be successful from a sales standpoint, but maybe not as profitable. And then those who are in the bottom of category of not being able to achieve any of the firms objectives based upon the introduction of the product. And you can see using the legend up here, those top performing firms, the green bar, super performed beyond the middle and bottom performer. That they were better at succeeding with products introduced in the marketplace but also better at identifying products that were phased and those products that should be killed. So this process allows you the information to make more informed decisions. So if we go back to the key steps in the process, you determine the steps in that process, and that new product development process can still be your funnel. But at each stage, you want to evaluate the customer feasibility, the technical feasibility and the economic feasibility. So regardless of where the product idea starts, you want to have a check and balance system of checking the feasibility from the customer standpoint, iIf the product started in the lab as a technical product. So let's see we're developed a product in our labs or in our garages, and we've identified a solution to the idea. That would be at the first stage of idea identification. But before we moved to concept development, we probably want to evaluate, well, our idea makes sense to us but is it feasible to customers? So we will gather information to determine the customer feasibility. All along, determining if it's still economic feasible. We may have the best product in the world, but customers may not be willing to adopt the product. Which means in the long run, it would be a failure if we launched the product into the marketplace. Subsequently, we may have the best product in the world from the technical standpoint, we may have customer acceptance of that product. But to make that product, it's not feasible economically, so we may end up killing the product at stage 1. So the criteria for evaluation always consists of three criteria, technical, customer, and economic feasibility. But the objective is to do that at each stage of the process. Now for the purposes of this specialization, we will focus primarily on these four steps. First, being the identification of the idea. Now you may already have an idea in hand and if that's the case, you don't have to worry about the technical aspects. But you want to determine whether it's customer feasible. From that, we will go into concept development and testing, taking that idea to the next stage. Are we able to satisfy the benefits that customers are looking for? And testing those concepts, on multiple concepts out on customers to see which one they favor, based upon feedback from the customer. And the fact that we can technically produce the product, we actually develop a prototype and then test that prototype. Not only testing the physical product, but maybe testing the marketing program associated with that product. And then based upon that, you'll be in a much better position to determine how successful the launch of that product will be. So again, for the purposes of our specialization, this is the standard type of product development process that we'll use. And also reflects the stages and the gates that we'll use to evaluate the new product or service. So going back to that development process, expanding it out in terms of the six steps. Ideation, do you have an idea for the new product and service in mind? Now remember, if you don't have a new idea in mind, you can use one of the ideas we talked about previously, either food truck service, the solar oven, or some software application. That will help you then to generate the concept for the product or brand or new item that you're developing. Using information from the customers of that concept we developed, we can test those concepts in a number of different ways before we actually design the product. And at both of these stages we're evaluating the economic market and the customer feasibility for the product. Ultimately, we want you to be in the position to launch the product with a marketing program that would increase the chances of it being successful in the marketplace. So coinciding with that new product development process would be the types of customer research you should do. Whether your objective is to understand, describe, or predict customer behavior, there are different techniques that you can use to provide you with the information to evaluate each of those stages from a customer feasibility standpoint. Some techniques are more qualitative where there are primarily based upon your five senses. Others are more quantitative which means they're more fact-based or numerical-based, and some maybe even causal where you can determine cause and effect. If we have these different sizes of the product, how will customers respond in terms of buying those products? So our job here is to identify your customer need requirements for each of these stage. And which of these techniques will produce the optimal information for you to make the decisions that you have at that particular stage in the development process. Now as we go throughout the specialization, you’ll be provided with different opportunities to use both qualitative, quantitative, as well as predictive techniques, to determine customers' reactions to your new product and idea. But without the product development process, you would not know what particular tools to use. And without the customer insight research techniques, you may not use the appropriate technique for the stage in the product development. By linking those two together, what we're hoping is that you will have the information necessary to determine the market feasibility, the technical feasibility, and the economic feasibility of your product. [MUSIC]
