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GGI RapidNews R&D Product Development eZine: Volume
3, Issue 3- March 29, 2002 R&D SURVEY RESULTS 2000 Metric Survey "Special Cuts": GGI's 2000 Product Development Metric Survey Results (MR14), which has just been released (see below), contains five separate "special cuts" at the 2000 survey data, in addition to the analysis of the overall survey population responses. These separate, stand-alone survey analyses reveal interesting aspects of industry measurement practices. GGI will discuss one section at a time over the next several issues of RN. The "special cuts" describe differences in metrics practices between Public vs. Private, Smaller vs. Larger, Higher vs. Lower Technology, More vs. Fewer Employees and Process, Repetitive/Discrete and/or Job Shop companies. Public vs. Private is the RN subject this month. Findings For Public vs. Private Companies: Below are some differences between publicly traded and privately held company metrics practices. There were 71 public and 43 private companies in the 2000 survey sample, with 7 non-respondents: * 46% of Public and only 21% of Private Companies have a clearly defined set of corporate metrics, while 24% of Private and only 6 % of Public Companies could not derive such a set. * Similarly, 48% of Public and only 21% of Private Companies have a clearly defined set of R&D (product development) metrics, while 44% of Private and only 13% of Public Companies could not derive such a set. * Perhaps the biggest product Portfolio Management difference between Public and Private Companies was that 10% of Private Companies did not use any of the typical frameworks for product/project analysis (Product Family Model, Line of Business, Product Type, Platform, Derivative, Project Size, etc.) * 45% of Private and only 25% of Public Companies said they did not track or calculate product life cycles. * More Public than Private Companies were apt to have a formal product obsolescence or retirement practice. 90% of Private vs. 79% of Public Companies let products fade away. * Public Companies were more apt to use a formal framework for product portfolio analysis than Private Companies. Increases over Private Companies were 100% for "Growth Potential over Market Share;" "Product Return vs. Product Investment" and "Market Risk vs. Technical Risk," albeit Public Companies still had a low percentage usage of these methods. * 64% of Private vs. 42% of Public Companies did not use quantitative financial data to determine the success or failure of their products in the marketplace. In summary, public companies have more formalized metric practices than do private companies. Public company reporting requirements to the SEC probably drive the improved usage of metrics by public companies. MANAGEMENT PRODUCTIVITY Attributes Of Successful Product Launch Strategies: New product development and launch success is "risky business." To be successful, companies must accurately identify their end user's needs, develop products to address those needs and effectively communicate that the user needs have been satisfied through its new product launch approach. What are the characteristics of a company's new product launch support program that most affect its product success in the marketplace? Do successful product launch decisions generically differ for consumer and industrial products? Is there a Body of Knowledge (BOK) for product launch success? The authors* conclude that new product launch decisions have not been systematically (empirically) investigated. They conducted their investigation in three parts: a literature review, a case history of 1,018 new product introductions in 3 countries, and a presentation of their findings with resulting research and management implications. The 4 principal research questions can be stated as 2 broader questions: 1. What are the differences in strategic/tactical launch decisions for consumer and industrial products? 2. What are the differences in strategic/tactical launch decisions for successful and unsuccessful consumer or industrial products? Typical Launch Scenarios Strategies for consumer products often launch small improvements to mass-marketed products with innovation levels similar to competitors to extend existing or add new lines. The strategy appears focused on defending the firm's position by further penetrating existing markets. Strategies for industrial products often launch technologically innovative products with marked performance improvements that are targeted at fast-growing niches or new markets. Consumer product launches often represent brand extensions equal to competitors; are launched through existing channels priced similarly to competitors; and are promoted to trade and customers through print and broadcasting media. Industrial product launches often represent a broader product assortment than competitors; are introduced with skimming prices through new channels with lower distribution expenditures; and are promoted through personal selling, direct marketing and public relations efforts. Factors In Successful & Unsuccessful Products Launching new and innovative products, or products which improve image in existing markets, are more often associated with strategic success. This finding is irrespective of market type. Launching broader assortments of products using print advertising are more often associated with greater tactical success. This finding is also irrespective of market type. Strategically successful consumer products are often launched with short to moderate cycle times into moderately growing markets to utilize excess capacity and/or erect competitive barriers. Strategically successful industrial products are often launched with shorter cycle times into markets with higher growth rates. In addition, more successful products are launched in the maturity phase of the life cycle. These later stage entries typically encounter fewer market competitors and enable increased penetration at lower introduction cost. Tactically successful consumer products are often launched as a broad range of brand extensions with higher distribution and promotion costs through print, TV and radio ads, and are priced similarly to their competition. Tactically successful industrial products are often launched with distribution and promotion expenses similar to their competitors through direct marketing and print advertising. A broader product assortment is often associated with higher success. Management Implications These analyses suggest that industrial firms achieve higher levels of product success when they use innovation to outperform competitors by increasing market penetration in existing markets through reductions in product cost. These analyses also suggest that successful vs. unsuccessful launches, with respect to firm strategy, differ largely in degree rather than principal. Consumer firms may want to pay greater attention to preferred pricing tactics and relative promotion expenditure levels with a greater focus on increased distribution spending. Industrial firms may want to reconsider the introduction of new products through new channels, which are too often associated with failure. Additionally, these firms may want to consider higher distribution spending levels and avoidance of agents/brokers to penetrate new markets. Summary Consumer firms should pay closer attention to assortment, distribution and promotion spending levels, and pricing tactics. Industrial firms should pay closer attention to distribution decisions and promotion tactics. * "Launch Decisions and New Product Success: An Empirical Comparison of Consumer and Industrial Products" Erik Jan Hultink, Susan Hart, Henry S.J. Robben and Abbie Griffin, JPIM, Volume 17, Number 1, January 2000, pages 5-21. CONFERENCES OF INTEREST Society of Concurrent Product Development 7th Annual Conference: The 7th Annual Conference for SCPD will be held at the Boston University Executive Education Center in Tyngsboro, MA on Wed.-Thurs. May 29-30, 2002. Several world-recognized speakers will be participating, but their names cannot officially be released yet. This conference is a great value. Please visit http://www.scpdnet.org for further updates and registration information. Boothroyd-Dewhurst's 2002 International Forum on DFMA: This internationally respected conference will be held in Newport, Rhode Island on June 10-12, 2002. Mark your calendars. You will see the leading practitioners and thought leaders for DFMA, Design for Serviceability, Design for Disassembly, Design for Recycleability, Design for Environment, and Green Design. Brad Goldense will be presenting a newly written paper "Measuring R&D Projects: Best Practices" at the 2002 Forum. Please visit http://www.dfma.com for further updates and registration information. "FEATURED" iSTORE PRODUCTS MR4 - 1998 Product Development Metrics Survey Results: The largest and most complete of the three reports prepared on the 1998 Product Development Metrics Survey - "Research Results" (MR4) - has been "deep-discounted" to $1,965.00. Typically selling for $2,620.00, this 131 page report's price has been reduced 25%. Research "Results" is GGI's most complete of the three published 1998 survey reports. This report provides 104-pages of presentation slides, in addition to the text. The report focuses on four areas: Corporate Metrics, Project Metrics, Metrics Systems, and Links to Reward and Recognition practices. The survey population of 190 companies is analyzed as a whole. The survey's findings may surprise you. In addition, this Results report is the only one of the three reports to contain the five "special cuts" sections that GGI employs in all our research: Public vs. Private, Smaller vs. Larger, Higher vs. Lower Technology, More vs. Fewer Employees and whether companies are Process, Repetitive/Discrete and/or Job Shop. The survey population is segmented and compared five ways. Visit http://www.goldensegroupinc.com/cgi/catalog.cgi?display_promo for additional information. NEW iSTORE PRODUCTS GGI's relocation of our corporate offices this past year to Needham, Massachusetts detracted from our ability to keep our iStore up to date. This past month, a substantial number of GGI publications have been added to our iStore at the URL below. Market Research MR14 - 2000 Product Development Metrics Survey Results: MR14's 211 pages represents the most complete and authoritative summary and analysis on the state of product development metrics inside corporate America. Research "Results" is GGI's most complete of the three published 2000 survey reports. The report analyzes data from an industry survey that targeted issues of R&D Linkages to Corporate Strategy, Product Portfolio Management, Product Selection Practices, Determination of Product Success, and an analysis of the most frequently used R&D metrics. In addition to the main body which analyzes the survey population as a whole, the report analyzed the same 'special cuts" sections consistent the structure of the 1998 survey: Public vs. Private, Smaller vs. Larger, Higher vs. Lower Technology, More vs. Fewer Employees and whether companies are Process, Repetitive/Discrete and/or Job Shop. Quotations & Citations Published in the Trade Press Q19 - "Interview: More on Linking Corporate Strategy to R&D: A Conversation with Brad Goldense," Best Practices Report, Management Roundtable, Inc., August 2001, 4 pages. Q18 - "New Study Examines Links Between R&D, Corporate Metrics" Best Practices Report, Management Roundtable, Inc., December 2000, 4 pages. Q17 - "Does R&D Contribute To Profits?" Injection Molding Magazine, Penton Publishing Company, May 2000, 2 pages. Q16 - "A P/L for R&D" CFO Magazine, The Economist Group, February 2000, 5 pages. [Backordered] Q15 - "What Is The Current State of Metrics Information Systems" Best Practice Report, Management Roundtable, Inc., December 1999, 3 pages. Q14 - "Measuring Profits, R&D Grows Vital" Providence Business News, Herald Press, September 20-26, 1999, 2 pages. Q13 - "New Study Reveals How To Improve Product Development Metrics" Managing Design Engineering, Institute of Management & Administration, Inc., February 1999, 4 pages. Q12 - "Pipeline Index Helps You Identify Product Development Overload" Managing Design Engineering, Institute of Management & Administration, Inc., January 1999, 2 pages. Published Articles A37 - "Corporate R&D Metrics: Barometers of Process Maturity" Best Practices Report, Management Roundtable, Inc., December 2001, 2 pages. A36 - "Measuring R&D's Linkage to Corporate Strategy: It Can Be Done" Best Practices Report, Management Roundtable, Inc., August 2001, 2 pages. A35 - "Product Development Metrics Systems" Integrated Engineering Technologies, Cornhill Publications Limited, Issue 1, 2001, 12 pages. [Backordered] A34 - "Project Measurement Practices in Manufacturing and High Tech" Machine Design, Penton Publishing, July 26, 2001, 5 pages. A33 - "Virtual Collaboration: Practically Speaking" Best Practices Report, Management Roundtable, Inc., April 2001, 2 pages. A32 - "R&D Portfolio Management: Progress and Opportunities" Best Practices Report, Management Roundtable, Inc., December 2000, 2 pages. A31 - "Virtual Co-Location: Technology Directions Are Focused On Maslow's Hierarchy" Best Practices Report, Management Roundtable, Inc., August 2000, 2 pages. A30 - "Metrics for Aligning Strategy, R&D, and the Factory" Best Practices Report, Management Roundtable, Inc., April 2000, 2 pages. A29 - "Metrics Bring Control to Product Development" Machine Design, Penton Publishing, March 23, 2000, 1 page. A28 - "Product Development: Metrics Macrotrends" Best Practices Report, Management Roundtable, Inc., December 1999, 2 pages. A27 - "The Future of Concurrent Engineering" Design News, Cahners Publishing, November 1, 1999, 1 page. A26 - "Metrics Strategy: Manage The Revenue Drivers" Best Practices Report, Management Roundtable, Inc., August 1999, 3 pages. A25 - "Product Development Process: Ready for the Next Century!" Best Practices Report, Management Roundtable, Inc., April 1999, 2 pages. A24 - "The Latest On Product Development Metrics" Best Practices Report, Management Roundtable, Inc., December 1998, 3 pages. Published Technical Papers T29 - "R&D Baselining: Diagnostic Medical Instruments" R&D and Clinical Trial Performance with Metrics Conference Proceedings, IIR - Institute for International Research, January 29, 2002, 40 pages. T28 - "Building an R&D Website for Competitive Advantage [Presentation" Best Practices for Web-Enabled Collaborative Product Design Conference Proceedings, IQPC - Interational Quality & Productivity Center, July 31, 2001, 32 pages. T27 - "Measuring R&D Portfolio Success: Best Practices" The 2001 International Forum on DFMA Conference Proceedings, Boothroyd-Dewhurst, Inc.,Newport, June 4-5, 2001, 41 pages. T26 - "Measuring R&D Portfolio Success: Best Practices" The 2001 International Forum on DFMA Conference Proceedings, Boothroyd-Dewhurst, Inc., June 4-5, 2001, 10 pages. T25 - "The State of Product Development Measurement & Reward Practices" The 2000 International Forum on DFMA Conference Proceedings, Boothroyd-Dewhurst, Inc., June 12, 2000, 9 pages. Visit http://www.goldensegroupinc.com/cgi/catalog.cgi
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