New Product Development - Engineering and Business are Two Sides of the Same Coin
New products are constantly being released to satisfy customers’ insatiable appetite for new features, greater performance, higher quality and/or lower cost. New product innovation generally comes from one of two sources. One of these are entrepreneurs and marketing groups who identify potential new product opportunities by evaluation of market needs and predict customer responses. The driving force behind this innovation is to develop “something” that can be sold for a profit. Engineers are the other group of innovators. Sometimes creativity is sparked by a new technology with the potential to revolutionize the entire industry. For engineers, the desire to make a “better product” than is currently available is often the driving force. It can become confusing because the term “new product development” describes a different process depending on whose perspective is taken.
For business, the focus is on product sales. The process begins with an idea for a new product that can be sold in the marketplace. Often multiple ideas are evaluated using a product screening process to quickly identify the best idea to pursue. This is followed by market research to estimate how much customers will be willing to pay for the product and how many units could be sold each year. Using this information, detailed financial models are developed, desired profit margins are defined, and the maximum cost to produce the product is established. This is followed by engineering product development. Next, product testing is performed in which potential customers are asked to evaluate prototypes and provide feedback. Testing may also include small scale release of the product to obtain clear information about customer’s willingness to pay the established price prior to fully investing in the product development. Finally, the product is released to the market.
In contrast, engineering new product development teams focus on the product. The process begins in a similar way with a creative idea. Often it is accompanied by specifications for the new product that are developed within the company or obtained from a customer. Conceptual designs are developed that provide potential solutions to the technical challenges. Several approaches are often evaluated and the cost to produce each design and the technical risks are considered when deciding which design alternative to pursue. This is followed by a detailed design phase to establish exact dimensions, determine fits between mating components, calculate expected product performance, and employ design for manufacturing and other optimization methods to enhance performance and reduce cost. Protypes are built and tested to ensure that the design meets specifications. It should be noted that “product testing” by engineers is different from the “product testing” described above that assesses market acceptance rather than technical performance. Once the prototypes pass testing, production tooling and manufacturing equipment are built. Finally, products built on the manufacturing line are tested to validate technical performance prior to market release.
Although these processes have different emphasis, aspects of both processes are necessary to develop a successful product. They are two sides of the same coin and one cannot be successful without the other. Ideally, market studies and engineering development should be done in parallel. As solutions to technical challenges are found and new information about the product cost are obtained, this information should be used to update the financial model. Customer feedback from marketing studies should also be used to redefine design goals. Product marketing groups that wait too long before involving engineering run the risk that the cost of the product may be too high to earn a profit. Engineering teams that neglect to include marketing in the initial stages run the risk that a technically feasible design cannot be sold at a price or in adequate volume to achieve overall project profitability. To overcome these issues, most companies use some type of structured product development process such as the stage-gate process or agile product development. The differences between these two approaches will be the topic of my next blog.
About the Author: Martin Tanaka is an Associate Professor at Western Carolina University who specializes in product design and development. He has eleven years of experience designing commercial products in industry and nine years of experience assisting local companies with product innovation. Dr. Tanaka has a Ph.D. in engineering and is a licensed professional engineer in the state of North Carolina. Martin also supports the local community as a technical consultant for Open Door Innovations LLC.