THE PRODUCT DEVELOPMENT CYCLE
There are ways for entrepreneurial firms to compete effectively in the area of production development. In fact the environment for product development is uniquely suited to smaller companies, which are often better able to adapt to change and move quickly in new directions. Three fundamental strategies should be incorporated into any entrepreneur’s product development program to enhance the chances of competing effectively:
- Design products right the first time;
- Shorten the time-to-market; and
- Outsource some product development tasks.
Entrepreneurs who develop products usually go through a process. The product development cycle consists of a series of tasks leading to introduction of the product in the marketplace. Although it appears to be a linear process, it is actually quite iterative with multiple feedback loops. A summary of the components of this process follows:
The first stage in the development of a business concept is opportunity recognition; that is, identifying a niche that has not been served, detecting a potential improvement in the existing product, or seeing an opportunity for a breakthrough product. Often times, (investors who are not always entrepreneurs) have an idea for a product or a technology without any thought to who might use the invention and in what manner.
Concept Investigation and Feasibility Analysis
Concept investigation is simply doing some preliminary research to determine whether the product or service idea currently exists, whether there is a potential market, how much it will cost to produce the product, and how much time it will take.
Design and Development of Platform
The first stages of design preparation go hand in hand with concept investigation, because planners normally need some preliminary working drawings of the product in order to estimate costs and manufacturing processes. These preliminary drawings are also used to apply for a patent if the product is patentable. The platform is the core product or technology from which other products or applications can be developed.
Prototype Building and Field Testing
From the initial engineered drawings will come the prototype or model of the product. Often the first prototype does not closely resemble the final product in appearance, but it usually does in function. Physical prototypes are helpful in the following ways:
- Communicating the form, fit, and function of the device
- Providing an example to a vendor for quotation
- Facilitating quick changes in a design
- Designing the correct tooling (devices that hold a product component in place during manufacturing and assembly)
Small engineering firms or solo engineers who support entrepreneurs and inventors; small job shops; and machine shops or model builders may be used to complete the prototype. These sources are normally quicker and less expensive than the larger, better-known firms. When seeking an engineer or model builder, one must caution and check out their qualifications, experience, and references relative to the task required of them. A major university engineering department is a good source of referrals, as are other engineers.
Businesses that do not manufacture products – service, retail, wholesale, and so forth – still need to design a prototype, but the prototype in this case will not always be physical. Instead, it will be a design or flowchart for how the business will provide a service or product to its customer. For example, a restaurant entrepreneur will design the layout of the restaurant and kitchen with an eye to how the customers and servers move through the restaurant. The food preparation area will need to be laid out efficiently so that the chef and the cooks can work quickly and do not have to move great distances to retrieve cooking utensils and food items. Every activity the restaurant undertakes should be prototyped to ensure that there is no duplication of effort and that each task is performed as efficiently and effectively as possible.
Initial Market Tests
With a working prototype of near production quality, it is possible to field-test it with potential users in environments where the product will typically be used. For example, it will be important to put a new construction tool on the hands of construction workers on real jobs in the field. In this way, the company can collect feedback based on actual use in real-life situations.
The number of prototypes used in the field-testing stage is normally limited because the cost per unit is much higher (as much as ten times higher) than it will be when the company is in normal production. This is because the company will not yet be meeting its suppliers’ volume levels for discounts. After conducting a small initial test production run in a limited market, the entrepreneur can go back and fine-tune the product to completion and market-ready status. This is also the first opportunity to test the manufacturing and assembly processes and determine accurate costs of production at varying levels of volume.
Product Market Introduction and Ramp-Up
The achievement of a production-quality prototype – one that has specifications that can be replicated in a manufacturing and assembly process – is a major milestone in the product development process, because the company now has a product that can be sold in the marketplace. During the final phases of developing this production-quality product, other aspects of the feasibility analysis have been completed.
NEW PRODUCT CHECKLIST
|Is there existing need for this product in the marketplace?||——||——-||——-|
|Will I be first in the marketplace with this product?||——||——-||——-|
|Can the product be protected legally?||——||——-||——-|
|Can entry barriers be erected?||——||——-||——-|
|SWOT ANALYSIS (STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS|
|Do the strengths of this product exceed any weaknesses?||——||——-||——-|
|Are there various opportunities for commercializing this product?||——||——-||——-|
|Do any significant threats exist to the development of the product?||——||——-||——-|
|DESIGN / DEVELOPMENT/MANUFACTURING|
|Is the product innovative?||——||——-||——-|
|Can it be developed quickly to market-ready state?||——||——-||——-|
|Can it be easily manufactured?||——||——-||——-|
|Do I have the resources to manufacture the product?||——||——-||——-|
|Is it more practical to subcontract the manufacturing?||——||——-||——-|
|Is there a possibility for spin-off products?||——||——-||——-|
|Is the return on this investment sufficient to justify the effort?||——||——-||——-|
|Are the development costs within reason?||——||——-||——-|
|Will it be possible to minimize the manufacturing investment through outsourcing, while still maintaining quality and control?||——||——-||——-|
|Is the money needed to produce the product available?||——||——-||——-|
Now it will be important to consider manufacturing and assembly needs and whether to manufacture or outsource.
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