Session 02 opportunity development

New Product Development

Session 2: Opportunity Development
June 13, 2010

© 2010 Dr. Jay Jootar
Slides downloadable from www.vcthailand.com

Agenda
 Overview
 Opportunities from Experience
 Opportunities from Market
 Opportunities from Technology
 Tools and Techniques
 Summary


NPD Process

Conceptualize Develop Launch

 Opportunity Product  Pre-launch testing and
development Planning
 System Architecting
 Market Space Mapping  Managing through Life-
 Development process
Cycle
 Positioning and Core
 Project Management
Capabilities
Marketing
 Business Model Design
 Pricing New Product
 Marketing Strategy
 Sales and Channel
 Total Business Case
Management
Development
 Marketing Communication


Opportunity defined

Opportunity
When technological
possibilities are
matched with market Clear and consistent
needs and expected statement about
market demand “product”
and its “value” to
“target market”


NPD’s three legs
New Product
Opportunity

Technological Value to
possibilities Target Market

WHAT

HOW WHY


Different paths to opportunity
Market concept
complete

2. Market given

4. Market pull

Product concept
3. Technology push 1. Product given complete


Examples
1. Market pull: The oil price is increasing steadily. Need a
means for business professionals to conduct their meetings
effectively without having to meet face to face.

2. Technology push: Our technology can pump water at twice
the rate of the existing device. Need to find the market for
this technology.

3. Product given: Find the market for a given washing
machines with the specific features and functionalities

4. Market given: Find the products which help the construction
firm to move construction material from the truck to the
construction site easily


Examples
complete

Rice farming
Powered
Market concept by small
truck
battery
Agriculture
Rugged
model

Double power
water pump
complete
Product concept


Sources of ideas

Internal Sources:
Research & Engineering
Sales, Marketing & Planning
Production
Other company executives

External Sources:
Customers & prospects
Contract research organizations & consultants
Technical publications
Competitors
Universities
Inventors
Unsolicited sources

Source: Cooper, R. G.


Source of opportunities
EXPERIENCE MARKET TECHNOLOGY
1. Unexpected 1. Demographic 1. New knowledge
success changes 2. Converging
2. High-growth area technologies
2. Unexpected failure
3. Shift in consumer’s 3. Process weaknesses
3. Unexpected taste or perception 4. Underutilized
external event
4. Shift in supply chain resources
4. Competitor- or strategic 5. Expansion of scale of
triggered idea landscape current operation
5. Change in regulation


1. Unexpected Success
 Do not think of unexpected success as
temporary event
 There might be underlying factors that can be
exploited to gain even more success


Example: McDonald
 Ray Kroc wondered why he
was selling so many
milkshake machine to
McDonald restaurant
 He visited the restaurant
and finally bought franchise
before expanding its
success into the biggest
restaurant chain in the
world


Questions to ask
1. What unexpected product success have you had recently?
2. In which geographic areas have you had unexpected success
recently?
3. In which market/industry segments have you experienced
unexpected success recently?
4. What customer segments have provided unexpected success
recently?
5. What unexpected success have your suppliers had recently?
6. What unexpected success have your competitor had recently?
7. Which of your technologies has had unexpected success recently?
8. What unexpected customer/user groups have bought from you
recently?
9. What unexpected sources have asked to sample, distribute, or
represent your product recently?
10. ……. AND WHY?

2. Unexpected Failure
 Instead of spending time defending failure,
one should be asking “What caused this
failure, and how can we turn it into an
opportunity the next time?”


Example: Ford
 Ford learned many lessons
Ford Edsel, the from the failure of launching
biggest failure in Edsel in 1950’s
history of automobile
 One of the lessons was that
people bought car not just as
a transportation, but also as a
lifestyle
 This led to the development
of Mustang, the first lifestyle
car that has been very
successful commercially
Mustang, the first
real lifestyle
automobile


Questions to ask
1. What unexpected product failures have you had recently?
2. In which geographic areas have you had unexpected failure
recently?
3. In which market/industry segments have you experienced
unexpected failures recently?
4. What customer segments have you provided unexpected failures
recently?
5. What unexpected failures have your suppliers had recently?
6. What unexpected failures have your competitors had recently?
7. Which of your technologies has had unexpected failures recently?
8. Which customer/user groups have had unexpected failures
recently?
9. Which distributors, dealers, and/or agents have had unexpected
failures recently?
10. …….AND WHY?

3. Unexpected External Events
• Unexpected external events can be from
competitors or some other unrelated events.
They can be internal or external to the firm.


Example

Aircraft hijacking in1960’s Metal detector is created by
applying existing technology used
for other industry


Example

AIDS
AIDS epidemic Condom has found another use
(besides contraception) to protect
transmission of the disease


Example

Availability of DVDs DVD players has been in such high
demands that many brands come out
with big marketing budget


Questions
• What unexpected external events have occurred
recently?
• What unexpected internal events have occurred recently?
• Have any expected external and internal events
combined in an unexpected way recently?


4. Competitor-triggered ideas
Example

Apple 2
IBM PC tweaked its development
efforts and come out with similar
product


Know your competition
• Routinely survey your competition
• Periodically perform a complete review of competitive products,
particularly new ones. Determine how well the product is doing
in the market place
• Obtain a sample of your competitor’s product. Undertake a
thorough evaluation of the product from a technical standpoint
• Obtain copies of ad and literature, knowing what the competitor
emphasizes or how it positions the product can yield new
insights for your own new products
• Arrange an internal brainstorming session aimed at better your
competitor’s product and how to position against it


5. Demographic Changes
• Dimensions
– Income
– Age
– Education
– Mix


Quiz: Demographic Size
• Total population of Thailand
• Number of households
• Mobile phone penetration
• Number of cars, motorcycles, pick-up truck
• Number of students
• Number of tourists
• Number of Thais working overseas
• Number of computers
• Number of Internet users


Example: Japanese aging population


Questions
• How is the age distribution of your customers and users
changing?
• How will the educational level of your customers and users
change in the next few years?
• How will the income distribution of your customers and users
change in the next few years?
• How will the geographic distribution of your customers and users
change in the years ahead?
• How might the buying habits of your customers and users change
in the year ahead?
• What are the customer demographics that might change over the
years ahead?
• How will the mix of your users and customers change in the next
few years?


6. High-growth areas
• One should search for changes in the present
business or related businesses in which growth
is occurring faster than growth in gross domestic
product (GDP) or population growth.


Mobile download content
Wallpaper Music (Ringtone) Game

Source: Siam Turakit


Mobile download market is big and growing

Category of download content
Highlights
game

color
5%  46% of Thai teenagers
15%
use mobile download
music
basic
service1
basic
10%
color
game
 6% use the service more
than 5 times a month1
music
70%
 The majority of download
comes from Ringtone1
Source: Kasikorn Research Center, Industry sources, TIC


Questions
• What parts of the business are growing faster than
economic or population growth?
• What other businesses are growing faster than economic
or population growth?
• What potentially high-growth businesses related to yours
are dominated by only one or two companies?
• What parts of your competitors’ businesses are growing
faster than economic or population growth?
• What parts of your customers’ or suppliers’ businesses are
growing faster than economic or population growth?


7. Shift in consumer’s taste or perception
• “What changes are happening in how our
customers perceive our products, and how can
we convert those changes into new
opportunities?”
• This is the area that can be consciously
manipulated. Creating new trend…


Example:

Hospital

Health consciousness

Fitness center


Questions
• What changes are occurring in how your products and services are
perceived?
• What changes are occurring in the values of your customers?
• What changes are occurring in the lifestyle, image, and status of
your customers?
• How will changes in perception affect your customers and
suppliers?
• For what new purposes have customers purchased your products
and services recently?
• What intangible reasons are customers developing to support your
products and services?
• What societal, peer, and normative pressures will affect your
products and services in the future?


8. Shift in supply chain or strategic landscape

Component End
suppliers customers

Opportunities can occur anywhere in the supply
chain…You need to translate that to see the
implied opportunities where you are


Example: eBay
 The popularity of eBay leads to
changes in distribution channel for
several kinds of goods
 Now people with little or no capital
can make money by selling goods
on eBay and get a fair price
without being beaten down by
retailer
 This lead to many products now
being sold primarily through eBay


Questions
• What major structural changes are occurring among your
customers?
• What major structural changes are occurring in your geographic
markets?
• What major structural changes are occurring within your
market/industry structure or in the conduct of your business?
• What major structural changes are occurring among your
competitors?
• What major structural changes are happening in your customers’
businesses?
• What major structural changes are occurring within your
regulatory environment?
• What major structural changes are occurring in your supplier
relationships?

9. Regulation Changes
• Watch for important regulation changes
that can create a whole new industry


Example: VoIP
In 2006, NTC
granted
permission to ISPs
to provide voice
over IP service,
thus opening a
new range of voice
services to be
delivered to users
by this new Softphone IP Phone Mobile Phone
technology (on PC) With WiFi


10. New Knowledge (Fundamental Research)
• Provide more focus to research to deliver new knowledge or
a capability that may spawn new products or processes
• Use relevant criteria to judge technology development
projects
– Degree of strategic fit and strategic importance to the
corporation
– Ability to achieve strategic leverage (e.g. platform for growth,
impact on multiple business units
– Potential for reward (value to the company, if successful)
– Likelihood of technical feasibility
– Likelihood of commercial success (for example, competitive
advantage, existence of in-house competencies)


Example: Wi-Fi
Original solution - Use wire to
Hi-speed internet
connect broadband at home
or office

hi-speed internet
Wi-Fi access point

Wi-Fi equipped notebook
Use WiFi (Wireless LAN) to
connect to
broadband at home or office


WiFi access point


WiFi-equipped Notebook

Wi-Fi built in Wi-Fi PC card insertion

“Intel Centrino”
Microprocessor embedded with Wi-Fi


Source of ideas for new knowledge
• Trade shows
• Trade publications
• Patents
• Suppliers
• Universities


Questions
• What new knowledge has recently become known about
your business?
• What combinations of knowledge have created new
insights into your business?
• What new sources of information about your business
have recently been tapped?
• What new patents or discoveries have been announced
relating to your business?


11. Converging Technologies
• Two or more technologies that perhaps singly do
not represent opportunity but that, when taken
together, represent substantial opportunity for
those willing to look for it.


Example: Digital camera
Optical
+
Digital imaging
+
Storage
technology


Questions
• What technologies in your businesses are converging or
merging?
• Which of your technologies is now being joined to outside
technologies?
• Which of your technologies can be more effective if
deliberately converged?
• What would be the ideal convergence of technologies in
your business?


12. Process Weaknesses
• All organizations are composed of various
processes, procedures, or systems.
• We should ask ourselves “What
bottlenecks, weak links, or missing links
are there in these processes and how can
we eliminate them?”


Example: Federal Express

Leverage weakness in USPS
process to deliver parcels and
packages to provide more efficient
service targeting at premium
prices


Questions
• What self-contained processes exist in the organization?
• What process weaknesses exist in our customers’
organization?
• What weakness or “missing link” prevents better process
performance?
• Why do some processes perform better at some times
than at others?
• What bottlenecks do each of these processes have?
• What process weaknesses among our competitors might
we be able to improve on?


13. Underutilized Resources
• Look for way to utilize utilized resources
into something that is valuable, scarce, or
expensive


Example: Bio-fuel
Gasohol Bio-diesel

Ethanol

Tapioca Sugar Cane Oil Palm


14. Scale Expansion for Existing Business

• Look for way to capture more market by
expanding scale of existing “successful”
business. Create a new business model
along the way.


Example: Dell Computer
1984 Founded company as PC’s Limited based in his dorm
room

1985 Built 1st PC “Turbo PC”
Began selling direct to consumers (instead of selling
through distribution channel)

1989 Set up its 1st on-site-service program to compensate for
the lack of local retailers

Michael Dell
1996 Started selling PC via web site

1999 Becomes the largest seller of PC in U.S.A.


Idea generating system
1. Establish a “focal point” for ideas
– Assign one person the responsibility of stimulating,
generating, and receiving new product ideas, moves the idea
to the next step and get feedback to idea submitter
– Make a list of possible sources of ideas
– Establish a flow lines or mechanisms to solicit ideas from
each source
1. Set up an idea bank
– Not all product ideas get acted upon
– Set up an “idea bank” a holding tank for inactive ideas


Business Plan
Workshop


Voice-of-Customer Research
• Camping out, a.k.a. “Fly-on-the-wall”, “Day-in-the-life-of”
• In-depth on-site interviews and visits with customers can often
point to unmet, unarticulated, needs that yield your next new
product breakthrough
• For B2B, focus on the entire workflow of customers
• Product Value Analysis – experiential method where customers
have interactions with facets of your product and then express
their views, concerns, and difficulties
• Customer surveys or focus groups
• Convene a group of experts to discuss the problem and possible
breakthrough solutions


Lead users
• Many commercially important products are initially
thought of and prototyped by lead users –
companies, organizations, or individuals that are
well ahead of market trends and have needs that
go far beyond the average user
• If we can find the lead users and get ideas from
them, we get the idea that are well ahead of the
market


Lead-user process
• Identify the target market and company goals for
innovations in this market
• Determining the trends: Talk to people in the field who
have a broad view of emerging technologies and leading-
edge applications
• Identify lead users: Use a networking process in which
project team members explain their quest to people with
apparent expertise on the subject, then ask for a referral
to someone with even more relevant knowledge
• Developing the breakthroughs: Host a workshop with
lead users and key in-house technical and marketing
people


Scenario Planning
• What is the best future scenario?
• What is the worst possible scenario of the future?
• How do you characterize these scenarios?
• Identify the primary decisions managers face
• Identify markers or signals of each scenario to spot which
way the world is moving


Business Plan Workshop
• Off-site company event designed to produce or
scope out at least several future revenue
streams
• Key is to harness the creative energy of the
entire group of senior and middle management


Example of Workshop Plan
• Day 1 & 2
– Opening speech
– Break-out session “Identify major trends, shifts, changing
customer needs, and potential disruptions that are taking
place in our market place”
– Break-out session “Identify the major technology shifts in your
and your customers’ industry that will impact the market and
change the way you do business”
– “Assessment if internal company strengths and core
competencies that might be leveraged to advantage and
shifts in the industry and value chain structure”
– Key challenge  “What opportunities do these changes
suggest to you”


Example of Workshop Plan
– Opportunity mapping – Have the team map out some of the
opportunities that their assessments have suggested 
Clustering of new opportunity suggestions around major
opportunity themes
• Day 3
– Cluster and collapse these many opportunity themes into
manageable subset of major opportunities  Convert into
drawings, sketches, prototype brochures and display on
posters around the conference room
– Have attendees walk to the posters of product idea they
would like to work on
– Each opportunity team fleshes the opportunity out further,
starts to shape the product, product family, or solution and
begins to think about the path forward


Immersion
• Select a product area where the company currently
has no presence but that it wants to attack. Select
based on strategic assessment.
• Assemble a dedicated cross-functional team to
immerse themselves in this area for the next eight to
twelve months.
• Harvest many ideas uncovered during this period and
sit down with others in the company, develop a list of
product opportunities


Broaden scope
• A project manager come up with a product idea
• He/she invite people from other business units and pose a
key challenge “What could this idea become if all the
business units in the room worked on it?
• Key is to put together a group of creative people, give
them a product idea, and ask how it can be amplified and
grown by employing the strengths of each of their business
units


In-house suggestion scheme
• Focus the scheme strictly on new product ideas
• Publicize the scheme widely; use in-company promotion
• Offer some guidance; provide a pamphlet or web page that
defines what a good idea is and what areas are in bounds
and out of bounds, and create an idea submission sheet or
template
• Provide fast and fair feedback to submitters
• Provide recognition or rewards for successful submitters


Provide Scouting Time
• A handful of progressive firms encourage select
groups of employees to be creative by providing
free time – “scouting time” – and some financial
helps on personal projects


Summary
• A well-developed new opportunity need to have clear
definition on both market and technology dimensions
• Leverage experience both good and bad to find a new
opportunity
• Look at the market, both customers and supply chain level
to identify new opportunity
• Exploit new technology, process to create a truly
innovative new business
• Use various tools to brainstorm and consolidate new
business ideas


Ending Notes

Think of the market as a “non-flat” world
Look on the other side to find new
source of wealth and opportunities


Reference
1. Cooper, R. G. Winning at New Products, Basic Books,
2001
2. Drucker, P. F. Innovation and Entrepreneurship: Practice
and Principles, Harper & Row, 1985
3. Robert, M. Product Innovation Strategy, McGraw-Hill,
1995


Session 02 opportunity development

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