Successful New Product Innovation: Trends to Watch in 2007
By
Michael Burkett
January 03, 2007
New product innovation has always been of strategic importance, but it took on even greater significance in 2006. The result has been increased attention in ways to better manage new product development and introduction (NPDI) processes, not just for cost and compliance, but to ensure the most successful new products are prioritized.
Many leading manufacturers have deployed PLM to address the NPDI process, while others are now exploring its benefits. As we enter 2007, we take a look at some of the expected developments in this area that will further improve NPDI processes.
Ownership of product innovation becomes a priority
A primary obstacle to improving NPDI and enterprise PLM adoption, as we’ve stated often, is the lack of ownership for the NPDI process. AMR Research surveys have shown that two-thirds of executives feel that this process is not under strategic and financial control, even though our studies as well as ones from Deloitte, IBM, and others rank innovation and new product launch as a top strategic initiative. We expect that resolving this ownership issue will be a top priority for manufacturers in the coming year.
A few of the factors involved in this include the following:
- There’s growing frustration with the return on R&D investment. A recent Booz Allen Hamilton study found no correlation between increased investment in R&D and resulting business benefits. Manufacturers are questioning their internal innovation processes, and in many cases are looking outside the organization for alternative sources.
- Developing and launching successful innovations is a cross-functional process that requires executive oversight to ensure accountability for success.
- Manufacturing leaders are assigning owners of innovation and putting structure around the process while taking care not to stifle creativity. General Electric has an executive responsible for innovation, and it has developed its own structured methodology called CENCOR (Calibrate, Explore, Create, Organize, and Realize) to instill more innovation into the organization.
PLM functionality deepens to fill existing gaps
While PLM has matured the past several years, there’s still plenty of opportunity for improvement. Here are some of the areas that are seeing development because of business process demands:
- The gap in analytics for validating new products will continue to close. This expands upon the simulation found in design applications to analysis of business viability of these designs. Expect better ability to validate market requirements and evaluate the cost-benefits of new features. Applications to evaluate manufacturing, supply, and service impacts of designs will help ensure products are sustainable post-launch.
- Electromechanical and software systems are gaining use across many industries. Automotive’s well-documented issues with embedded software are representative of what many face in managing design across these different domains. Applications to deal with this are maturing and improve requirements management, configuration management, and interdependencies across these systems.
- External partner collaboration has always been a major factor in PLM investment. However, as these external relationships become more intimate, applications are morphing to support the security and flexibility needed. Digital rights management and lightweight 3D visualization are some of the improvements underway.
New industries adopt while traditional users expand
Adoption of PLM is not equal across all industries. The most mature have built on a foundation of several years of investment in CAD and design data management. Others have not had this legacy and are only recently discovering the benefits available from improving this process.
Some of the industry developments include the following by industry segment:
- Traditional industries—These include automotive, aerospace, and industrial equipment, which have laid a foundation of PDM and collaborative product design for several years. Yet many are only now seeing opportunities to improve in areas such as innovation management using product dashboards for program and product portfolio management, and customer-facing processes to improve response to design quote requests and evaluate new product profitability.
- Emerging industries—These include consumer products (CP), apparel, and chemical, where the legacy investment described above has been less apparent. Product functionality is improving for their needs, and they are now beginning to explore the benefits achieved by other industries. Apparel manufacturers, driven by fast fashion, are benefiting from a single record of product data and line planning, while CP is discovering global specification management and product portfolio management.
- Small and midsize businesses (SMBs)—Smaller companies have long seen PLM as a complex application that was not applicable to their requirements. However, these manufacturers are realizing that they are participants in the global marketplace and need design collaboration, product data management, and automated design quotation processes as much as larger competitors. To meet this need, vendors are simplifying pricing and deployment options to make PLM a reality for these businesses.
The trends mentioned here are by no means the only developments expected in the coming year, but instead represent highlights of the opportunities that lie ahead. Manufacturers already pursuing PLM should take these observations into consideration as part of their deployment roadmaps. Those just starting down the PLM path should consider these a subset of the broader benefits that PLM can provide. We will continue to monitor developments in these areas throughout the year and provide updates on maturity and adoption as they become available.
Read the entire AMR Research article " Successful New Product Innovation: Trends to Watch in 2007".
