New Product Development Essay

This literature review shall be reviewing journal articles that discuss the importance of the Fuzzy Front End Phase to the processes involving the development of new products. It would first give an overview of the role the Fuzzy Front End Phase has on new product development. The factors and characteristics of the said phase would also be presented to gain a better understanding of the topic at hand. Afterwards, it would review the different articles written about the topic using three perspectives: (1) organizational; (2) environmental; and finally, (3) individual. Of the aforementioned perspectives, this literature review would focus on the third one, the individual. A number of authors have recognized the important role that the fuzzy front end phase has on new product development (Ottenbacher, Shaw and Ermen 2006; Drexkler 2006). The study of Reid and Brenanti (2004) was one of the researches that give importance to the role of the fuzzy front end phase in ensuring the success of the whole process of new product development. In technology-based enterprises, transforming different forms of technologies into new products and processes is one of the greatest challenges. It is then within the said process of innovating these technologies that the early phase of the FFE (Fuzzy Front End) is said to have the greatest impact not just to the process but also to the result as it would significantly affect the design and the costs of the said project. Unfortunately however, this particular stage according to both Herstatt and Verworn (2004) is the least well-structured part of the whole innovation process, looking at both theory and practice. Herstatt and Verworn (2001), Kim and Wilemon (2002) and Kohn (2006) all recognize the fact that the competitive nature of today’s society are pushing for the development of innovative and unique products in a faster pace yet at a lesser cost. Manufacturing firms, without a doubt, are developing new products and it is because of this that they give so much importance to the New Product Development Processes. However, despite the tremendous focus to this particular stage, Herstatt and Verworn (2000) note that failure rates remain high. As a result, many researchers as well as practitioners within the manufacturing industry are in constant search of finding ways by which they could make the New Product Development Process successful. One of the greatest opportunities to improve the stage, as indicated by some of the researchers such as Herstatt and Verworn (2000) is through the fuzzy front end or the pre-development phase. Moreover, Herstatt and Verworn (2000) developed a causal model in order to pave the way for a better understanding of the fuzzy front end phase and its role in ensuring the success of new product development. Figure 1. The Four Important Front End Factors (Herstatt and Verworn 2000) Looking from the model presented above, one could see the four important front end factors that help in the improvement of communication and at the same time, reduce the deviations that the firms may encounter during the execution of their project. In the same manner, the factors could also help in increasing the efficiency and satisfaction of the research and development (R&D) managers with regard to the project. Herstatt and Verworn (2000) list the following as the factors that are very important to the fuzzy front end phase: (1) interdisciplinary idea generation and selection; (2) reduction of market uncertainty; (3) reduction of technical uncertainty; and finally, (4) intensity of initial planning. The first factor mentioned by Herstatt and Verworn (2000) was interdisciplinary idea generation and selection. According to the authors, this includes the process of incorporating different functions into the generation and selection of new product ideas. It is usually a combination of the identification of an organization’s need problem or opportunity together and the purpose they have in order to satisfy these. Afterwards, they go directly to the reduction of uncertainties since these are already usually present with the first factor. The second factor is the reduction of market uncertainty. According to Herstatt and Verworn (2000), this particular factor refers to the knowledge that organizations have about their target markets and customers as well as the needs of their users. Furthermore, Ottenbacher, Shaw and Ermen (2006) assert that this knowledge could help them understand the attractiveness of their new products based on the perspective of their market and how they could continuously develop the said product. Through the fuzzy front end phase, manufacturing firms that are involved in the development of new products are able to reduce the uncertainties of their projects. However, Herstatt and Verworn (2000) stress the need to look into technical uncertainties during the fuzzy front end phase rather than giving too much emphasis on the market. This is because of the fact that it is through this knowledge that they will be able to identify whether or not they have the necessary technology and requirements to make their projects feasible. Lastly, the factor initial planning must be considered in order to guarantee the success of new product development. According to the authors and developers of the causal model, this factor helps in translating the overall project goals into a series of activities, properly allocating the resources for each phase (Belliveau, Griffin and Somermeyer 2007; De Jong and Vermeulen 2006). Likewise, Koen et al (2001; 2002) views the fuzzy front end as a phase wherein a set of activities happen that are essential to the process of New Product Development or NPD. They describe these activities as something chaotic, unpredictable and unstructured, something that Kim and Wilemon (2002) concur with. Kim and Wilemon (2002) describes the FFE phase as something filled with fuzziness, ambiguity and uncertainty. In fact, stages are often performed in an environment where there are many unknown factors. In the same manner, the information to be used for decision making are rather more informal and approximate rather than quantitative, formal and precise. Fuzziness, for Kim and Wilemon (2002) usually comes out from a firm’s uncertainty regarding their technical capabilities in making a certain project or product feasible. It also comes from their lack of knowledge with regard to the requirements of their customers, their markets, the resources required of them, the ability of the company in pursuing this project, taking into consideration their capabilities and limits. Aside from being the phase wherein these uncertainties are identified, the fuzzy front end helps in the elimination of these risks in order to ensure the success of the next development processes. In summary, the fuzzy front end phase of product innovation is generally concerned with the development of certain concepts regarding the product that is essential to its innovation and development (Audretsch and Acs, 1991). The development of a clear product concept during the FFE stage allows the different enterprises to clearly understand factors essential to the development of products which include time, costs, required technical expertise, the formation of the right development team, market potential and positioning, risk and organizational fit. It generally helps in avoiding decisions that are costly and risky (Beck, et al. , n. d. ). Although it generally contributes to the successes of the whole process concerning new product development, the FFE stage is not spared from limitations and advantages. Processes involved in the fuzzy front end phase of product innovation generally face different delays especially those related with costs. During this particular phase, different activities are usually carried out during under different conditions. Unfortunately, there are barriers that exist in every situation, hampering the success of these activities. The following are the barriers to the FFE phase: (1) lack of vision, (2) lack of perceived urgency. (3) lack of formalization, (4) lack of effective project leadership, (4) ineffective communication processes and finally, (5) ineffective people conducting the work associated with the Fuzzy Front End phase of product innovation. The Fuzzy Front End Phase: An Environmental Perspective This part, as the heading implies would discuss the Fuzzy Front End Phase and its importance based on the environmental perspective. It would look into the views and researches conducted by scholars who had been long been respected in the field: (1) Herstatt and Verworn; (2) Khurana and Rosenthal; (3) Kim and Wilemon; (4) Reid and Brentani; (5) Koen; (6) Garcia and Calantone among others. According to Brentani and Reid (2004), the environmental perspective has been one of the most important approaches in studying fuzzy front end as an essential part of new product development and innovation. Brentani and Reid (2004) defines the environmental perspective as that which views three aspects (industry, institutional and country) as impacting innovation. The idea that the fuzzy front end involves processes of information gathering and adoption from the environment is based on the assumption that the environmental external to the firm is the primary source of new ideas for discontinuous innovations that even in-house ideas ultimately have some input from external sources (Brentani and Reid 2004). Eldredge and Gould (1972), on the other hand, note that according to the first perspective, innovation processes fail to continue because of certain phenomena affecting the environmental level. They further state that †¦ While organizational species change little during most of their history, random events can foster rapid speciation, thereby punctuating or interrupting this stability and resulting in concentrated periods of change and new paths of evolution. Authors who come from the environmental perspective of the fuzzy front end phase usually looks into innovation coming from a macro-level. The usually make use of the historical industrial analyses in order to examine the long-run nature and economic impact of failed innovations, Brentani and Reid (2004) mention. Furthermore, the environmental perspective promotes the idea that companies must be able to exhibit an advantage over the other members of the industry in order to stay alive despite the presence of a fierce competition. In order to establish this advantage, they must be able to produce products at a faster rate using technologies that only they have. Moreover, it is also due to this that firms are encouraged to first look into their environment of operation before actually proceeding on to the development of new products (Griffin, Hoffman, Price and Vojak 2007; Montoya-Weiss and O’Driscoll 2007). Because of this, firms once again innovate depending on what their environment requires of them. Quinn (1985, in Brentani and Reid 2004) says: Technology tends to advance through a series of random insights frequently triggered by gratuitous interactions between the discoverer and the outside world. These interactions provide the new combinations of old elements. . . The accelerated world of today demands manufacturing firms to be more competent in terms of the production of new products and at the same time, speed up their development processes (Griffiths-Hemans and Grover 2006; Zhang, Lim, Cao 2004). All organizations nowadays have recognized the importance of innovation in order to become successful today, tomorrow and in the near future (Resources for Success 2006). However, new product development for technologically advanced industries is facing many difficulties and uncertainties. Furthermore, the environment perspective of analyzing the fuzzy front end phase of new product development must also pay attention to what kind of products that a manufacturing firm must be able to produce. The study of Koen (2006) will be presented towards the latter part of this section that could give a better understanding of the different kinds of products and the appropriate FFE process that could be used for this. Garcia and Calantone (2002) and Broring and Leker (2007), on the other hand, note that the different strategies being used by the manufacturing firms must be positively related with their organizational structure which must then be patterned after the competitive environment of the industry to which they belong to. Brentani and Reid (2004) further states that in order to understand the fuzzy front end phase using this perspective, one must understand that the environment plays a very important role in the decisions made by individuals who are exposed to early information regarding technology. It is because of this that Kim and Wilemon (2002) give importance to the introduction of technologically challenging products at the right time as one of the so-called success factor for firms living in today’s world wherein innovation becomes more important. An example of this would be companies that are being threatened by a situation wherein a competitor is on the verge of taking away its business due to the introduction of a new product. Failure to respond to the competitor’s action could mean the loss of a certain firm’s market share and profits. Undoubtedly, the importance of the fuzzy front end phase is once again highlighted. Kim and Wilemon (n. d. ) concur with the claims of various researchers that the fuzzy front end phase is a topic that is usually neglected in the literature discussing new product development. This is because of the fact that scholars would usually focus on the efficiency of the firms’ processes rather than examining the fuzzy front end phase which is said to be important in cutting down cycle time. Thus, the said phase is given much importance in terms of its ability to make a critical contribution to the success of new products (Weissenberger-Eibl and Koch 2007). According to Kim and Wilemon (n. d. ), the following are the prime goals that are usually addressed in the fuzzy front end phase: (1) selecting the right opportunity; (2) producing a well-defined product concept; and finally, (3) clarifying customer and project requirements before the actual development of the new product. It is then because of this that developers who are well experienced in the entire process are becoming more attracted to investing considerable time and money in this stage to ensure that the project is feasible. Kohn (2006) shares the same view with Kim and Wilemon (2002). According to the said author, for members of the mature industries that are exposed to fierce competition, the processes regarding new product development gains tremendous importance. This is due to the fact that they are in faced with challenges of producing new, unique products at a shorter period of time and at lower costs. However, the new product development process fails to guarantee the firms as it is said to cause both time delays and substantial increases in cost. As a result, more and more researchers are giving more importance to an early phase where the functions and other factors related to the development of new products would be examined and analyzed. Khurana and Rosenthal (1997) also mentioned some of these factors in their discussion of the fuzzy front end process in order to give an in depth analysis on how this could help in ensuring the success of new product development. All the activities included in the fuzzy front end phase of product development are individual activities which are logically related to each other. The description provided for the process should be analyzed based on concepts such as product ideas, market analysis and technology options. Because of this, it is but proper to understand the relationships that exist between the different activities involved in the fuzzy front end phase of product development. The main focus should be placed on product strategy and portfolio plans. Focusing on these two would ensure that the development of the product jives with that of the capabilities and competencies of the companies developing them yet at the same time, recognizing limitations such as roles, communications and finally, culture. The aforementioned elements thus can be seen as having played very important roles as they serve as preconditions or foundations for the many activities that a certain enterprise would undergo as part of their new product development process. As a result, companies implemented a phase-review management system to define and serve as guidance for these project-specific activities (Wycoff, 2003). Companies usually begin working on new product opportunities, usually referred to as pre-phase zero when they begin to see an opportunity for their businesses. If they see that the exploration for this opportunity could be beneficial to their businesses, they then assign a small group which may or may not include suppliers to join forces in the development of the product’s concept and definition (this is where phase zero then begins). Phase one immediately happens after phase zero. It is in this particular phase wherein the enterprises examine the feasibility of their project (at the business and technical level). It is also in this particular phase wherein these companies start preparing and planning for their NPD (new product development) project. The development team then identifies the new product, how it could be developed and the rationale for the business proceeding behind it. The fuzzy front end phase then ends upon the completion of this phase wherein the team presents the business case and the business units involve would then choose between the commitment to fund, staff and launch the project or kill it (Montoya-Weiss and O’Driscoll 2007). Khurana and Rosenthal (1997) also give importance to activities which are product-specific and must be present during the fuzzy front end phase. Product-specific front-end activities are essential in making product concepts clear. At the same time, it also gives specific definitions to both product and market requirements; it also aids in the development of plans, schedules and estimates how much resources does one product need. However, the limiting factor that is associated with these elements is the fact that they could not create detailed designs and other specifications for the product and its other parts (Broring and Leker 2007). Generally, Khurana and Rosenthal (1997) defines product concept as one of the basic steps wherein (1) customer needs, (2) market segments, (3) competitive situations, (4) business prospects and (5) alignment with existing business and technology plans are identified. Studies made states that the different product concepts must be clearly defined so that the managers could identify the opportunities that could be beneficial for their companies. They must be able to identify and understand what their consumers need and at the same time, recognize the available technologies and applications that they could use in satisfying these wants and needs. In illustrating intangible products, one could sketch a three-dimensional of such products to be able to understand and identify the wants and needs of the consumers. Herstatt and Verworn (2000) also recognize the presence of these factors as a vital part of the causal model they developed in order to understand the fuzzy front end phase as an essential aspect of the new product development process. As seen from the aforementioned discussion, Herstatt and Verworn adopted the factors of the fuzzy front end phase as presented by Khurana and Rosenthal (1997). According to the authors, these factors are an essential part of the fuzzy front end phase in order to ensure the success of New Product Development. Basically, the identification of these would help the companies pinpoint their needs as an organization and the manner by which these could be achieved. In this manner, they will be able to identify the product that they have to produce in order to stay alive despite being in the midst of competition. Aside from this, the fuzzy front end phase also helps organizations in determining their market and technical uncertainties. This would help them understand their target markets, their customers and their needs, the potential of their products vis-a-vis the market, and finally, the attractiveness of their product when introduced to the market. On the other hand, it could also give them a better understanding of the capabilities and limitations they have as a company. This is because both market pull and technology push are becoming more important to recent times. Traditionally, most products were distinguished as either driven by the customer (or markets), also known as market pull or affected by recent technological advancements, also referred to as technology push. Bretani and Reid (2004) stresses on this matter by identifying two kinds of technology: (1) generic technologies and (2) application technologies. Generic technologies are defined as those required to manufacture the products and are held widely by all participants that get involved in the industry. On the other hand, application technologies are those that distinguish the organization from the competition and that are developed systematically within the firm building on generic technologies.