User:Elliot Bendoly/Proposed/Product-Service Design and Development

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Product-Service Design and Development refers to the entirety of processes involved in bringing to market a new product or service offering. The purpose of product or service design and development is to advance the long-term success of the organization.


Contents

Research

Research of product-service design and development has been approached from different levels. At the macro-level researchers investigate how the creation of new products is a mechanism of firm competition and economic advancement (e.g., Schumpeter, 1939; Barnett, 1953). This area of inquiry has lead to firm-level models about the way new products, or innovations, create corporate advantage in the domestic and global marketplace (e.g., Porter, 1979, 1980; Souder, 1987). Alternatively, micro-level researchers, particularly from the field of operations management, have taken interest in the way new products, and recently new services, are developed within a firm. This area of research was spurred by the reports of new product development practices that came out of the consulting firm Booz, Allen and Hamilton in 1968 and again in 1982 (Booz, Allen and Hamilton, 1968, 1982). The reports generated by the consulting firm were insightful about the successes and failures of new product development and provided a multi-stage process map for product development based on the firms studied. Following these reports, a proliferation of research has systematically investigated the transition of ideas into final goods. The findings about product development have been condensed in reviews of the literature including Brown and Eisenhardt’s (1995) review of product development findings, Montoya-Weiss and Calantone (1994) review of new product performance, and practical handbooks such as the PDMA Handbook of New Product Development.

Although the research of new product development has matured since the mid twentieth century, the investigation of new service development is rather new (De Jong and Vermeulen, 2003). A reason for the delayed uptake in research concerning new service development may be due to the perception that service development is an accidental phenomenon, the result of mere intuition, flair, or luck (Langeard et al., 1986). However, much research at the end of the twentieth century has shown that new services may be the result of formal development processes rather than the concluding “new services happen” (e.g., Menor et al., 2002). Building on the conceptualization of a formal process, new service development research has utilized the juxtaposition between service and product development to drive research in this area. Moreover, research suggests that service researchers may be rigorous in their efforts and apply an operations perspective to service research; thus investigating the link between operational performance to business drivers, performance measurement and operations improvement, service design, service technology, the design of internal networks and managing service capacity (Johnston, 1999).

Four General Processes

While context specific process maps have been used to conceptualize they way product and service development unfolds in certain industries and firms, the general way development is thought to be carried out is through design, analysis, development, and launch/market introduction (Krajewski et al., 2009). Figure 1 presents the conceptual progression of processes as well as the inter-relatedness of processes across design and development.

PSDDProcess.jpg

Figure 1: New Product-Service Processes


Design

In the design process, the organization sets in motion those processes that will initialize a new product or service offering. At the end of the design process, there should exist an understanding of the new product-service, for example by blueprint, mental or physical model, prototype, or process plan, such that it may serve to inform subsequent development processes. In general, research defines design for products and services as follows:

  • Product design is defined to be the process of making choices about multiple attributes of the product characteristics to bring about its effective and efficient transition into a final product (e.g., Boothroyd, 1994; Magrab et al. 2009).
  • Service design refers to the process of characterizing a new service idea, put forth through specifications and meaningful representations (Clark et al., 2000).

A variety of processes may be applied to the designing of a product or service. Foremost is the process of generating an idea or ideas that are viable new product or service offerings worthy of being fleshed out into a formal design. Two approaches to idea generation that have received much attention in the research are the fuzzy approach and the more procedural approach. The fuzzy approach calls for ideas to emerge from creativity, ingenuity, and invention due to new perspectives, novel situations, opportunity or technological advancements (Reid and De Brentani, 2004). For example, the transition from an internal combustion engine to an electric propulsion system, created the opportunity for car manufacturers to consider changes in car design (Pohl and Elmquist, 2010). Alternatively, research suggest that ideas may derive from a reckoning or procedural evaluation of the marketplace (Elmquist and Segrestin, 2007). This manner of idea generation often utilizes some type of technique to draw out information and infer the best type of new product-service offering. Particular techniques may include market research, strengths-weaknesses-opportunities-threats (SWOT) analysis, and quality-function deployment.

Regardless of the approach for idea generation, however, research shows that other factors may affect the success of idea generation and product-service design. One factor that may influence the success of the design process, and even subsequent processes, is the actual or planned involvement of different stakeholders in design decisions. For example, Vairaktarakis (1999) modeled the relationship between the information provided by customers, engineers, marketers, and accountants in the design phase to design decisions. The researchers showed how the house of quality (HOQ) was used to facilitate the identification of customer and technical requirements. This operations approach to identifying particular elements of product design helped order the customer preferences, rate competitors and select parts. Further, the research identifies the decisions that should be made under specific conditions in order to achieve optimal performance (i.e., the best parts mix (if feasible) that maximizes product performance while below budgetary limits). A different approach is taken in the paper by Blackhurst et al. (2005). In their paper, the authors propose a network based methodology called Product Chain Decision Model (PCDM) that models decision-making processes regarding product and process designs in the context of supply chains. The PCDM provides practitioners with an approach that facilitates decision making about supply chain, product and process designs before decisions are finalized.

Another factor that is thought to play into the success of design is the technology or tools utilized during design. CAD (computer-aided design) provides a tool that facilitates design. Moreover, CAD has been applied during concurrent engineering of products to support design decisions as well as promote cross-functional information sharing. The findings reported in Tan and Vonderembse (2006) suggest that concurrent engineering, the degree to which product and process designs are synchronized and simultaneously achieved in early stages can enhance the efficiency and effectiveness of the product development processes later. Thus, integrating tools such as CAD may help designers meet time, quality, productivity, and cost objectives.

When it comes to services the design may not be as easily determined as it is with products. A service may be described by the series of interactions among those people, processes, and other physical elements involved in the interaction (Johnston, 1999). As Menor (2000) suggests, a new service arises when there is a change in the service offering (i.e., what the service is), or the service concept (i.e., how it is being offered). The latter challenge, that of the service concept is discussed in Goldstein et al. (2002); it underlies service design and further “ensures integration between the how and the what (p. 124).”

Analysis

While decision making occurs during the process of design, the organization should take a critical review of the new product-service to ensure it fits with corporate strategies, core capabilities, industry regulations, and customer needs (Krajewski et al., 2009). A well-specified product-service design should provide the means for evaluation on all regards. Research suggests that the screening process of designs, or concept selection, may entail an iterative feedback with earlier processes in order to ensure that the new product-service is progressing towards a viable and marketable solution (Augustine et al., 2010). During this analysis the specifications and functional characteristics of the new product need to be evaluated for manufacturability and sustainability of production or service processes (Lee et al., 2010). Further, the evaluation may benefit from the perspectives from others who may be affected by the design. For example, an organization may seek internal input such as marketing, production, and maintenance personnel, or external input from customers, suppliers, and sellers (Sandmeier, 2009).

Development

During development, the new product-service is further specified such that competitive priorities are used to design or redesign the processes that will bring the offering to market. In the development process the product-service undergoes rigorous evaluations through pilot runs, test batches, or market research to understand the efficiencies that may be gained in its production and on into its product-service life-cycle. In general, researchers have defined the study of new product and new service development as follows:

  • New product development (NPD) refers to those activities involved in developing products from an idea through to market introduction (Hart, 1999).
  • New service development (NSD) refers to the processes required to bring about a new service that considers the relationships between the service organization, the liaison between the customer and the organization, and the customer (Johnson et al. 2000).

In many cases, organizations enable new product-service development by connecting internal personnel across functions or a mix of internal and external personnel with relevant functional abilities. As such, new product-service development teams may be the formal entities that are tasked with the design and development of the product-service. Research about such cross-functional teams has contributed to the way processes are thought to unfold during design and development, and may influence the success of the final offering. For example, Calantone and colleague’s (2002) studied the interaction between personnel in marketing and manufacturing during NPD processes. Their research shows that the ability of marketing to understand and communicate on manufacturing topics may be crucial to establishing good working relationships which, in turn, may benefit new product development. Other research investigating the integration of marketing personnel into NPD processes concurs (Swink and Song, 2007).

Research has also shown that bringing in external human resources can be beneficial for new product success. Petersen and colleagues (2005) indicate that firms may impact effectiveness as well as financial and design performance by integrating the capabilities and culture of the supplier into development decisions. Moreover, the stage of supplier integration was found to have a significant moderating effect on the project team effectiveness-design performance relationship such that the effect of project team effectiveness on product performance was greater when suppliers were integrated earlier in the process. Further research concurs that having suppliers involved in decisions about technical requirements and coming to a joint agreement about requirements can enhance project team effectiveness (e.g., Koufteros et al., 2007; Song and Benedetto, 2008).

Market introduction

The final process of design and development is the introduction of the product-service to the market. The launch of the product-service requires the coordination of internal resources and external agents. That is, the launch process may require service or production training to ramp up for the launch. Furthermore, end process decisions and actions are needed. For example, decisions about the release of a product-service to market may still be pertinent to the offerings success. For instance, the organization may need to consider the timing of release (e.g., in relation to competitors or other product offerings) and where the release occurs (e.g., regional before international) (Krajewski et al., 2009).

Additionally, at the end of the design and development process, a final evaluation and feedback about the project may be obtained. In particular, researchers contend that the management of knowledge and organizational learning attained from process experiences is important for future new product-service success (e.g., Hacklin et al., 2009; Ruy and Alliprandini, 2008). The knowledge and information from design and development processes represent core competencies of the organization and the effective management of such information may provide additional benefits in the continued success of the firm's new product-service undertakings.


Context Specific Processes and Findings

While new product-service design and development may be conceptualized under the four processes of design, analysis, development, and market introduction, research has also identified specific process needs for certain contexts. Such contexts include:

  • Software development has a number of proposed development process templates. These include the spiral (Boehm, 1988) and agile (e.g., Schwaber, 2002; Martin, 2003) models of software development. The templates offer different approaches in terms of feedback mechanisms, evaluations and stakeholder integration.
  • Financial services has received much attention by researchers of service design and development (see review by Johne and Storey, 1998). For example, Menor and Roth (2007) focused on assessing NSD competence in financial firms. Through iterative and rigorous assessment of convergent and divergent validity, scale items and measures were refined for five dimensions of NSD competence: NSD Process Focus, Market Acuity, NSD Strategy, NSD Culture, IT Experience.


References

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  • Tan, C. and Vonderembse, M.A. (2006) “Mediating effects of computer-aided design usage: From concurrent engineering to product development performance.” Journal of Operations Management, Vol. 24, pp. 494-510.
  • Vairaktarakis, G.L. (1999) “Optimization tools for design and marketing of new/improved products using the house of quality.” Journal of Operations Management. Vol. 17, pp 645-663.

Further reading

  • Christensen, C M (2003). The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business, HarperCollins, US. 320 pages. ISBN 0-06-052199-6.
  • Clark, K B and Wheelwright S C (1993). Managing New Product and Process Development: Text and Cases, The Free Press, US. 896 pages. ISBN 0029055172. This book provides fundamental knowledge of new product development.
  • Fitzsimmons, J. and Fitzsimmons, M.J. (1999). New service development: Creating memorable experiences, Sage, US. 344 pages. ISBN 9780761917427. This book provides fundamental knowledge of new service development.
  • Wheelwright, S C and Clark K B (1992). Revolutionizing product development: Quantum leaps in speed, efficiency, and quality, The Free Press, US. 364 pages. ISBN 0-02-905515-6. This book provides fundamental knowledge of new product development.

External links

New Product Development Body of Knowledge website maintained by DRM Associates

PDMA Product Development and Management Association

See also

Behavioral Operations, Operations Management, Project Management

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