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Powerful Products: Strategic Management of Successful New Product Development
Book Reviews / The Journal of Product Innovation Management 18 (2001) 349 –353
The book will have the most appeal to new product development program managers with systems engineering backgrounds and a current assignment involving incremental development. If the authors want to appeal to marketoriented new product developers, they should link their process to commercial process and practices like stage gate, adding recognition of voice of customer techniques and inquiry tools like context analysis, voice-of-customer analysis, and latent needs identification. They need to strengthen the book’s discussion of technology independence, and at least discuss the issues of figuring out how to delight customers, not just respond to their spoken requests. Overall, I think Customer Centered Products: Creating Successful Products Through Smart Requirements Management is a sound book that has much to teach product innovators about requirements management. I found it conceptually insightful, well organized, easy to read, and practical. It is clear that the authors have expertise and experience in the field. The system engineering and aerospace/government emphasis should not be an excuse not to read this valuable book. I am confident that Customer Centered Products will not sit idly on my shelf, and I will be referring to it repeatedly. Gregory D. Githens, PMP, NPDP Catalyst Management Consulting
Powerful Products: Strategic Management of Successful New Product Development Roger Bean and Russell Radford; New York: American Management Association, 2000. 274 ⫹ xii pages $39.95 There are two styles for managing new product development: the market oriented approach, which seeks to develop products that meet specific market needs; and, the product oriented approach, which seeks or creates markets for specific product concepts. If your company’s style is the former, Powerful Products may be a good book for you to use to introduce your senior management to the key concepts of new product development. In Powerful Products, Roger Bean and Russell Radford have produced an executive summary of the market oriented new product development process. This is a book that is squarely aimed at senior and executive management. You will not find detailed “how-to” instructions in this book. What you will find is a clearly stated fundamental philosophy that new product development is a strategic process that demands the involvement of the top management of the company. Powerful products result when new product development is aligned with corporate strategy to produce products that fill the needs of strategic market segments. The book is organized around three major aspects of the new product development process:
351
1. Developing the corporate strategy, including market segmentation. 2. Developing product concepts that are appropriate for the target market segments. 3. Designing, manufacturing and distributing the products. After an overview in Chapter 1, the next four chapters focus on the strategic issues in new product development. This section is the heart of the book and emphasizes the role of senior management in choosing target market segments and insuring that new product development projects are aligned with corporate strategy, resources, and culture. Proper market segmentation and the choice of strategic target markets are highlighted. The recommended market segmentation technique is called “interactive experience group conferencing.” This is an approach developed and practiced by Bean, Radford and Associates, the consulting firm of which both authors are principals. Chapters 6 through 13 cover, in broad outlines, the various elements of new product development, beginning with identifying market opportunities, and proceeding through product design, development and launch. The authors deliberately avoid recommending a specific NPD process – in their opinion, processes must be designed around a specific company’s culture, markets, and organization – but they do cover the essential elements that they feel must be included in such a process. For example, the authors do not even mention the stage-gate concept, but rather focus on the strategic decisions to be made during design and development. While many new product development practitioners will find this section somewhat superficial and lacking in detail, it does present a discussion of each aspect of new product development in language that is readily understandable and that is not process specific. Therefore, it can be used as a framework for discussing a specific new product development system with senior management and showing how the system supports strategic corporate goals. The last chapter deals with implementation of new product development systems, again emphasizing the importance of senior management commitment and support for successful implementation. The authors touch on the principles of change management while retaining their focus on the importance of leadership and decisiveness. The book closes with two appendixes: a sample new product decision screen and a detailed format for a strategic plan incorporating new product development as a growth engine. The authors also include a short bibliography. Powerful Products succeeds as a high level overview of the strategic aspects of market driven new product development. It is designed as a “quick-read” and the most important concepts are summarized in pithy headlines that punctuate the text. The book could have been improved by the inclusion of more case studies and concrete examples to illustrate and validate the assertions of the authors. Better notes and a more extensive bibliography would have made
352
Book Reviews / The Journal of Product Innovation Management 18 (2001) 349 –353
the book more useful to those unacquainted with the new product development literature. This is not a book that you will refer to often, but it is a useful, easy to read, introduction to new product development concepts. George C. Kingston East Longmeadow, MA, USA
Collaborative Advantage: Winning Through Extended Enterprise Supplier Networks Jeffrey H. Dyer; Oxford University Press, 2000. 209 ⫹ xii pages $27.50 In the last decade we have seen the rise of the extended enterprise: companies working together in intimate, trustbased relationships to develop, produce and deliver complex products. In Collaborative Advantage, Professor Dyer studies the astounding success of two companies in the automotive industry that plunged deeply into extended enterprises techniques, Toyota and Chrysler. His extensive research and crystal clear analysis show exactly how these two companies achieved more than double the profitability of their rivals by investing and sharing in the futures of their suppliers. This book is a must read for executives and managers of companies that develop complex products. It provides useful rules and a practical template for how to get the most value out of your partners and suppliers. Collaborative Advantage is aimed at executives and managers at all levels. Although the case studies are from the automobile industry, any company that produces complex products (products composed of many parts or assemblies and requiring many competencies to build) will benefit from its lessons. The focus is practical and tutorial. Dyer is a very clear, articulate, and interesting writer. He proves each of his major points with real, statistically valid data. For example, he shows quantitatively how much a trustbased relationship saves money compared to an arms-length relationship. Before merging recently with Daimler Benz, Chrysler had become the shining star of American automotive companies, earning more than double the profits of its larger rivals Ford and GM in the 1990s and cutting seriously into their market share. Chrysler accomplished this feat by bucking the American trend of putting its suppliers into continuous, cutthroat competition to reduce cost, and instead adopted the techniques of Toyota, long the dominant Japanese automobile maker. Suppliers were treated as partners— guaranteed longer-term business and reasonable profits—if they could help Chrysler to reduce cost and improve quality overall. Dyer studied Chrysler and Toyota along with other auto makers over an eight year period, conducting interviews with over 200 executives and surveys of over 500 suppliers.
Dyer characterizes companies according to three numbers called their Governance Profile: the percentage of total value added internally, the percentage added by “partner” suppliers, and the percentage added by “arms-length” suppliers. Collaborative extended enterprises are those with a much higher percentage of partner-suppliers (48% for Toyota vs. 10% for GM). He demonstrates that building this kind of collaboration requires time and commitment. The partners must be willing to invest in people and assets that are dedicated to each other, and to share both explicit and implicit knowledge with other companies which may also be their competitors. These collaborative relationships are trust-based rather than contract-based— detailed contractual agreements can waste time and resource, while never covering all potential problems. Dyer shows how systems have been set up to transfer knowledge and to encourage intersupplier ideas for cost reduction. The author concludes by giving us his vision of the successful extended enterprise of the future. For large automotive companies, this vision is that a few “Megasuppliers” will add most of the product value through their own extended enterprises. In addition, suppliers will learn to extend the partnerships and trust through several tiers, creating a whole connected value chain of partner-suppliers. I found Collaborative Advantage to be to be fresh, articulate, and complete in its coverage of successful ways of establishing an extended enterprise, and of the pitfalls of “arms-length” supplier relationships. Scott Elliott, PhD Product Development Consulting, Inc
The Customer Marketing Method: How to Implement and Profit from Customer Relationship Management Jay Curry; New York: The Free Press. 236 pages; $25.00 and Driving Customer Equity: How Customer Lifetime Value is Reshaping Corporate Strategy Roland T. Rust, Valarie A. Zeithaml and Katherine N. Lemon; New York: The Free Press. 273 pages; $28.00 These two books focus on the topic of customer relationship management (CRM). Each offers an approach to customer segmentation and strategies for improving the top line of a selling organization. Both books are intended for sales, marketing, and service managers and executives, and will be useful to product developers whose work is influenced by these. The Customer Marketing Method is a basic book that outlines how an organization should initially begin segmenting customers. The authors articulate the value and business results that can be achieved by not treating all customers identically. Treating different types of customers
The book will have the most appeal to new product development program managers with systems engineering backgrounds and a current assignment involving incremental development. If the authors want to appeal to marketoriented new product developers, they should link their process to commercial process and practices like stage gate, adding recognition of voice of customer techniques and inquiry tools like context analysis, voice-of-customer analysis, and latent needs identification. They need to strengthen the book’s discussion of technology independence, and at least discuss the issues of figuring out how to delight customers, not just respond to their spoken requests. Overall, I think Customer Centered Products: Creating Successful Products Through Smart Requirements Management is a sound book that has much to teach product innovators about requirements management. I found it conceptually insightful, well organized, easy to read, and practical. It is clear that the authors have expertise and experience in the field. The system engineering and aerospace/government emphasis should not be an excuse not to read this valuable book. I am confident that Customer Centered Products will not sit idly on my shelf, and I will be referring to it repeatedly. Gregory D. Githens, PMP, NPDP Catalyst Management Consulting
Powerful Products: Strategic Management of Successful New Product Development Roger Bean and Russell Radford; New York: American Management Association, 2000. 274 ⫹ xii pages $39.95 There are two styles for managing new product development: the market oriented approach, which seeks to develop products that meet specific market needs; and, the product oriented approach, which seeks or creates markets for specific product concepts. If your company’s style is the former, Powerful Products may be a good book for you to use to introduce your senior management to the key concepts of new product development. In Powerful Products, Roger Bean and Russell Radford have produced an executive summary of the market oriented new product development process. This is a book that is squarely aimed at senior and executive management. You will not find detailed “how-to” instructions in this book. What you will find is a clearly stated fundamental philosophy that new product development is a strategic process that demands the involvement of the top management of the company. Powerful products result when new product development is aligned with corporate strategy to produce products that fill the needs of strategic market segments. The book is organized around three major aspects of the new product development process:
351
1. Developing the corporate strategy, including market segmentation. 2. Developing product concepts that are appropriate for the target market segments. 3. Designing, manufacturing and distributing the products. After an overview in Chapter 1, the next four chapters focus on the strategic issues in new product development. This section is the heart of the book and emphasizes the role of senior management in choosing target market segments and insuring that new product development projects are aligned with corporate strategy, resources, and culture. Proper market segmentation and the choice of strategic target markets are highlighted. The recommended market segmentation technique is called “interactive experience group conferencing.” This is an approach developed and practiced by Bean, Radford and Associates, the consulting firm of which both authors are principals. Chapters 6 through 13 cover, in broad outlines, the various elements of new product development, beginning with identifying market opportunities, and proceeding through product design, development and launch. The authors deliberately avoid recommending a specific NPD process – in their opinion, processes must be designed around a specific company’s culture, markets, and organization – but they do cover the essential elements that they feel must be included in such a process. For example, the authors do not even mention the stage-gate concept, but rather focus on the strategic decisions to be made during design and development. While many new product development practitioners will find this section somewhat superficial and lacking in detail, it does present a discussion of each aspect of new product development in language that is readily understandable and that is not process specific. Therefore, it can be used as a framework for discussing a specific new product development system with senior management and showing how the system supports strategic corporate goals. The last chapter deals with implementation of new product development systems, again emphasizing the importance of senior management commitment and support for successful implementation. The authors touch on the principles of change management while retaining their focus on the importance of leadership and decisiveness. The book closes with two appendixes: a sample new product decision screen and a detailed format for a strategic plan incorporating new product development as a growth engine. The authors also include a short bibliography. Powerful Products succeeds as a high level overview of the strategic aspects of market driven new product development. It is designed as a “quick-read” and the most important concepts are summarized in pithy headlines that punctuate the text. The book could have been improved by the inclusion of more case studies and concrete examples to illustrate and validate the assertions of the authors. Better notes and a more extensive bibliography would have made
352
Book Reviews / The Journal of Product Innovation Management 18 (2001) 349 –353
the book more useful to those unacquainted with the new product development literature. This is not a book that you will refer to often, but it is a useful, easy to read, introduction to new product development concepts. George C. Kingston East Longmeadow, MA, USA
Collaborative Advantage: Winning Through Extended Enterprise Supplier Networks Jeffrey H. Dyer; Oxford University Press, 2000. 209 ⫹ xii pages $27.50 In the last decade we have seen the rise of the extended enterprise: companies working together in intimate, trustbased relationships to develop, produce and deliver complex products. In Collaborative Advantage, Professor Dyer studies the astounding success of two companies in the automotive industry that plunged deeply into extended enterprises techniques, Toyota and Chrysler. His extensive research and crystal clear analysis show exactly how these two companies achieved more than double the profitability of their rivals by investing and sharing in the futures of their suppliers. This book is a must read for executives and managers of companies that develop complex products. It provides useful rules and a practical template for how to get the most value out of your partners and suppliers. Collaborative Advantage is aimed at executives and managers at all levels. Although the case studies are from the automobile industry, any company that produces complex products (products composed of many parts or assemblies and requiring many competencies to build) will benefit from its lessons. The focus is practical and tutorial. Dyer is a very clear, articulate, and interesting writer. He proves each of his major points with real, statistically valid data. For example, he shows quantitatively how much a trustbased relationship saves money compared to an arms-length relationship. Before merging recently with Daimler Benz, Chrysler had become the shining star of American automotive companies, earning more than double the profits of its larger rivals Ford and GM in the 1990s and cutting seriously into their market share. Chrysler accomplished this feat by bucking the American trend of putting its suppliers into continuous, cutthroat competition to reduce cost, and instead adopted the techniques of Toyota, long the dominant Japanese automobile maker. Suppliers were treated as partners— guaranteed longer-term business and reasonable profits—if they could help Chrysler to reduce cost and improve quality overall. Dyer studied Chrysler and Toyota along with other auto makers over an eight year period, conducting interviews with over 200 executives and surveys of over 500 suppliers.
Dyer characterizes companies according to three numbers called their Governance Profile: the percentage of total value added internally, the percentage added by “partner” suppliers, and the percentage added by “arms-length” suppliers. Collaborative extended enterprises are those with a much higher percentage of partner-suppliers (48% for Toyota vs. 10% for GM). He demonstrates that building this kind of collaboration requires time and commitment. The partners must be willing to invest in people and assets that are dedicated to each other, and to share both explicit and implicit knowledge with other companies which may also be their competitors. These collaborative relationships are trust-based rather than contract-based— detailed contractual agreements can waste time and resource, while never covering all potential problems. Dyer shows how systems have been set up to transfer knowledge and to encourage intersupplier ideas for cost reduction. The author concludes by giving us his vision of the successful extended enterprise of the future. For large automotive companies, this vision is that a few “Megasuppliers” will add most of the product value through their own extended enterprises. In addition, suppliers will learn to extend the partnerships and trust through several tiers, creating a whole connected value chain of partner-suppliers. I found Collaborative Advantage to be to be fresh, articulate, and complete in its coverage of successful ways of establishing an extended enterprise, and of the pitfalls of “arms-length” supplier relationships. Scott Elliott, PhD Product Development Consulting, Inc
The Customer Marketing Method: How to Implement and Profit from Customer Relationship Management Jay Curry; New York: The Free Press. 236 pages; $25.00 and Driving Customer Equity: How Customer Lifetime Value is Reshaping Corporate Strategy Roland T. Rust, Valarie A. Zeithaml and Katherine N. Lemon; New York: The Free Press. 273 pages; $28.00 These two books focus on the topic of customer relationship management (CRM). Each offers an approach to customer segmentation and strategies for improving the top line of a selling organization. Both books are intended for sales, marketing, and service managers and executives, and will be useful to product developers whose work is influenced by these. The Customer Marketing Method is a basic book that outlines how an organization should initially begin segmenting customers. The authors articulate the value and business results that can be achieved by not treating all customers identically. Treating different types of customers