Managers at Work: Using the Internet In New Product Development

MANAGERS AT WORK The speed, convenience, interactivity, and worldwide coverage of the Internet match the requirements of the different activities in the new product development (NPD) process, which involves uncertainties and risks and requires firms to take into account the views of customers and to introduce their new products to the market fast (1-3). This article highlights the role that the Internet can play in the different stages of the NPD process and identifies related opportunities and constraints based on industry examples. Research has consistently shown that a high-quality process is one of the most critical success factors in new product development (4-6). Although different firms may adopt different types of NPD process, the typical process generally includes such discrete and identifiable stages as the preliminary investigation, detailed investigation, development, testing and validation, and market launch (4). Activities at each stage are undertaken by cross-functional teams and conducted both sequentially and simultaneously. Throughout these phases, strategic decisions are made about whether to go ahead with a new project, modify it or kill it. The following sections examine these phases in more detail and explain how the Internet can be used at each step to enhance the effectiveness of the NPD process, along with some limitations associated with using it at each stage. Preliminary Investigation This stage involves "up-front" market, technical and financial assessments of new product ideas. As its title implies, this stage deals with an initial evaluation of new product ideas and preliminary appraisal of other potential factors that might affect the success of the new product ideas under consideration (4). Every new product starts with an idea, and companies at this stage generate as many ideas as possible for further consideration. Indeed, numerous experiments have shown that online idea-generation sessions generate more unique and quality ideas than do face-to-face sessions and that the participants are significantly more satisfied with this type of meeting (7). Thus, the Internet can offer a viable platform for electronic idea generation by individuals in different parts of the world. Companies are increasingly using the Internet for this purpose. For example, Polaroid Corp. used Internetbased methodologies to develop its highly popular i-Zone, which prints mini-photos that can be stuck anywhere. The company asked several hundred representatives of its target population to visit a private online research site and assemble their ideal i-Zone with different features that they valued. The results suggested that the respondents viewed the product as a fashion accessory and wanted "cool" styles. These characteristics of i-Zone were totally inconsistent with the features that some Polaroid engineers originally envisioned, which were more technical and costly. The Internet allowed the company to understand its customers better and thus design the products they wanted (8). Although the Internet can help firms generate new product ideas effectively and efficiently, firms still worry that people who take part in online idea generation sessions may not represent the target customers. Compared to others, these people are usually more comfortable with computers. However, if the potential buyers of a new product do not fit into such a profile, firms may not be able to learn their opinions. Indeed, even Polaroid Corp. had to use other more traditional market research techniques along with the Internet to have a better representative sample and to validate the results of the online idea generation (8). At the preliminary investigation stage, the Internet can also allow companies to collect market intelligence and identify market trends, thus being able to assess the viability of their new product ideas more effectively before making substantial commitments to further development of these ideas. …