New Product / Service Design and Development

Definition: 

Operations department undertakes Research and Development (R&D) to drive innovations in functionality, design and quality in a product category. New product designs can add to a firm’s product mix, drive new sales, meet new customer needs, and increase revenue and profitability.

Closely related to Marketing—Product strategies and is in pursuit of the Product Differentiation goal of operations (Role of operations). New product ideas can arise from; a consumer approach (feedback from end-user) or internal technological innovation (improvements in processing, tinkering and experimentation).

In this strategic approach, operations takes an active role in driving of innovation in a firm; not just the passive role of manufacturing. 

The operations team have specific expertise and experience that can bring new ideas and innovations.

Stages of development:

• Product concept and market research 

• Product design and prototyping  

• Testing (performance, durability, reliability)

• Refinement (and continued market research)

• Production, launch, distribution

When to apply this strategy:

• When a firm’s product mix is maturing / declining in life cycle. 

• When a firm has the resources to drive innovation to gain a competitive advantage. 

• When a firm is under pressure from low-cost rivals; respond with product innovations hard to imitate. 

• When a firm has a high risk appetite to be the first-mover in a category (new product innovation is expensive and consumer adoption is uncertain).