New Product Development of Nokia

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Introduction

Strategic realignment is often perceived as a requisite ingredient for survival in a tumultuous environment. Hence, all aggressive organizations strive to capitalize on their potential and amass a large market share while retaining the existing customers.

Ideally, many firms opt to design new product as a competitive tool. Thus, most innovative firms find it easier for them to out do their rivals. Although innovation is vital for success, the process adopted to develop new product has bearing on the final product. Most organizations and firms use varied processes in developing a new product.

The method used depends on the level of technology that is available. When producing a simple product a simple procedure is adopted compared to the procedures used when developing sophisticated products. This report will therefore compare the process that is used by Nokia Company against the process that was proposed by Crawford (1994). Crawford (1994)’s New Product Development (NPD) process is perceived as a universal one upon which other manufacturers derive their processes.

Objectives

This report provides information on how Nokia develops its new products. Therefore, the objectives of the report include;

To understand the method used by Nokia in developing new products.
To evaluate the existing gaps between Nokia NPD process and the Crawford (1994) process.
To evaluate Constraints that influences an organisation’s NPD procedures.
To understand the adjustments that Nokia can employ to improve its production.

Research Methodology

The research methodology is a comparative analysis of the procedure that is used by Nokia Company against the processes that are suggested by Crawford (1994). Both processes are or present some similarities as well as differences that characterize the diverse perspectives employed to meet similar objectives. The data from Nokia’s R&D is supplemented with information obtained from secondary sources to decipher the approaches that are assumed by the organization.

This report is a comparative case study that covers the Nokia new product development process against a Crawford (1994) process. A case study was opted for since it provides in-depth information pertaining internal operations of the organization. Since the information that is needed is confined in a single organization, a cases study helps narrow the focus and scope hence enhancing a speedy achievement of the results.

Many scholars have used this method in assessing the internal welfare of the organization as well as comparing some competencies.

All the data that has been used in this report is obtained from secondary sources. The main source of data was the internet, books and journals. It is widely known that some information that is deemed as organization’s secrets are withheld from the public and therefore it was difficult to obtain the fine details of each process. This limitation was circumvented by consulting divergent sources.

Literature Review

Many academicians and scholars have suggested criteria, which organizations should use to develop new products. The process of developing a new product begins when a firm identifies the need to generate a new product line to meet the needs of the customers. Chesbrough (2003) asserts that all firms operating in an open innovation paradigm are compelled to always produce superior products compared to their rivals.

They do this to acquire or to maintain their market share. With such aspirations, organizations devise ways and means to meet the existing gaps by producing new products. Management in most organizations bases their new product development strategies on process described by Crawford (1994). Below is an elaboration of the linkages existing between Nokia’s eight tier models compared to Crawford (1994)’s five tier NPD processes.

Idea Generation

Nokia has well elaborated NPD process that commences with ideal generation. The Research and Development (R&D) department has the responsibility of generating ideas deemed relevant in generation of new ideas. Since obtaining information is such a tedious task, the R&D engages in brainstorming session to obtain internal information (Cravens, 2000).

On the other hand, where need arises, the organization carries out outreach information collections to obtain the ideas of suppliers and customers. This process is a rigorous activity that requires enormous information to design the best product. Nokia’s three-fold information is more reliable given that different ideas are incorporated in the project. Hence, deficiencies of staff’s ideas are supplemented by customers and suppliers ideas and, therefore, the R&D has a better beginning point.

Bruce et al (1995) contend that the R&D need a large pool of information to begging with in order to accommodate a diverse scope of customers needs. On the other hand, Crawford (1994)’s NPD process commences with overview and opportunity identification.

This approach stems back from where the Nokia process starts. Nokia overlooks this stage since it first identifies the problem and immediately it starts directly working the solution. The Crawford (1994) approach is a step behind the Nokia’s approach in almost all the steps but the ultimate model is similar.

Idea Screening

Once the ideas are generated, the R&D assesses the suitability of the ideas obtained to eliminate the less useful ones. It is worth highlighting the value of information simply because inclusion of erroneous information would spoil the final product (Cravens, 2000). Therefore, the R&D needs to work tirelessly to eliminate any unwanted information from leaking to the product development process.

Idea screening is done by appraising each concept against criteria, less fit information are dropped while the most viable information is considered for the next step. Crawford (1994) asserts the importance of working with less but useful information rather having voluminous and less important data. Nokia incorporates external partners as well as experts in screening information to ensure only the most important information is considered.

Conversely, Crawford (1994)’s second step entails concept generation and it requires obtaining of relevant information from all viable sources. Once the concept is generated the information is subdivided to form several alternatives. Each alternative is then evaluated to asses its usefulness. He further proposed the use of analytical method in evaluation of information to ensure a scientific measurement is used to weigh the outcome.

Concept Development and Testing

Kuczmarski (1988) contends that all information needs to be tested against the predetermined goals and expectations. Nokia meets this obligation by ensuring that all information and ideas are expressed in a meaningful end user terms. Stating concepts according to the consumer terms not only retain the product focus but it also enhances a mental picture of the product design (Bruce, Leverick and Littler, 1995).

At this level, Nokia uses some target customers to assess the product concept. Customer inclusion plays a vital role in maintaining the product development retails customers’ satisfaction. At this stage, Crawford (1994)’s approach coincides with the Nokia concept but with few inclusions.

According to Crawford (1994), once information and concepts are assessed against expectations. The valid concepts are screened against the market factors to ensure compliance and validation. Moreover, the focus shifts to sale projections to assess the expected outcome. Once the marking evaluation is done, the organization should strive to extract projected financial reports to determine the worthwhile of the project. Finally, the product protocol is determined to make sure prior marketing and distribution channels are set in place.

Marketing Strategy Development

To avoid a marketing dilemma, Nokia makes prior arrangement on the marketing criteria that would best suite the new product. At this point, the target market is determined and at the same time, the distribution channel is set. Burt (1992) argues prior marketing arrangement enhances competitive advantage over competitors who may opt to make replica of the product.

In addition, Burt (1992) points out that a competitive organization should always maintain a visionary eye to be able averse risks while capitalizing on future opportunities. Nokia has done well in meeting this expectation as it usually set prices in advance as well as carrying out projected market survey both in the short run and in the long run. Precautionary measures are also set in place in case the actual marketing fails to match expectations. This is done by designing a marketing mix to sell the products.

Business Analysis

Business analysis is a deliberate act that developers take towards understanding the scope and challenges that awaits the new product. At this point, the management should endeavor to pinpoint all the challenges and limitations that face the new telephony products. Suggestions on how to cope with such limitations are also recommended.

In addition, an in-depth assessment of the costs and sales are projected to help meet the future demands. Finally, the organization keeps a profit margin as the target for the future sales. Thomas (1993) supports prior planning as a means of avoid shocks and surprise turn of events. All these projections allow the management to evaluate the progress of the market according to the estimated product sales.

Product Development

Both Nokia and Crawford (1994)’s processes have project development in their NPD process. This highlights the importance and the significance of this stage. The Nokia Company develops prototypes before producing commercial products. Urban and Hauser (1993) postulate that prototype is the best way of actual market test since it also allow fine adjustments of the product before the commercial release.

For Nokia, prototypes are used to measure product acceptability and final customer observation about the product. The prototype is also used to test the functionality of the products to evaluate how well it meets the predetermined goals and objectives. However, in Crawford (1994) NPD process, prototype is placed in the third step. According to Crawford (1994), prototype is used to assess the market situation as well as determining the quality of the product.

Once the prototype is evaluated, the Nokia Company makes fine adjustments to ensure that the final product is ideal. All the amendments are based on the feedback received from the consumers, suppliers, distributors; as well as ideas generated from within the organization. However, in case the discrepancies between the actual performance and expected performance should surpass the set limit; the management may opt to restart the entire process.

Test Marketing

Nokia carries out three types of market testing; standard test markets, controlled test markets and simulated test markets. Standard test market is the natural market that is governed by market forces of demand and supply. When testing by this method, the product is subjected to the stiff competition that would affect any normal product.

Once the product is assessed under natural conditions the management can be able to evaluate the way of improving product. The second market testing is done under the controlled environment. One way of doing this is by eliminating competition and assuming a monopolistic atmosphere. The third test market i.e. the simulated market testing is done where customers are exposed to stage advertising and then their purchasing decisions are monitored.

For accessing a new market, Nokia’s quest to include collaborations from partners is an added advantage. Hamel and Prahalad (1994) gave a similar opinion or suggestion of strategic alliances and partnership as a means of reaching out to the unexplored territories. This market testing method is only applied to new products.

Urban and Hauser (1993) have reiterated the need to conduct market tests to evaluate the behavior of consumers toward the new product. Nokia has been using these three tests to most of its new product. Before launching any product, an intensive market promotion is usually conducted to popularize the product before the actual production. Conversely, Crawford (1994) has set the market-testing phase as a constituent of the final phase. Nokia decided to carry out market testing as a strategy for promoting the products.

Commercialization

Commercialization is the last step that Nokia uses in developing a new product. This phase involves large-scale production of new products. Since all the amendment and fine-tuning have already been done, the organization expects minimal obstacles limiting the products limitations.

However, according to Crawford (1994) the final stage is dubbed the launch phase. This step encompasses several activities such as market testing, the launch strategic planning as well as public policy issue. By setting the commercialization process independently, Nokia concentrates all the efforts in commercializing the product without having any competing priorities as is the case in Crawford (1994) system.

Existing Gaps

Although both processes bear some similarities, some sharp differences exist. In Crawford (1994) model, five processes are used whereas Nokia uses a more elaborate process that comprises of eight steps. The two approaches harbor all the steps in new product development but Nokia model is a more elaborate hence reducing chance of errors occurring in the process. However, the Nokia model is time consuming due to the large number of participants that are involved, which delays agreement.

Therefore, it is upon the organization to reconsider altering the NPD process; focus should be on reducing the duration that it takes. Conversely, its worth to critic Crawford (1994)’s final step i.e. the launch phase, which has so many things that ought to be done in preceding the stages. Testing market with the final product may prove a misplaced action especially when the action fails to meet the expected result. Such a backfired mission would force the organization to start the entire process from the scratch.

Results and Discussion

The adoption of an eight-tier production generation system, by Nokia, has proved clearer, more inclusive and accommodating format as compared to the Crawford (1994)’s five-tier model. The Nokia model disintegrates the several processes into distinct activities hence making it easier for the management to deal with each item with the overlapping effect as in the case of Crawford (1994) model that overcrowds.

When items are evenly spread, the management is able to analyze each item exhaustively without being force to subdivide their focus on competing opinions. The flexibility of Nokia model to accommodate networks has helped the organization in reaching out to the marginalized groups hence increasing chances of product acceptability.

The Nokia model consumes more time before the final product is generated compared to the Crawford (1994) model that takes relatively shorter time. Since the need to develop a new product emanates from customer survey reports, delayed production of the product is likely to get a negative response from the market.

Thus, the organization strives to merge several activities or reduce the time that each activity takes. It also worth noting that since Nokia operates in a perfect market, some of its competitors may realize to produce telephony with features that are needed in the market only for Nokia to realize the market is already occupied.

Core competencies

The terms core competencies are repeatedly used in business writings although few authors give adequate definitions of the same (Duysters & Hagedoorn, 2000).

According to Nokia management, there are three main competencies that the organization is anchored on; the handsets, network technology and middleware. As the organization develops new products, it is always important to maintain a clear consideration on the three issues. This is where the firm uses an elaborate intermittent process to ensure adherence to its core principles.

Since Nokia is a world leading telephony producing firm, the management and the R&D department enjoys the liberty of operating without pressure in terms finances and technology. Hence, the organization has ample time to carry out intensive research as well as forging partnerships with other members to ensure quality in the product development process. However, longevity in the product development process has often affected the products produced negatively.

On the other hand, Crawford (1994) process is a congested approach and may be difficult to be followed by ordinary managers. This problem can be addressed by further subdividing these activities into independent sub-activities to enhance clear understanding as well as reducing mystification. Giving clear-cut sub-activities facilitates easier identification of the problem and this may save the management the agony of tracing the problem.

Recommendations

It is important to an organization to keep re-inventing its new product development processes and procedures. Such re-invention is important because competition is only best handled with through product offering.

A product offering is only enhanced through innovation and product development. Innovation helps towards meeting customer desires or needs as expressed through feedback on existing products. Further, it helps create new markets as new products attract new clientele. Finally, innovation keeps organizational brand fresh and appealing.

After a critical analysis of all the steps that Nokia follows in New Product Development, a number of issues that are worthy addressing. The following recommendations are suggested for future considerations.

There is need to keep improving the process so that the organization benefits from having a reliable product development process. The kind of products developed is largely dependent on the process employed. Therefore, improving the process would definitely translate into improving the new product development exercise and final products developed.

Nokia should consider reducing the time that is used in idea generation but increase more time in developing the product. A lengthy process means responding to market characteristics too late. It also means organization has to do much forecasting given product launch is only possible after a long time.

Nokia should also encourage out sourcing of some phases of product development to competent product developers to enhance faster development of new products. Outsourcing can come in handy, or as it has done elsewhere, bring on board independent developers with creative ideas.

Using independent developers or scouting for creative works by such and adopting them can shorten new product development in the organization. Finally, the R&D should also consider carrying out benchmarking activities to identify the criteria used by its main rivals to understand the strategic adjustments that can be applied.

Conclusion

From the comparative analysis that was carried on Nokia’s new product development procedure and the one presented by Crawford (1994), it is clear that Nokia’s trajectory process is more superior and more conclusive. The entire processes are systematic in nature and well interlinked thus covering any loophole that may exist between one phase and the other.

However, Nokia’s processes are time consuming due to the many parties involved in the decision-making process. On the other hand, Crawford (1994)’s new product development process is a well-designed process that expertly interlinks some processes to reduce the duration required before the final product is launched.

From this research, it is clear that Crawford (1994)’s process serves best as a benchmark tool against which organizations may design their NPD processes. Finally, the stiff competition, which firms across the globe are currently facing, requires that firms improve their new product development mechanisms in order to fit in an open innovation paradigm.

References List

Bruce, M. Leverick, F. & Littler, D. (1995). Product Development; Meeting the Challenge of the Design and Marketing Interface. New York: Willey.

Burt, R. S. (1992). Structural Holes: The Social Structure of Competition. Cambridge (MA): Harvard University Press.

Chesbrough, H. R. (2003). Open Innovation. Cambridge, MA: Harvard Business School Press.

Cravens, W. D. (2000). Strategic Marketing. 6th Ed. Boston: Irwin McGraw-Hill.

Crawford (1994), M. (1994). New Product Management. Chicago: Irwin.

Duysters, G. M. & Hagedoorn, J. (2000). Core Competence and Company Performance in the Worldwide Computer Industry. The Journal of High Technology Management Research, 11, 75-91.

Hamel, G. & Prahalad, C. K. (1994). Competing For the Future. Boston, MA: Harvard Business School Press.

Kuczmarski D.T. (1988). Managing New Products. New Jersey: Prentice Hall

Thomas, J. R. (1993). New Product Development; Managing and Forecasting for Strategic Success. New York, NY: John Wiley & Sons Inc.

Urban G. & Hauser, J. (1993). Design and Marketing of New Products. New Jersey: Prentice-Hall.

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