A Case Study in Innovation for New Balance: Four Phases of New Product Development

This chapter illustrates a comprehensive methodology that includes the issues and tools presented in earlier chapters. It begins with how companies identify opportunities to develop new products, how they expand their understanding of those opportunities, and how they translate that understanding into a set of product requirements or specifications that fulfill the market’s needs. The examples then show how that early set of product requirements leads to a process of prod­uct conceptualization and refinement, and eventually production of a product with features tailored to the needs of the individuals in the target market.[11]

For this project, New Balance assigned the team the task of developing a new market opportunity for the growing consumer seg­ment of people who are overweight—not traditionally a market that is targeted by athletic apparel companies. The strategic area was gen­eral in nature, not restricted to shoes or clothing or to specific gen­ders or age groups.

Here is a quick overview of the approach. Several factors con­tribute to the development of new product opportunities. These fac­tors are social, economic, and technological (SET). As these factors change over time, they generate gaps in the marketplace between products and services that exist and the potential for those that would better fulfill market needs, wants, and desires. These gaps, then, cre­ate new product and service opportunities. To respond to these opportunities, you need to understand the value that customers will expect in the new product. The customer’s expectations of value must then be translated into product attributes. So understanding the changing social, economic, and technological factors leads to finding opportunities that must then be translated in value and converted into product attributes. It sounds simple when stated this way, but companies struggle, particularly when analyzing customer value expectations. If you do not get the value right, the product will not be successful, no matter how strong your quality program is or how lean your manufacturing capability.

This innovation process is a complement to the downstream pro­grams of quality manufacture. It is a four-phase process that clarifies the earliest innovation stage, often called the “fuzzy front end” of product development. The four phases are 1) identifying a product opportunity, 2) understanding the product opportunity, 3) conceptu­alizing the product opportunity, and 4) refining the product opportu­nity. In 16 weeks, this method can support interdisciplinary teams in identifying product opportunities and turn them into fully developed product proposals and patents.

The student team described here followed the four-phase inno­vation process to create a complete product concept, ready for patent protection. Provisional patents were then filed to give the company time to assess the concept in the context of its business strategy.[12] In the following sections, we walk through the steps of the innovation process while illustrating the development of the product for the growing overweight market.

Phase I: Identifying Product Opportunities

Bob is approaching 50, and his current health and family genes are telling him he better lose the pounds. There are a lot of guys like Bob.

In the first phase of the process, product opportunities are identified, starting with research into trends. By the end of this phase, the devel­opment team will have identified gaps in the marketplace where a product or service would improve the well-being of the target mar­ket. The goal of Phase 1 is to identify one product opportunity. The opportunity must be stated in broad terms, with a focus on the expe­rience of the opportunity, without any hint of a product description. It would be stated something like “a process and/or device to safely protect a child in a car.” Most people automatically want to develop a car seat.

Chapter 4, “Identifying Today’s Trends for Tomorrow’s Innovations,” discussed trends and their implications—in particular, the SET factors that interact in a dynamic way to create product opportunities. For instance, the rising number of overweight people worldwide, but especially in America, yields new opportunities for athletic apparel companies to widen their target beyond the fit and trim, to design products for those needing help with a first step toward activity. As Americans become heavier, the pressures to get thin have increased with current emphasis on diet control. Issues of style in fashion have emphasized women more than men. Insurance companies are beginning to consider obesity a disease that could demand some level of reimbursement. This economic factor did not come into play as the eventual product was developed, but it was important to consider in understanding the overall opportunity.

Trends such as these lead to product opportunity gaps in the mar­ketplace. For example, a more sedentary populace expands the mar­ket for equipment used in low-exertion exercise, such as walking. A heavier populace puts more stress on shoes, increasing the need for high-performance materials that can better stand the rigors of heavier people. Insights that identify such trends come from customer-based interviews and interactions as well as secondary literature-based read­ing and research.

The team went in depth in each direction and brainstormed more than 100 product opportunity gaps in the marketplace. Selecting the best opportunity from a field of 100 requires qualitative research with possible users, coupled with a sense of the profit potential of each. Many could develop into exciting and successful products. Insights from potential customers and experts become the filter that selects the one product opportunity that survives. For instance, the product team was composed of students in their early 20s, but after studying the social, economic, and technological factors, they narrowed their target to middle-aged men. As these students moved forward in their work, the decisions were increasingly made for them by the information they had gathered, not by themselves, because they had to look completely outside themselves to properly serve their focal market.

As examples of the range of product opportunities developed in this phase, the team considered changing the orientation of foot entry into a shoe, an all-inclusive measurement system for fitting shoes, and “sexier” walking equipment for that market. Only after much thought and discussion on numerous ideas did the team settle on the oppor­tunity “to allow overweight 40- to 55-year-old men who have long been sedentary and who have become more aware of their health to overcome physical and mental hurdles on the way to establishing an active, healthy lifestyle.”

This phase began with general strategic directions and ended with open opportunities, not with product ideas. This first phase defined the scope of the problem to attack, the opportunity to be explored in later phases, and the questions to be answered.

Phase II: Understanding the Product Opportunity

If Bob could walk 10,000 steps a day, he could get enough exercise to lose weight and get himself in better shape. He is willing but does not want to wear a sign saying “Look at me;

I’m walking.” How can he get feedback and not have to wear something overt for everyone else to see?

The next step in the process is to gain an in-depth and insightful understanding of the user and purchaser and to identify and under­stand all the influences and implications of the product to them and to the market at large. The example shows how developers translate customer insights into product requirements, which will then form the criteria for assessing concepts developed in Phase iii. Engineers and designers often develop concepts with little frame of reference. Without a clear framework for decision making, teams usually fail to choose the most appropriate options. Establishing of a wide range of criteria for a potential product helps support the parallel develop­ment of product visual attributes of lifestyle, ergonomic aspects, and core technology. Teams must develop actionable insights that stem from a clear understanding of the stakeholders and a particular focus on emerging needs of the end customer.

This is the key phase for innovation, and this is where many of the ideas and tools discussed in this book become critical. This phase is focused on qualitative research, an approach at times especially diffi­cult for traditional market researchers and engineers, who are trained in the use and comfort of statistics and numbers. It is here that a propo­sition of value based on customer needs, wants, and desires creates a framework for product innovation. The challenge is to identify, under­stand, and articulate the key attributes of value and to turn that value proposition into actionable insights that will eventually be developed into a product. It is here that strategic planning (see Chapter 7) and identifying a market in terms of a scenario rather than a statistic (see Chapters 4, and 6) come together in an analysis of market value.

This analysis of the value must be broken into attributes that product developers can act on to develop so that they can produce products that are highly desired by the end users and purchasers. The analysis of value helps transition product development from qualita­tive insights to realized product features. So we discuss product value before product attributes.

The idea of value is not to get more features for less money. Instead, value is the connection of a user to a product in a way that augments his lifestyle and makes his activities easier and better. value is the product’s ability to fulfill wishes, to meet expectations of fanta­sy. The challenge is how a product developer understands the value a customer seeks, and translates that understanding into product char­acteristics. All the research and analysis we have discussed so far pro­vide that understanding. Now they need to be converted into design attributes that evolve into product attributes.

Value Opportunity

We have developed a framework that both represents attributes of value and provides a mechanism to translate those attributes into product requirements. Value can be broken into seven discrete class­es, called value opportunities, that capture an initial but complete understanding of what people need, want, and desire in the products and services they use.

• Emotion

The first is emotion, the direct connection to the user experi­ence and fantasy. What fantasy do people expect from use of the product? For overweight men who have become aware of their need for a healthier lifestyle, emotion is critical. Products that make them feel powerful and independent will support their choice to be more active, and products that aid their confidence will encourage them as they strive toward a new lifestyle.

• Ergonomics

Next is ergonomics, the attribute that addresses the physical interaction with a product. How easy and intuitive is the prod­uct to use? From an interview of a shoe store manager, over­weight men were happy just to find a durable shoe that would fit and would have enough initial cushioning to be comfortable. As expected, many larger individuals had trouble donning and removing shoes.

• Aesthetics

Aesthetics includes not only visual, or form, but all the senses that interact in experiencing a product. overweight men are accustomed to sacrificing aesthetics to live with shoes that are either comfortable or visually appealing, not both. on one hand, such a finding could support the notion that aesthetics could be ignored. on the other hand, any product that met other needs in addition to scoring high on aesthetics could have significant impact.

• Identity

A product is the physical statement of the brand identity and is central to its success. Every experience with a product affects the identity, and identity sets up the experience. overweight men, like everyone else, use products to make personal statements and to express self-definition. in the arena of health-enabling products, whether enabling shoes or enabling medical devices, products lack identity and differentiation, so an opportunity exists to bring positive self-expression into this market.

• Impact

Next comes impact—addressing the societal influence connect­ed to and addressed by the product. This includes social relevance to groups and individuals, and environmental consid­erations. As exercise networks and clubs increasingly become a nexus for social interaction, as obesity increasingly captures U. S.

national attention like smoking did a few years ago, the oppor­tunity for societal impact increases the relevance of obesity- related products.

• Core technology

Core technology addresses the functions that enable perfor­mance. Is the product state-of-the-art in its ability to perform? To date, exercise technologies have concentrated on the needs of those already exercising, not those who are struggling toward an active lifestyle. In shoes, where the provided cushioning does not vary by shoe but the need for cushioning varies by person, the cushioning and reliability are calibrated for the lighter and fitter. so exercise shoes for the heavyset may benefit from technologies to allow for size-appropriate cushioning and performance.

• Quality

Quality addresses not only manufacturing quality but also the expectation of how the product will perform overtime. Although traditionally viewed as manufacturing quality, it also includes the product’s fit and finish and its durability. How quickly do shoes wear out when used by those with larger bodies?

Innovation begins with understanding how these aspects of value connect customers to market opportunities. The use of this under­standing is a sophisticated process of defining each value attribute for a product opportunity and then refining that definition into attributes that a product or service must incorporate to succeed. As the product development process proceeds, the articulation of those attributes gets refined and eventually becomes the product’s form and features. Finding a solution that holistically integrates these attributes can be a difficult process of negotiation that requires an innovative outcome. It is this step-by-step process of exploration and refinement that sepa­rates comprehensive innovation from technology-focused invention, and also the innovative from the mundane.