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SUBJECT: New Product Development Functional Responsibilities

ALPHANUMERIC IDENTIFIER:

BRIEF DESCRIPTION: Product development efforts are increasingly being executed by a team consisting of representatives from the primary functions of a business – research and development, marketing, manufacturing, and finance. These teams should work collaboratively, although the structure of the team and the depth of each members’ roles will vary depending on the industry and firm culture. What does not change from firm to firm, however, is that the continued interaction of all of the aforementioned functions is necessary in order to ensure smooth product development with minimal delays.

KEYWORDS: new product development, cross-functional teams

OVERVIEW:

The continual introduction of new products is essential to all businesses. Without a steady stream of new, innovative products, firms will find revenues and profits diminishing as their existing products mature and are replaced by next generation products. New product development efforts, however, cannot be successful without the involvement of all the core functions of a business – R&D, finance, manufacturing, and marketing.

For example, a firm can maximize its profits by involving the finance function to ensure that the highest-NPV projects are undertaken. Marketing can assist by estimating demand and providing accurate forecasts of sales. They can also support R&D by providing clear and detailed specifications directly from the voices of their customers. R&D, in turn, can work closely with manufacturing personnel in order to minimize delays in production ramp-up resulting from a design that is un-manufacturable. Manufacturing, once R&D has provided a feasible design, can set up the process and minimize delays that occur when the product development process is handled in a "throw-it-over-the-wall" manner.

New product development teams’ responsibilities should be outlined at the onset of a project. More specifically, the following issues should be resolved before any development activities occur:

• Communication of the strategy and mission of both the team and the firm as a whole – Does the firm want to be a technology leader or a fast follower? Will the product compete on the basis of price or differentiation?
• Selection of a team leader – In some firms, such as those with product managers, the team leader is specified. In others, however, the decision of whom to institute as a team leader is left either to senior management or the team members. The leader should be someone with a general manager’s view and able to rally his or her "troops" during times of adversity.
• Determination of who will comprise the core team – Certainly, the "main" functions of finance, R&D and/or design, manufacturing, purchasing, and marketing should be represented. The team must remember, however, that each member represents his or her own core function within the business and therefore also has loyalties to that function. Furthermore, each function representative must deal with competition from other projects for employees’ time and have a means by which to prioritize projects.
• Specification of members’ roles – Some roles and responsibilities are outlined by function; however, every team also needs a champion and a sponsor. The champion must be prepared to fight for the team in the face of resistance, firm politics, or technical failure. Sponsors are usually members of senior management who can allocate resources to the product development team.

Manufacturing-oriented businesses obviously benefit from a continuous stream of new products. The best firms have cross-functional, highly collaborative teams who are aware of their responsibilities both with respect to the team and to the firm. These teams can minimize delays in product launch that result from rework due to an un-manufacturable design or poor estimation of market potential.

REFERENCES:

• Class notes, Marketing 625, New Products Management, Venkat Ramaswamy, University of Michigan Business School, taught Fall 1998.
• Crawford, Merle. New Products Management, Irwin, 1997, pp. 261-272.

ACKNOWLEDGEMENT: This is a March 29, 1999 revision by Gene Goodson of an assignment for OM742 contributed by Jeanette Kao.