New Product Development in SMEs

Small to Medium Enterprises (SMEs) are world-leading innovators, but not all SMEs can replicate that same success every time. The problem is that their methods are ambiguous and undefined. Only a small amount of research has gone into this area, and little is understood about the process that SMEs use in the development of new products. In order to help them in their process of innovation and New Product Development (NPD), a framework has been formed that gives these businesses the opportunities to recognise and develop their own capabilities in the NPD process. This leads to better innovations, faster.

IMPROVING THEIR CHANCES?

This framework was developed through research into the NPD processes in SMEs. The initial question was not how to go about developing existing ideas, but rather in forming new ones. In what direction should the SMEs pursue innovative ideas, products, or strategies? This is achieved by helping these businesses in recognising their own best approaches to idea generation, how to play to their strengths in the area of NPD.

HOW DOES IT WORK?

The framework is generally contained within what we call the holistic model. The holistic model consists of a number of dimensions, both internal and external, that influence the NPD environment within SMEs. One of the biggest advantages of SMEs is their ability to adapt quickly to environmental factors. This holistic model aims to support the development of strategy without trying to be a prescriptive model that stifles the ability of the owner/manager to react to change. The holistic model's core element is the Value Generation Model (VGM), a unique visual representation of the company's value chain.

THE VALUE GENERATION MODEL

The VGM aids in the understanding of what needs to be improved, and what are the strengths of the business. Essentially it is a value chain wrapped in an intuitive circular model, demonstrating the consumer-centric cyclical process of NPD. The various departmental elements of the value chain are the sections, and the smaller blocks are the specific capabilities of the business.

The aim then is to have a complete, balanced circle of capabilities that accomplish all the activities in the value chain to a high standard. The VGM consists of separate layers, the concentric circles surrounding the ring. These represent the levels of capability available to the company, ranging from core capabilities to outsourced abilities. Different balances of capabilities then reflect the strategic direction and possible focus for the business.

AND... HOW DOES IT HELP ME?

The framework is easily implemented into any SME, with three steps:

1. Analysis of the business capabilities.
   
2. Strategic Development and scenario building.
   
3. Communication of the results.  

It eventually allows for a final strategy or set of strategies to be developed, one that utilises all the specific capabilities of the business and also highlight areas for building or improving upon. The visual aspect of the models allows for a much more digestable and easily communicated goal, for senior managers and team members alike to share. As a final outcome, this gives SMEs the tools and the information to enable ideas to be grown from their strengths and capabilities.

MORE INFORMATION

For more information on the framework, its applications and how to implement it in your business, or a copy of the brochure posted to you, contact:

Dr Rainer Seidel
The University of Auckland
Private Bag 92019
Auckland 1142, New Zealand

Find further details in this brochure: "Becoming a World-Leading Innovator" (1.2mb)