RESEARCH OF THE NEW PRODUCT DEVELOPMENT PROCESS

Abstract

New product development is the main factor of economic progress in building the economic competitive advantage. The life cycle of products becomes very short and it trends to be shorter year by year. It means that innovation becomes the main driver force in the economy. The innovation level is not sufficient in Latvia. One of the most significant players in the innovation field are business incubators in Latvia. This research study underlines the role of evaluation of each stage of innovation processes. The authors offer a new model for the evaluation of innovation processes stage by stage. This model allows to identify the main problems that hinder innovation. This model allows to develop concrete proposals for improving the innovative climate in the country. The research is based on the authors’ conducted research as a part of scientific grant of Rezekne Academy of Technologies „New product development process modeling and analysis in Latvia – innovation barriers”. The main methods, that are used in this research were as follows: content analysis, comparative analysis, synthesis, abstract and logical construction methods.

Full text

116 Latgale National economy research
RESEARCH OF THE NEW PRODUCT DEVELOPMENT
PROCESS
Irena SILINEVICA1, Maris IGAVENS2,
Liene AMANTOVA-SALMANE3
1Dr.sc.ing., professor, Rezekne Academy of Technologies, Rezekne, Latvia,
e-mail: irena.silinevica@ru.lv, phone: +371 29103480
2Mg.soc.sc., scientific assistant, Rezekne Academy of Technologies, Rezekne, Latvia,
e-mail: maris.igavens@ru.lv, phone: +371 29235941
3Mg. soc.sc., lecturer, Rezekne Academy of Technologies, Rezekne, Latvia,
e-mail: lienea@yahoo.com, phone: +371 29429895
Abstract. New product development is the main factor of economic progress in building
the economic competitive advantage. The life cycle of products becomes very short and
it trends to be shorter year by year. It means that innovation becomes the main driver
force
in the economy. The innovation level is not sufficient in Latvia. One of the most significant
players in the innovation field are business incubators in Latvia. This research study
underlines the role of evaluation of each stage of innovation processes. The authors offer
a new model for the evaluation of innovation processes stage by stage. This model allows
to identify the main problems that hinder innovation. This model allows to develop
concrete proposals for improving the innovative climate in the country. The research is
based on the authors’ conducted research as a part of scientific grant of Rezekne Academy
of Technologies „New product development process modeling and analysis in Latvia –
innovation barriers”. The main methods, that are used in this research were as follows:
content analysis, comparative analysis, synthesis, abstract and logical construction
methods.
Keywords: innovation, methods, R&D
JEL code: 0310,0320,C90
Introduction
New product development is the one of the key factors for progress
and competitive advantage in each country. Companies across the world
are faced with changes to both the production technology and service
organization. The product life cycle has never been so short as now,
therefore, new product development is one of the most important business
tasks. Using only the traditional methods of increasing competitiveness,
for example, cost reduction, it is not possible to remain on the market. Only
a consistent approach and the development of creative ideas are the
factors, which help a company to successfully operate. In any economy, a
new product or service development are essential for economic growth
and the welfare development vector. One of the possibilities for the

Journal of Social Sciences No 1(8) 117
development of new products in Latvia is the use of business incubators.
Innovation development in Latvia is insufficient. This problem has not
been established. There is the lack of sufficient quality methodology to
investigate the causes of this problem.
The aim of the research study is to develop a model for the assessment
of a new product development process.
To achieve this aim several tasks were defined:
• comparison different innovation measurement models;
• development a new model, which allows evaluating every stage
of the innovation process;
The research subject: the innovation measurement models.
The hypothesis of this research is the following: It is possible to create
innovation measurement model which allows to identify the main
problems that hinder innovation.
In order to achieve this objective, the authors conducted theoretical
studies, examining the existing innovation evaluation system, by using
content analysis, deductive, logical and comparison and others methods.
As a result, the authors worked out a new model for the assessment of
innovation processes step by step.
Research results
Latvia has a low innovation performance - one of the EU-28, which is
based on a small proportion of small innovative companies, investment in
research and development (R & D) activities and insufficient cooperation
among science, technology and innovation development organisations,
higher education and industry sectors. One of the most important public
support measures in this area is the Latvian Investment and Development
Agency (LIDA) operational programme “Entrepreneurship and
Innovation” 2.3.2.1. activity “Business incubators” funded by the European
Regional Development Fund (ERDF) (hereinafter – activity). These
activities within the tenderers (start-up companies until 2 years of age)
could receive business support services (advices and infrastructure
support) and specialised services (new product development consultancy,
design and prototyping services, laboratories, international marketing
services, design services, etc.), by using appropriate agreements with the
business incubator operators or / and the service providers. As part of the
overall activity until 31 December 2013, the aid was received by 493
companies, prototype development and technological advice and services
for new product development are among the most popular ones
(Reģionālo biznesa… 2014).

118 Latgale National economy research
The findings, related to the innovation process, approved -that
traditional models of innovation management are directed to new product
development that involves resource management, information and
knowledge for the development of market demand (Clark, 1992). Product
development is defined as the process of market information to create the
final product for commercial purposes (Clark, Fujimato, 1991). Other
authors defined the development of a new product as effective
organisational and management processes by consuming minimum time
and minimum cost to sell these products on a market (Wheelwright,
Cklark, 1992). While Cooper (Cooper et. al., 2008), noted that new product
development is a formal process with well-defined decision-making
criteria. A set of activities that begins with the market research and ends
with the production and sales of the product on the market (Ulrich,
Eppinger, 2004). The new product development process consists of
activities, which results in a new or redesigned product on the market.
This process consists of creation opportunities, then selection from these
opportunities and their implementation in a concrete product that is
offered to consumers (Loch, Kavadias, 2008). Innovation process
management is defined (What is…, 2016) as a systematic approach to
nurturing the creative capabilities of employees and creating a workplace
environment that encourages new ideas for workflows, methodologies,
services or products. Scott Berkun (Scott Berkun, 2013) has defined
‘innovation’ as follows: ‘Innovation is a significant positive change’ by
underlining that: ’It’s a result. It’s an outcome. It’s something you work
towards achieving on a project.’ Different researchers use distinctive
innovation measurement models, like the Diamond Model, the Funnel
Model, the Innovation Value Chain Model, e.t.c. Dalia Gamal (Dalia Gamal,
2011) summarized different innovation measurement models and their
respective focuses, and dimensions (see table 1).
The most applied model, which characterizes innovation, new
products, and technological development processes, is a NASA model. This
model is adopted by the European Space Agency and the European
Commission with minor changes. This approach is also used for the main
innovation policy instruments, for example, by implementing Horizont
2020, in innovation support competitions. This model foresees 10 stages
of technology readiness levels. They are as follows (Technology
readiness…, 2013):
TRL 0: idea;
TRL 1: basic research;
TRL 2: technology formulation;
TRL 3: applied research;
TRL 4: small scape prototype;

Journal of Social Sciences No 1(8) 119
TRL 5: large scale prototype;
TRL 6: prototype system;
TRL 7: demonstration system;
TRL 8: first of a kind commercial system;
TRL 9: full commercial application.
Table 1
Summarized comparison among different innovation measurement
models (Source: Dalia Gamal, 2011)
Model
Focus
Dimensions
Remarks
Diamond
Model
Innovation process
Enabling factors
Linkage
Strategy process
Organization
Linkage
Learning
Adequate when the
innova -tion process
on its infan-cy. It
highlights key
dimensions of the
innovation process as
well as its enabling
institutional factor
Funnel
Model
Technological
innovation
Product innovation
R&D process as the
core activity
Strategic thinking.
Portfolio management
& metrics
Research
Ideation
Insight
Targeting
Innovation
development
Market development
Selling
An adequate model
when
there is a due
innovation process in
the organization
Innovation
value
chain (IVC)
Idea Management
Output performance
Generation
Conversion Diffusion
knowledge acquisition
Building innovation
Commercializing
innovation
It emphasizes the
assessment
of the output of the
innovation
process
Oslo Manual
Innovation
Linkage
Output in certain
duration
Innovation
Linkage
Demand
Infrastructure
and institutional
framework Innovation
policies
Very beneficial when
considering country
level
international
comparisons
Innovation
Radar
Innovation output
performance
Offerings
Customers Processes
Marketing
It does not ensure the
sustainability of
innovation
process

120 Latgale National economy research
However, this model is incomplete because it does not include factors,
which characterise targeted interactions between a new product and a
market. In other words, the successful commercialisation of innovations
does not show in this model. This model just underlines the stages of the
technology development processes. B.Hicks, S.Culley, A.Larsson, T.Larsson
“A Methodology for Evaluating Technology Readiness during Product
Development-”, 2009, pointed to the shortcomings of this model and
suggested the TRL model has to be supplemented with columns, which
foreseen marketing and product implementation activities, see table 2.
Table 2
Product readiness levels and the product development process
(source: Hicks, et.al, 2009)
PRL
TRL
Marketing
Manufacturing
Other Functions
Develop- ment
phase
1
2
Target market
identified.
-
Business goals of
development
effort defined
Mission statement
2
3
Market seg-ments
defined.
Lead users& their
needs identified.
Competing pro-
ducts analysed.
Manufacturing
cost estimated
Production
feasibility assesed
Single concept
selected for futher
development
Project justified
economically
-IPR issues
investigated
Concept develop-
ment
3
4
Plan for product
options and
extended product
family formulated.
Make-or-Buy
analysis
performed.
Key suppliers
identified.
Final assembly
scheme designed.
-Support Make-or-
Buy analysis.
-Potential service
issues identified.
-System-Level
Design
4
5
Marketing plan
developed
Standard parts
identified.
Production pro-
cesses defined.
Tooling designed.
Long lead-time
tooling procured.
Quality assurance
processes defined.
-Control
documentation
issued.
-Detal design

Journal of Social Sciences No 1(8) 121
Table 2 continued
5
6
Promotion and
launch materials
developed.
Field testing
facilitated.
Supplier ‘ramp-
up’facilitated.
Fabrication and
assembly
processes refined
Commence work
force training
Quality assurance
processes refined.
-Sales plan
finalised.
-Regulatory
approval/certifica
tion obtained.
Testing and
refine-ment
6
7
7
8
8
9
Early ‘production
ramp-up’ products
placed with
preferred
customers.
Work fource trai-
ning completed.
Operation of
entire production
system
commenced.
-
Production Rump-
Up
9
9
Product
promotion.
Full production
Service & support
infrastructure.
Product launch
Table 3
Model for research of innovation processes
(Source: own research)
Nr.
Stage
Actions
Development
phase of
innovation
1
Idea
Basic research, Target market identified, Product
references and sketches develpment, Make-or-Buy
analysis performed, Market segments defined
Product concept
defined
2
Project
Technology formulation, Key suppliers identified,
Product technical project, Product Competitevness
defined, Small scape prototype - alfa prototype
Product detail
design
completed
3
Prototyping
Prototype validation in the real life environment –
beta prototype, Field testing facilitated. Standard
parts identified, Marketing plan developed,
Promotion and launch materials developed.
Final patern of
product
demonstrated
4
Production
Supplier ‘ramp- up’ facilitated.
Fabrication and assembly processes refined
Tehnology, equipment and tools refined,
Promotion and launch materials developed.
Sales plan finalised. Regulatory approval/
certification obtained. Product demonstration.
Sales with preferred customers.
Product
production
demonstrated
5
Sale
Work force training completed.
Operation of the entire production system
commenced. Aftersales serive provided.
Advertisment.
Service &
support
developed

122 Latgale National economy research
The examination of above mentioned models allowed to work out a
new model for research of innovation processes. The authors offer the new
model, divided into 5 stages (see Table 3).
Each stage is described taking into account the product design
activities, the processes development activities, and the marketing
activities. In addition, the phase of the innovation is determined in each
stage.
The proposed model allows evaluating every stage of the innovation
process, to identify the main problems that hinder innovation. This model
allows developing concrete proposals for improving the innovative
climate in the country. The next actions of the authors will draw attention
to the practical research of innovation processes in firms, which are
operated in the business incubators in Latvia, using the proposed model.
Conclusions and suggestions
New product development is the one of the key factors for progress
and competitive advantage in each country. Latvia has a low innovation
performance in comparison with other EU countries because of the lack of
innovative companies, lack of investments in research and development,
insufficient cooperation among science, higher education and industry
sectors.
Different researchers use distinctive innovation measurement
models, like the Diamond Model, the Funnel Model, the Innovation Value
Chain Model, e.t.c. More applied model, which characterizes innovation,
new products, and technological development processes, is a NASA model.
This model is adopted by the European Space Agency and the European
Commission with minor changes. The authors of this research study offer
an important step in the solution to this problem – to perform an analysis
of innovation processes stage by stage. The authors propose a new model,
which allows evaluating every stage of the innovation process, to identify
the main problems that hinder innovation. This model allows developing
concrete proposals for improving the innovative climate in the country.
The research was elaborated with the financial assistance of Rezekne Academy of
Technologies provided through a research grant for the “New product development
process modeling and analysis in Latvia – innovation barriers”.

Journal of Social Sciences No 1(8) 123
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124 Latgale National economy research
JAUNA PRODUKTA ATTĪSTĪBAS PROCESA IZPĒTE
Irēna SILINEVIČA1, Māris IGAVENS2, Liene AMANTOVA-SALMANE3
1 Dr.sc.ing., Rēzeknes Tehnoloģiju akadēmija, profesore
2Mg.soc.sc., Rēzeknes Tehnoloģiju akadēmija, zinātniskais asistents
3Mg. soc.sc., Rēzeknes Tehnoloģiju akadēmija, lektore
Kopsavilkums
Jaunu produktu attīstība ir galvenais faktors ekonomikas konkurētspējas
priekšrocības attīstībā. Produktu dzīves cikls gadu pēc gada arvien vairāk saīsinās. Tas
nozīmē, ka inovācija kļūst par galveno ekonomisko dzinējspēku. Latvijā ir zems
inovatīvo sniegumu salīdzinājumā ar citām ES valstīm, jo trūkst inovatīvu uzņēmumu,
trūkst ieguldījumu pētniecībā un attīstībā, nepietiekama sadarbība starp augstākās
izglītības, zinātnes un rūpniecības nozarēs.
Šajā pētījumā uzsvērta inovāciju procesu izvērtēšanas nozīme jaunu produktu
attīstības veicināšanā. Dažādi pētnieki izmanto atšķirīgu inovāciju novērtēšanas
modeļus, kā ‘Diamond’, piltuves modeli, inovāciju ‘Value Chain’ modeli, utt. Pētījumā
šie modeļi tiek salīdzināti. Vairāk piemērots modelis inovācijām, jauniem produktiem
un tehnoloģijas attīstības procesiem ir NASA modelis, ko, ar nelielām izmaiņām,
izmanto Eiropas Kosmosa aģentūras un Eiropas Komisija.
Autori piedāvā jaunu inovāciju procesa izvērtēšanas modeli soli pa solim. Šis
modelis ļauj identificēt galvenās problēmas, kas traucē jauninājumiem, kā arī izstrādāt
konkrētus priekšlikumus, lai uzlabotu inovatīvu klimatu valstī.
Galvenās metodes, kas tiek izmantotas šajā izpētē ir: satura analīze, salīdzinošā
analīze, sintēze, abstraktās un loģiskās konstrukcijas metodes. Piedāvātajā rakstā tiek
atspoguļoti autoru veiktie pētījumi Rēzeknes Tehnoloģiju akadēmijā realizētajā
zinātniskā granta „Jaunu produktu attīstības procesu modelēšana un analīze Latvijā –
inovācijas barjēras” ietvaros.
Atslēgas vārdi: inovācijas, metodes, P&A.