Some of our telecom customers have expressed interest in undertaking the PDMA (Product Development and Management Association) certification exam to qualify as NPDP (New Product Development Professional), which we strongly recommend and endorse.
Some of our trainers are already qualified NPDPs and have kindly compiled the below study aids based on the newly revised NPDP Body of Knowledge (BoK). The NPDP BoK combines all preparation materials needed for the revised exam into a single publication – most recent version was published in May 2017.
These study aids are not intended to replace full training courses or NPDP BoK but are there to provide a high level overview of the key study topics and assist in preparation.
For proper self-study preparation, we strongly recommend you purchase your own copy of the full NPDP BoK which is available on Amazon at: https://www.amazon.com/Product-Development-Management-Body-Knowledge/dp/1544893388/ref=sr_1_3?ie=UTF8&qid=1492455269&sr=8-3&keywords=Product+Development+and+Management+Body+of+Knowledge
In terms of the exam – it’s 3.5 hours long and consists of 200 multiple choice questions with a pass rate of 75% or 150 questions covering the following topics:
- Product Strategy
- Portfolio Management
- NPD Processes
- Culture, Organisation and Teams
- Tools and Metrics
- Market Research
- Product Lifecycle Management
Few Tips:
- Prepare thoroughly: exam is very long and covers all the topics in great depth.
- The way some questions are written requires in-depth understanding in order to answer the questions (not only high level understanding).
- Take your time with the answers – you have just over a minute per question so think about the answer before you click.
- If you are not 100% sure try to use the elimination process as an aid – ie. start with the most unlikely answer and eliminate it so that the list of possible correct answers is reduced.
Study Notes:
- Strategy
78% of best companies integrated strategy with prod development programs vs 54% for rest.
Porter: strategy defines organisations unique position and says how resources should be used to achieve competitive advantage
Hierarchy of strategy:
- Mission statement,
- Corporate strategy,
- Innovation strategy (within it we have NPD portfolio strategy & project strategy),
- Functional department’s strategy.
Innovation strategy should provide alignment, prioritisation and evolution of trade-offs.
Organisational identity must be: central (all company), enduring and distinguishing (differentiation).
Business strategy impact on prod development: define business goals, define role for prod development, define differentiation & positioning focus, project portfolio selection & resources allocation.
Porter strategy framework:
- Cost leadership: broad market focus, economy of scale, low cost unit, no frills, optimised supply chain / low prod dev funding <0.3% of sales, minor product changes & cost reductions, tech for systems improvements
- Differentiation: broad market, prod quality, loyalty, higher margin, innovation is req. / high prod dev funding 2-20% of sales, customer intimacy, long term dev, use tech. for prod. functionality
- Segmentation: narrow market, deep cust understanding, higher margin, high prod dev funding, customer intimacy, lead user groups, use tech. for prod. Functionality
Miles and Snow strategic framework:
Prospector: first to market, growth, risk taking, flexible and value speed to market
Analyser: fast follower, often better products, balance priorities of 1 & 3
Defender: maintain niche in stable market, risk adverse, deep core capability focus
Reactor: respond only under duress, no clear strategy
Disruptive innovation (Christensen): specific needs of segment, special features, over time features improved.
Pisano innovation landscape map:
- Routine,
- Disruptive (new bus model),
- Radical (mainly technology driven),
- Architectural (combine bus model and technology).
Innovation support strategies:
- Platform: common elements across multiple products, rapid dev., long-term view, operational efficiencies, can create differentiation
- Technology: technology S curve (embryonic, growth, maturity), technology roadmaps
- Marketing: business goals -> marketing strategy -> marketing mix PPPP -> marketing plan/tasks; core product, tangible features, augmented features; value proposition; BSG portfolio classification: stars, question marks, cash cows, dogs; product roadmap
- IP: patents, copyright, trademark, plant variety rights, trade secrets / reactive, proactive, strategic, optimised approaches
- Capability: internal, external ( incl. open innovation), combination
- Portfolio Management
Doing right projects and doing projects right. Portfolio management is about doing right projects.
Goals of portfolio management: value maximisation, balance, strategic alignment, pipeline/resources balance, sufficiency (meet $ goals).
Types of projects (strategic buckets): breakthrough/radical/disruptive projects, platform projects, derivative projects, support/incremental projects.
Strategic alignment (Cooper): strategic fit, strategic contribution, strategic priorities.
Copper’s 3 methods of project selection: top-down (% allocated to above buckets), bottom-up (criteria/evaluation), combination
3 key success factors: unique/superior product, targeting an attractive market, leveraging organisational strengths
Others incl: strategic alignment, technical feasibility, level or risk, regulatory impact, time to market
Non-financial evaluation: pass/fail evaluation, scoring evaluation
Financial evaluation: benefits of returns, costs (fixed/variable), capital costs
Key indicators: NPV, ITT, ROI, Payback period
Balanced portfolio: key dimensions of criteria (eg. product newness and market newness), allocating prod dev opportunities, ongoing management
Use of Bubble Diagrams to represent portfolios eg. 1. low/high risk vs. low/high reward, capital investment size (by growing the size of bubble circle), 2. Market risk vs. tech risk 3. Market newness vs. Technology newness
Resource allocation issues: too many projects, poor planning, projects competing, delays, priority changes, lack of support, fire fighting
Resource allocation benefits: better project flow/less delays, higher output/more launches, higher employee satisfaction, effective portfolio management
Portfolio resource allocation methods:
- Based on project resources demand (prioritize projects, develop project plans, allocate resources, determine cumulative resources for all projects, match resources demand, if overload: reprioritise or source additional resources)
- Based on new business goals (new products goal, estimate returns, prioritize projects based on business goals and financial returns, continue with project planning as in 1.)
- Resource allocation as business process (supply/demand). 4 roles in resource planning process: project leader, resource owner, resource planner, product planner
- Tools for resource allocation: requirements input form to capture demand and consolidate supply
- NPD Process
If uncertainty is high keep the stakes low (historic new product failure rate of over 50%)
Success rate related to product development practices and process (best 82% success rest 59%).
Reduce risks as the project progresses and costs increase.
Fuzzy front end includes: idea generation, initial concept development and high level business case.
Prod dev process should not be uniformly designed process for all developments – must be flexible.
Booz & Co process: Exploration, Screening, Business evaluation, Development, Testing, Commercialization.
Stage-Gate (comprehensive & holistic idea to launch system): Discovery, Scoping, Business case, Development, Testing & validation, Launch
Stage includes: Activities, Integrated Analysis, Deliverables
Gate includes: Deliverables, Criteria, Outputs (decision: go/kill/hold/recycle; path forward: approved project plan, date, deliverables for next gate)
Benefits: adds discipline, emphasis on quality, transparent, adaptable
Limitations: can be bureaucratic, perceived as rigid/costly, stifling creativity
Integrated Product Development (IPD) evolved from concurrent engineering, employs an integrated team from multifunctional disciplines to develop new products with strong learning and CI component.
Concurrent engineering: All elements of product to be considered in early design and all design activities to occur at the same time. Seen as replacement to waterfall model.
Waterfall process: requirements, design, implementation, verification, maintenance.
Lean: developed on the back of Toyota’s Production System (TPS) and designed to remove waste from processes & improve productivity & operational efficiency.
Lean goals: profit per hr, efficient utilisation, faster time to market, more projects, more satisfied customers, fewer wasteful activities
Sources of waste: chaotic environment, lack of resource, lack of prioritization, poor communication, poor requirements, over-design, to many meetings & email overload.
Lean core concepts: knowledge growth, lean flow, manage, improve and CI.
Agile: iterative approach, self-organising teams, incremental iterative work cadences – sprints. Designed to execute tasks fast & make changes quickly.
Elements: product backlog, scrum, sprint, product owner, scrum master, scrum team.
Governance questions: tailored prod dev process in place, measurable targets, process metrics, authority/responsibility, timely decision making, regular reviews
Product Innovation Charter: background (purpose, scope, role of team, constrains, state of technology, market analysis), focus arena (target market, key technologies, SWOT), goals/objectives (market share profit, sales, budget, timelines), special guidelines (working relationships, project reporting, expenditure responsibilities, external agencies, time of launch).
- Culture, Organisation and Teams
Culture: shared beliefs, values, assumptions and expectations of people in organisation.
Climate: set of properties of work environment (leadership, communication, responsibility, opportunity, rewards)
Success culture: clear goals, try & fail, clear performance objectives, innovation culture, effective communication, constructive conflict, rewarding work
Management roles in product development:
- Strategy: corporate vision/mission, business strategy, functional strategies, product strategies, innovation str.
- Process: process champion (establish), process owner (results), process manager (flow), project manager.
- Organisation & teams: establish climate/culture, implement practices, develop team
- Product: CPO, SVP, Group Prod Mangr.
Product management (mother): discovery and definition of scope
Project management (midwife): execution and delivery of scope
High performing team: strategic alignment, engagement, empowerment.
Team formation steps: forming, storming, norming, performing, adjourning.
Impact on teams:
- Internal (culture, structure, process, people, leadership, change management & collaboration)
- External (reputation, collaborations, competitors, demands…)
Cross-functional teams & matrix structures:
- Functional (optimal use of resources, expert depth but rigid and bit task oriented)
- Lightweight (nominal project team lead with little power, mix of project & functional activities priority)
- Heavyweight (project has priority over functional activities, project lead has authority
- Autonomous (tiger teams, lead full responsibility over staff)
- Tools and Metrics
Ideation Tools:
SCAMPER (Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, Reverse)
Brainstorming
Mindmapping (imagine connections btw ideas)
Storyboarding (eg story of consumer product use)
Brain writing (write idea, pass to another person to add etc)
Six thinking hats: White (facts), Yellow (benefits), Black (problems), Red (emotions), Green (ideas), Blue (process)
SWOT (strength, weaknesses, opportunities, threats)
PESTLE (political, economic, social, technological, legal, environmental)
Delphi (forecasting via several rounds of questionnaires to experts)
Divergent thinking: seeks alternatives & new ways of thinking for innovation.
Convergent thinking: assumes correct way and is conservative. Brings data and logic to find solutions.
Feasibility analysis: market potential, financial potential, technical capability, marketing capability, manufacturing capability, intellectual property, regulatory implications and investments required)
Financial analysis:
Sales forecasting: ATAR model (awareness-trial-availability-repeat) – similar to MBM market share index tool.
Cost elements: overheads, fixed costs, variable costs, capital costs (CAPEX); working capital includes all 3.
Ex-factory price (costs plus margin excl. transport etc) -> wholesale price -> retail price
ROI measures: payback period, NPV, IRR
FV future value = original amount x (1+interest rate)^number of periods eg. 100*(1+0.05)^3
PV (present value) =
NPV is the cumulative PV of returns minus the cumulative value of PV costs.
IRR – is the rate at which NPV has zero value.
Product concept (features, benefits) -> design specifications (quantify, units, values) -> technical specifications
Design thinking: Identify (discover via customer insights & define design specification), Solve (create concept to prototype & evaluate and get feedback for improvement
Quality function deployment (QFD) via House of Quality
- Identify customer attributes / needs (whats)
- Identify design attributes / measurable technical characteristics (hows)
- Relate customer and design attributes (no relationship, weak, moderate, strong)
- Evaluate competing products and add the key market selling points
- Evaluate design attributes & set targets
- Select design attributes to be deployed
DFSS (Design for Six Sigma) reduce variation via process improvement.
Six Sigma DMAIC – define, measure, analyse, improve, control.
Six Sigma IDOV – identify, design, optimise, validate.
TRIZ: problem solving method based on data, logic, patterns & repeatable solutions not intuitive creativity.
TRIZ activities: functionality (what causes the change), resources, ideality (benefits), contradictions, trends
Project management:
5 Steps: initiating, planning, executing, monitor/control, closing
Triple constraint: scope, schedule & budget.
Critical path: shortest time project can be completed without slack
Schedule compression: add resources/costs & do tasks in parallel
Project budget preparation: bottom up, parametric (infer cost from past projects), historical (specific data from past projects), company specific
Risk management: planning, identification, qualitative analysis, quantitative analysis, response planning (avoid, transfer, mitigate & accept), motoring/control.
Project risks: resource availability, finance availability, resource capacity, reliability of info, scope definition
Product risks: harm customers, fail to deliver benefits, fail regulatory req, not meet customer expectations
Decision trees method & tool
Performance metrics must be: linked to strategy and form a base for CI.
Common metrics: vitality index (% of sales from new prod), R&D as % of revenue, break even time, # of patents, # of new products over time.
Improvement references
Comparative performance assessment study (CPAS), journal of product innovation management (JPIM), presentations from outstanding corporate innovators
Key success factors:
Doing right things: fewer projects, first-to-market strategy, establish global strategy, monitor new tech, importance of IP, clear portfolio mngm strategy, formal idea generation process
Doing things right: use tools, qualitative market research, use social media for cust feedback info, use formal NPD system/process, involve senior execs, focus on team development
Org Culture: involve senior exec, use cross-function teams, recognition & rewards sys, support external collaboration
Success metrics steps:
Form prod dev learning team, critically evaluate current management against success factors, identify factors to improve
- Market Research
Voice of Customer: range of techniques to capture feedback/requirements/needs from customers.
6 key steps in market research: define problem, define level of accuracy, collect data, analyse and interpret, reach a conclusion, implement.
Secondary research: based on information from studies previously performed by others (market statistics, trade fairs, research publications…)
Primary research: involving collection of information directly by you and specifically for your organisation
Qualitative & Quantitative methods.
Statistical basis of quantitative method: margin of error (confidence interval), confidence level, variance
Sampling methods: random sampling, stratified sampling, cluster sampling.
Focus Groups: qualitative method, 8-12 participants, good to identify opportunities (ideas), needs, value prop, product refinements
Customer site visits: qualitative method, good to identify ideas, customer needs and prod refinements.
Ethnographic research: qualitative method for study of customers in relation to their environment. Field based research done: on-site (where ever customer used the product) or in-home.
Social media as market feedback tool.
Surveys: qualitative and quantitative.
Consumer panels: trained panels and un-trained panels. Good to confirm if customers like the product, provide direction for product improvement, instrument for objective measure
Alpha testing: mainly done by developers to confirm usability.
Beta testing: done by number of end users before delivery. Feedback creates change requests & confirms product compatibility.
Gamma test: specific requirement test done by end customers.
Test marketing / market testing:
- Sales wave research (free offer of product and records satisfaction)
- Simulated test marketing (30-40 customers in test campaign to check promotional materials effectiveness
- Controlled test marketing (panel of stores is selected to launch and sales are measured)
- Test market (specific region or cities to launch)
Multivariate analysis:
Factor analysis: to test relationship btw variables (eg product feature impact on preference)
Multi dimensional scaling (MDS): visual representation of product similarities by customers on X dimensions
Conjoint analysis: determine product attributes most influential on decision making
Crowd-sourcing: enlisting info via large scale audience via internet (eg. Lego for new toy ideas)
Big Data: volume, velocity, variety
Opportunity identification tools (mainly qualitative): secondary research, social media, focus groups, customer site visits, lead user groups, ethnography, multivariate tools
Opportunity evaluation (still mainly qualitative): secondary res, focus groups, customer site visits, surveys
Concept development (still qualitative): focus groups, lead user group, online discussion forums, customer site visits
Prototyping & testing: (qualitative & quantitative): focus groups, lead user, consumer panels, alpha test
Pre-Launch (quantitative): best test, market testing
- Life Cycle Management
Product Lifecycle (PLC) stages after development: introduction, growth, maturity, decline.
Crossing the chasm – making transition from early adopters market to mainstream.
Go-to-market: old school (linear process of What? Who? How? Where?)
New School approach: iterative 8 step process incl:
What: 1. Value Prop 2. Whole solution
Who: 3. Market segmentation 4. Target segments 5. Beachhead strategy (start from highest potential segment)
How: 6. Channels
Where: 7. Promotion plans 8. Messaging
Sustainable product innovation.
4 stages of maturity: Beginning, Improving, Succeeding, Leading
Circular economy: 1. Preserve natural capital 2. Optimise resources & yields 3. Systems effectiveness
Triple bottom line: financial, social & environmental (or 3Ps: profit, people, planet)
Greenwashing: spending more money on green ads than actually implementing green business practices
LCA (life cycle assessment) – scientific method of analysis of environmental impact
EPD (environmental product declaration) – report on environmental product impact based on LCA
