NPDP Certification Preparation Workshop
PDMA Glossary of New Product Development Terms
(from PDMA web site 3/19/08)
? Product Development & Management Association, 2006, reprinted with permission.
Acknowledgment: Some of the definitions for terms in this glossary have been adapted from the glossary in New Products Management, by C. Merle Crawford and C. Anthony Di Benedetto. Terms,
phrases, and definitions generously have been contributed to this list by the PDMA Board of Directors, the design teams for the PDMA Body of Knowledge, the editors and authors of The PDMA ToolBooks 1
and 2 for New Product Development (John Wiley & Sons, 2002, 2004), the editors and authors of The
PDMA Handbook of New Product Development, both 1st and 2nd editions (John Wiley & Sons, 1996,
2004) and several other individuals knowledgeable in the science, skills and art of new product development. We thank all of these volunteer contributors for their continuing support. Accidental Discovery: New designs, ideas, and developments resulting from unexpected insight, which can be obtained either internal or external to the organization.
Adoption Curve: The phases through which consumers or a market proceed in deciding to adopt a new product or technology. At the individual level, each consumer must move from a cognitive state (becoming aware of and knowledgeable about), to an emotional state (liking and then preferring the product) and into a cognitive, or behavioral state (deciding and then purchasing the product). At the market level, the new product is first purchased by the innovators in the marketplace, which are generally thought to constitute about 2.5% of the market. Early adopters (13.5% of the market) are the next to purchase, followed by the early majority (34%), late majority (34%) and finally, the laggards (16%). Affinity Charting: A "bottom-up" technique for discovering connections between pieces of data. An individual or group starts with one piece of data (say, a customer need). They then look through the rest of the data they have (say, statements of other customer needs) to find other data (needs) similar to the first, and place it in the same group. As they come across pieces of data that differ from those in the first group, they create a new category. The end result is a set of groups where the data contained within a category is similar, and the groups all differ in some way. See also Qualitative Cluster Analysis. Alliance: Formal arrangement with a separate company for purposes of development, and involving exchange of information, hardware, intellectual property, or enabling technology. Alliances involve shared risk and reward (e.g., co-development projects). (S ee also Chapter 11 of The PDMA HandBook 2nd
Alpha Test: Pre-production product testing to find and eliminate the most obvious design defects or deficiencies, usually in a laboratory setting or in some part of the developing firm’s regular operations,
although in some cases it may be done in controlled settings with lead customers. See also beta test and gamma test.
Alpha Testing: A crucial "first look" at the initial design, usually done in-house. The results of the Alpha test either confirm that the product performs according to its specifications or uncovers areas where the product is deficient. The testing environment should try to simulate the conditions under which the product will actually be used as closely as possible. The Alpha test should not be performed by the same people who are doing the development work. Since this is the first "flight" for the new product, basic questions of fit and function should be evaluated. Any suggested modifications or revisions to the specifications should be solicited from all parties involved in the evaluation and considered for inclusion. Since the testing is done in-house, special care must be taken to remain as objective as possible.
Analytical Hierarchy Process (AHP): A decision-making tool for complex, multi-criteria problems where
both qualitative and quantitative aspects of a problem need to be incorporated. AHP clusters decision elements according to their common characteristics into a hierarchical structure similar to a family tree or affinity chart. The AHP process was designed by T.L. Saaty.
Analyzer: A firm that follows an imitative innovation strategy, where the goal is to get to market with an equivalent or slightly better product very quickly once someone else opens up the market, rather than to be first to market with new products or technologies. Sometimes called an imitator or a "fast follower." Anticipatory Failure Determination (AFD): A failure analysis method. In this process, developers start
from a particular failure of interest as the intended consequence and try to devise ways to assure that the failure always happens reliably. T hen the developers use that information to develop ways to better identify steps to avoid the failure.
Applications Development: The iterative process through which software is designed and written to
meet the needs and requirements of the user base or the process of enhancing or developing new products.
Architecture: See "product architecture."
As-Is-Map: A version of a process map depicting how an existing process actually operates. This may differ substantially from documented guidelines.
Asynchronous Groupware: Software used to help people work as groups, but not requiring those
people to work at the same time.
Attribute Testing: A quantitative market research technique in which respondents are asked to rate a detailed list of product or category attributes on one or more types of scales such as relative importance, current performance, current satisfaction with a particular product or service, for the purpose of ascertaining customer preferences for some attributes over others, to help guide the design and development process. Great care and rigor should be taken in the development of the list of attributes, and it must be neither too long for the respondent to answer comfortably or too short such that it lumps too many ideas together at too high a level.
Audit: When applied to new product development, an audit is an appraisal of the effectiveness of the processes by which the new product was developed and brought to market. (see Chapter 14 of The
PDMA ToolBook 1)
Augmented Product: The Core Product, plus all other sources of product benefits, such as service, warranty, and image.
Autonomous Team: A completely self-sufficient project team with very little, if any, link to the funding organization. Frequently used as an organizational model to bring a radical innovation to the marketplace. Sometimes called a "tiger" team.
Awareness: A measure of the percent of target customers who are aware that the new product exists. Awareness is variously defined, including recall of brand, recognition of brand, recall of key features or positioning.
Back-up: A project that moves forward, either in synchrony or with a moderate time-lag, and for the same marketplace, as the lead project to provide an alternative asset should the lead project fail in development. A back-up has essentially the same mechanism of action performance as the lead project. Normally a company would not advance both the lead and the back-up project through to the market place, since they would compete directly with each other.
Balanced Scorecard: A comprehensive performance measurement technique that balances four
performance dimensions: 1. Customer perceptions of how we are performing; 2. Internal perceptions of how we are doing at what we must excel at; 3. Innovation and learning performance; 4. Financial performance.
Baton-Passing Process: See Relay-Race Process.
Benchmarking: A process of collecting process performance data, generally in a confidential, blinded fashion, from a number of organizations to allow them to assess their performance individually and as a whole.
Benefit: A product attribute expressed in terms of what the user gets from the product rather than its physical characteristics or features. Benefits are often paired with specific features, but they need not be. Best Practice: Methods, tools or techniques that are associated with improved performance. In new product development, no one tool or technique assures success; however a number of them are associated with higher probabilities of achieving success. Best practices likely are at least somewhat context specific. Sometimes called "effective practice."
Best Practice Study: A process of studying successful organizations and selecting the best of their actions or processes for emulation. In new product development it means finding the best process practices, adapting them and adopting them for internal use. (See Chapter 36 in the PDMA HandBook
2nd Edition, Chapter 33 in The PDMA HandBook, Griffin, "PDMA Research on New Product
Development Practices: Updating Trends and Benchmarking Best Practices," JPIM, 14:6, 429-458,
November, 1997, and "Drivers of NPD Success: The 1997 PDMA Report," PDMA, October, 1997) Beta Test: An external test of pre-production products. The purpose is to test the product for all functions in a breadth of field situations to find those system faults that are more likely to show in actual use than in the firm’s more controlled in-house tests before sale to the general market. See also field test. Beta Testing: A more extensive test than the Alpha, performed by real users and customers. The purpose of Beta testing is to determine how the product performs in an actual user environment. It is critical that real customers perform this evaluation, not the firm developing the product or a contracted testing company. As with the Alpha test, results of the Beta Test should be carefully evaluated with an eye toward any needed modifications or corrections.
Bill of Materials (BOM): A listing of all subassemblies, intermediate parts, and raw materials that go into a parent assembly, showing the quantity of each required to make an assembly.
Bowling Alley: An early growth stage strategy which emphasizes focusing on specific niche markets, building a strong position in those markets by delivering clearly differentiated "whole products" and using that niche market strength as leverage point for conquering conceptually neighboring niche markets. Success in the Bowling alley is predicated on building product leadership via customer intimacy.
Brainstorming: A group method of creative problem-solving frequently used in product concept generation. There are many modifications in format, each variation with its own name. The basis of all of these methods uses a group of people to creatively generate a list of ideas related to a particular topic. As many ideas as possible are listed before any critical evaluation is performed. (See Chapters 16 and 17 in The PDMA HandBook 2nd Edition.)
Brand: A name, term, design, symbol, or any other feature that identifies one seller’s good or service as
distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item,
a family of items, or all items of that seller.
Brand Development Index (BDI): A measure of the relative strength of a brand’s sales in a geographic
area. Computationally, BDI is the percent of total national brand sales that occur in an area divided by the percent of U.S. households that reside in that area.
Breadboard: A proof-of-concept modeling technique that represents how a product will work, but not how a product will look.
Break-even Point: The point in the commercial life of a product when cumulative development costs are recovered through accrued profits from sales.
Business Analysis: An analysis of the business situation surrounding a proposed project. Usually includes financial forecasts in terms of discounted cash flows, net present values or internal rates of returns.
Business Case: The results of the market, technical and financial analyses, or up-front homework. Ideally defined just prior to the "go to development" decision (gate), the case defines the product and project, including the project justification and the action or business plan. (See Chapter 21 of The PDMA
HandBook 2nd Edition).
Business Management Team: Top functional managers and business unit head who work together
throughout the design of the decision-flow component of a stage-gate process.
Business-to-Business: Transactions with non-consumer purchasers such as manufacturers, resellers (distributors, wholesalers, jobbers and retailers, for example) institutional, professional and governmental organizations. Frequently referred to as "industrial" businesses in the past.
Buyer: The purchaser of a product, whether or not he or she will be the ultimate user. Especially in business-to-business markets, a purchasing agent may contract for the actual purchase of a good or service, yet never benefit from the function(s) purchased.
Buyer Concentration: The degree to which purchasing power is held by a relatively small percentage of the total number of buyers in the market.
Cannibalization: That portion of the demand for a new product that comes from the erosion of the demand for (sales of) a current product the firm markets. (See Chapter 34 in The PDMA HandBook 2nd
Capacity Planning: A forward-looking activity that monitors the skill sets and effective resource capacity of the organization. For product development, the objective is to manage the flow of projects through development such that none of the functions (skill sets) creates a bottleneck to timely completion. Necessary in optimizing the project portfolio.
Category Development Index (CDI): A measure of the relative strength of a category's sales in a
geographic area. Computationally, it is the percent of total national category sales that occur in an area divided by the percent of U.S. households in that area.
Centers of Excellence: A geographic or organizational group with an acknowledged technical, business, or competitive competency.
Certification: A process for formally acknowledging that someone has mastered a body of knowledge on a subject. In new product development, the PDMA has created and manages a certification process to become a New Product Development Professional (NPDP).
Champion: A person who takes a passionate interest in seeing that a particular process or product is fully developed and marketed. This informal role varies from situations calling for little more than stimulating awareness of the opportunity to extreme cases where the champion tries to force a project past the strongly entrenched internal resistance of company policy or that of objecting parties. (see Chapter 5 in The PDMA ToolBook 1st Edition.)
Change Equilibrium: A balance of organizational forces that either drives or impedes change.
Charter: A project team document defining the context , specific details, and plans of a project. It includes the initial business case, problem and goal statements, constraints and assumptions, and preliminary plan and scope. Periodic reviews with the sponsor ensure alignment with business strategies. (see also Product Innovation Charter)
Checklist: A list of items used to remind an analyst to think of all relevant aspects. It finds frequent use as a tool of creativity in concept generation, as a factor consideration list in concept screening, and to ensure that all appropriate tasks have been completed in any stage of the product development process. Chunks: The building blocks of product architecture. They are made up of inseparable physical elements. Other terms for chunks may be modules or major subassemblies.
Classification: A systematic arrangement into groups or classes based on natural relationships. Clockspeed: The evolution rate of different industries. High clockspeed industries, like electronics, see multiple generations of products within short time periods, perhaps even within 12 months. In low clockspeed industries, like the chemical industry, a generation of products may last as long as 5 or even 10 years. It is believed that high clockspeed industries can be used to understand the dynamics of change that will in the long run affect all industries, much like fruit flies are used to understand the dynamics of genetic change in a speeded-up genetic environment, due to their short life spans. Cognitive Modeling: A method for producing a computational model for how individuals solve problems and perform tasks, which is based on psychological principles. The modeling process outlines the steps a person goes through in solving a particular problem or completing a task, which allows one to predict the time it will take or the types of errors an individual may make. Cognitive models are frequently used to determine ways to improve a user interface to minimize interaction errors or time by anticipating user behavior.
Cognitive Walkthrough: Once a model of the steps or tasks a person must go through to complete a task is constructed, an expert can role play the part of a user to cognitively "walk through" the user’s
expected experience. Results from this walk-through can help make human-product interfaces more intuitive and increase product usability.
Collaborative Product Development: When two firms work together to develop and commercialize a
specialized product. The smaller firm may contribute technical or creative expertise, while the larger firm may be more likely to contribute capital, marketing, and distribution capabilities. When two firms of more equal size collaborate, they may each bring some specialized technology capability to the table in developing some highly complex product or system requiring expertise in both technologies. Collaborative product development has several variations. In customer collaboration, a supplier reaches out and partners with a key or lead customer. In supplier collaboration, a company partners with the provider(s) of technologies, components, or services to create an integrated solution. In collaborative contract manufacturing, a company contracts with a manufacturing partner to produce the intended product. Collaborative development (also known as co-development) differs from simple outsourcing in its levels of depth of partnership in that the collaborative firms are linked in the process of delivering the final solution to the intended customer.
Co-location: Physically locating project personnel in one area, enabling more rapid and frequent decision-making and communication among them.
Commercialization: The process of taking a new product from development to market. It generally includes production launch and ramp-up, marketing materials and program development, supply chain development, sales channel development, training development, training, and service and support development. (See Chapter 30 of The PDMA HandBook 2nd Edition).
Competitive Intelligence: Methods and activities for transforming disaggregated public competitor information into relevant and strategic knowledge about competitors’ position, size, efforts and trends.
The term refers to the broad practice of collecting, analyzing, and communicating the best available information on competitive trends occurring outside one’s own company.
Computer-Aided Engineering (CAE): Using computers in designing, analyzing and manufacturing a
product or process. Sometimes refers more narrowly to using computers just at the engineering analysis stage.
Computer-Aided Design (CAD): A technology that allows designers and engineers to use computers for their design work. Early programs enabled 2-dimensional (2-D) design. Current programs allow designers to work in 3-D (3 dimensions), and in either wire or solid models.
Computer-Enhanced Creativity: Using specially-designed computer software that aids in the process of recording, recalling and reconstructing ideas to speed up the new product development process. Concept: A clearly written and possibly visual description of the new product idea that includes its primary features and consumer benefits, combined with a broad understanding of the technology needed. Concept Generation: The processes by which new concepts, or product ideas, are generated.
Sometimes also called idea generation or ideation. (See Chapters 15 and 17 in The PDMA HandBook
Concept Optimization: A research approach that evaluates how specific product benefits or features contribute to a concept’s overall appeal to consumers. Results are used to select from the options investigated to construct the most appealing concept from the consumer’s perspective.
Concept Screening: The evaluation of potential new product concepts during the discovery phase of a product development project. Potential concepts are evaluated for their fit with business strategy, technical feasibility, manufacturability, and potential for financial success.
Concept Statement: A verbal or pictorial statement of a concept that is prepared for presentation to consumers to get their reaction prior to development.
Concept Study Activity: The set of product development tasks in which a concept is given enough examination to determine if there are substantial unknowns about the market, technology or production process.
Concept Testing: The process by which a concept statement is presented to consumers for their reactions. These reactions can either be used to permit the developer to estimate the sales value of the concept or to make changes to the concept to enhance its potential sales value. (See Chapter 6 in The
PDMA HandBook 2nd Edition)
Concurrency: Carrying out separate activities of the product development process at the same time rather than sequentially.
Concurrent Engineering (CE): When product design and manufacturing process development occur
concurrently in an integrated fashion, using a cross-functional team, rather than sequentially by separate functions. CE is intended to cause the development team to consider all elements of the product life cycle from conception through disposal, including quality, cost, and maintenance, from the project’s outset. Also
called simultaneous engineering. (See Chapter 30 of The PDMA HandBook 1st Edition.)
Conjoint Analysis: Conjoint analysis is a market research technique in which respondents are systematically presented with a rotating set of product descriptions, each of which contains a rotating set of attributes and levels of those attributes. By asking respondents to choose their preferred product and/or to indicate their degree of preference from within each set of options, conjoint analysis can determine the relative contribution to overall preference of each variable and each level. The two key advantages of conjoint analysis over other methods of determining importance are: 1) the variables and levels can be either continuous (e.g. weight) or discreet (e.g. color), and 2) it is just about the only valid market research method for evaluating the role of price, i.e. how much someone would pay for a given feature (See Chapter 18 of The PDMA HandBook 2nd Edition).
Consumer: The most generic and all-encompassing term for a firm’s targets. The term is used in either
the business-to-business or household context and may refer to the firm’s current customers, competitors’
customers, or current non-purchasers with similar needs or demographic characteristics. The term does not differentiate between whether the person is a buyer or a user target. Only a fraction of consumers will become customers.
Consumer Market: The purchasing of goods and services by individuals and for household use (rather than for use in business settings). Consumer purchases are generally made by individual decision-makers, either for themselves or others in the family.
Consumer Need: A problem the consumer would like to have solved. What a consumer would like a product to do for them.
Consumer Panels: Specially recruited groups of consumers whose longitudinal category purchases are recorded via the scanner systems at stores.
Contextual Inquiry: A structured qualitative market research method that uses a combination of techniques from anthropology and journalism. Contextual inquiry is a customer needs discovery process that observes and interviews users of products in their actual environment.
Contingency Plan: A plan to cope with events whose occurrence, timing and severity cannot be predicted.
Continuous Improvement: The review, analysis and rework directed at incrementally improving practices and processes. Also called Kaizen.
Continuous Innovation: A product alteration that allows improved performance and benefits without changing either consumption patterns or behavior. The product’s general appearance and basic
performance do not functionally change. Examples include fluoride toothpaste and higher computer speeds.
Continuous Learning Activity: The set of activities involving an objective examination of how a product development project is progressing or how it was carried out to permit process changes to simplify its remaining steps or improve the product being developed or its schedule. (see also Learning Organization) Contract Developer: An external provider of product development services.
Controlled Store Testing: A method of test marketing where specialized companies are employed to handle product distribution and auditing rather than using the company’s normal sales force.
Convergent Thinking: A technique generally performed late in the initial phase of idea generation to help funnel the high volume of ideas created through divergent thinking into a small group or single idea on which more effort and analysis will be focused.
Cooperation (Team Cooperation): The extent to which team members actively work together in
reaching team level objectives.
Coordination Matrix: A summary chart that identifies the key stages of a development project, the goals, and key activities within each stage, and who (what function) is responsible for each. Core Benefit Proposition (CBP): The central benefit or purpose for which a consumer buys a product. The CBP may come either from the physical good or service, or it may come from augmented dimensions of the product. (see also Value Proposition) (See Chapter 3 of The PDMA ToolBook 1st Edition.)
Core Competence: That capability at which a company does better than other firms, which provides them with a distinctive competitive advantage and contributes to acquiring and retaining customers. Something that a firm does better than other firms. The purest definition adds "and is also the lowest cost provider."
Corporate Culture: The "feel" of an organization. Culture arises from the belief system through which an organization operates. Corporate cultures are variously described as being authoritative, bureaucratic, and entrepreneurial. The firm’s culture frequently impacts the organizational appropriateness for getting things done.
Cost of Goods Sold (COGS or CGS): The direct costs (labor and materials) associated with producing a product and delivering it to the marketplace.
Creativity: "An arbitrary harmony, an expected astonishment, a habitual revelation, a familiar surprise, a generous selfishness, an unexpected certainty, a formable stubbornness, a vital triviality, a disciplined freedom, an intoxicating steadiness, a repeated initiation, a difficult delight, a predictable gamble, an ephemeral solidity, a unifying difference, a demanding satisfier, a miraculous expectation, and accustomed amazement." (George M. Prince, The Practice of Creativity, 1970) Creativity is the ability to
produce work that is both novel and appropriate.
Criteria: Statements of standards used by decision-makers at decision gates. The dimensions of performance necessary to achieve or surpass for product development projects to continue in development. In the aggregate, these criteria reflect a business unit’s new product strategy. (See
Chapters 21 and 29 of The PDMA ToolBook 2nd Edition.)
Critical Assumption: An explicit or implicit assumption in the new product business case that, if wrong, could undermine the viability of the opportunity.
Critical Path: The set of interrelated activities that must be completed for the project to be finished successfully can be mapped into a chart showing how long each task takes, and which tasks cannot be started before which other tasks are completed. The critical path is the set of linkages through the chart that is the longest. It determines how long a project will take.
Critical Path Scheduling: A project management technique, frequently incorporated into various software programs, which puts all important steps of a given new product project into a sequential network based on task interdependencies.
Critical Success Factors: Those critical few factors that are necessary for, but don’t guarantee,
commercial success. (See Chapter 1 of The PDMA HandBook 2nd Edition).
Cross-Functional Team: A team consisting of representatives from the various functions involved in product development, usually including members from all key functions required to deliver a successful product, typically including marketing, engineering, manufacturing/operations, finance, purchasing, customer support, and quality. The team is empowered by the departments to represent each function’s perspective in the development process. (See Chapters 9 and 10 in The PDMA HandBook 2nd Edition
and Chapter 6 in The PDMA ToolBook 1.)
Cross Sections: An explanation of a part that is referenced by slicing through the area that needs to be explained.
Crossing the Chasm: Making the transition to a mainstream market from an early market dominated by a few visionary customers (sometimes also called innovators or lead adopters). This concept typically applies to the adoption of new, market creating technology-based products and services. Customer: One who purchases or uses your firm’s products or services.
Customer-based Success: The extent to which a new product i s accepted by customers and the trade. Customer Needs: Problems to be solved. These needs, either expressed or yet-to-be articulated, provide new product development opportunities for the firm. (See Chapter 14 in The PDMA HandBook
Customer Perceived Value (CPV): The result of the customer’s evaluation of all the benefits and all the costs of an offering as compared to that customer’s perceived alternative. It is the basis on which customers decide to buy things. (See Chapter 4 of The PDMA ToolBook.)
Customer Site Visits: A qualitative market research technique for uncovering customer needs. The method involves going to a customer’s work site, watching as a person performs functions associated with the customer needs your firm wants to solve, and then debriefing that person about what they did, why they did those things, the problems encountered as they were trying to perform the function, and what worked well. (See Chapters 15 and 16 of The PDMA HandBook 2nd Edition.)
Customer Value Added Ratio: The ratio of WWPF (worth what paid for) for your products to WWPF for your competitors’ products. A ratio above 1 indicates superior value compared to your competitors. Cycle Time: The length of time for any operation, from start to completion. In the new product development sense, it is the length of time to develop a new product from an early initial idea for a new product to initial market sales. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within the company. (See Chapter 12 of The PDMA
HandBook 2nd Edition.)
Dashboard: A typically colored graphical presentation of a project’s status or a portfolio’s status by project resembling a vehicle’s dashboard. Typically, red is used to flag urgent problems, yellow to flag impending problems, and green to signal on projects on track.
Data: Measurements taken at the source of a business process.
Database: An electronic gathering of information organized in some way to make it easy to search, discover, analyze, and manipulate.
Decision Screens: Sets of criteria that are applied as checklists or screens at new product decision points. The criteria may vary by stage in the process. (See Chapter 7 in The PDMA ToolBook 1 and
Chapter 21 of The PDMA HandBook 2nd Edition.)
Decision Tree: A diagram used for making decisions in business or computer programming. The "branches" of the tree diagram represent choices with associated risk s, costs, results, and outcome probabilities. By calculating outcomes (profits) for each of the branches, the best decision for the firm can be determined.
Decline Stage: The fourth and last stage of the product life cycle. Entry into this stage is generally caused by technology advancements, consumer or user preference changes, global competition or environmental or regulatory changes. (See Chapter 34 of The PDMA HandBook 2nd Edition).
Defenders: Firms that stake out a product turf and protect it by whatever means, not necessarily through developing new products.
Deliverable: The output (such as test reports, regulatory approvals, working prototypes or marketing research reports) that shows a project has achieved a result. Deliverables may be specified for the commercial launch of the product or at the end of a development stage.
Delphi Processes: A technique that uses iterative rounds of consensus development across a group of experts to arrive at a forecast of the most probable outcome for some future state. Demographic: The statistical description of a human population. Characteristics included in the description may include gender, age, education level, and marital status, as well as various behavioral and psychological characteristics.