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Technological Forecasting & Social Change 77 (2010) 1339–1354

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Technological Forecasting & Social Change

Integrating technology roadmapping and portfolio management at the front-end of new product development Maicon G. Oliveira ⁎, Henrique Rozenfeld Dept. of Production Engineering, São Carlos School of Engineering, University of São Paulo (USP), São Carlos, SP, Brazil

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Article history: Received 12 November 2009 Received in revised form 9 July 2010 Accepted 14 July 2010 Keywords: Front-end New product development Technology roadmapping Project portfolio management High-tech companies Brazilian case study

a b s t r a c t Many authors point out that the front-end of new product development (NPD) is a critical success factor in the NPD process and that numerous companies face difficulties in carrying it out appropriately. Therefore, it is important to develop new theories and proposals that support the effective implementation of this earliest phase of NPD. This paper presents a new method to support the development of front-end activities based on integrating technology roadmapping (TRM) and project portfolio management (PPM). This new method, called the ITP Method, was implemented at a small Brazilian high-tech company in the nanotechnology industry to explore the integration proposal. The case study demonstrated that the ITP Method provides a systematic procedure for the fuzzy front-end and integrates innovation perspectives into a single roadmap, which allows for a better alignment of business efforts and communication of product innovation goals. Furthermore, the results indicated that the method may also improve quality, functional integration and strategy alignment. © 2010 Elsevier Inc. All rights reserved.

1. Introduction The front-end of new product development (NPD) comprises the activities that precede the formal development of new product projects. This phase defines the new products that should provide competitiveness and revenue for the business, which makes it a critical phase for NPD process performance. If a company is ineffective at this point, despite its successful technical development, there is a high probability of product failure in terms of financial, strategic or commercial expectations [1–9]. Research on NPD process performance has shown the need for improving this initial phase [10–13]. Front-end inefficacies are related to features such as cross-functional uncertainties, multiple goals, lack of information and dynamic decisions [2–4, 8]. Nevertheless, companies should learn how to deal with the front-end to gain a competitive advantage and to launch successful products. Among many management practices currently applied at the front-end, technology roadmapping and portfolio management have been widely adopted because of their capability of achieving effective outcomes [9, 14]. At the front-end, technology roadmapping can be used mainly for strategic planning, product planning, program planning and integration planning [15]. Some advantages of applying TRM are integrating innovation perspectives (market, product and technology), facilitation of intraorganizational communication and long-term planning [16]. Project portfolio management (PPM) supports the evaluation, selection, prioritization and control of the company's project portfolio. Consequently, it helps to ensure strategic alignment, maximization of project portfolio value and resource planning [17], facilitating the selection of the best new product concepts for the development and launch of successful products. This is one of the main front-end objectives.

⁎ Corresponding author. E-mail addresses: [email protected] (M.G. Oliveira), [email protected] (H. Rozenfeld). 0040-1625/$ – see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.techfore.2010.07.015

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M.G. Oliveira, H. Rozenfeld / Technological Forecasting & Social Change 77 (2010) 1339–1354

Since TRM and PPM have complementary features, some authors have indicated their integration as an opportunity to improve the front-end [14, 18]. This makes sense, because on the one hand the standalone application of TRM does not result in a portfolio of NPD projects and on the other hand PPM needs a list of projects as input which should be future-oriented or aligned with the company's strategy. Therefore, if PPM is applied without this orientation, i.e., as a standalone tool, it may have a limited list concerning future orientation. Consequently, the results of the front-end based on the standalone application of TRM or PPM may be ineffective for the NPD process. Nevertheless, there is little evidence of their integration. In our review of the literature we found only two studies focusing on this topic: Park and Park [19] and Albright and Nelson [20]. Moreover, both propose roadmapping as an alternative to traditional portfolio management practices, i.e., for selecting and planning a portfolio of projects, rather than focusing on its complementary application. In this context, this research intends to explore the complementary features of TRM and PPM at the front-end of NPD. To achieve its aim, this paper proposes a method based on the integration of TRM and PPM. The acronym of the proposed method is the ITP Method, which stands for (I) Integrated, (T) Technology Roadmapping and (P) Portfolio Management. Using a case research methodology, this integrated method was implemented at a small Brazilian high-tech company in the nanotechnology industry with the purpose of testing the integration itself and of analyzing benefits for front-end execution. Thus, it contributes not only to the theory by analyzing how TRM and PPM would be integrated, but also to practice by developing an initial reference for companies interested in improving their application of TRM and PPM. The next section reviews the literature of the front-end of NPD, TRM and PPM to contextualize the research and clarify its theoretical backgrounds. Section 3 describes the methodology adopted in the research. Section 4 then presents the development and proposal of the ITP Method. Section 5 describes the case study and the analysis of integrated application of TRM and PPM. Finally, Section 6 concludes with a description of how the integrated application worked during the case study, giving insights regarding its contribution to front-end execution and suggesting opportunities for future research. 2. Literature review 2.1. The front-end of new product development (NPD) The front-end of new product development has caught the attention of researchers and companies. Some of the reasons for this interest stem from its strong impact on the success of NPD and its ineffectiveness when compared to other parts of the NPD process [2, 4, 10, 11, 13]. Moreover, the front-end creates a link between business goals and the new product development process [6, 21], which makes it an important channel to achieve successful innovations. The activities of the front-end of NPD precede product design, determining product opportunities in terms of strategic goals, market needs and technological solutions. These, in turn, lead to product concepts and to projects to deliver these concepts. Upon conclusion of these activities, the pool of product projects is evaluated, and the ones that converge with business interests are selected for development in the design phase of NPD [3–5]. The front-end groups people from many functional areas of business, such as: senior management, marketing, design and manufacturing [22]. In addition, it works with complex and uncertain information [1, 3, 4]. Other characteristics that challenge companies during front-end execution are the application of tools from different knowledge areas and the difficulty in defining responsibilities among stakeholders, which has an impact on its management [23, 24]. 2.2. Technology roadmapping Technology roadmapping serves to describe the market, to plan product and process development, to establish technological capacities and to analyze resources [25]. It reveals the interrelations among market, product and technology parameters, and identifies objectives that justify company efforts [26]. The roadmap structure should be linked with technology roadmapping objectives in order to achieve the expected results. The most generic roadmap has a horizontal timeline and three layers: market, product and technology [16]. Fig. 1 depicts a generic roadmap.

Fig. 1. Generic roadmap [16].


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The literature describes various characteristics of TRM. A compilation was made in this study, as follows: • The success of technology roadmapping depends on support from an influential stakeholder [15, 27, 28]. • The participation of specialists in the process increases the probability of success [15, 27, 29]. • Roadmapping is a multifunctional process; thus, the involvement of participants from different functional areas is essential [20, 27]. • The symbols employed in the roadmap should be known to enable organizational communication [20]. • Customization of roadmapping contributes to the effective application of TRM, since it can be used in different environments and for distinct purposes [15, 30]. • The process is considered responsible for adding value in the TRM application [15, 25, 30]. 2.3. Project portfolio management Project portfolio management aligns the management of individual projects with the management of business operations [31]. It can be defined as a dynamic process in which the portfolio of active projects is reviewed and updated periodically. During the process, current projects are reviewed and cancelled and new projects are assessed, selected and prioritized [18]. Project portfolio management has particular features, namely, the presence of unknown information, multiple goals and interrelated projects [17]. More than simply individual project management, it involves the management of a project group to achieve specific business goals [32]. Cooper, Edgett and Kleinschmidt [17] explain that PPM should attain four goals: maximization of portfolio value, portfolio balancing, strategic alignment and resource allocation. The simultaneous achievement of these goals results in better project portfolios. However, there is a constant conflict among these goals that limits the achievement of an optimum portfolio. 3. Research methodology The methodological approach adopted here derives from Karl Popper's [33] logic of scientific discovery, which states that new ideas can be proposed as a hypothesis by means of logical deduction and that they must then be tested by empirical applications. This study does not attempt to prove the integration of TRM and PPM as a generic truth. Instead, it attempts to negate it through a process Popper calls falsification. If the method proves empirically useful to a specific case, this means it is temporarily useful to this kind of organization until it is tested again in another application. If the proposed method withstands detailed and severe tests, it is corroborated. Thus, the research methodology is a combination of two methods: the deductive approach to define the method (hypothesis), and a case research to test it. The methodology is divided into five stages: analysis of front-end models, analysis of TRM processes, analysis of PPM processes, development of the ITP Method, and testing using a case study. These stages are represented in Fig. 2. The analysis of front-end models involves investigating NPD process models focusing solely on the front-end phase. In addition, some models of the front-end of the innovation process are also considered, since some of them involve the front-end of NPD. The group of selected models is further examined to identify the main activities of the front-end and its function in the NPD process. The analysis of TRM and PPM processes is similar. These two stages select the process models for investigating the activities, organizational aspects and tools used in the application of TRM and PPM. The development of the ITP Method comprises three steps: evaluation of the method's completeness after integration of TRM and PPM, definition of the method's activities, and definition of the method's supporting tools. The first step evaluates how the integration of TRM and PPM supports the front-end of NPD. The second step makes a comparative analysis of front-end, TRM and PPM to define the method's activities. The third step selects the tools to be used and customizes them to adapt the procedure for application. Testing of the model using the case study is based on the case research methodology proposed by Voss, Tsikriktsis and Frohlich [34] to guide the researcher's activities and approach throughout the practical study. At this stage, this study aims to assess how TRM and PPM work when applied in an integrated way and identify the benefits this integration would bring to the front-end execution.

Fig. 2. Stages of research methodology.

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The case study results are collected from two interviews, the first prior to the application of the method, when the company's initial situation in the front-end is evaluated. In the second interview, held at the end of the case study, the team is asked to explain how the ITP Method supports the front-end in terms of changes in the metrics: quality, functional integration, strategy alignment, duration and costs. 4. Integrated technology roadmapping and project portfolio management method (ITP Method) Subsection 4.1 comprises stages 1, 2 and 3 of the methodology. The development of the method is presented in subsection 4.2, which corresponds to stage 4 (Fig. 2). The outcome of this stage is the ITP Method described in subsection 4.3. 4.1. Analysis of references to be integrated into the ITP Method 4.1.1. Front-end models This study analyzes front-end models with the purpose of selecting one to be used as a reference in the development of the ITP Method. Four models were considered: Clark and Wheelwright [6], Cooper [4], Koen et al. [3], and Crawford and Di Benedetto [5]. These are among the most cited front-end models in the literature of production innovation management, which gives them the degree of acceptance required for use in this research. To enable the method to be developed, the model to be selected should be comprehensive regarding the components of the front-end of NPD. Thus, the adopted criteria analyze if the model encompasses the three main components of the front-end of NPD: product opportunity identification, concept generation, and project selection. Moreover, the level of detail used in the description and the presentation of tools are also considered positive factors for the selection, because they allow for a better understanding and implementation of the proposal. The Clark and Wheelwright [6] model shows four front-end activities: Technology Assessment and Forecasting, Market Assessment and Forecasting, Development of Goals and Objectives, and the Aggregate Project Plan. The first three activities involve the identification of product opportunities at the front-end; therefore, the authors completely support this requirement. However, the concept generation and project selection components are only partially fulfilled by the Aggregated Project Plan. This model presents its activities in detail and includes some application tools. The Cooper [4] model considers a front-end comprising three activities: Discovery, Scoping and Build Business Case; and three gates: Idea Screen, Second Screen and Go To Development. The identification of product opportunities is supported by the Discovery activity, the concept generation by Scoping and Build Business Case, and lastly, project selection is provided by the Gates. Hence, this model is a good front-end reference model. The only characteristic that makes this model less advantageous is the low level of details in some activities and the lack of tools and examples, which would better support its application. The model proposed by Koen et al. [3] suggests five front-end activities: Opportunity Identification, Opportunity Analysis, Idea Generation and Enrichment, Idea Selection and Concept Definition. Furthermore, this model adopts a new organizational structure among its activities, indicating that the front-end is a flexible process. The first and second activities support product opportunity identification and the next three represent the concept generation. The last component, which is the project selection, is not clearly presented in this proposal. Nevertheless, it is considered during the execution of idea selection and concept definition activities, but it is not described sufficiently to support front-end development. Regarding its explanation, some detailed information and examples of tools are missing from this model, which may make it difficult to use as a reference for implementation. The Crawford and Di Benedetto model [5] presents three front-end activities: Opportunity Identification and Selection, Concept Generation and Concept/Project Evaluation. In addition, this model places three Gates after each of its activities: Direction, Initial Review and Full Screen. This model comprises one activity for each component of the front-end, i.e., Opportunity Identification and Selection for product opportunity identification, Concept Generation for concept generation and Concept/Project Evaluation for project selection. Additionally, this model includes tools and examples of how to implement activities. Table 1 presents a compilation of the analysis and indicates that Crawford and Di Benedetto's model [5] should be the one selected, because it is more comprehensive than the others regarding the main components of the front-end. In addition, this model offers a more detailed explanation, which is important for front-end implementation. It should be pointed out that the scope of this paper does not include a definition of a “new” model for the front-end. Our intention is to analyze the integration of TRM and PPM, so that other models could also be defined to test the integration. However, in this work, the more comprehensive model serves as a reference for stage 4.

Table 1 Analysis of front-end models. Models

Product opportunity

Concept generation

Project selection

Level of details

Clark and Wheelwright [6] Cooper [4] Koen et al. [3] Crawford and Di Benedetto [5]

Supported Supported Supported Supported

Partially supported Supported Supported Supported

Partially supported Supported Partially supported Supported

High Low Low High


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4.1.2. Technology roadmapping processes The research aimed to select a process that would allow for the identification of activities and tools used in the application of technology roadmapping. Therefore, the criteria for selecting the TRM process were the presence of a well structured set of activities for TRM development and the presentation of tools. This study assessed three technology roadmapping processes to identify one that could be used in the development of the method: Willyard and McClees [25], Albright and Kappel [29] and Phaal, Farrukh and Probert [16]. These processes are among the most cited references in the literature on roadmapping, which supports their inclusion in this study. The Willyard and McClees [25] model comprises eight activities for technology roadmapping: Description of Business; Technology Forecast; Technology Roadmap Matrix; Quality; Allocation of Resources; Patent Portfolio; Product Descriptions, Status Report and Summary Charts; and Minority Report. This process presents the main activities related to TRM development. However, it is unclear regarding the sequence of application or even the relationship between them, which would add complexity to its implementation. Furthermore, it presents examples of tools used in the activities, but does not explain how to use them. The Albright and Kappel [29] model proposes the TRM development in four sections: Market, Product, Technology and Summary/Action Plan. This process describes a set of activities which deal with each issue of TRM in a clear sequence for development. The only point lacking in this process is a more detailed explanation of how to perform the activities. In addition, the process includes tools related to its activities; however, like the previous process, it does not explain how to apply them. The Phaal, Farrukh and Probert [16] model proposes four workshops for TRM: Market, Product, Technology and Charting. In addition to the workshops, the process proposes a planning activity at the beginning and an implementation activity at the end. All workshops and activities are interlinked using their results, adding a clear flow in the process. Finally, this model offers an extensive explanation concerning the development of each activity and a group of tools for use during this application. The results of the analysis are presented in Table 2. This table indicates that the Phaal, Farrukh and Probert [16] TRM process was the most suitable one according to the aforementioned criteria, as it contains a detailed and structured procedure of technology roadmapping application in terms of activities and tools. 4.1.3. Project portfolio management processes Numerous portfolio management processes are available, since this issue has been studied for many years. This research intends to follow a procedure for portfolio management that represents the standard approach reported in the literature. Consequently, it is possible to increase the generalization achieved by its integration with TRM. Based on this purpose, this study selected the proposals presented by Cooper, Edgett and Kleinschmidt [18] and Archer and Ghasemzadeh [35]. These processes are two traditional and accepted approaches for portfolio management that include the activities and tools required to develop the method, according to a bibliographical review of the portfolio management field. The Cooper, Edgett and Kleinschmidt [18] process involves periodic meetings for portfolio review, during which new and ongoing projects are evaluated to define the project portfolio. Additionally, this process proposes gates between project phases. The gates evaluate each ongoing project individually to decide if it should be continued, cancelled or reviewed. The Archer and Ghasemzadeh [35] PPM process comprises three phases: pre-process, process and post-process. The preprocess phase involves definition of the strategy and selection of the process methodology. The process phase comprises the following stages: pre-screening, individual project analysis, screening, project portfolio selection, and portfolio adjustment. The third phase, post-process, involves the control of ongoing projects. An analysis of these two methods indicates the presence of a common set of activities, although they include some complementary aspects. Archer and Ghasemzadeh [35] propose an in-depth analysis of each project, and Cooper, Edgett and Kleinschmidt [18] analyze the balance of the portfolio and resource capacity limitations. Consequently, this study intends to combine these complementary parts to reach a portfolio management process which would best support integration with technology roadmapping. 4.1.4. Implications of the selected process for the ITP Method's features Listed below are some considerations about the selected references that affect the application and configuration of TRM and PPM in this study: • Since Crawford and Di Benedetto's [5] model is not designed to support technology planning, the ITP Method considers only product planning. Moreover, as this is a reference model, the ITP Method must be customized to meet the requirements of a specific practical application. • Like the ITP Method proposed here, the Phaal, Farrukh and Probert [16] process focuses on product planning. However, the TRM process considers technology forecasting as an input for product planning. Since Crawford and Di Benedetto's [5] model does not Table 2 Analysis of TRM processes. TRM processes

Organization

Tools

Willyard and McClees [25] Albright and Kappel [29] Phaal, Farrukh and Probert [16]

Unclear Clear Clear

Included/not described Included/not described Included/described

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include technology planning, the application of the TRM process adopted in the ITP Method may lack the input of technology forecasting. • The PPM process proposals of Cooper, Edgett and Kleinschmidt [18] and Archer and Ghasemzadeh [35] were combined in the ITP Method for the specific application described in this paper. This may limit the proposal, because it was not validated in other situations. Therefore, an evaluation must be made of the activities that make sense in other specific applications. • The configuration of technology roadmapping and portfolio management is flexible for each context. Due to requirements introduced by the front-end of NPD, and the characteristics of TRM and PPM processes adopted, the overall configuration defines TRM as being responsible for product opportunity identification and for confirmation of strategic alignment of the selected NPD projects. On the other hand, the PPM process will be assigned to evaluate, prioritize and select projects. Thus, following Crawford and Di Benedetto's [5] front-end model, the TRM is initially applied to identify product opportunities, after which the PPM is implemented to evaluate and select projects, and lastly, the portfolio of selected NPD projects is organized into a small roadmap, which is compared to the original one to ensure strategic alignment. 4.2. Development of the ITP Method 4.2.1. Evaluation of the method's completeness after integration of TRM and PPM This step analyzed how technology roadmapping and project portfolio management fit the front-end. The contents and goals of Crawford and Di Benedetto's [5] front-end model were compared with Phaal, Farrukh and Probert's [16] TRM process, and with Cooper, Edgett and Kleinschmidt's [18] and Archer and Ghasemzadeh's [35] PPM processes. The technology roadmapping process revealed a similarity with the opportunity analysis and selection phase of the NPD frontend model, while the project portfolio management process remained aligned with the concept/project evaluation phase. The relationship of TRM and PPM with opportunity analysis and selection phase and with concept/project evaluation phase, respectively, contributes two insights: • If these phases follow a sequence in the front-end, the application of TRM and PPM should follow the sequence of phases they are related to. Hence, TRM should be introduced before PPM, because the opportunity analysis and selection phase precede the concept/project evaluation phase of Crawford and Di Benedetto's [5] model. • Neither technology roadmapping nor project portfolio management contributes consistently to the concept generation phase. Hence, the integration of these methods may not fully meet the requirements to support the front-end of NPD. These insights will affect the definition of method's activities. 4.2.2. Definition of the method's activities The method's activities were defined based on the aforementioned models. The activities selected from TRM were: definition of unit of analysis, business strategy analysis, market analysis, product analysis, technology analysis, and definition of product strategies. The project portfolio management yielded: financial evaluation, evaluation of probability of success, evaluation of strategic alignment, project prioritization, project interrelationship analysis, and selection of the NPD project portfolio. An evaluation was made to determine if the activities defined up to this point from TRM and PPM encompassed the functionality expected for the front-end. To this end, the aforementioned activities were compared with the functionalities described in Crawford and Di Benedetto's [5] model, to ascertain if they sufficed to support the proposed method. This comparison indicated that the method lacked an activity related to the concept generation phase. Therefore, a new activity was included, the “Proposition of NPD projects”, to complete the other activities derived from technology roadmapping and project portfolio management. In the end, the flow of method activities started with TRM activities, followed by the “Proposition of NPD projects” activity, and ending with PPM activities. 4.2.3. Definition of the method's supporting tools The last step involves defining the tools that should be used in the application of the method. Most of the necessary tools were found in the following references: Crawford and Di Benedetto [5], Phaal, Farrukh and Probert [16], Cooper, Edgett and Kleinschmidt [18] and Archer and Ghasemzadeh [35]. Complementary references were examined to define tools for financial evaluation [36–38], probability of success evaluation [39] and project interrelationship analysis [32]. 4.3. ITP Method overview The procedure developed for the ITP Method comprises 13 activities which are described in the following discussion. Fig. 3 illustrates the method, showing the activities, information flow and the connections among activities. Further information about the method is given in the subsection of each activity. 4.3.1. Definition of unit of analysis This activity establishes the boundaries of the method's application in terms of business unit, market segment and product line. The unit of analysis should reflect the scope the company wishes to consider in the front-end of NPD. Fig. 4 presents the components of this unit.


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Fig. 3. ITP Method overview.

4.3.2. Business strategy analysis This activity identifies the business drivers that establish the directions and targets in the NPD process. First, the method examines the performance dimensions of the product line, which represent quantitative and qualitative product aspects such as: weight, originality, innovation, profitability, etc. Based on these dimensions, the team analyzes the business strategies and defines the drivers related to them. Some examples of business drivers are: growth of market share, improvement of organization knowledge, increase in business profitability, etc. During the strategy analysis, the start and end dates of business drivers should be identified to determine their position in time. Finally, the team selected to participate in the activities evaluates the priorities of the business drivers. If the unit of analysis considers more than one business unit, the priorities may be different due to the possible existence of independent strategies in each unit. 4.3.3. Market analysis This activity involves defining the drivers that represent market needs and trends. Like in the previous activity, an analysis of the product performance dimensions may help in the identification of market drivers. Some examples of market drivers are: customized products, cheaper products, smaller sizes, etc. The duration and priority of each driver are estimated based on marketrelated information. If the unit of analysis encompasses more than one market segment, the priorities may also differ.

Fig. 4. Components of unit of analysis. Adapted from [16].

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4.3.4. Product analysis This activity determines the product features of the selected product line. Some examples of product features are type of material, modular framework, size specification, etc. In order to determine the most important features, an evaluation is made of their ability to fulfill business goals and market drivers. Since the drivers may have different priorities, this evaluation also indicates possible arrangements that can contribute toward product strategies. For instance, a new product with specific features may be chosen to meet the priorities of a single market segment, or features that are always important to specific market segments may serve as the basis for the creation of a new product platform. To this end, the products are planned to meet the requirements of their respective drivers in the appropriate time. 4.3.5. Technology analysis This activity involves identifying the technologies and evaluating their ability to deliver the product features. Based on this information, the company can ascertain whether or not the required technologies are available. If unavailable, plans should be made for their development or acquisition. In so doing, the company ensures they will be ready for use in new product development. 4.3.6. Definition of product strategies This activity analyzes the information created in the preceding activities to formulate product strategies. The activity uses the generic roadmap to integrate business, market, product and technology information [16]. The relationships indicated in the roadmap delimit the goals to be pursued in the new product development. In addition, the roadmap clarifies product opportunities. These results shape the product strategies for the NPD process within the unit of analysis. 4.3.7. Proposal of NPD projects This activity involves the definition of product concepts and projects that meet the product strategies. A template describing the minimum information required to propose a NPD project is used. Based on this reference, the team can collect a set of important information needed to support decision making in the subsequent activities. This template should include the following: project type, market segment, estimated price, potential revenue, primary market requirements, product vision, main product materials and components, critical competencies, estimated resources and product life cycle planning. 4.3.8. Financial evaluation This evaluation consists of analyzing the financial aspects of projects to determine the financial return for the business. The financial evaluation is based on traditional metrics such as: net present value (NPV), internal rate of return (IRR), payback, and return on investment (ROI). Some of the estimated information used here includes: market share, product price, investments for product development, and product life cycle. Of course this evaluation involves uncertainties and risks; however, it enables the company to identify the products with the highest potential for financial return in the available portfolio. 4.3.9. Evaluation of probability of success This activity evaluates the risks that may affect the development of the product project. These risks may be technical when they involve product design and commercial when they impact the product's launch. The method proposes a list of predefined criteria based on the study of Davis, Fusfeld, Scriven et al. [39], which defines the most common technical and commercial risks. Finally, depending on the risks entailed in the project, the team rates the probability of success for each NPD project. Table 3 lists the criteria used in the evaluation. More information about these criteria can be found in the cited reference. 4.3.10. Evaluation of strategic alignment This activity analyzes the alignment between the project and the business strategies. This information clarifies whether the project contributes toward the achievement of the company's strategies. The criteria proposed for the evaluation were collected from Cooper, Edgett and Kleinschmidt [18], and comprise: strategic congruence, strategic impact, proprietary position, platform for growth, technical and commercial durability, and synergy with other operations within the corporation. From the proposition of the NPD project to strategic alignment evaluation, the projects are analyzed and evaluated individually. The next activities involve portfolio analysis and selection, and will contribute to the final decision about which portfolio of NPD projects should pass on to the design phase of the NPD process.

Table 3 Criteria for evaluating the probability of success. Adapted from [39]. Commercial criteria

Technical criteria

Customer/market need Market/brand recognition Distribution channel Customer strength Raw material supply Environment, health and safety

Proprietary position Competencies/skills Complexity Access to external technology Manufacturing capability


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4.3.11. Project prioritization This activity ranks the proposals of new product projects based on the information prepared in three preceding activities: financial metrics, probability of success, and strategy alignment. The method proposes a standard calculation to prioritize projects, although each company can select the solution that best fits its business objectives. First, the activity normalizes the value of NPV and the scores of probability of success and strategic alignment to facilitate comparisons among projects. The three normalized values are then multiplied to reach the final score of each project. The decision to multiply aims to reduce the probability of selecting a project containing a low value [40], which benefits the choice of better balanced projects. In the end, the final score is used to rank projects in the portfolio. 4.3.12. Project interrelationship analysis This activity examines the interrelationships among projects that may affect the project portfolio selection. The method analyzes four interrelationships among projects [32]: technical, resource utilization, benefits, and timing. Based on a grid analysis, the interrelationships are rated between each project pair. This enables the team to determine which projects are the most technology-dependent or have the greatest technical impact, which share the most resources, which are the most beneficial for the success of the others, and which of them should be planned for earlier or later development. 4.3.13. Selection of NPD project portfolio This activity involves selecting the NPD projects to be included in the ongoing product project portfolio, i.e., to be approved to the design phase of the NPD process. The selection should define the portfolio which satisfies four goals: strategic alignment, value maximization, balancing and resource allocation [17]. Value maximization and strategic alignment were already considered in the project prioritization activity. Resource allocation is done based on two techniques: investment buckets analysis and critical resources analysis [18]. The last goal to achieve is balancing. To this end, the projects approved for allocation are plotted on bubble charts. The method suggests NPV, probability of success and project duration as the criteria to be used in verifying the portfolio balance. These criteria aim to verify the trade-off among portfolio risk, short and long-term projects, and portfolio revenue potential. Other criteria may be applied to balance the portfolio, but that will depend on the business interests. Cooper, Edgett and Kleinschmidt [18] present a list of criteria and bubble charts that can also be applied in this task. The projects' interrelationships are reviewed concomitantly to ascertain if any relationship may lead to an arbitrary selection. The last task is confirmation of the alignment between the selected project portfolio and the product strategies defined for the NPD process. The NPD project portfolio is chartered on a mini-roadmap and then compared with the product strategy roadmap created in the product strategies definition activity. This ensures that the selected portfolio meets the goals of the front-end. Table 4 summarizes the method's activities. A comparison of the independent application of TRM and PPM and the proposed method indicates that the ITP is expected to provide the following advantages: • Less time to develop TRM and PPM due to the presence of a structured procedure. • Establishment of the information required to perform the whole method. • Greater efficacy of front-end because of the alignment of TRM and PPM. Table 4 Summary of ITP Method activities. Activity

Description

1. Definition of unit of analysis

Establishes the boundaries of the method's application in terms of business unit, market segment and product line. Identifies the business drivers that establish the directions and targets in the NPD process. Defines the drivers that represent market needs and trends. Determines the product features of the selected product line. Identifies technologies and evaluates their ability to deliver the product features. Formulates the product strategies by analyzing the information created in the preceding activities. Uses the generic roadmap to integrate business, market, product and technology information. Defines product concepts and projects that meet the product strategies. Analyzes the financial aspects of projects to determine the financial return for the business. It includes traditional metrics such as: NPV, IRR, payback, and ROI. Evaluates the risks that may affect the development of the product project. It separates the risks into technical and commercial risks. Analyzes the alignment between the project and the business strategies according to specific criteria. Ranks the proposals of new product projects based on financial metrics, probability of success, and strategy alignment. Verifies four types of interrelationships among projects that may affect the project portfolio selection: technical, resource utilization, benefits, and timing. Selects NPD projects to be included in the ongoing product project portfolio by analyzing strategic alignment, value maximization, balancing and resource allocation.

2. 3. 4. 5. 6.

Business strategy analysis Market analysis Product analysis Technology analysis Definition of product strategies

7. Proposal of NPD projects 8. Financial evaluation 9. Evaluation of probability of success 10. Evaluation of strategic alignment 11. Project prioritization 12. Project interrelationship analysis 13. Selection of NPD project portfolio

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Table 5 Business and market drivers. Business drivers

Priority

Market drivers

Priority

Application of available technology Acquisition of a sustainable brand Participation at the end of the value chain

7 7 3

79% antimicrobial protection efficiency Life cycle of protection exceeding 10 years Nontoxic in the manufacturing process Moisture protection packaging Environmentally degradable

10 7 3 7 1

5. Implementation of the ITP Method at a small high-tech company The case study was developed in a small high-tech company in Brazil, called Nanox Technology S/A.1 This company manufactures nanotechnology products for the textile, petrochemical and durable goods industries. It stands out among small Brazilian high-tech companies for winning the 2007 FINEP2 Innovation Award due to its innovative products. The case study took five months, with regular meetings attended by the executive, financial, R&D and commercial directors. The researcher guided the team in the application of the ITP Method and recorded information for further investigation. 5.1. Case study findings 5.1.1. Definition of unit of analysis The company was interested in launching new products in a product line for antimicrobial protection. There were possibilities for introducing new products in several market segments, so the company decided to make a strategic assessment using SWOT and a value chain analysis to identify the target market, according to its capabilities and strategies. This selection led to more indepth planning, although many opportunities were disregarded due to the paucity of resources available for garnering market information and the short time to market new products. 5.1.2. Business strategy and market analysis Having selected the market segment, the team began to define the dimensions of the product's performance. The product's chemical nature meant that this definition led to very different results compared to those found in mechanical products, which is the type of example commonly available. Some of the identified product performance dimensions were: cost versus protective ability, maintenance of material properties, type of interface, sustainability regulations, antimicrobial agent and type of application of the material. The business and market drivers were then brainstormed using the above dimensions as references. The business drivers lacked a clearly defined time horizon because of a gap concerning product goals in the strategic business plan. Market drivers also lacked a time horizon due to the difficulty of forecasting trends in a market which is just beginning to show an interest in providing its products with antimicrobial protection. The business driver priorities were evaluated by this same team, since they are members of the company's board of directors. However, a few potential clients were contacted to evaluate the market drivers, giving the team a different perspective of market priorities. Some of the generic business and market drivers are presented in Table 5. To comply with a confidentiality agreement signed with the company, the priorities listed in the table are fictitious, thus serving simply as an example. The scores used in this case were 1 (low), 3 (medium/low), 7 (medium/high) and 10 (high). 5.1.3. Product analysis At this point, the product's features were determined and their ability to contribute to the business and market drivers was assessed. This task involved the use of a spreadsheet based on the QFD (Quality Function Deployment) approach, which facilitated rating by the participants and the definition of the final score. Table 6 shows part of a spreadsheet of the case to exemplify the procedure. The final score was normalized to 10 to facilitate comparisons of the scores. Based on the results, the team concluded that an opportunity existed to define a new product with primary features for the market entry version. After that, a new product would be launched with additional features to increase its competitiveness and thus its market share. 5.1.4. Technology analysis The next activity was the identification of technologies related to the product's features and the evaluation of their potential to contribute to the successful performance of the desired features. The company's objective was to implement a nanotechnology already available in its assets, so this technology was automatically included in the plan.

1 2

Details about the company are available at: http://www.nanox.com.br. A Brazilian federal agency that promotes industrial development — http://www.finep.gov.br.


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Table 6 Evaluation of the contribution of the product features to business and market drivers. Product features Market drivers

Priority

79% antimicrobial protection efficiency Life cycle of protection exceeding 10 years Environmentally degradable

10 7 1

Business drivers

Priority

Acquisition of a sustainable brand Final score Normalized final score

7

Concentration of chemical agent 10 7 3

0 152 10.0

Dosage in the final product

Type of microorganisms eliminated

7 1 10

3 7 1

0 87 5.7

0 80 5.3

Table 7 Evaluation of the contribution of technologies to product features. Technologies Product features

Weight

Chemical process technology

Nanotechnological material mix

Antimicrobial technology

Concentration of chemical agent Dosage in the final product Type of microorganisms eliminated Final score Normalized final score

10.0 5.7 5.3

3 7 1 75 6.1

7 3 7 124 10.0

1 3 10 80 6.4

The other technologies were considered based on current knowledge available in the company. However, it was clear that a technology monitoring process was lacking due to the difficulty of identifying technological possibilities. A spreadsheet was created to help evaluate the technological contribution of the product's features. Table 7 shows part of this spreadsheet as an example for other applications. The scores given to the product's functions were used as weights here, indicating the technologies that make the greatest contribution to the most important product features.

5.1.5. Definition of product strategies The team reviewed the results and charted the key issues on a roadmap containing the market/business, product and technology layers within a three-year timeframe. The creation of the roadmap revealed several inconsistencies in the integration of market, product and technology perspectives. However, the team recognized the most potential product opportunities and defined product strategies to be pursued. Fig. 5 depicts the schematic representation of the roadmap created in the case study, as well as a photograph that illustrates its results.

Fig. 5. Roadmap of the case study.

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Table 8 Results of evaluation activities. Projects

Duration

NPV

IRR

Probability of success

Strategic alignment

Alpha Beta Gamma Delta

2 years 6 years 4 years 3 years

R$ R$ R$ R$

94% 86% 41% 74%

70.3% 63.5% 60.3% 52.0%

3.8 4.2 3.8 2.9

211,631.78 143,763.13 270,104.05 484,469.38

Table 9 Analysis of resource relationships. Projects

Alpha


0 0 0

Beta

Gamma

Delta

Score

1

1 1

0 0 0

2 1 0 0

0 0

0

5.1.6. Proposal of NPD projects The new product opportunities underpinned the proposition of four NPD projects. The team had no problems in outlining the proposals, likely because of the preceding analyses and the use of a template to guide them in garnering the information for the projects.

5.1.7. Evaluations (financial, probability of success and strategic alignment) and interrelationship analysis With this clear view of the four NPD projects, the evaluation (financial, probability of success and strategic alignment) was made and the interrelationships analyzed. Table 8 lists the results of this evaluation, while Table 9 shows the grid used to analyze the resource relationships among the projects. The grid analysis is performed by giving a rating of 1 if a relationship exists and of 0 if it does not. The projects with high scores have relationships that may affect the selection of the NPD portfolio.

5.1.8. Project prioritization The project prioritization activity should define the ranking method according to the company's interests. In this case, a combination of financial, probability of success and strategic alignment criteria was used. Initially, all the values were normalized to 10 (10 being the highest value). The three values were then multiplied by each other to reach the final project score used for the prioritization. Table 10 presents this result.

5.1.9. Selection of NPD project portfolio The selection of a NPD project portfolio is useful for companies that have many projects to develop and must select the best project portfolio considering values, resources, strategic alignment and balance. However, because only four projects were selected in this case and resources were available for them, the company made an analysis only to ascertain that they were aligned with its strategy and that they represented a balanced portfolio. The NPD projects were considered aligned with product strategies and provided a balanced portfolio; therefore, they were approved for the NPD design phase. This systematic approach conferred reliability on the decision to develop the four NPD projects. The photograph in Fig. 6 was taken during the meeting when the team checked the portfolio and made its final decision.

Table 10 Prioritization of the projects. Projects

Probability of success

NPV


70.3% 63.5% 60.3% 52.0%

R$ R$ R$ R$

Normalized value Alpha 10.0 Beta 9.0 Gamma 8.6 Delta 7.4

211,631.78 143,763.13 270,104.05 484,469.38

4.4 3.0 5.6 10.0

Strategic alignment

Final project

Final normalized project

393.1 268.2 430.6 517.8

7.6 5.2 8.3 10.0

3.8 4.2 3.8 2.9

9.0 10.0 9.0 7.0


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Fig. 6. Meeting to select the NPD project portfolio.

5.2. Assessment of the contribution of the ITP Method The improvements resulting from the implementation of the ITP Method were evaluated through interviews at the beginning and end of the case study. The first evaluation investigated the company's initial situation regarding the front-end activities it carried out, who participated in them, and which method and tools were employed. This information was garnered during interviews with the same team that participated in the case study. The results of this first evaluation revealed some important aspects about the company's initial situation in terms of the frontend. It was lacking some activities, which might indicate gaps in the front-end it practiced. Employee responsibilities were undefined, implying ineffective results and poor communication. The methods and tools the company used were not designed for front-end activities. Moreover, these activities lacked a clear application procedure and were rarely integrated. The second evaluation took place after the method was applied. The researcher asked the participants to fill out a questionnaire designed to evaluate their opinions about five metrics: systematization of the decision process, strategic alignment, integration of functional areas, quality, cost, and duration. The choice of answers to each metric in the questionnaire was: increased, did not increase, or decreased. Based on the findings of the questionnaire, several conclusions were drawn about the changes achieved pursuant to the application of the ITP Method. These results are presented in Fig. 7, which distributes the answers based on the metrics and the number of interviewees. The small number of participants precluded an exact conclusion about each metric. However, the metrics revealed an increase in the duration, quality, integration of functional areas, strategic alignment, and systematization of the decision process. Cost was the only variable that did not change, according to the average score of the answers. The increase in quality, strategic alignment, integration of functional areas and systematization of the decision process indicates an improvement in the front-end execution. This improvement may be ascribed to the potential of technology roadmapping and project portfolio management. The participation of a cross-functional team supported by a systematic procedure may be another factor that contributed to this improvement. The increase in duration reflects a greater effort on the part of the team, since the method added new activities and new tools to underpin the company's front-end of NPD. This increased effort implies increased cost, which is estimated based on man-hour

Fig. 7. Evaluation of the front-end changes provided by the ITP Method.

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costs. However, the results showed that the cost remained unchanged, possibly indicating an improvement in the team's efficiency after application of the method. 6. Conclusions This paper presented the ITP Method, which proposes to integrate technology roadmapping and project portfolio management during their application at the front-end of NPD. To assess its integration, the method was applied at a small high-tech company. These conclusions discuss the results of the ITP Method for the company, insights about the integrated application of TRM and PPM, and opportunities for future research. 6.1. Results of the ITP Method in the case study The assessment demonstrated that the ITP Method contributed positively to the front-end. The metrics of quality, integration of functional areas, systematization of the decision process, strategic alignment, cost, and duration were evaluated based on interviews with the participants. In general, the results showed an improvement, with the exception of the variable Duration, which increased, and the variable Cost, which remained unchanged. The changes in Duration can be attributed to the need to carry out additional activities the company did not previously engage in, but which are important for effective front-end execution. Although the duration was longer the cost remained unchanged, probably as a result of the team's increased efficiency during the activities. The results of the assessment correspond to the case study where the method was applied. This small high-tech company is an organization whose hierarchical levels are very similar and whose functional areas are more integrated than in other types of organization. This likely contributed to the positive changes in the variables assessed, since it enabled employees with a holistic business vision to be gathered in a single team. The results of the case study are based on a specific case involving nanotechnology products. Therefore, the application of the ITP Method to other types of industrialized products may bring insights that differ from those identified here. Together with the issues related to organization and product type, the company's initial situation in the front-end may limit the generalization of the research results. According to the first researcher's assessment, the company was ineffective, lacked a proper procedure, and did not use suitable methods and tools. However, since there are many small high-tech companies that face the same issues, the results achieved in this research have a potential for further exploration. For instance, the technological region where Nanox is located contains many other companies in which this study could be applied along the same lines. However, it should be kept in mind that the results presented here come from a single case study and therefore cannot be generalized. This study considered technology planning only superficially, reflecting the front-end model which was adopted, i.e., Crawford and Di Benedetto [5]. This model uses technology information, but its purpose is not to plan the development or acquisition of new technologies for new products. Moreover, the goal of the small high-tech company of this research was to develop new products using its available technologies, i.e., its current product strategy was based on the technology-push strategy. Therefore, this research did not cover issues related to new technology planning, which would be clearer in a market-pull strategy in which the market would drive the development of new products and technologies. Technology roadmapping is known for its potential to contribute to new technology planning. Thus, the case study did not fully exploit the possible benefits of the ITP Method. Furthermore, its use in new technology planning would be more suitable for the front-end of the innovation process, which involves new product development and new technology development processes [41]. 6.2. Insights about the integrated application of TRM and PPM This research confirms that the integrated application of TRM and PPM may be more advantageous than a standalone application. The main findings of this research that support these conclusions are: • Integrating TRM and PPM according to Crawford and Di Benedetto's [5] model contributes to align NPD teams with front-end goals. • The integration enables a holistic understanding of the activities, tools and information from the beginning to the end of the front-end. This facilitates the execution of activities and improves quality since it reduces possible misunderstandings. • The process becomes more efficient in terms of information exchange and communication, since the TRM and PPM are conceptually integrated. Otherwise, it would be cumbersome to integrate the results of the two methods in an independent application. The ITP Method represents a specific configuration of TRM and PPM application. First of all, TRM was used to identify new product opportunities. Afterwards, PPM was used to evaluate and select the NPD projects. Finally, TRM was applied again to create a graphic visualization of the selected portfolio, serving to support the strategic alignment. Since the TRM and PPM are flexible approaches, it may be possible to integrate them in different configurations. For instance, TRM could be applied after PPM in order to analyze interrelationships among NPD projects. In addition, opportunities for product platforms could be identified considering resources and technical constraints. The findings of this research revealed the need to integrate other methods to complement the requirements of the front-end. For instance, the scenario planning method could contribute to the forecasting of market and technology trends, which was


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considered a weak point in the case study. Idea management would contribute to support the definition of new product concepts based on opportunities identified from TRM. 6.3. Opportunities for future research These are the results of an initial investigation into the integrated application of TRM and PPM at the front-end of NPD. Other related issues that could be addressed to complement this research are: • Development of case studies in companies with different organizational characteristics and products. • Application of the ITP Method to support the front-end of the innovation process, where the function of technology planning is more important than in the NPD process. • Integration of idea management methods, which would contribute to concept generation, a phase supported superficially by the ITP Method. • Integration of the scenario planning method to improve the forecasting of market and technology trends.

Acknowledgments The authors would like to thank FAPESP (www.fapesp.br) and CNPq (www.cnpq.br) for their financial support. They are also indebted to the participants at Nanox S.A. for their contribution to the case study. References [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41]

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Maicon Gouvea de Oliveira is a doctoral student at the Department of Production Engineering, São Carlos School of Engineering, University of São Paulo, Brazil. He earned his Bachelor's degree in mechanical engineering and his Master of Science degree in production engineering also from University of São Paulo. His research interests include new product development, fuzzy front-end, innovation strategies, technology roadmapping, portfolio management and other innovation management fields. Henrique Rozenfeld is a full professor at the Department of Production Engineering, São Carlos School of Engineering, University of São Paulo, Brazil. He earned his PhD from the WZL Institute, Aachen University, Germany in 1988. He has published more than 300 papers in the field of new product development and production planning, and is the first author of the book “Gestão do Desenvolvimento de Produtos: uma referência para melhoria do processo” (Product Development Management: a reference for process improvement), which is one of the most widely consulted reference works in Brazil about management of new product development.