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To develop new products efficiently, companies such as General Electric and 3M ttse a specific sequence of steps to make their products ready for market. Figure 9-5 shows the new-product process, the seven stages an organization goes thiough to identify business opportunities and convert them into saLble products o, ,".ui""r. Today many firms use a formal Stage-Gate@ process to evaluati whether the results at each stage of the new-product development process are successful enough to warrant proceeding to the next stage. If problems in a stage can,t be corrected, the project doesn't proceed to the next stage and product development is ki1led.21

Stage l: New-Product Strategy Development For companies, new-product strategy developmentis the stage of the new-product pro- cess that defines the role for a new product in terms of the firm's overall objectives. During this stage, the firm uses both a SWOT analysis (Chapter 2) and,environmental scanning (Chapter 3) to assess its strengths and weaknesses relative to the trends it identifies as opportunities or threats. The outcome not only defines the vital "protocol,, for each new-product idea but also identifies the strategic role it might serve in the firm's business portfolio.

New-product development in services, such as buying a stock or airline ticket or watching a National Football League game, is often difficult. Why? Because services are intangible and performance-oriented. Nevertheless, service innovations can have a huge impact on our lives. For example, the online brokerage firm E*TRADE has revolutionized the financial services industry through its online trading.

Stage 2: ldea Generation Idea generation, the second stage of the new-product process, involves developing a pool ofconcepts to serve as candidates for new products, building upon the privious stage's results. Many forward-looking companies have discovereditreir own organiza- tions are not generating enough useful new-product ideas. This has led to open lrroro_ tion, in which an organization finds and executes creative new-produit ideas by developing. strategic relationships with outside individuals and, or[anizations. Open innovation helps organizations overcome the not-invented-here barrlers discussed ear- lier. consider the following examples of open innovation relationships.22

Employee and co-worker $uggestion* Employees should be encouraged to suggest new-product ideas through suggestion boxes. The idea for Nature vaiey granola bars from General Mills came when one of its marketing managers observei co-workers bringing granola to work in plastic bags.

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