New Product & Service Development
Big idea
New product and service development (NPSD) is the disciplined system through which firms convert customer insight into shippable offerings. Prof. Abhishek Mishra structures the process as a stage-gate funnel — Idea Generation → Concept Development & Testing → Business Analysis → Prototype Development → Market Testing → Commercialisation — with hard go/no-go decisions at each gate. The brutal industry statistic is that roughly 80% of new products fail in the marketplace; the discipline is built to kill weak ideas early when killing them is cheap. Service development adds an extra dimension: services are produced and consumed simultaneously, are inherently intangible, and depend on the service-profit chain (employee satisfaction → service quality → customer loyalty → profit).
Key concepts
- The stage-gate funnel. Idea Generation → Screening → Concept Development & Testing → Business Analysis (size, cost, ROI) → Prototype → Market Test → Launch. Gates kill weak ideas before they consume capital.
- Why most new products fail. Weak customer insight, technical infeasibility, poor positioning, late market timing, channel resistance, internal politics. The 80% failure rate is the industry baseline — the funnel exists to bend that curve.
- Product vs service development. Services are intangible, simultaneous (produced and consumed at once), heterogeneous (vary by employee and customer) and perishable (cannot be inventoried). The service blueprint replaces the engineering drawing.
- Voice of the customer (VOC). Ethnographic observation, jobs-to-be-done interviews (Christensen), conjoint analysis, beta testing. The goal is to discover the progress the customer is trying to make, not just feature preferences.
- Innovation typology. Incremental (line extension), radical (new-to-firm), disruptive (Christensen — starts low-end, climbs up), architectural (recombines existing components in new ways). Each requires different development resources and capital.
- Service-profit chain (Heskett et al.). Internal service quality → employee satisfaction → employee retention/productivity → external service value → customer satisfaction → customer loyalty → revenue growth and profit. Employee experience precedes customer experience — not vice versa.
Self-check
A consumer-goods company has spent ₹12 crore developing a new variant and is now at the Market Test gate. Test markets show CSAT is strong but repeat purchase is only 18% (the category benchmark is 45%). The product VP argues 'we've already spent ₹12 crore, let's launch nationally.' What is the correct stage-gate response?
- A. Launch — sunk cost has been paid
- B. Kill or significantly redesign — the ₹12 crore is a sunk cost; what matters is the forward-looking economics, and an 18% repeat rate against a 45% benchmark predicts national failure. The whole purpose of stage-gates is to make the kill decision when killing is still cheap
- C. Launch in one region only
- D. Run the same test for another 6 months
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Continue learning
- Map your firm's most recent product launch against the stage-gate funnel. At which gate were the kill signals first visible — and were they acted on, or did sunk-cost reasoning carry the day?
- Pick a current customer segment. Write down the job they are hiring your product to do. Now write down the alternatives they consider for the same job — are any of them outside your stated competitive set?
- If you audited your firm's NPS by employee tenure and engagement, where would the service-profit chain be breaking? What single intervention would close the biggest gap?
📝 Going deeper. Robert G. Cooper's Winning at New Products (5th ed., 2017) is the canonical Stage-Gate reference. Clayton Christensen's Competing Against Luck (2016) is the most accessible Jobs-to-Be-Done treatment. Heskett, Sasser & Schlesinger, The Service Profit Chain (1997) remains the foundational service-development read.