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Strategic Product Planning Strategic Product Planning – The Enlightenment An explorative mapping of formal processes within Nordic-based industrial companies Master of Science Thesis in the Master’s Degree Programs Management and Economics of Innovation, and Supply Chain Management KRISTOFFER CLAESSON DANIEL LOVENBÄCK Department of Technology Management and Economics Division of Innovation Engineering and Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden, 2012 Report No. E 2012:075 MASTER’S THESIS E 2012:075 Strategic Product Planning – The Enlightenment An explorative mapping of formal processes within Nordic-based industrial companies KRISTOFFER CLEASSON DANIEL LOVENBÄCK Tutor, Chalmers: Magnus Holmén Tutor, Triathlon: Martin Karlsson & Peter Bengtsson Department of Technology Management and Economics Division of Innovation Engineering and Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden 2012 Strategic Product Planning – The Enlightenment – An explorative mapping of formal processes within Nordic-based industrial companies © Kristoffer Claesson, Daniel Lovenbäck, 2012 Master’s Thesis E 2012:075 Department of Technology Management and Economics Division of Management and Economics of Innovation Chalmers University of Technology SE-412 96 Gothenburg, Sweden Telephone: + 46 (0)31-772 1000 Chalmers Reproservice Gothenburg, Sweden, 2012 Acknowledgements Since this master’s thesis, carried out during the spring of 2012, has been one of the largest academic projects conducted by us up until this date it has been both challenging and inspiring. It has been a major step in finalizing our studies within the area of Industrial Engineering and Management at Chalmers University of Technology. During our work with the master’s thesis we have had the privilege to receive valuable input and guidance from multiple sources in our effort to finalize the report, and we are grateful for each and every one of them. Firstly we would like to thank our supervisor at Chalmers University of Technology, Magnus Holmén, for his support during this thesis. He has provided us with valuable input and constructive criticism when needed, and we appreciate every meeting we have had. We would also like to thank our supervisors at Triathlon, Martin Karlsson and Peter Bengtsson, for their guidance and feedback provided. We have also had the ability to receive feedback from industry senior advisor within the ISEA group, which has been highly helpful. In addition to these special acknowledgements we would also like to show our appreciation to all the employees at Triathlon for their positive and encouraging attitude, as well as towards all the people and companies that have given us their time and energy to participate in the study. Gothenburg, June 2012 Kristoffer Claesson and Daniel Lovenbäck Note 1: The initiator of this master’s thesis was Triathlon Consulting Group, hereafter referred to as Triathlon. Triathlon is a management consultancy firm serving large, multinational, industrial clients based in the Nordic region. The firm focuses on management issues within the areas strategy, opera- tions, and finance. (Triathlon, 2012) Note 2: Input and feedback on this master’s thesis has also been provided by ISEA, Industry Senior Advisors, an organization consisting of a large number of executives and experts in the late stage of their careers. ISEA has direct access to senior expertise in many areas through its partners and through individual associate memberships. (ISEA, 2012) Note 3: The investigated companies in this master’s thesis include: ABB, Alfa Laval, Arkivator, Astra Tech, AstraZeneca, Atlas Copco, Atlet, Electrolux, Ericsson, ESAB, Fläkt Woods, Gambro, Getinge, Geveko, GGP Sweden, Höganäs, Kemira kemi, Mölnlycke Health Care, Plastal, Saab Group, SCA, Scania, SKF, Sony, Swegon, Thule, Volvo Aero, Volvo Buses, Volvo Cars, Volvo Construction Equipment, and Volvo Trucks. In addition to the mentioned companies a number of companies have chosen to be anonymous in this study. Abstract Strategic product planning (SPP) consists of the continuous planning process of deciding which products should be offered to the market in order to reach future business goals, while considering the alignment of market demand and R&D capabilities. This master’s thesis analyses how SPP is conducted in Nordic-based large to medium sized industrial companies by focusing on three aspects; how companies organize their SPP process, how the companies align the market demand with their R&D capability, and how companies evaluate their product portfolio. In addition to this a set of eight contextual factors has also been evaluated in order to explain the differences in the way companies conduct SPP and their SPP performance. Data was collected from 36 reference points acquired through structured/semi-structured telephone interviews. Before conducting the interviews an explorative study was made, where literature was studied, industry experts were consulted, and interviews with representative companies were held. The study shows that companies tend to have a product management function responsible for the planning, with a marketing or sales function included together with a R&D function. The frequency of conducting the planning is often annually, with a planning horizon of approximately five years. When companies evaluate their SPP performance typical measures are success and accuracy of products and projects. Companies tend to have a departmental responsibility in place in order to ensure the alignment between market demand and R&D capabilities. Companies also tend to evaluate their portfolio based on financial parameters, strategic fit, and customer or market oriented parameters. When balancing the portfolio between different types of products there are usually no formal processes in place. Companies tend to focus on individual projects rather than the whole product portfolio. They also focus on adding new products rather than evaluate existing products. The contextual factors evaluated in the study influence the SPP process in different ways, where turnover is the most significant influencer. Time-to-market, product complexity, and portfolio complexity also show high degree of signification. Conclusions from the study are that company turnover is often correlated with how the company is organized. Companies showing a higher turnover also rank themselves higher on their overall SPP performance. This is argued to stem from higher degree of formal processes in companies with higher turnover. Table of Contents 1 Introduction ................................................................................................................................ I 1.1 Background ......................................................................................................................... 1 1.2 Purpose ............................................................................................................................... 3 1.3 Structure of the thesis ......................................................................................................... 3 2 Theoretical framework ................................................................................................................4 2.1 Organization of the strategic product planning process ....................................................... 5 2.1.1 Functions included in the planning and planning responsibility .................................... 5 2.1.2 Planning horizon .......................................................................................................... 5 2.1.3 Roadmapping............................................................................................................... 6 2.2 Alignment of market demand and R&D capabilities ............................................................. 7 2.2.1 Alignment of marketing and R&D functions within firms .............................................. 8 2.3 Product portfolio evaluation .............................................................................................. 10 2.3.1 Portfolio planning ...................................................................................................... 10 2.3.2 Portfolio Management ............................................................................................... 12 2.4 Contextual factors influencing strategic product planning.................................................. 14 2.5 Strategic product planning performance............................................................................ 16 2.5.1 Performance measures .............................................................................................. 16 3 Methodology ............................................................................................................................18 3.1 Research process and method ........................................................................................... 18 3.1.1 Explorative study ....................................................................................................... 18 3.1.2 Data collection ........................................................................................................... 19 3.1.3 Data compilation and analysis .................................................................................... 20 3.2 Research questions............................................................................................................ 21 3.3 Quality criteria..................................................................................................................
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