PRODUCTPLANNINGANDSTRATEGYFORMULATION 173- LicensesandPatents.Apatent,andtherelatedlicense,arisefromlegalefforts
toprotectpropertyrightsofinvestorsorofthosewhoowninventions.Apatent
isacquiredfromtheU.S.PatentOfficeandprovideslegalcoveragefora period
ofseventeenyears,whichmeansallothermanufacturersareexcludedfrommak-
ingormarketingtheproduct.However,therearenofoolproofwaystoprevent
competition.Therearetwomaintypesofpatents:thoseforproductsandthose
forprocesses.Thefirstcoversonlytheproduct'sphysicalattributeswhilethelat-
tercoversonlya phaseofa productionprocedure,nottheproduct.Thepatentholder
hastherighttoitsassignmentorlicense.Anassignmentisanyoutrightsale,with
thetransferofallrightsofownershipconveyedtotheassignee.Alicenseis a right
tousethepatentforcertainconsiderationsinaccordancewithspecificterms,but
legaltitletothepatentremainswiththelicensor. - JointVentures.Whentwoormorecompaniescreatea thirdorganizationtocon-
ducta newbusiness,ajointventureexists.Thisorganizationstructureemerges,
primarily,wheneithertheriskorcapitalrequirementsaretoogreatforanysin-
glefirmtobear.Lackoftechnicalexpertise,limiteddistributionnetworks,and
unfamiliaritywithcertainmarketsareotherpossiblereasons. Jointventuresare
commoninindustriessuchasoilandgas,realestate,andchemicals,orbetween
foreignanddomesticpartners.
Jointventureshaveobviousapplicationtoproductdevelopment.Forexam-
ple,smallfirmswithtechnologicalresourcesareaffordedanopportunitytoacquire
capital0:-marketingexpertiseprovidedbya largerfirm.
TheNewProductDevelopmentProcess
Evidencesuggeststhattheremaybeasmanyvarietiesofnewproductdevelopmentsys-
temsastherearekindsofcompanies. Forthemostpart,mostcompaniesdohavea formal
comprehensivenewproductdevelopmentsystem,andtheevolutionofsuchsystemswere
notnecessarilytheresultofsystematicplanning.ThelistofactivitiessuggestedinFigure
7.5illustratestheextensivenessofthisprocess.Becauseofthecomplexityoftheprocess,
itisimportantthatthegeneralguidelinesofeffectivemanagementbeappliedtonewprod-
uctdevelopment. 13
Beforestartingourdiscussionoftheeight-stepprocessofnewproductdevelopment,
a necessarycaveatshouldbeconsidered:a greatmanynewproductsfail.Dependingon
definitionsusedfol'productsactuallyintroduced,failure ratesrangebetween 20 percent
and 30 percent,buthavebeenashighas 80 percent.Ofmoreconcernthantheleveloffail-
urearethereasonsforfailure. Possibilitiesinclude:technicalproblems,badtiming,mis-
understandingtheconsumer,actionsbycompetitors,andmisunderstandingtheenvironment.
Step1 :GeneratingNewProductIdeas
Generatingnewproductideasisa creativetaskthatrequiresa specificwayofthinking.
Gatheringideasiseasy,butgeneratinggoodideasisanotherstory.Examplesofinternal
sourcesare
- Basicresearch:manycompanies,suchasDuPont,haveseveralscientistswhoare
assignedthetaskofdevelopingnewproductideasandrelatedtechnology. - Manufacturing:peoplewhomanufactureproductsoftenhaveideasaboutmodi-
ficationsandimprovements,aswellascompletelynewconcepts.