Risk management at an early stage of new product development

Abstract

The world is moving at a very dynamic pace, and the unpredictability in the market environment is increasing rapidly. Hence the development of new products has become a challenge and has led to the failure of products in the market. To help overcome product failures, effective RM can play a vital role in the NPD process to reduce or manage risks proactively in the NPD process. Considering this aspect, studies also reveal that risks identified and managed at an ESNPD can help manage future risks efficiently down the NPD process. Furthermore, recent research concludes successful firms invest twice the money and time in the front-end activities before the development than unsuccessful firms. Hence this study seeks to investigate the current RM practices in PD industries and aims to provide necessary improvement proposals in this domain of research.

Risk and RM were defined based on various external frameworks like the ISO 31000, PMI & PRINCE2 to provide the basis of RM in this study. Furthermore, RM frameworks relevant to NPD were also reviewed in the literature review. To support the RM frameworks, extensive research was conducted in investigating two more research domain areas that are: (1) Potential risks identified at an ESNPD and (2) Standard RI techniques available for better risk identification at an ESNPD. Furthermore, a current state analysis was conducted in 5 PD case companies with 4 being SME’s and one large scale enterprise to identify loopholes in the RM practices in the industry. In addition to this, venture capital investors were also interviewed to get a broader perspective on this study.

The empirical results indicated that none of the companies utilises RM process frameworks and RI techniques in a structured manner to support their management of risks. The thesis concludes by discussing how to better RM in PD companies by proposing an integrated RM process framework model. The process framework was designed by considering the loopholes found from the empirical research that best fits the characteristic of the PD companies. This research study provides valuable basic information on the RM process frameworks at an ESNPD and RI techniques that support the RM frameworks, which can also help in terms of extensive research for the future in this area of study.