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- Innovation may generally be defined as a complete activity that starts with the conception of an idea and ends in commercialization.
- It is clear that companies capable of mobilizing their knowledge and technological capacities to create new products, processes and services have a distinct competitive advantage.
- The predevelopment phase is essential to innovative companies, considering that it is in this phase where new opportunities are identified and ideas are transformed into concepts with increased potential for success.
As product life cycles have been substantially reduced and technological and competitive environments are fast-changing, there is an urgency to improve innovation processes. Thus, any company intending to compete on the basis of innovation must be proficient in all phases of the new product development process.
However, recent surveys show companies that accurately conduct the early phase of product development, the predevelopment phase, have a higher probability of overcoming innovation challenges. Two factors were identified as playing a major role in product success: quality of execution of predevelopment activities and a well-defined project prior to the development phase.
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Managers suggest that the early development phase of innovation (often called “predevelopment,” “pre-phase” or “fuzzy front end”) provides the greatest opportunity to optimize the product development process. At this early stage, the effort to optimize is low but the effect on the total innovation process is high. Future projects are defined, and cost and time reductions often result. Consequently, competence in managing the front end of product development is meaningful to new product success.
In this context, beauty companies, seeking new markets and revenues have heavily invested in technological innovation and in the development of products. As a rule, a new product must be developed within a period of approximately six months, which is a very short period when compared to the development of pharmaceutical products, for example—though it’s worth noting the quality and amount of research being invested in beauty product development is equivalent to that of dermatologic pharmaceuticals.
The global beauty industry is dominated by big enterprises that rely on technological capacity and commercial intelligence, and product differentiation and innovation capacity are key to competing effectively.
In Brazil, for example, the astounding growth of the beauty market is due, in part, according to the Brazilian Toiletry, Perfumery and Cosmetic Association (ABIHPEC), to the development of new technologies and constant introduction of new products.
Considering the importance of predevelopment activities and the large potential for growth of the Brazilian beauty industry, this article will analyze and describe the activities of the predevelopment phase adopted by Brazilian-based Natura Cosméticos S.A., in the context of technological innovation.
The period between the time when a product opportunity is first considered and when the idea is judged ready for development is defined as a predevelopment phase. During the predevelopment phase, the organization develops product concepts and determines which ideas should receive resources in order to be developed. Hence, this phase represents a group of strategic, conceptual and planning activities in order to establish goals that precede the new product development process.
Concerning the differences between the predevelopment and the development phases, the predevelopment phase is intrinsically non-routine, dynamic and uncertain, since the development idea and its subsequent selection typically requires ad hoc decisions and not well-defined processes. Thus, many of the practices that aid product development do not apply to the predevelopment phase. The nature of work, commercialization dates, funding levels, revenue expectations, activities and measures of progress are basically different.
However, many development phase activities are based on the quality of the predevelopment outcome. It has been verified that the main outcome is the unambiguous product definition, since it allows estimating development requirements such as cost, time, required technical expertise, the appropriated development team, market potential and positioning, risk and organizational fit. These outcomes might be classified into product definition, time and people dimensions. Hence product definition determines what product will be developed, duration of the predevelopment phase determines when the development phase begins, and people management is related to successful transfer of the project team commitment to the development phase.
There are several definitions and process models for the early phases of the product development. In “Predevelopment activities determine new product success” (Industrial Marketing Management, 1988), R.G. Cooper divided predevelopment into four stages: idea generation, initial screening, preliminary evaluation and concept evaluation—with emphasis on the importance of both market-related and technical activities.
Some experts suggest that predevelopment includes product strategy formulation and communication, opportunity identification and assessment, idea generation, product definition, project planning and executive reviews.
The most robust predevelopment model probably is a theoretical model called the New Concept Development Model (NCD Model), which provides a common terminology for the predevelopment phase. The model consists of three sections, the uncontrollable influencing factors, the engine and the five key elements. The influencing factors are relatively uncontrollable by the corporation and consist of organizational capabilities, the outside world (distribution channels, law, government policy, customers, competitors, political and economic climate) and the enabling science (internal and external) that may be involved. The controllable engine is the leadership, culture and business strategy of the organization that drives the five key elements. The controllable five key elements are opportunity identification, opportunity analysis, idea generation and enrichment, idea selection and concept definition.
In this phase, the organization identifies opportunities that it might want to pursue. Business and technological opportunities are considered so that resources will be allocated to new areas of market growth, operating effectiveness and efficiency.
Road mapping, technology trend analysis and forecasting, competitive intelligence analysis, customer trend analysis, market research and scenario planning are the main methods utilized in opportunity identification.
In this phase, an opportunity is assessed to confirm that it is worth pursuing. Supplementary information is needed for specific business and technology opportunities. It involves early and regular assessments of market and uncertain technology. Many of the same tools used in opportunity identification are used in this element as well.
Idea Generation and Enrichment
Idea generation and enrichment may be a formal process, including brainstorming sessions and idea banks, prompting the organization to generate new or modified ideas for the identified opportunity. Alternatively, a new idea may also be generated outside the boundary of any formal process—such as an experiment that goes wrong.
Idea generation and enrichment may supply opportunity identification, demonstrating that the NCD elements often work in a nonlinear form. Some of the most effective tools and techniques include an organizational culture that encourages employees to generate their own ideas, varies incentives, creates an online idea bank, establishes a formal role for someone to coordinate ideas from generation through assessment, and provides a mechanism to handle ideas outside the organization.
In general, idea selection requires an iterative series of activities that are likely to include multiple passages through opportunity identification, opportunity analysis, and idea generation and enrichment—frequently with new insights from the influencing factors and new directives from the engine. This task should be done in a formal way and rapid feedback should be provided to the idea generators.
To initiate product development, the innovator must make a compelling case for investment in the business or technology proposition. This document may contain objectives, concepts matched to corporate strategies, potential of opportunity, market or customer needs and benefits, and a business plan that specifies a specific win-win value proposition for value chain participants.
The NCD Model, with its common language and terminology, is considered the main contribution to this survey, and it was applied and tested in the Natura case study.
The development of new beauty products that will satisfy consumer desires requires knowledge in areas such as dermatology, physiology, pharmacology, immunology, etc.—as well as expertise in several technology and scientific fields specific to the product.
There are, typically, six stages in the beauty product development process, according to recent studies.
- Planning: Identification of market tendencies and opportunities in line with the commercialization plan adopted by the company. Evaluation of available technology and resources for the development of a new product.
- Concept Development: Establishment of the product profile based on market opportunities and available technology. The product concept must include information about its functions, benefits, presentation, aesthetic aspects, packing characteristics, estimated cost, the targeted market segment and a proposed launch date.
- System-level Design: Investigation of packaging, ingredients and other physical components and the means of production that answer the established requirements for the product. This includes research on equipment, ingredient suppliers and scientific publications, and then elaborating on the preliminary list of components with cost requirements, production and regulatory concerns in mind.
- Detail Design: Prototypes are built, and testing is undertaken toward improving the prototypes.
- Testing and Refinement: Performance tests on volunteers is undertaken to evaluate the formulation performance and its gauge acceptance by the consumer. Formulation improvements are still underway.
- Production/Scale Up: After proper testing and legal approval, production of the first product units begins, and trials are undertaken to evaluate and improve the conditions of product performance.
In summary, to develop beauty products that fit consumer desires, companies should effectively execute all stages of a development process that embraces distinct scientific and technological fields.
While product cycles have been shortened and the technological and competitive environment has changed rapidly, companies must be able to quickly convert technology into new products and, at the same time, answer the demands of consumers. In this context, the predevelopment phase is essential to innovative companies, considering that it is in this phase where new opportunities are identified and ideas are transformed into concepts with increased potential for success.
The objective of this study was to analyze and describe the activities of the predevelopment phase adopted by Natura, which averages 300 product introductions over a two-year period. Its product innovations are both incremental and radical, and the latter are developed, primarily, inside the company.
Product innovation ensures the company does not remain stuck in traditional technologies, though it works in the context of a sustainable innovation. The company focuses on the technologies that make it possible to introduce a group of attributes totally different from those already recognized by consumers, and the search for new attributes/claims is constant.
In recent years, too, Natura developed new products in partnership with research centers as well as national and international universities. The search for partners demonstrates that the company is aware it is necessary to develop new technological abilities to increase its innovation capacity. When new capabilities are developed, it allows the company to understand the waves of innovation and even anticipate them, increasing the potential to fulfill future market needs.
Natura’s predevelopment activities, analyzed according to the NCD Model (from the identification of opportunities through product concept), are highly influenced by marketing and technological tendencies. Searching for the best way to identify these tendencies, the company has developed a management model based on funnels. From simple ideas to the complex activities, the initiatives that may result in a new product go through the innovation funnel and the product funnel—two processes with different focuses but aligned to create constant dialogue. The funnel models allow the elevation of market competitiveness and differentiators through a strategic analysis and meeting consumer needs.
The authors are grateful for the financial support of Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES). Also the authors gratefully acknowledge the Natura Cosméticos.
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