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Predevelopment: An Innovation Advantage—A Natura Case Study
By: Sabrina Clepf, Vânia Passarini Takahashi, Flávio Bueno Camargo Junior and Patrícia Maria Berardo Gonçalves Maia Campos
Posted: October 26, 2012, from the November 2012 issue of GCI Magazine.
- 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.
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.