Product development
Product development
Product development is where organisations deliver modified og new products to existing markets. This is a limmited extention of organisational scope. In practice, even markets penetration will probably require some product development, but here product development implies greater degrees of innovation. However, product decelopment can be an expensive and high-risk activity for at least two reasons.
New strategic capabilities
Product development typically involves mastering new technologies that may be unfamiliar to the organisation. For example, many banks entered online banking, at the beginning of this century, but suffered many setbacks with technologies so radically different to their traditionally high street branch means of delivering bank services. Thus project development typically involves heavy investments and high risk of project faliur.
Project management risk
Even within fairly familiar domains, product development projects are typically subject to the risk of delays and increased costs due to projects complexity and changing project specifications over time. A famous recent case was the 11bn euro Airbus A380 double-decker airline project, which suffered two years of delay in the mid-2000s because of wiring problems. Airbus had managed several of aircraft developments before, but the high degree of customisation required by each airline customer, and incompatibilities in computer-added design software, led to greater complexity than the company’s project management staff could handle.