New Product Development

General Motors

Roberto CastilloJenilee KilburyApril 23, 2013MGMT-762

GM Through the Years

• Video

• New Product Development • Pre and Post Bankruptcy

• Future NPD at GM• Recommendations

Pre-Bankruptcy NPD1908-2009

New Product Development (1989)

• Process and Product Innovation• Manufacturing

• Cost Reductions

• Car models and features• 80% Applied Research• 53% focused on short range projects

• 12% Basic Research• Only 8% of researchers’ time focused on NPD

Koerner, E. Technology Planning at General Motors. Long Range Planning, Vol 22, No 2, p 9-19, 1989.

New Product Development• Silo Approach

• Research, Engineering and Manufacturing meet once a month• No formal communication between groups• “Advanced Engineering Staff”– Role is to be “matchmaker between enabling technologies and the

advanced production groups”– Gatekeeper

New Design Marketing Engineering Manufacturing

Koerner, E. Technology Planning at General Motors. Long Range Planning, Vol 22, No 2, p 9-19, 1989.

Pontiac Aztek

• Sold from 2001-2005• Best year sold >30k• Ranked on Time

Magazine’s• Worst Cars of All

Time (2007)• Worst Inventions of

All time (2010)

• Greatly Anticipated• Projected sales of

50-60k per year

http://www.cars.com/pontiac/aztek/2003/expert-reviews/

Disadvantages to Silo Approach

• 10-15 year time to market• Product decisions reviewed by as many as 70 executives• 2 months to make a decision

• 27 facilities each working on their own products• No collaboration• Overlap in work• Missed opportunities

• Approval of products were not necessarily based on clear commercial potential

• Lack of Environmental Monitoring in market• Inability to determine trends

New Design Marketing Engineering Manufacturing

Process of Innovation• 4 Phase product program

management• Decision/Approval after each

phase • “Pre-Phase 0”• Basic Research

• Phase 0• Critical path planning chart –

100 tasks• Concept vehicle• Corporate approval

Koerner, E. Technology Planning at General Motors. Long Range Planning, Vol 22, No 2, p 9-19, 1989.

Process of Innovation• Phase 1• Detailed design• Prototype produced to

validate design

• Phase 2• Testing• Pilot Production

• Phase 3• Final production• Continuous Improvement of

design

Koerner, E. Technology Planning at General Motors. Long Range Planning, Vol 22, No 2, p 9-19, 1989.

What went wrong?• Cutting costs – quality decline• Introduction of Japanese cars• Lack of environmental scanning• 90’s market shifting toward fuel-efficiency

• Attempted Saturn and Electric Car

• Focused on large sedans and SUVs • 2000’s Gas Prices Up – GM not prepared

• Silo Approach NPD• Slow time to market• Not agile – unable to quickly adapt to changing trend

Post-Bankruptcy NPD2009- Present

After Chapter 11

• Strategy• Culture Creation

• Cross Functional Team• Include the VOC• Cut brands • Decrease cost of marketing

• Goal: Reduce speed to market• Weekly meeting to discuss ideas

Management Changes

• Culture Change• Focus on quality Vs. cost savings• Speak up in development meetings• “Pride Builder”• You won’t win with Good Enough Attitude

Demographic Changes

• Penetrate into new markets • Baby boomers are not driving as much• Need to appeal to younger generation

Strategic Expansion

• Expanding into new strategic group• Creating a “luxury” • Cadillac Vs. BMW 3 Series

New Product Development

• Trends• Toyota Prius• Go Green Effect

• Chevy Volt • Electric car • Gas

• Innovation = increase on Stock Price• Public Offering had a good response• Increase stock price

Products: Chevrolet Volt

Product Innovation: Chevrolet EN-V

• Electric Networked Vehicle• Avoid Crashes • No gas• Drive and Park itself

GM and Risk with Product Innovation

• Technology improving faster than customer needs• Too sophisticated for users• Organization capabilities• Patents • Copy cat attack first

Process Innovation

• Acquisition of Financing Companies• Facilitated dealers to sell cars

Future

• Penetrate with new products into new markets• Australia, China, Brazil

• Radical Innovation• Keep developing self-electric driving cars

• Differentiation Strategy• Sustainable Production• Keep increasing engine efficiency • MPG

Recommendations

• Eliminate any formal process • Incentive creativity on key players• Increase ideas to the Funnel

• Ambidextrous firm• Radical Innovation = Blue Ocean • Incremental Innovation• Cut cost by Improving efficiency

Recommendations

• Outside Partners• Educate “Gas Station” to start new business as

energy stations• Risk( High Switching cost)

• Increase collaboration with Academia• Towards new energy production

• Keep aiming towards the Luxury Car business• Customers with high purchasing power

Recommendations

• Create unit of environmental scanning

Questions?

Thank You