Business Ethics and Social Responsibility
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Business Beyond Profit Motivation: Innovative Ways in Developing New
Products
Module 017
Business Beyond Profit Motivation:
Innovative Ways in Developing New Products
What is the purpose of doing business if it is not being profitable? Earning money
and being profitable should not be the sole purpose of the business. Is should
only serve as an indicator that the venture is doing well.
At the end of this module, you will be able to:
1. Realize why an entrepreneur must look beyond profit in establishing its
business.
2. Recognize the purposes of launching a business.
3. Know the importance of Developing New Products to sustain a business.
Business Beyond Profit Motivation
According to Torben Rick, businesses with a strong sense of purpose are more successful.
Torben Rick share a list of list of 7 good reasons not to use profit as our primary purpose:
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According to Nikos Mourkogiannis, author of Purpose: The Starting Point of Great
Companies, there are four main types of purpose in establishing a business:
1. Discovery – rooted in intuition that life is a kind of adventure. Example: Apple and
their goal to always come up with the new / most innovative products (esp. in
comparison to Microsoft who clearly follows a different path).
2. Excellence – implies standards and purports the belief that excellent performance in
our role in life represents the supreme good.
3. Altruism – a purpose built in serving its customers in a way that is beyond standard
obligation. Example: Wal-Mart, Body Shop.
4. Heroism – demonstrates achievement (often with a charismatic and visionary
leader). Example: Ford, Microsoft.
Source: Wendy St Clair Pearson review
An entrepreneur whose only purpose is for personal gain, for abundant profit, may
have a dead end in their cause. Stand for something beyond simply increasing
profits. A true vision for a business rests on foundations of both purpose and
values. The business goals must be in parallel with this foundation. Without a clear
foundation, a business will be in peril.
Innovative Ways in Developing New Products:
New products and services are the lifeblood of all businesses. Investing in their
development is a part of any venture and should not be taken for granted. It is crucial to
business growth and profitability. But embarking on the development process is has its
uncertainties. It needs considerable planning and organization.
THE LIFECYCLE OF PRODUCTS AND SERVICES
Introduction
Decline Growth
Maturity
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Business Beyond Profit Motivation: Innovative Ways in Developing New
Products
Stages in the Lifecycle of Any Product or Service:
1. Development - at this stage product or service is only an idea or a concept.
There will be a need to invest on research and development.
2. Introduction - this stage is the launch the businesses product or service. There
will be a need to invest on marketing.
promote consumer awareness
get customers to try the product
educate consumers about the product
3. Growth - this stage is when the product or service is establishing itself. The
business will be encountering competitors, and through crucial planning and
intensive marketing, sales will be growing and profit margins will be at a good
position. This will then be the perfect time to work out on the reduction of the
costs of delivering the new product.
4. Maturity - sales growth is slowing down or a possibility that it will even stopped.
Cost has been trimmed down and been able to reduce production and marketing
costs, but increased competition has driven down prices. Now is likely to be the
best time to invest in a new product.
5. Decline - new and improved products or services are on the market and
competition is high. Sales fall and profit margins decline. Increased marketing
will have little impact on sales and won't be cost-effective unless new markets
are identified.
Developing the tangible product or service is only a small part of the new product
development process, which includes the complete journey from generating the initial
idea to bringing the product to market.
By setting out the steps, the business product development will become more attuned,
focused and flexible approach that can be adapted for all different types of products
and services.
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What can be done to extend the Product Life Cycle?
• Develop new uses for the products
• Develop new product features and line extensions
• Increase the existing market (target market)
• Change Marketing Mix (5P’s)
• Link products to a trend
8 Step Process Perfects New Product Development
An entrepreneur must know that productivity is one of the key ingredients for successful
product development. One of the two key processes in Robert’s Rules of Innovation is
the NEW PRODUCT DEVELOPMENT PROCESS.
The New Product Development process is often referred to as The Stage-Gate
innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive
research on reasons why products succeed and why they fail.
When an entrepreneur focuses and collaborate in developing new innovations, adopting
the following eight ingredients into your system of innovation will aid to ensure that it’s
overall marketability will happen immediately, and accurately, making everyone
productive across the board.
Step 1: Generating Idea
The development of a product will always start with a concept. The rest of the process
will guarantee that ideas are tested for their possibility, so in the beginning all ideas are
simply good ideas.
Idea comes in different forms and directions. It is important to start with utilizing basic
internal and external SWOT analyses, (Strengths, Weaknesses, Opportunities and
Threats), as well as current marketing trends, one can distance themselves from the
competition by generating ideologies which take affordability, ROI, and widespread
distribution costs into account.
In addition to this business-centred activity, are methods that focus on the customer’s
needs and wants. This could be:
Under-taking market research
Listening to suggestions from your target audience – including feedback on your
current products’ strengths and weaknesses.
Encouraging suggestions from employees and partners
Looking at your competitor’s successes and failures
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Business Beyond Profit Motivation: Innovative Ways in Developing New
Products
Step 2: Screening The Idea
This step is crucial to ensure that unsuitable ideas may instantly be rejected as soon as
possible. Ideas need to be considered objectively, ideally by a group or committee or
department.
Specific screening criteria need to be set for this stage, looking at ROI, affordability and
market potential. These questions need to be considered carefully, to avoid product
failure after considerable investment down the line.
Step 3: Concept Development and Testing The Concept
Concept testing must be done after idea screening but it is different from test
marketing.
One has an idea and it passed the screening stage. However, internal opinion is not the
most important. You need to ask the people, the customers, through survey.
There are different ways to test concepts. For instance, using a small group of your true
customer base – those that convert – the idea need to be tested to see their reaction.
The idea should now be a concept, with enough in-depth information that the consumer
can visualise it.
Aside from patent research, design due diligence, and other legalities involved with new
product development; knowing where the marketing messages will work best is often
the biggest part of testing the concept. Does the consumer understand, need, or want
the product or service?
Step 4: Business Analytics
During the New Product Development process, build a system of metrics to monitor the
development and progress. Include input metrics, such as average time in each stage, as
well as output metrics that measure the value of launched products, percentage of new
product sales and other figures that provide valuable feedback. It is important for an
organization to be in agreement for these criteria and metrics.
Once the concept has been tested and finalized, a business case needs to be put
together to assess whether the new product/service will be profitable. This should
include a detailed marketing strategy, highlighting the target market, product
positioning and the marketing mix that will be used.
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This analysis needs to include: whether there is a demand for the product, a full
appraisal of the costs, competition and identification of a break-even point.
Step 5: Test Marketing
Test marketing is different to concept or consumer testing, in that it introduces the
prototype product following the proposed marketing plan as whole rather than
individual elements.
This process is required to validate the whole concept and is used for further refinement
of all elements, from product to marketing message.
Arranging private tests groups, launching beta versions, and then forming test panels
after the product or products have been tested will provide you with valuable
information allowing last minute improvements and tweaks. Not to mention helping to
generate a small amount of buzz. WordPress is becoming synonymous with beta testing,
and it’s effective; Thousands of programmers contribute code, millions test it, and
finally even more download the completed end-product.
Step 6: Product Development
If the new product is approved, it will be passed to the technical and marketing
development stage. This is when a prototype or a limited production model will be
created. This means you can investigate exact design & specifications and any
manufacturing methods, but also gives something tangible for consumer testing, for
feedback on specifics like look, feel and packaging for example.
Provided the technical aspects can be perfected without alterations to post-beta
products, heading towards a smooth step 7 is imminent. According to Akrani, in this
step, “The production department will make plans to produce the product. The
marketing department will make plans to distribute the product. The finance
department will provide the finance for introducing the new product”.
As an example; In manufacturing, the process before sending technical specs to
machinery involves printing MSDS sheets, a requirement for retaining an ISO
9001 certification (the organizational structure, procedures, processes and resources
needed to implement quality management.)
In internet jargon, honing the technicalities after beta testing involves final database
preparations, estimation of server resources, and planning automated logistics. Be sure
to have your technicalities in line when moving forward.
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Business Beyond Profit Motivation: Innovative Ways in Developing New
Products
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are
purchasing your good or service, and technical support is consistently monitoring
progress. Keeping your distribution pipelines loaded with products is an integral part of
this process too, as one prefers not to give physical (or perpetual) shelf space to
competition. Refreshing advertisements during this stage will keep your product’s name
firmly supplanted into the minds of those in the contemplation stages of purchase.
When the concept has been developed and tested, final decisions need to be made to
move the product to its launch into the market. Pricing and marketing plans need to be
finalised and the sales teams and distribution briefed, so that the product and company
is ready for the final stage.
Step 8: Post Launch Review and Perfect Pricing
The detailed launch plan is needed for this stage to run smoothly and to have maximum
impact. It should include decisions surrounding when and where to launch to target
your primary consumer group. Finally in order to learn from any mistakes made, a
review of the market performance is needed to access the success of the project.
New product development can be made much simpler and focused, with a higher
likelihood of success, by following these steps to guide you.
Review the NPD process efficiency and look for continues improvements. Most new
products are introduced with introductory pricing, in which final prices are nailed down
after consumers have ‘gotten in’. In this final stage, you’ll gauge overall value relevant
to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new
product profits. You continuously differentiate consumer needs as your products age,
forecast profits and improve delivery process whether physical, or digital, products are
being perpetuated.
Remember: The Process Is Loose
The entire new product development process is an ever evolving testing platform where
errors will be made, designs will get trashed, and loss could be recorded. Having your
entire team working in tight synchronicity will ensure the successful launch of goods or
services, even if reinventing your own wheel. Productivity during product development
can be achieved if, and only if, goals are clearly defined along the way and each process
has contingencies clearly outlined on paper.
Example of New Product Development:
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Glossary
Altruism: the belief in or practice of disinterested and selfless concern for the well-being
of others
Innovative: introducing new ideas; original and creative in thinking.
Heriosm: bravery
Profit: obtain a financial advantage or benefit, especially from an investment.
Contingency: an incidental expense.
References and Supplementary Materials
Books and Journals
Maximiano, J.M. B.; Business Ethics and Corporate Social Responsibility; 2014;
Philippines; Anvil Publishing Inc.
Online Supplementary Reading Materials
How Great Companies Think Differently; Https://hbr.org/2011/11/how-great-companies-
think-differently; June 26, 2017
Having a Purpose Beyond Profit; Https://www.torbenrick.eu/blog/organisational-
development/having-a-purpose-beyond-profit/; June 26, 2017
Develop New Product and Services; http://www.infoentrepreneurs.org/en/guides/develop-
new-products-and-services/; June 26, 2017
Online Instructional Videos
Chapter 10 - Video #1 - Developing New Products and Services;
https://www.youtube.com/watch?v=2dsOokAwDK8; June 28, 2017
