Product development does not occur in isolation as a separate functional activity. It is a company philosophy, a basic company strategy and a multifunctional company activity. In recent years to show this all-encompassing basis, bringing together product, process, marketing and organisational innovations, there has been development of an overall innovation strategy. This innovation strategy is related to the company's overall business aims and strategy, as well as the social, economic and technological environment, and the company's own knowledge and skills. The business strategy also includes a product strategy outlining the products of the future. The combination of the innovation and product strategies is the basis for the product development strategy, and from this can be developed, with the company's technology strategy, the product development programme as shown in Fig. 2.1. In building business and innovation strategies, it is important to recognise that from them comes a product development programme both for many years ahead and for the immediate year.
The innovation strategy is built up in the business strategy from the innovation possibilities, but only after thorough coordination with the product, marketing and technology strategies. The product development strategy is then built from the innovation strategy, together with other parts of the business strategy such as product mix planning and marketing strategy. Finally from the new product portfolio and the product development strategy is built the product development programme. In this way the product development programme sits harmoniously with the strategic direction of the company, the company's technical and marketing capabilities, and the customers in its ultimate market.
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