New Product Development Process for Physical-Digital Products : A Case Study of a Swedish Manufacturing Company

Abstract: Manufacturing firms are realising the customer value and competitive edge that can be captured through digitalisation. Manufacturing firms are therefore striving to integrate digital technologies on the existing product range to create an ecosystem of connected products to create, monitor and manage the aftermarket product services. The integration introduces multiple conflicting innovation regimes into the organisation namely product innovation and digital innovation regime. This changes the way traditional manufacturing companies work with dynamics business models and dynamic market conditions requiring a new approach to maintaining customer relationships, rethinking the organizational structure and product developmental processes. The current study focuses on the product development challenges to which the manufacturing companies are exposed while developing connected products. Physical development processes are characterised by physical materiality, long lead times, upfront planning, early binding following a linear development framework while digital innovation is characterised by digital materiality, shorter lead time, multiple launches, late bindings which follows an iterative agile model of development. The contrasting characteristics create challenges for executing physical-digital product development projects. A Swedish manufacturing company is considered as a case study company and 19 process challenges are identified and reported in the current study through interviews with 26 stakeholders from diverse functions along with secondary data observations from project interaction meetings. These challenges are prioritised and group into five overarching challenges which are lack of integrated development process, coordination issues, integration issues, knowledge gap and resources issues. Three external companies are interviewed to compare challenges in the physical-digital product development process and identify process and practices adopted by the companies to mitigate those challenges. Based on the insights from the literature study, interviews from the case company and external companies, six recommendations were proposed. The recommendations include defining clear roles and responsibilities, creating a TRL chart for connectivity, strengthen front-loading activities, developing connectivity integrated NPD process, creating a flexible framework for functions to coordinate and develop connectivity integrated testing process.