Product Development is the design of new products, or new features in old products that is meant to offer better benefits to the target users (Ulrich and Eppinger, 2012). Product Development goes further to involve the marketing of the created product. Several factors determine the success of Product Development. Broadly categorized, such factors include type of product in question, state of the target market and economy, the characteristics of the target customers among other factors within and beyond the company. All these factors constitute part of the risks faced by company involved in product development (Towey, 2013). Factors that make a company vulnerable to such risks include Internal Malice from company's own personnel, risks arising from Cyber Crime, Physical Intrusion, Customer Reception of the product, and Financial Risks among others. This paper discusses the above vulnerabilities in detail regarding a Product Development Company.
Internal Malice
A company could be vulnerable to the activities of its own staff. Employees could design to sabotage intentionally the process of developing a product leading to its failure. Such malicious acts may involve leaking of private information to competitors, deliberately failing to use the right components in making the product and by deciding to overlook some quality assurance stages of the product. One cause of such internal disorder could be poor employee relations. The best way to deal with such is through constant and open communication within the team that is involved in the product development. Another measure to prevent internal sabotage would be to put in place strict internal controls to the process.
Cyber Crime
Cyber Crime refers to external and unauthorized access to a company's systems (Ries, 2011). This can lead to loss of data that was backed up in the system, besides leading to loss of the trade secret regarding the product under development. This gives competitors an upper hand. To prevent this a company needs to put in place robust anti-hacking software to protect its systems against external attack. The company can also prevent this by ensuring that only few and authorized staff can access the system. The process of access itself should be strong and unlikely to be accessed by a single individual. Another way is to automate the systems to make sure not even the administrators know the access passwords.
Physical Intrusion
As the term suggests this type of vulnerability occurs when unauthorized persons get physical access into the place where the product is being developed. This could be because of burglary, or because of collusion between rightful people and those not authorized, or because of unauthorized persons faking identify and access into the product incubation rooms. To prevent such undesired intrusion a company should closely monitor access into the room by use of CCTV cameras, security codes, Biometrics of the personnel and even physical inspection and identity of those seeking access into the room.
Customer Reception
A company becomes more vulnerable to this risk when it undertakes develop a product without detailed market research to identify dynamics of the customers (Ries, 2011). To reduce the likelihood and the severity of this risk a company needs to be constantly in touch with its target customers and ask them the kind of product and features that they would want. Another way to manage this vulnerability is to carry out product testing before its release into the market.
Financial Risk
This happens in the event a new product fails to create adequate demand that will profit the company (Vyas, 2015). As a result, the company ends up having spent more money in product development than it can get from the sale of the product. To manage this risk a company should come up with a product development budget and stay within its limits. Another way is to take cost reduction measures such as simplification of the process, adoption of technology and seeking affordable alternatives. More importantly, the company should be keen in market research to ensure they only develop what the market needs.
Risk Assessment Matrix
The Risk Management tool is used to help companies in decision making on what risks need greater efforts to curb. It involves both quantitative and qualitative risk assessments (Haimes, 2013). This matrix prioritizes the risks in order of their severity and likelihood of them happening (Dallas, 2006). It creates categories of risk ranging from those with high severity and likelihood to those with low. This helps the decision makers. The above risks could be prioritized as follows based on their severity in case they happen:
Financial Risk. - Critical risk
Customer Satisfaction. - Serious risk
Cyber Crime. - Moderate risk
Internal Malice. - Minor risk
Physical Access. - Negligible
The risks could be assessed using the matrix below:
Key:
References
Dallas, M. (2006). Value and risk management: A guide to best practice. Oxford: Blackwell Pub.
Haimes, Y. Y. (2013). Risk modelling, assessment, and management. Hoboken, N.J: Wiley.
Ulrich, K. T., & Eppinger, S. D. (2012). Product design and development. New York: McGraw-Hill/Irwin.
Ries, E. (2011). The lean start-up: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York, NY: Crown Business
Towey, D. (2013). Cost management of construction projects. West Sussex, UK: Wiley Blackwell
Vyas, V. S. (2015). Low cost, low-tech innovation: New product development in the food industry. London: Routledge
