Skullcandys New Product Development - Essay Example

?Introduction Skullcandy, the pioneer that introduced headphone that connects to both the cell phone and an MP3 player. By following the dream that Rick Alden had, the company soon broke its $1 million sales in 2005. The growth of the company was inevitable and in the following year the company sold almost $10 million worth of products in the market. The aim of this report is to highlight the team structure used in the development of new products at Skullcandy. In addition, the report would also highlight the reasons for adopting such a team structure along with the size and growth of the company. This report would also provide the sources of innovation at the company founded by Alden and would also highlight the importance of these sources in relation to development cycle, collaboration and supply chain. In the end, a brief conclusion would summarize the main idea behind the case study.  Skullcandy’s New Product Development Team Structure The team structure applied for the new product development at Skullcandy was a mixture of topologies. It was observed that from senior management to employees, every single employee was involved in the development process. This indicates that the team structure applied was a mixture of lightweight and heavyweight topologies. Types of developments teams include; functional teams, lightweight teams, heavyweight teams and autonomous team structures (Bach, 2005). At Skullcandy, the team structure that was applied for the new product development was a combination of lightweight and heavyweight team structures. But because the company’s size was small, the company was focusing more on lightweight team structure and generally smaller firms rely on lightweight team structure (Boxall, Purcell, & Wright, 2007). This lightweight structure could be observed in the development of products with the help of following evidence. a) The aim of the first team was to decide upon the functionality of the product to make it attractive and eye-catching. b) In the second phase of new product development, designers provided the company with finalized sketch based upon the requirement of the company so that the company could provide its customers with the best available headphones in the market. c) Furthermore, marketers were added to the team to devise marketing strategies around the product. The aim of this team was to gain initial sales contracts based on the prototypes provided by the designers. d) The last team that was involved in the new product development was for design refinement. This evidence proves that the team structure used in the development of new product was lightweight. On the other hand, the heavyweight team structure was also involved in the development of new product. Some of the evidence for the involvement of heavyweight teams area as follows; a) Josh Poulsen was responsible for handling the lightweight teams so that they could meet their deadlines effectively. b) Dan Levine was responsible for taking major decisions regarding the product. c) Before the manufacturing of the product, the last decision was taken by Rick Alden, the founder of the company, as tooling of the product entails large irreversible investment. Growth and Size Influencing Development Process The company that came into existence to provide the customers with headphones that could serve dual purpose was smaller in size but the company was growing at a very fast pace. In its initial years, the company broke its $1 million in sales in 2005 and in the following year, the company was able to increase its sales up to $10 million. In 2007, the company was able to attract most of the customers and the revenues of the company accounted for $35 millions. In the following year, the company was able to double its sales figures and revenues. The sales figure for 2008 was $86.5 million followed by over $100 million. This indicates that the company was doubling its sales figures which eventually led to the growth of the company but was unable to enhance its size. To meet the demands of the customers, the company outsourced professional firms for the development of Skullcandy’s product. This indicated that the company was unable to handle the demands of the customers’ solo due to which it relied heavily on external parties for the designing, creating of prototypes and manufacturing of final products. Skullcandy’s progress was outstanding however the company adapted the strategy of outsourcing. With outsourcing the problem is that the size of the company would remain the same (Sako, 2006), also this does not built internal capabilities (Moynagh, and Worsley, 2005; Grimshaw, & Miozzo, 2009) and this was the case with company and they had to require external parties’ assistance. For instance, the company used an industrial design firm for the design of skullcandy’s headphones according to the requirement. Meanwhile, for the creation of prototypes the company used a Chinese company. In addition, Skullcandy was using another Chinese company for the manufacturing of final product based on the prototype designed by earlier Chinese company. Human resource has an important role in the success of the organization (Marchington, & Wilkinson, 2008). The strength in human resource due to its small size was another factor that led the company to take assistance of external parties. It was also observed that the people involved in the process of new product development were working on several projects at a time. These were some of the factors that could have influenced the development process at Skullcandy. Advantages and Disadvantages of Human Resource Due to its small size and lack of strength in human resource, the company’s human resource was constantly working on several project teams and smaller firms have been following the same strategy (Pilbeam, & Corbridge, 2006) particularly to save costs (Pilbeam, & Corbridge, 2010). Some of the advantages and disadvantages associated with employees working on several project teams simultaneously are as follows; a) Constantly working on several project allowed the workforce to gain information regarding the project. This helped the employees to specialize in particular work they do (Taylor, 2010). b) Employees working on several teams provide them with an opportunity to exchange ideas and opinions regarding projects (Secord, 2003). c) By working on several projects, each employee is provided with an opportunity to understand the product offering along with the technologies used by the company (Price, 2007). On the other hand, making an employee work on several projects at a time has some disadvantages. Some of the major disadvantages are as follows; a) By working on several projects, an employee lacks confidence regarding the project. As an employee works on several projects, he/she lacks sense of ownership which could influence the performance of the employee (Salaman, Storey, & Billsbury, 2005). b) Being provided with an atmosphere where ideas and knowledge could be shared, but too much sharing of ideas lead to homogenization (Redman, & Wilkinson, 2009). c) Being provided with several projects, the performance and productivity of an employee could be reduced leading to delays in the completion of projects (Torrington, Hall, & Taylor, 2008). Main Source of Innovation There are always some sources or factors behind any innovation. The five main sources of innovation are as follow (Schilling, 2010): 1. Firms 2. Individuals 3. Private non profits 4. Government funded research 5. Universities The main source of innovation of Skullcandy was the production of headphones that could be connected to both the cell phones and an MP3 player. This source of innovation led the company to discover many innovation ideas. Some of other innovative ideas were; a) With extensive experience in human resource, the company was able to develop headphones in snowboard helmets along with Giro ski. b) With constant knowledge about the trend in the market, the company was able to provide the customers with important fashion accessories to attract sport enthusiast along with other customers in the market. c) The company began targeting hip-hop fans and to do so, the company created a partnership with key musicians such as Snoop-Dogg. This partnership led to the creation of Skullcrasher – a headphone that was designed for hip-hop fans to listen rap music with extreme bass amplification. d) The company also collaborated with Mix Master Mike. This collaboration provided the company with an idea to provide the DJ’s with Ultimate DJ Headphones. Factors Important for Skullcandy to Pursue These Sources of Innovation Some of the factors important for Skullcandy to pursue above mentioned sources of innovation are as follows; a) Rick Alden, the founder of Skullcandy, is well aware of the trends in snowboarding. With his extensive background in the snowboarding industry provides him with superiority over others in the market. b) Having the support of his father, Paul Alden, the company could attract customers as Rick’s father has strong connection in the same industry. The associations led by Rick’s father helped in the opening of Ski resort and by doing so, the people have strong relationship with Rick’s father. c) Rick also has his brother’s support. David Alden being a pro snowboarder can help the company gain customers. Along with this, David is also a sales representative for several snowboard lines. This indicates that David has strong connections with the suppliers and retailers. This will eventually help the company to have strong supply chain relation. Challenges associated with measuring and rewarding team member’s performance Since all the team members work on projects at a time, it is difficult to assess and identify the performance of a single member in the team (Tobey, & Benson, 2009). This is a challenge that the company has to face when measuring the performance of the team member and providing each team member with rewards according to their performance and in such situations identifying the contribution of each one is difficult (Leopold, Harris, & Watson, 2005). As indicated that the annual incentive was based on individual performance and overall company performance. Since 75 percent of the annual bonus was based on individual performance, it has become a challenge for the company to assess and measure the performance. The only way to assess the performance of team members is to wait until the final product is released into the market (Legge, 2005). This means that the gap between the team member performance and providing the customers with the final product is too great (Bratton, & Gold, 2007). Conclusion To conclude, it could be said that the company’s performance was exceptionally outstanding in its initial years. Due to small size, the company applied lightweight and heavyweight team structures in order to get the job done. But the focus of the company was on lightweight teams. To meet the unending demands of the customers, the company took assistance from external parties (outsourcing) to meet the needs of the customers. The major reason for Skullcandy’s success was the commitment and dedication to provide the customers with innovative product along with the enriched experience of senior management of Skullcandy. References Bach, S. (ed.) (2005). Managing Human Resources, fourth edition. 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