A case study from the Greek banking sector: LITERATURE REVIEW

NSD process activities

According to Cooper (1994), the new product development process could be defined as ‘a formal blueprint, roadmap, template or thought process for driving a new product project from the idea stage through to market launch and beyond’. On the other hand, as far as the development of new services in financial institutions and other service businesses is concerned, most of the existing literature on this topic has been based largely on models concerning the development of physical, manufactured products.

A fundamental model of new product development was formulated by the consulting firm Booz Allen & Hamilton in 1982. This model consists of the following seven steps: New product strategy development, Idea generation, Screening and Evaluation, Business analysis, Development, Testing and Commercialisation. Several authors have tried to adjust this model to the services context by making smaller or larger modifications. , Many others have suggested that it could also be adopted by financial institutions in general and the banking sector in particular.

Most of these models use a three-stage innovation process that could be divided into pre-development, development and launch activities. They also suggest that there is a sequential way of developing new services, where a service bank has to be engaged in most of these stages before introducing a new service and they have brought in Cooper (1994) to introduce the term of ‘stage-gate’ systems. However, it seems that the initial stages of the whole process (or pre-development activities) have a great impact upon its success. A number of different authors have demonstrated the significance and vitality of these initial activities. Lievens et al. (1999) refer to this significance of initial stages as the ‘path dependency effect’ and Moenart et al. (1995) as the ‘fussy-front end’, meaning that the planning stage determines the success of the whole process.

Figure 1 The initial stages of developing new services

Based on the models proposed by Booz Allen & Hamilton (1982), Davis (1997) and Scheuing and Johnson (1989), it could be argued that the initial stages of the new service development process are the following:

—     formulation of a new service development strategy

—     market problems and needs exploration

—     idea generation

—     idea screening

—     concept development

—     concept testing

—     business analysis

These stages are depicted in Figure 1 and each of them is analysed in more detail below.