Using Simulations to Define the Product Development StrategyExpected to Achieve the Shortest Time to Profitability

摘要

Small entrepreneurial companies are challenged by the need to achieve the fastest path to profitabilitywithin the constraint of limited resources. Such companies often face a situation in whichresources must be allocated among multiple products, or platforms, as the company engagesnew markets. These allocations must be made within the context of new and complex technologiesand products and uncertainty in market adoption rates. In this paper, a system model isproposed that will identify a product development strategy that minimizes the time to profitabilitygiven the constraints of fixed resources and assumptions regarding key parameters such asproduct development time, market adoption rates, and cost learning curves. This model is usedto compare a platform development strategy for products of varying newness, complexity, andpotential profitability with one of developing the same products independently. By accountingfor product lifecycles, the model considers parallel and serial product development.