Portfolio management for new product development: results of an industry practices study

Portfolio management for product innovation – picking the right set of development projects – is critical to new product success. This article reports on the new product portfolio practices and performance of a large sample of firms in North America. Reasons why portfolio management is important are identified, followed by the relative popularity of the different portfolio techniques: financial methods are first, followed by business strategy methods, bubble diagrams and scoring models. Next, how the various portfolio methods fare in terms of six performance metrics is probed. Financial methods, although the most popular and rigorous, yield the worst results overall, while top performing firms rely more on non‐financial approaches – strategic and scoring methods. The details of how some of these more popular methods are employed by firms to rate and rank development projects are also provided. Finally, managerial implications, including suggestions for making portfolio management more effective in industry, are outlined.     

Involving purchasing in new product development

Purchasing is evolving into a strategic business activity and thus also a potential contributor to the successful development of new products. However, the literature on the involvement of purchasing in new product development (NPD) is sorely lacking. We conducted an exploratory study to investigate purchasing's involvement in NPD, the drivers of this involvement and the influence on new product success. We conducted telephone interviews with purchasing and NPD managers from 43 firms. The results show that firms differ in the extent to which they involve purchasing in NPD and that higher involvement has a positive effect on NPD performance. R&D managers can use the results to design a more effective purchasing–R&D interface and increase the success of NPD.     

PERSPECTIVE: Cross‐Functional Integration in Spanish Firms

Published studies of new product development in Spain provide conflicting evidence regarding the role of cross‐functional integration in new product success. One possible explanation for these results is the use of idiosyncratic scales for measuring the level of cross‐functional integration. This study adopts the scale items used in a previous study and replicates that research process using data collected from managers of 134 Spanish companies involved in new product development. Findings confirm the appropriateness of these scales in a Spanish context and the importance of cross‐functional integration to new product success in Spanish firms. No support is found for the hypothesis that participative management is positively correlated with the level of cross‐functional integration. Cross‐functional integration is found to be negatively related to goal incongruity and positively related to top‐management support for integration.     

Performance typologies of new product projects

New product success is a vital but elusive goal for many firms. The last two decades have witnessed numerous studies into new product successes and failures in an attempt to uncover what makes a winner. Indeed, myriad characteristics, factors, and practices have been found that appear to discriminate between successful and unsuccessful new products.With few exceptions, much of this research has tended to view new product performance on a unidimensional continuum, usually financial performance (e.g., profitability). Whereas immediate profitability is no doubt an admirable goal, there are other ways of looking at a new product's performance—for example, degree of technical success, time-to-market, and its overall impact on the company.The current investigation takes a broader view of new product success. A number of measures of new product performance were captured, rather than just the single measure continuum; this resulted in a performance map with two major and quite independent underlying dimensions of performance. A typology of performance was then developed—a classification of new product projects by how well they performed: five scenarios or clusters of projects are identified on this map, each with its unique performance characteristics. We then investigate in detail each project type and probe what drives the performances of these five different clusters of projects: that is, what makes for new product success of these five project types, when success is measured in different ways. The study was undertaken in world class multinationals in the chemical industry in four countries, but its results appear to have validity across a broad spectrum of industry.     

Absorbing knowledge from supply-chain,industry and science: The distinct moderating role of formal liaison devices on new product development and novelty

Building on open innovation literature and recent developments within absorptive capacity research, this paper addresses if the use of formal liaison devices by firms differently influences the effects of external knowledge acquisition from suppliers, customers, competitors and universities on new product development and novelty of new products. The results of a survey of 248 Spanish industrial high-tech firms show that whereas the use of these mechanisms positively moderates the relationship between knowledge acquisition from suppliers and competitors and new product development, they negatively moderate the effect of knowledge acquisition from universities and have no effect on knowledge acquired from customers. On the other hand, the use of these devices negatively moderates the relationship between knowledge acquisition from suppliers and novelty of new products, and has no effect on the knowledge acquired from customers, competitors and universities. Moreover, knowledge acquisition from universities has a direct negative effect on novelty. Contribution of these findings to open innovation and absorptive capacity research is discussed.     

An exploratory Investigation of new product forecasting practices

To guide new product forecasting efforts, the following study offers preliminary data on new product forecasting practices during the commercialization stage (prelaunch and launch stage). Data on department responsibility for and involvement in the new product forecasting process, technique usage, forecast accuracy, and forecast time horizon across different types of new products are reported. Comparisons of new product forecasting practices for consumer firms versus industrial firms are also reported.
Overall, study results show that the marketing department is predominantly responsible for the new product forecasting effort, there is a preference to employ judgmental forecasting techniques, forecast accuracy is 58% on average across the different types of new products, and two to four forecasting techniques are typically employed during the new product forecasting effort. Compared to consumer firms, industrial firms appear to have longer forecast time horizons and rely more on the sales force for new product forecasting. Additional analyses show that there does not appear to be a general relationship between a particular department's involvement and higher forecast accuracy or greater satisfaction, nor does it appear that use of a particular technique relates to higher forecast accuracy and greater satisfaction. Countering previous research findings, the number of forecasting techniques employed also does not appear to correlate to higher forecasting accuracy or greater satisfaction. Managerial and research implications are discussed.     

Organisational, technical and marketing antecedents for successful new product development

Previous research in new product development has examined the role of organisational structure and marketing and technical skills and activities in encouraging successful innovation. This study examines the role played by organisational structure in supporting the marketing and technical/production activities in new product development, and direct and indirect effects of all of these antecedents on new product success. The goal of the study is to observe which factors lead to product success and to determine how they interconnect. Implications for new product management are provided in the concluding section.     

Understanding market agility for new product success with big data analytics

The complexity that characterises the dynamic nature of the various environmental factors makes it very compelling for firms to be capable of addressing the changing customers' needs. The current study examines the role of big data in new product success. We develop a qualitative research with case study approach to look at this. Specifically, we look at multiple cases to get in-depth understanding of customer agility for new product success with big data analytics. The findings of the study provide insight into the role of customer agility in new product success. This study unpacks the interconnectedness of the effective use of data aggregation tools, the effectiveness of data analysis tools and customer agility. It also explores the link between all of these factors and new product success. The study is reasonably telling in that it shows that the effective use of data aggregation and data analysis tools results in customer agility which in itself explains how an organisation senses and responds speedily to opportunities for innovation in the competitive marketing environment. The current study provides significant theoretical contributions by providing evidence for the role of big data analytics, big data aggregation tools, customer agility, organisational slack and environmental turbulence in new product success.     

Project visioning: Its components and impact on new product success

The concept of corporate vision has been receiving considerable attention in the strategy scholarship. A clear and lofty organizational vision can provide direction to a company and can positively impact its ability to succeed. Yet research on vision at the project level has been curiously lacking. The purpose of this research is to define project vision, discuss its components and explore its impact on successful new product development. After studying the vision on a series of 13 innovations at three companies (Apple, IBM and HP), we identified several components of an effective project vision that include vision clarity, vision agreement/support and vision stability and assessed their impact on new product success. To confirm the validity and generalizability of our observations, we then tested these insights on 509 new product teams from a wide variety of firms. We found that an effective vision varies depending on the innovation type - incremental, evolutionary and radical. Our results demonstrate that vision clarity is positively associated with success in evolutionary (market or technical), and radical innovations, but not for incremental projects. Vision stability is positively associated with success in incremental and evolutionary market innovations; and vision support is positively associated with success in incremental, and evolutionary technical innovations.     

Best new product development and management practices in the Korean high-tech industry

This paper investigates critical factors affecting the likelihood of new product success and effective new product development (NPD) models for Korean high-tech firms. Empirical results suggest that successful projects differ from unsuccessful projects in project environment, skills and resources, project leadership, strategic fit, efficient NPD process, and effective product-positioning strategies.This study confirmed that efficient and effective new product development and management were important determinants of high-tech firms' competitive advantage. Furthermore, the findings of this study raised questions about some commonly held beliefs when compared with Western studies focusing on high-tech industries.     

The front end of new product development: a Canadian survey

Despite the importance of the early stages of a product's life, very little attention has been paid to empirically testing the activities performed in the front end of new product development. This article presents the results of a survey of 53 individuals from fifteen high technology firms in the integrated circuit board industry. Our study adopts Cooper's (1988) 'predevelopment' model consisting of idea generation, product definition and project evaluation stages, and probes the activities undertaken in each stage. Particular activities were found to play pivotal roles in achieving the objectives of each stage. The results present a clarified view of front end activities that can be used as a starting point for adequately preparing products for development and market success.     

Achieving new product success via the synchronization of exploration and exploitation across multiple levels and functional areas

While ambidexterity has been identified as a critical prerequisite for new product success, synchronizing exploration and exploitation in practice represents a multifaceted enigma. Ambidexterity is not in reality limited to a single organizational level, or a specific functional area. Firms become ambidextrous when corporate-level exploratory and exploitative strategies interact with operational-level exploratory and exploitative capabilities across multiple functional areas. Data from a sample of technology-intensive industrial firms using a multi-informant design shows that operational-level exploratory and exploitative product innovation and marketing capabilities allow firms to implement corporate-level exploratory and exploitative strategies in the context of new product development (NPD). Further, the findings reveal that the integration of exploratory product innovation–exploratory marketing and exploitative product innovation–exploitative marketing is significant for the implementation of exploratory and exploitative strategies over deploying each capability in isolation. Finally, we show that the implementation of exploratory and exploitative strategies drives new product success through creating distinct positional advantages to customers in the form of both differentiation and cost efficiency. These positional advantages help to better explain the effects of exploratory and exploitative capabilities on new product market performance.     

Controlling new product R&D projects

New products are critical to the success of most corporations. But managing the R&D projects that produce new products has proven to be a risky and tricky business. Theorists and practitioners claim that one of the major obstacles to higher new product output is the ‘tight’ control practices found in large corporations. The conventional wisdom argues that, to correct this, firms need to find ways ‘to loosen-up.’ But is that all there is to it? This article presents five findings for effectively controlling new product R&D projects. These findings emerged at the conclusion of an empirical research investigation into the formal and informal control practices that business unit managers use to control various new product R&D situations. The article concludes with several recommendations for those managers who want to control their new product R&D projects better.     

Navigating the new product development process

The quest for success in new product development (NPD) requires management to navigate complex processes. This study presents empirical evidence of the evaluative criteria used by well-experienced NPD managers from the UK and the Netherlands to control performance at different gates of the NPD process. The emerging usage patterns suggest that these criteria are aligned to the specific requirements of each stage in the process. This allows for detection of problems and initiation of adjustments that increase the chance for overall success of the new product. Based on these findings, recommendations are provided for managers to safeguard strategically the performance of their NPD efforts.     

Ambidexterity's mediating impact on product development proficiency and new product performance

This study examines the mediating impact of ambidexterity on the relationship between product development proficiency and new product performance. Using survey data from 253 Taiwanese firms, the results indicate that the significance of the direct effect of marketing proficiency and technical proficiency on new product performance is reduced when the indirect effect of marketing proficiency and technical proficiency through ambidexterity is included in the model. Consequently, ambidexterity reflecting the interaction between exploitation and exploration plays a mediating role explaining the positive relationship between product development proficiency and new product performance. Managerial implications and future research directions are discussed.     

Canonical correlation analysis of unobserved relationships in the new product process

Previous studies of success and failure in new product development have examined the effects of numerous variables upon new product outcomes. Some of these variables are controllable by the firm; many are not. This study employs canonical correlation analysis to investigate the nature of the interactions within and between two sets of variables (controllable and environmental) in the new product process. Several insightful implications for new product management are obtained and presented. Among these is the need for production and marketing synergy in new product development     

The new product process: an empirically-based classification scheme

New product successd is largely determined by the way a firm conceives, develops and commercializes a new product—the new product process. Traditionally, the new product process is portrayed as proceeding in an orderly, stepwise fashion from product idea to launch. This article reports the results of a research study whose purpose was to uncover what actually occurs during the new product process. Fifty-eight case histories were obtained from industrial product firms, and their process flow charts analyzed using a novel comparison method. No two projects were found to follow the identical process, and seven distinct types of processes were identified. Several of the processes were found to yield generally inferior results. The "best' process, in terms of success versus failure and overall program performance, featured a balance between marketing oriented and technically oriented activities, and was characterized by a large number of varied steps in the process.     

Developing new business-to-business professional services: What factors impact performance?

Business-to-business professional services has been a high growth area for over a decade. Increasing complexity and high technology characterizes this sector, making new product development both essential and risky for firms. Surprisingly little research has been done to understand the industrial professional services sector and, in particular, to discover what factors lead to new product success or failure, however. This article reports the results of an investigation that examines how professional services firms develop new products and what factors impact the performance of these ventures.     

Managing R&D-marketing integration in the new product development process

Cross-functional coordination and collaboration between R&D and marketing is crucial to the success of the new product development process. By understanding how organizational characteristics influence the quality and quantity of information exchanged during the planning and implementation stages of innovation, managers can take steps to increase the communication within their firm, and thereby increase the probability of new product development success. This examines the effects of several organizational characteristics posited to play an important role in the effective cross-functional information exchange using data collected from 376 U.S. firms. The authors found (1) positive impacts on information exchange are attributed to a formalized system of procedural interaction, the quality of the cross-functional relationship, and a joint-rewards structure; and (2) the quality and quantity of cross-functional information exchanges are influenced negatively by the lack of credibility, and positively by rewards for interaction and a high quality of cross-functional relationship.     

Launching new product features: a multiple case examination

The present study investigates the strategies that eight companies employed in launching new product features in a variety of markets. A literature review shows that launching new product features is an under‐researched area. This lack of attention may be detrimental to companies, as in many mature markets—such as those for durable consumer goods like television sets, coffee machines or videocassette recorders—the launch of new product features is perhaps the single most important product development activity that companies employ. We sought to address three research questions, namely what are the current strategies used by managers for launching new product features, how do these strategies differ, and what are the opportunities and pitfalls of these strategies? A multiple case study involving 38 managers from different functional backgrounds was used, thereby investigating the feature introductions of eight companies in‐depth. The study first identifies six feature launch decisions: the feature's position in the feature life cycle, the core technology concerned, the focus on feature or product, the differentiation practices used by the firm, feature diffusion in the product line, and the make‐or‐buy decision. Based on these decisions, four distinct feature launch strategies were distinguished: dictatorship, pioneering, establishing, and following. Dictatorship companies launch feature innovations that are based on fundamentally new technologies. Pioneers are not as powerful as dictators and focus on features that are based on applied and proven rather than on fundamentally new technologies. Establishes copy and improve successful features and launch them quickly and broadly as a standard in mass markets. Followers launch standard features that already existed in the mass market. These four strategies describe how the firms in our sample launched new features in the marketplace. As such, they describe when and where in the product line what feature was introduced. Such a typology of feature launch strategies helps to proactively understand the strategies firms have for launching new product features. The article discusses for each strategy the relevant feature launch decisions, possible applications, and opportunities and pitfalls. We conclude with the implications of our study for research and managerial practice.