Planning and uncertainty in new product development

The domain of New Product Development (NPD) is subject to considerable uncertainties. Aside from market‐related sources of uncertainty, the degree of innovativeness of the underlying product concept is a significant source of uncertainty, as unclear goals and specifications like, e.g. product specifications may lead to substantial delays in the project. However, companies are required to manage the innovation process as efficiently as possible. The resulting conflicting demands often leave companies struggling to achieve both efficiency as well as flexibility due to their often opposing implications for organizing and managing NPD projects. In this context, planning plays a central role; however, its usefulness for NPD project success is perceived quite differently. While there are reports about a positive influence of initial planning on various success measures, others have questioned the effectiveness of elaborated initial planning and contend that the ability to rapidly react to changes later in the process and to improvise may lead to success in NPD. This study aims at achieving a better understanding of planning in NPD by investigating a sample of 475 Research & Development projects in Japanese electrical and mechanical engineering companies. Regression analysis is used to shed more light on the interplay of planning intensity, changes, and the degree of technological newness of the NPD project and their influence on project success. Our results indicate planning to be of value for different types of innovation projects. Furthermore, the influences of the variables in question vary with the success measures that are taken into account, indicating that a more detailed and contingent understanding of planning in NPD needs to be developed.     

Impact of Strategic Type on Success Measures for Product Development Projects*

Does the strategic type of firm affect which success measures should be used for product development (PD) projects? This paper theorizes that it should and finds that it does because the PD projects undertaken are usually an expression of the strategic type of the firm. The purpose of this research is to affirm a 1996 survey of members of the Product Development & Management Association (PDMA) that proposes that firms' PD performance measures should vary by their strategic type. Thus, for example, prospectors, the strategic type most likely to introduce new products to new markets, should place greater importance on PD success measures consistent with their characteristic strategies of changing product lines and early market entry. In contrast, defenders, the strategic type most likely to maintain stable product lines for existing markets, should place greater importance on PD success measures consistent with their characteristic strategies of stable product lines and market penetration. Analyzers, a hybrid type between prospectors and defenders, should prefer measures consistent with their characteristic strategies for improving products and being early followers in newer markets. To relate strategic types to specific success measures for PD projects, this paper proposes a model of the relationship based on the degree of project newness to the firm and then catalogs measures of PD project success and groups them according to degree of project newness. The research findings are based on survey responses from 222 individuals who are employed by financial service providers, who identified their firms by strategic type and rated the importance of PD success measures to their firms. The importance of 21 performance measures is compared by strategic type to find significant differences among prospectors, analyzers, and defenders. This research finds several significant relationships. prospectors, for example, attach greater importance to customer satisfaction, launch timeliness, and product return on investment, all of which may be characterized as relating to a higher degree of project newness to the firm. defenders and analyzers, on the other hand, attach more importance than prospectors to measures of unit volume, cost reduction, and margin goals, all of which relate to a lower degree of project newness to the firm. In short, because prospectors seek to introduce new products to new markets, they consider important those measures, which accord with greater product and market newness. The major conclusion of this paper is that strategic type affects the importance of project performance measures and that all firms should not use the same success measures. Firms should contextualize their success in PD projects based on their strategic type. This conclusion resonates with previous findings that strategy is a key determinant of PD success, though it is infrequently included in PD success studies. This paper, therefore, challenges the implicit assumption in the mainstream of PD success literature that success can be determined without regard to firm strategy.     

The relative importance of project success dimensions

Traditionally, the success of a project is assessed using internal measures such as technical and operational goals, and meeting schedule and budget. More recently, it has been recognized that several other measures should be used to define project success. These measures reflect external effectiveness: the project's impact on its customers, and on the developing organization itself.
In our study of 110 defense projects performed by Israeli industry, we used a multidimensional approach to measure the success of defense projects. Based on previous studies, we defined four dimensions of success: meeting design goals ; benefits to the customer ; benefits to the developing organization ; and benefits to the defense and national infrastructure . For each project, we asked three different stakeholders (the customer, the developing organization, and the coordinating office within the Ministry of Defense) for their views on the relative importance of these dimensions of success. Analysis of the data revealed that the dimension benefits to the customer is by far the most important success dimension. The second in importance is meeting design goals . The other two dimensions are relatively unimportant.     

An Empirical Study of Platform and Derivative Product Development Projects

Many firms now realize the importance of planning product families and product platforms. However, little research addresses planning and execution of different types of projects within a product family platform series. This study investigates project characteristics, development challenges, typical outcomes, and success factors for product development projects at different locations in the product family spectrum. “Platform” projects result in products that initiate a new product family platform for a company. “Derivative” projects result in products consisting of extensions to an existing product family platform. Data on 108 new product development projects from a variety of assembled products industries were collected via a detailed survey and analyzed. Findings indicate that: (1) platform and derivative projects differ in project task characteristics (including the amount of new technology development undertaken and project complexity) and market newness; (2) platform and derivative projects generally do not differ in terms of project success (achievement of project objectives, level of company satisfaction, and perceived customer satisfaction) or smoothness of project execution; (3) both platform and derivative projects generally are executed in similar ways; (4) certain managerial approaches (including contingency planning, project-based evaluation of personnel, and overlap of design and manufacturing engineering) are associated with higher project execution success for both platform and derivative projects; and (5) use of interdependent technologies and novel project objectives are associated with project execution failure for platform projects. The results suggest that firms can continue to employ a single product development management process for both platform and derivative projects, as long as modest customization of the process is made for the given project type. Completely different management processes are not required. In all, the results presented in this article suggest specific managerial actions companies can take to significantly improve product development success. © 1999 Elsevier Science Inc.     

Technological collaboration in the korean electronic parts industry: patterns and key success factors

This study empirically examines different patterns of collaborative technological development projects and the key success factors (KSFs), using data from 82 projects in the Korean electronic parts industry. The patterns of technological collaboration were categorized into 4 types by two contingency variables: development motive (technology–push or market–pull) and source of initiation (focal firm– or partner–initiated). The bivariate relationships revealed that project characteristics (technological complexity, demand certainty, and financial support of the government), partner characteristics (the level of trust with partners), and collaborative management practices (commitment of the focal firm, and information sharing in the collaboration process) appear to be different depending on the two contingency variables. Each type of collaborative R&D project also had different KSFs. While diverse characteristics like strategic importance, goal compatibility and information sharing with partners are critical for the success of technology–push projects, just only specificity of collaboration process and outcome appears important to the success of demand–pull projects. For focal firm–initiated projects, project characteristics are KSFs, whilst partner characteristics and collaboration management practice are found to be more critical for the success of partner–initiated projects. The findings suggest that the different contingencies such as development motive and source of initiation bring about different patterns of collaborative technology development projects, which in turn lead to a different set of KSFs, since different information, roles of partners and the focal firms, and collaboration management practices are needed to successfully implement the different types of projects. Based on empirical results, this study discusses managerial, policy, and theoretical implications for the collaborative R&D activities taking place in the Korean electronic parts industry.     

International R&D project evaluation by multinational corporations in the electronics and IT industry of Singapore

This paper explores a number of variables associated with the evaluation of international R&D projects by multinational corporations (MNCs) in the electronics and IT industry of Singapore. Empirical analysis of the data collected from R&D managerial executives suggests a series of considerations in relation to their R&D investments. It is desirable if R&D can create a potential impact on the growth of their regional and international businesses. In considering the risks associated with an R&D project, a balance approach would be appropriate when demanding a return on investment. In particular, the consistence with customer demands, the achievement of time‐based competitiveness, the training of R&D manpower and the development of conducive innovation environments are fundamental to the success of international R&D projects.     

PDMA Success Measurement Project: Recommended Measures for Product Development Success and Failure

Success is not just elusive; it is also multifaceted and difficult to measure. A firm can assess the success or failure of a development project in any (or all) of many terms, including customer satisfaction, financial return, and technical advantage. To complicate matters, success may be measured not only at the level of the individual project, but also at the program level. With so many variables to consider and so many stakeholders involved, managers face a difficult challenge just deciding which measures are useful for measuring product development success. Recognizing that no single measure suffices for gauging the success of every product development project, Abbie Griffin and Albert L. Page hypothesize that the most appropriate set of measures for assessing project-level success depends on the project strategy. For example, the objectives (and thus, the success criteria) for a new product that creates an entirely new market will differ from those of a project that extends an existing product line. Similarly, they hypothesize that the appropriate measures of a product development program's overall success depend on the firm's innovation strategy. For example, a firm that values being first to market will measure success in different terms from those used by a firm that focuses on maintaining a secure market niche. To test these hypotheses, product development professionals were presented with six project strategy scenarios and four business strategy scenarios. For each project strategy scenario, participants were asked to select the four most useful measures of project success. For each business strategy scenario, participants were asked to choose the set of four measures that would provide the most useful overall assessment of product development success. The responses strongly support the idea that the most appropriate measures of project-level and program-level success depend on the firm's project strategy and business strategy, respectively. For example, customer satisfaction and customer acceptance were among the most useful customer-based measures of success for several project strategies, but market share was cited as the most useful customer-based measure for projects involving new-to-the-company products or line extensions. At the program level, firms with a business strategy that places little emphasis on innovation need to focus on measuring the efficiency of their product development program, while innovative firms need to assess the program's contribution to company growth.     

Risk management, project success, and technological uncertainty

In times of increased competition and globalization, project success becomes even more critical to business performance, and yet many projects still suffer delays, overruns, and even failure. Ironically, however, risk management tools and techniques, which have been developed to improve project success, are used too little, and many still wonder how helpful they are. In this paper we present the results of an empirical study devoted to this question. Based on data collected on over 100 projects performed in Israel in a variety of industries, we examine the extent of usage of some risk management practices, such as risk identification, probabilistic risk analysis, planning for uncertainty and trade-off analysis, the difference in application across different types of projects, and their impact on various project success dimensions. Our findings suggest that risk management practices are still not widely used. Only a limited number of projects in our study have used any kind of risk management practices and many have only used some, but not all the available tools. When used, risk management practices seem to be working, and appear to be related to project success. We also found that risk management practices were more applicable to higher risk projects. The impact of risk management is mainly on better meeting time and budget goals and less on product performance and specification. In this case, we also found some differences according levels of technological uncertainty. Our conclusion is that risk management is still at its infancy and that at this time, more awareness to the application, training, tool development, and research on risk management is needed.     

Flexibility planning for managing R&D projects under risk

Incorporating managerial flexibility in an innovative R&D project is important, because managers face greater uncertainty in today's competitive and dynamic changing environment. It is essential to bring managerial flexibility into R&D project planning to decrease technical and market risks, while increasing potential market value. The objective of this paper is to develop a flexibility planning methodology based on real option analysis to improve managerial flexibility for R&D projects. The proposed methodology identifies potential risks that may occur during every R&D stage. It also recognizes a cascading option structure to resolve the identified risks, and evaluates and selects adequate options that maximize the potential value of the project. Instead of using a traditional option pricing method, a dynamic programming model that considers multidimensional product performance and market payoff is used to evaluate the R&D project value. Using the proposed methodology, managers can identify future scenarios as a function of their management actions. The proposed flexibility planning methodology can help managers improve managerial flexibility of R&D project and increase the success rate of product launch. A drug development project is used to illustrate the proposed methodology.     

R&D Project Termination Decisions: Processes, Communication, and Personnel Changes

The decision to terminate a project can demoralize project managers and team members, and increase concerns about job security. For these reasons, managers tend to delay project termination decisions. However, delaying project termination diverts scarce R&D resources from higher potential projects. Ramaiya Balachandra, Klaus K. Brockhoff, and Alan W. Pearson describe the results of a study that explores the manner in which managers inform staff of the decision to terminate or continue a project. Survey respondents are the highest ranking R&D managers in 78 large German, British, and U.S. companies. Respondents were asked to describe the procedures they use for monitoring R&D projects and deciding whether to continue a project. Underlying this research is the belief that more effective management of these processes can improve project team effectiveness, employee relations, and morale. All survey respondents use project monitoring procedures. Most use formal procedures, often supplemented with informal procedures. More than one person usually monitors projects. Project managers, their immediate superiors, and project staff typically have these responsibilities, but respondents also indicate that marketing managers often monitor projects. Compared to U.S. companies, European firms typically involve fewer people in project monitoring. U.S. firms involve more non-R&D personnel in these tasks. Most firms focus on monitoring such variables as time, technical success, and probability of technical success. Staff motivation is the least used monitoring variable. Cost control was mentioned more frequently by German respondents than by respondents from other countries. Decisions regarding the fate of a project usually come from individuals not directly involved with the project. Termination decisions are typically communicated in writing; no respondents use staff meetings to relate such decisions. Following the decision to terminate a project, management faces the difficult task of finding suitable jobs for project team members. Rather than assign an entire team to a new project, management typically disbands a team and assigns its members to other teams. The inherently uneven progress of R&D projects complicates these scheduling problems, and thus compounds the career uncertainty caused by project termination decisions.     

An investigation into the managerial roles and career paths of gatekeepers and project supervisors in a major R & D facility

This study investigates the role of gatekeepers in the transfer of information within a single R&D location by comparing directly the performance of project groups with and without gatekeepers. The results show that gatekeepers performed a linking role only for projects performing tasks that were 'locally-oriented' while 'universally-oriented' tasks were most effectively linked to external areas by direct project member communication. Gatekeepers also appear to facilitate external communication by their locally-oriented project colleagues. A follow-up study five years later showed that almost all gatekeeping project leaders had been promoted up the managerial ladder; in contrast, one half of the non-gatekeeping project leaders had ascended the technical ladder. This implies that higher managerial levels demand strong interpersonal as well as technical skills.     

The influence of voluntarily disclosed qualitative information

We examine the voluntary disclosure of qualitative information about actions involving governmental agencies and managerial intentions or beliefs in R&D project announcements in The Wall Street Journal. Our analysis indicates that information regarding government approval and managerial intentions/beliefs voluntarily disclosed in R&D project announcements interacts with industry/firm variables to provide significant incremental explanatory power in both the innovation and commercialization stages of R&D projects. Our data also indicate that the biggest impact is from managerial intentions, especially an intent to increase market share when coupled with being a larger firm. Copyright © 2000 John Wiley & Sons, Ltd.     

Investigation of Factors Contributing to the Success of Cross-Functional Teams

Although recent empirical research shows that most firms have implemented cross‐functional teams for the majority of the new product development projects undertaken, they are still finding it hard to ensure that these teams are successful in completing the new product development task. In this article, the author first reviews the vast literature on cross‐functional new product development teams to uncover the array of factors that have previously been demonstrated or hypothesized to relate to cross‐functional team success, when measured at the project level. He then analyzes the responses of 112 new product development professionals to determine which factors are more frequently mentioned as leading to project success. In looking at how to achieve successful teams, many factors have been suggested in the literature by a number of different researchers. The author suggests a model of these factors that divides them into three categories that help achieve success. Setting the stage for product development by developing appropriate project goals, empowering the team with the needed decision‐making power, assigning the appropriate human resources, and creating a productive climate should be related to fostering team success. Of these four factors, appropriate project goals is mentioned most often as being associated with success, followed by empowerment. Several specific team behaviors, including cooperation, commitment to the project, ownership of the project, and respect and trust among team members, also have been posited to contribute to team success. Of these, this research finds that cooperation is mentioned most often as being associated with success, followed by commitment and ownership. Finally, a number of researchers have suggested that team leaders, senior managers, and champions provide enabling support to cross‐functional teams in achieving success. Team leadership is the most frequently mentioned enabler, according to these findings, followed by senior management support. The author's results also show that increased use of cross‐functional teams in new product development is related to higher project success. However, achieving cross‐functional team success appears to be more complicated than previously thought. For example, across the set of factors identified in this research, the most frequently mentioned is obtaining the team behavior of cooperation. Setting appropriate project goals, a stage‐setting step that is completed early in the project, follows closely in relative importance. Finally, providing good team leadership as an enabler is the third most frequently mentioned factor in achieving success. This suggests that companies must work in all dimensions to maximize the probability of achieving team success.     

The Role of Market Information in New Product Success/Failure

Although no single variable holds the key to new product performance, many of the widely recognized success factors share a common thread: the processing of market information. Understanding customer wants and needs ultimately comes down to a company's capabilities for gathering and using market information. And another well-acknowledged success factor the integration of marketing, R&D, and manufacturing focuses on the sharing of information. In other words, a firm's effectiveness in market information processing—the gathering, sharing, and use of market information—plays a pivotal role in determining the success or failure of its new products. Brian D. Ottum and William L. Moore describe the results of a study that examines the relationship between market information processing and new product success. They also explore the organizational factors that facilitate successful processing of market information, and thus offer ideas for better managing the development of new products. The respondents—marketing, R&D, and manufacturing managers from Utah-based computer and medical device manufacturers—provided information about 58 new products, including equal numbers of successes and failures. The survey responses reveal strong relationships between product success and market information processing, with success most closely linked to information use. In other words, the gathering and sharing of information are important, but only if the information is used effectively. In 80 percent of the product successes studied, the respondents ultimately possessed and used a greater than average amount of market information. And in 75 percent of the failures, the respondents knew less than average about the market at project inception, and gathered or used less than the average amount of market information during the project. For the projects in this study, the integration of marketing, R&D, and manufacturing contributed not only to the sharing and use of information, but also to overall project success. However, the results of the study suggest that the way in which a project is organized plays only an indirect role in determining new product success—most likely by improving the processing of market information. From a managerial perspective, the most important variables identified in the study are market information shared, market information used, and financial success.     

Building Dynamic Capabilities in New Product Development through Intertemporal Integration

Although successful development of a given product may help explain the current success of a firm, creating longer‐term competitive advantage demands significantly more attention to developing and nurturing dynamic integration capabilities. These capabilities propel product development activities in ways that build on and develop technological and marketing capabilities for future product development efforts and create platforms for future product development. In this article, we develop a conceptual model of a dynamic integration process in product development, which we call intertemporal integration (ITI). In its most general form ITI is defined as the process of collecting, interpreting, and internalizing technological and marketing capabilities from past new product development projects and incorporating that knowledge in a systematic and purposeful manner into the development of future new products. Research propositions outlining the relationship of ITI to performance are presented. We provide specific examples of managerial mechanisms to be used in implementing ITI. We conclude with implications for research and practice. Effective management of ITI can increase new product development success and long‐term competitive advantage. This implies that management needs to engage in activities that gather and transform information and knowledge from prior development projects so that it can be used in future development projects. Project audits, design databases in computer‐aided design (CAD) systems, engineering notebooks, collections of test and experimental results, market research and test market results, project management databases, and other activities will all be important in the acquisition of knowledge from prior new product development (NPD) projects. Managers also should initiate the creation and maintenance of databases of technical and marketing information from prior projects, job performance reports, seminars and workshops related to technological issues and advances, and publication of technical journals to assist in the process of knowledge acquisition. Similarly, techniques such as assigning project managers from earlier development projects, reusing key components and technologies, and developing a company‐wide methodology for managing projects can be used to boost the application and use of knowledge.     

Analyzing the Effects of Market and Resource Orientations on Innovative Outcomes in Times of Turbulence*

Innovation and new product success are often a core precursor to superior performance. Although research has examined the resource‐based view (RBV) and market orientation (MO) individually, limited research has evaluated and compared their effect on innovation and new product success in one study. Furthermore, relative to MO, comparatively less research has been conducted to evaluate the relationship between organizational learning (OL) and the RBV to examine their effects on a firm's ability to innovate and succeed. The purpose of this paper is to investigate the role of environmental variables (i.e., market turbulence and technological turbulence) on the relationship between two strategic orientations and performance and to extend a previous study. Specifically, it aims to evaluate whether a focus on the customer or the firm will impact innovation, product quality, new product success, financial performance, and customer value in settings of varying environmental turbulence. Data were collected from more than 200 senior executives. LISREL was applied to evaluate the relationships under examination. Interaction effects were assessed using a nested goodness‐of‐fit strategy using a multiple‐group solution. Results depicted significant relationships between organizational learning and both resource and market orientations. Significant relationships also emerged between each strategic orientation and various performance indicators. Interaction effects were observed for market turbulence on customer value and market orientation as well as for resource orientation (RO) on innovation in times of high technological turbulence. The paper concludes with a review of theoretical and managerial implications to stimulate further debate. These results suggest that managers seeking innovation and new product success cannot afford to ignore the environment and do so at their peril. The provision of customer value is essential for positive financial performance. Thus, management needs to monitor environmental contexts so that they are able to adjust their investment in market orientation and the requisite processes that enable its implementation. Conversely, the effects of RO on performance are more robust across industry conditions, presenting an alternative avenue for management to achieve market superiority. The paper concludes with a review of theoretical and managerial implications to stimulate further debate.     

How well did the new Sumitomo Electric project ranking method predict performance?

The development and implementation of a new R&D project scoring method (NS-method) within Sumitomo Electric Industries was introduced in a previous report. This paper evaluates the NS-method's effectiveness by comparing the information generated by application to 146 projects in 1997 with the project achievements in 2000. The test results revealed that the NS-method's evaluation scores were correlated to the performance indicators such as the gross profit and R&D productivity. It also showed that, when projects are classified into three groups (i.e., Top, Middle, Bottom) according to the forecast data generated by the NS-method, the projects in the Top category had higher actual productivity ratios and success rates than those in the Bottom category.     

How to select the right public partner in smart city projects

Firms that want to exploit Smart City's opportunities need to cooperate with local governments. From a managerial point of view, there is scant research on how to select public partners in Smart City projects. In fact, while there are several cities claiming to be ‘smart’, not all cities fulfil the essential requirements for successful Smart City projects. This paper shows how to build successful public–private alliances in Smart Cities and, more specifically, how to select the right city to test, develop or sell smart technologies. This study uses a multiple-case research design and follows an exploratory and qualitative methodology. The results show that firms improve the success of their projects if they assess three main aspects of partner selection, these being partner complementarity, commitment and compatibility. The paper, therefore, provides several managerial implications regarding how firms may be more effective in selecting where to start their Smart City projects and how public organisations may become more attractive. Finally, academic implications, limitations and future lines of research are presented.     

The roles of R&D team leaders in Korea: a contingent approach

This study empirically examines the relationship between the role of R&D project leaders and their team performance using data from 87 project teams in 6 R&D organizations in Korea. The results reveal that:
(1) R&D project leaders played five different roles in performing their jobs – strategic planner, team builder, gatekeeper, technical expert, and champion;
(2) All but the champion role of a leader is positively related with project team performance;
(3) However, this relationship between the role of leader and project team performance varies according to the characteristics of R&D project teams and their tasks.
Specifically, it becomes important for a leader to focus less on the team building role as the team gets older. The team building role of a leader, however, is more important for higher performance of relatively certain R&D projects, while for uncertain R&D projects, the strategic planning role appears to be more crucial. Based on these results, this study discusses several managerial and theoretical issues related to the role of a leader in R&D project teams.     

The drivers of success in new-product development

Why are some new products so successful and some companies outstanding performers in new-product development? The article identifies success factors from numerous research studies into NPD (new-product development) performance in industry. Three categories of success drivers have been defined. First, success drivers, that explain the success of individual new-product projects, are more tactical: They capture the characteristics of new product projects, such as certain executional best practices (building in voice-of-customer; doing the front-end homework; and adopting a global orientation for the project), and well as the nature of the product itself (a compelling value proposition, for example). A second category is drivers of success at the business level: They include organizational and strategic factors, such as the business's innovation strategy and how the firm makes its R&D investment decisions; how it organizes for NPD; climate and culture; and leadership The third category of success divers identified is the systems and methods the firm has in place for managing NPD, for example gating systems, Agile development approaches, and ideation methods. The details of each of these 20 success drivers, along with their managerial implications, are outlined in the article.