New Product Development Process: A Perspective for Reexamination

In spite of the increased sophistication of new product development processes, the percentage of successful new product introductions has not improved significantly in the last two decades. This calls for a reexamination of the new products development process. Yoram Wind and Vijay Mahajan suggest 13 strategic guidelines for the development of new or modified products. These guidelines, if followed, could improve a firm's chances of developing and introducing successful new products.     

How Involving More Functional Areas Within a Firm Affects the New Product Process

Effective new product development decisions are often based on information obtained from multiple functional areas in the organization, making effective communications an important part of successful development efforts. Linda Rochford and William Rudelius examine the effects on new product performance of obtaining information from multiple functional areas during the stages of the new product development process. In addition, they explore the effects of information sharing among functional areas on new product performance. Results suggest that a surprisingly large number of functional areas in the medical products firms in the study do not contribute or use information in many of the new product development stages. However, for several stages of the new product process, obtaining information from more functional areas and sharing information among more functional areas has a positive impact on new product performance.     

Accelerating New Product Development: A Preliminary Empirical Test of a Hierarchy of Implementation

Although time to market and a product's profitability are closely linked, simply speeding up new product development (NPD) is no guarantee of success. In fact, haphazardly adopting the numerous methods for accelerating NPD may jeopardize the potential success of the new product and the company. An article in a previous issue of The Journal of Product Innovation Management suggests that companies seeking to speed up their NPD process should take a hierarchical approach to implementing the various acceleration techniques. To improve the likelihood that efforts to accelerate NPD will pay off with shorter development time, greater market share, and improved profitability, it is recommended that a company start by focusing on simplification of the NPD process. From there, the company can proceed in sequence through techniques involving the elimination of unnecessary steps in the NPD process, parallel processing (i.e., performing two or more NPD steps at the same time), the elimination of delays, and speeding up of the NPD process. Ed J. Nijssen, Arthur R. L. Arbouw, and Harry R. Commandeur follow up on this earlier work by addressing several key questions regarding the proposed hierarchy of techniques for accelerating NPD. First, do companies that make extensive use of the proposed hierarchy develop new products faster than companies that do not? Second, do companies that make extensive use of the hierarchy enjoy better financial performance than those that do not? Third, regardless of the hierarchy, are products developed faster by companies that make more intensive use of acceleration methods than by companies that use fewer methods of acceleration? Finally, how does financial performance compare among companies that make more intensive use of acceleration methods without following the hierarchy and those that use fewer methods of acceleration? A survey of Dutch companies finds that the proposed hierarchy of techniques has a positive effect on NPD speed. The survey results also suggest that faster NPD is possible through the use of the various acceleration methods without regard for the order in which they are implemented. However, a strong positive relationship is evident between the hierarchy and the profitability of the product and the company. In other words, a random approach to NPD acceleration does not improve financial performance. By trying to accelerate NPD in accordance with the proposed hierarchy of methods, a company can avoid critical mistakes that might otherwise limit financial results.     

Making Trade-Offs in the New Product Development Process: A German/US Comparison

Using a conjoint analysis experiment, Ashok Gupta, Klaus Brockhoff and Ursula Weisenfeld present how R&D, marketing, and manufacturing managers in Germany make trade-offs among three critical variables in the new product (NPD) process: development schedule, development costs, and product performance. The findings are compared with a similar study of US firms. This comparison underscores the basic problem: US managers do not emphasize product development speed to the same extent as do German managers.     

Time-Based Management of the New Product Development Process

This study explored the problem of compressing new product development by focusing on the specific phases of the innovation process. These phases manifest significant qualitative differences that require attention for understanding the complexities of accelerating new product development. Based on data from 35 high-technology companies, Necmi Karagozoglu and Warren Brown identified several different acceleration methods. Results revealed unexpected and at times inconsistent insights than those reflected in the case study and anecdotally based literature, and implied also that some of the well documented approaches to successful new product development need to be replaced with their time-based versions.     

Improving the New Product Development Process: A Fractal Paradigm for High-Technology Products

Those professionals who are charged with improving the new product development (NPD) process may well feel as though they have been asked to bring order out of chaos. For every level in the organization, and for every step in the NPD process, they must contend with myriad, often interdependent choices—of products and processes; of tools and technologies; of proven best practices and hypothesized solutions. In turn, each choice may cascade into several additional decisions. With so many issues to address and so many variables to consider, practioners and researchers alike need a clear, but complete, framework for exploring, understanding, and improving the NPD process. To help bring some order to the study and the practice of NPD management, W. Austin Spivey, J. Michael Munson, and John H. Wolcott introduce a new metaphor, or paradigm, for product development: a fractal paradigm. Like some fractal images, their framework for understanding the essence of NPD rests on the concept of self-similarity. In other words, the picture their framework provides for understanding and managing the NPD process consists of the same set of concerns, regardless of the level at which the process is viewed. They developed this fractal paradigm during an empirical study of technology transition in a highly successful federal laboratory organization. Whether the focus is on the organization, the division, the team, or the individual, the essence of the NPD process as viewed through their framework comes down to two sets of factors: management factors and resource factors. In turn, each of these factors cascades into several interrelated sets of concerns. For example, the management factors comprise concerns about leadership and the management system. The resource factors include concerns about information, infrastructure, time, and money. Regardless of the level of detail at which the framework is viewed, improving the NPD process requires attention to all of these factors, by all levels within the organization. For example, visionary leadership on the part of senior management will have little effect if middle management and line supervisors fail to provide the necessary leadership for their respective groups of subordinates. Notwithstanding the complexity of the NPD process, the fractal paradigm focuses attention on those few key factors that must be managed continually, throughout all levels of the organization, to ensure successful commercialization of new products.     

Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm

Product innovation and the trend toward globalization are two important dimensions driving business today, and a firm's global new product development (NPD) strategy is a primary determinant of performance. Succeeding in this competitive and complex market arena calls for corporate resources and strategies by which firms can effectively tackle the challenges and opportunities associated with international NPD. Based on the resource‐based view (RBV) and the entrepreneurial strategic posture (ESP) literature, the present study develops and tests a model that emphasizes the resources of the firm as primary determinants of competitive advantage and, thus, of superior performance through the strategic initiatives that these enable. In the study, global NPD programs are assessed in terms of three dimensions: (1) the organizational resources or behavioral environment of the firm relevant for international NPD—specifically, the global innovation culture of the firm and senior management involvement in the global NPD effort; (2) the global NPD strategies (i.e., global presence strategy and global product harmonization strategy) chosen for expanding and exploiting opportunities in international markets; and (3) global NPD program performance in terms of shorter‐ and longer‐term outcome measures. These are modeled in antecedent terms, where the impact of the resources on performance is mediated by the NPD strategy of the firm. Based on data from 432 corporate global new product programs (North America and Europe, business‐to‐business, services and goods), a structural model testing for the hypothesized mediation effects was substantially supported. Specifically, having an organizational posture that, at once, values innovation plus globalization, as well as a senior management that is active in and supports the international NPD effort leads to strategic choices that are focused on making the firm truly global in terms of both market coverage and product offering. Further, the two strategies—global presence and global product harmonization—were found to be significant mediators of the firm's behavioral environment in terms of impact on performance of global NPD programs.     

An Examination of Collaboration in High-Technology New Product Development Processes

For more than a decade, researchers have explored the benefits of eliminating organizational boundaries between participants in the new product development (NPD) process. In turn, companies have revamped their NPD processes and organizational structures to deploy cross-functional teams. These efforts toward interfunctional integration have produced a more responsive NPD process, but they don’t represent the endgame in the quest for more effective NPD. What’s next after the interfunctional walls come down?Pointing out that many high-tech firms have already taken such steps as integrating customers and suppliers into the NPD process, Avan Jassawalla and Hemant Sashittal suggest that such firms need to go beyond integration and start thinking in terms of collaboration. Using information from a study of 10 high-tech industrial firms, they identify factors that seem to increase cross-functional collaboration in NPD, and they develop a conceptual framework that relates those factors to the level of cross-functional collaboration achieved in the NPD process.Compared to integration, collaboration is described as a more complex, higher intensity cross-functional linkage. In addition to high levels of integration, their definition of cross-functional collaboration includes the sense of an equal stake in NPD outcomes, the absence of hidden agendas, and a willingness on the part of participants to understand and accept differences while remaining focused on the organization’s common objectives. Collaboration also involves synergy—that is, the NPD outcomes exceed the sum of the capabilities of the individual participants in the NPD process.Their framework suggests that structural mechanisms such as cross-functional teams can provide significant increases in NPD-related interfunctional integration. However, high levels of integration do not necessarily equate to high levels of collaboration. Characteristics of the organization and the participants also affect the level of collaboration. For example, achieving a high level of collaboration depends on participants who contribute an openness to change, a willingness to cooperate, and a high level of trust. Their framework also points to key organizational factors that affect the level of collaboration—for example, the priority that senior management gives to NPD and the level of autonomy afforded to participants in the NPD process.     

An Integrative Model of the New Product Development Process

Previous studies of new product development have identified a series of variables that are important determinants of new product success. The goal of this article is to demonstrate the nature of the complex interrelationships that exist among these variables. Roger Calantone and Anthony di Benedetto propose an integrative model of the new product decision process. They examine data gathered from a sample of industrial manufacturing companies and test their model empirically using three-stage least squares analysis. The article concludes with a discussion of implications for new product managers.     

A Longitudinal Study of the Impact of R&D,Patents, and Product Innovation on Firm Performance

Because of increasing levels of competition and decreasing product life cycles, a firm's ability to generate a continuous stream of innovations may be more important than ever in allowing a firm to improve profitability and maintain competitive advantage This paper investigates several issues that are central to an examination of the innovation productivity in a firm. First, the relationship between a firm's commitment to research and development and its innovative outcomes is examined. Two innovative outcomes are analyzed: (1) invention, which focuses on the development of new ideas; and (2) innovation, the development of commercially viable products or services from creative ideas. Invention is measured by the number of patents granted, and innovation is assessed by the number of new product announcements. Second, because many inventions ultimately result in marketable innovations and because patents may provide protection for new products, the relationship between patents and product announcements is also investigated. Finally, the ability of a firm to benefit from its inventions and innovations is studied by examining their separate effects on firm performance, measured as return on assets (ROA) and sales growth. Drawing from a sample of 272 firms in 35 industries over 19 years, the results from a model of simultaneous equations provided support for some of the hypotheses, but several other surprising findings were found. As expected, R&D spending was positively related to patents. This finding is consistent with others who argue that internal research capabilities, particularly those with a strong basic research component, is key to enabling a firm to generate creative outputs. More surprising was the finding of increasing returns to scale to R&D spending. While this contradicts much of the existing research, it is consistent with economic arguments for the advantages of scale in innovation. Also interesting is the finding that, while a significant curvilinear relationship exists between R&D spending and product announcements, it is not the predicted inverse‐U but instead a U‐shaped relationship. Consistent with previous work, product announcements were found to be positively related to both performance measures. A negative relationship was found between patents and both ROA and sales growth. While these findings were unexpected, they are intriguing and call into question the value of patents as protection mechanisms. In addition, these results may be resulting from the rise of strategic patenting, where an increasing number of firms are using patents as strategic weapons. As expected, a positive relationship was found between patents and new product announcements.     

Crossfunctional Teams in Product Development: Accommodating the Structure to the Process

This article reports the conclusions from a study of crossfunctional product development teams with emphasis on the implications for altering organizational structure to accommodate team process. A comparative study of teams in four U.S.firms, using anthropological and sociolinguistic methods, found that team work is inherently paradoxical. It poses numerous contradictions and paradoxes for individuals, teams, and organizations. At one of the research sites, tacit recognition of this reality and a conviction that teams were critical to product development led to a continuous accommodation of the organization to the requirements of team work and to impressive organizational outcomes. Conceptual and managerial lessons are drawn from this successful case and are offered here to help guide both future research and the actual implementation of team work in firms.     

Organizational Influences on the New Product Development Process in Financial Services

The last decade has been notable for increasing levels of environmental turbulence brought about by technological advances, deregulation, consumer sophistication, and competition. Consequently a premium has been placed on the ability of managers to differentiate their products and maintain competitive advantages. This may be achieved by developing an organizational climate that is responsive to change and supportive of new product initiatives. In his article, Des Thwaites draws on the established literature and a panel of informed opinion from the financial services sector to identify 12 characteristics of an organization that influence the effectiveness of the new product development process. United Kingdom building societies are examined to determine the emphasis given to these critical aspects of innovation. Three underlying factors, communication, people and mission, explain much of the variance among building societies. Five discrete groupings of firms are identified, and significant differences between their orientations are determined across a range of variables supporting new product development. While the empirical section of the study relates to a specific industrial sector, several issues and the recommendations transcend industry boundaries.     

The Early Stages of New Product Development in Entrepreneurial High-Tech Firms

This study examines the most valuable sources of new product ideas and the criteria used to screen potential new products in entrepreneurial, high-tech firms. Teresa Pavia explored the practices of 118 small, young, high-tech firms. Her findings complement a variety of existing studies of the new product process in large firms and the few existing studies of the process in entrepreneurial, high-tech firms. The firms participating in this study rely on informal techniques to generate new product ideas. They place heavy reliance on input from their customers and often develop new products in response to problems articulated by these customers. Although the annual strategic plan is not used by most firms as a new product identification tool, it is highly rated by the most successful firms. Successful firms also actively engage in environmental scanning. The majority of the respondents do not use financial measures as a screening criterion, preferring to evaluate new products by "gut feel." However, the firms that have experienced the fastest growth in sales employ financial hurdles for project selection. The educational background of the key GO/NO GO decision-makers was also evaluated. Two thirds of the firms reported having a key decision-maker with an educational background in business. The educational background of the key decision-makers had little impact on the aspects of the new product process studied here.     

Financial Incentives and Salesperson Time Orientation in New Product Launch: A Longitudinal Study

The success of a new product launch critically depends on an engaged and dedicated sales force. Salespeople who are involved in a new product launch must overcome significant uncertainty associated with the new product's performance, which can affect success expectations and, in turn, sales effort for the new product. Moreover, success expectations may drop in the first few months of the launch period, due to initial negative market feedback or general decline in sales force enthusiasm. Diminished expectations may start a vicious circle effect where lower success expectations for the new product lead to lower sales effort that, in turn, leads to lower performance, which further lowers expectations, and so on. Based on insights from attribution‐expectancy theory, this study investigates two distinct mechanisms to counteract the potential downward spiral in success expectations and sales effort devoted to a new product. Specifically, this research examines the role of financial incentives and salespersons' long‐term orientation in creating and maintaining high new product success expectations and sales effort during a new product launch. To investigate how the effect of these factors changes over time, success expectations and sales effort are examined across two critical points in time: the start of a new product launch and at completion of the first sales cycle. To test the model empirically, the North American sales force (n = 129) of a business unit of a global firm is surveyed longitudinally during the launch of a new line of industrial products. The data are analyzed using a partial least squares model. The results show that initial success expectations have a significant effect on sales effort later in the launch, and that this relationship is mediated by success expectations later in the launch. Success expectations and sales effort early in the launch are also shown to impact the perceived attractiveness of the financial incentives offered, but this does not translate into higher success expectations or sales effort at the end of the launch. In contrast, the long‐term orientation of salespersons is key to maintaining higher success expectations and sales effort at the end of the launch.     

New Product Development Processes and New Product Profitability: Exploring the Mediating Role of Speed to Market and Product Quality

In new product development, faster is not always better. Conceptually, being faster to market should improve financial performance by improving product quality and reducing development expenses. Empirical support is mixed, however, demonstrating that higher speed to market exhibits an inverted U‐shaped relationship with product profitability. Conventional wisdom and empirical research suggest managers make speed to market–product quality–development expense trade‐offs. A particular concern regarding speed to market is that extreme speed may jeopardize product quality. Some researchers suggest that speed to market improves product quality while others suggest firms must balance both speed to market and product quality. Also, shorter lead times may be associated with reduced development expenses, but empirical evidence is conflicting. This research attempts to reconcile conflicting results regarding the speed to market–product quality relationship, their joint impact on product profitability, and their mediation role in the effects of development expenses and cross‐functional integration on product profitability. Partial least squares (PLS) is used to analyze multiplexed archival and survey data collected from NPD managers for 1115 different NPD projects in several firms. The results support the hypothesized equations, explaining 27% of speed to market variance, 35% of product quality variance, and 45% of product profitability variance. This study makes two contributions. First, because speed to market and product quality are related, simultaneous consideration of both factors enhances insight into their joint effect. Second, it provides evidence that speed to market and product quality jointly mediate development expense by NPD phase and cross‐functional integration effects on product profitability. Key results from the large sample data analysis include the following. Speed to market and product quality both enhance product profitability, but the impact of speed to market is larger than that of product quality. Speed to market and product quality partially mediate the impact of fuzzy front end phase expenses on product profitability, while expenses in the latter phases exhibit no impact on the mediators or profitability. Thus, the results suggest that trade‐offs are made not only between time, quality, and expense (i.e., if additional expenses are incurred at all), but also that trade‐offs relate to when (i.e., in which NPD phase) additional development expenses are incurred. Finally, cross‐functional integration (both internal and external) substantially impacts product profitability through a mix of direct and mediated effects.     

A Contingency‐Based Approach to the Use of Product Platforms and Modules in New Product Development

To face the challenges of increasing demand for variety, more specific customer demands and shortening product life cycles, firms increasingly adopt mass customization techniques. Two important such techniques are product modularization and product platform development, which allow firms to reach high levels of product variety, and at the same time, keep complexity and its related costs at a limited level. Often modularization and product platform development are treated as variants of the same basic idea. However, even if the concepts are closely related, they also have some fundamental differences, which influence their usefulness and applicability in different settings. One potential shortcoming of existing literature on modularization and product platforms is the present lack of research on their limitations and potential negative effects. Therefore, the purpose of this paper is to identify and explore contingencies influencing the applicability of modularization and product platforms, respectively, taking their different economic effects as a starting point. Moreover, the paper addresses how different organizing solutions are interrelated with the use of modularization and product platform approaches. The empirical observations originate from studies of three Swedish manufacturing firms. The study reveals that important contingencies affecting the applicability of modularization and product platforms are demand side characteristics and the speed of environmental change. Furthermore, it is seen that firms need to organize themselves differently with respect to how they combine modularization and platforms, for example, in terms of degree of centralization, formalization, and allocation of decision‐making authority, and that this poses challenges to the combined use of the two approaches.     

British Manufacturing Organization and Workplace Industrial Relations: Some Attributes of the New Flexible Firm

The characteristics of the largest British manufacturing firms are analysed in order to argue that the form of organization adopted at corporate and plant level by such firms is distinctive. The first part of the paper looks at the characteristic kinds and types of productive activities that the largest British firms undertake. It is then suggested that there is a distinctive pattern of organization for production at plant level, described as the 'new flexible firm', the features of which are formally set out. The new flexible firm have some key features which help to make sense of an emerging pattern of workplace industrial relations in manufacturing. The way this new form of organization at plant level utilizes labour contradicts rather than supports the expectations of some analysts about the importance of human resource management.