Technical risk and new product success: An empirical test in high technology business markets

Following a methodology similar to the one used in Cooper's NewProd studies, this study examines the impact of technical risk on the ability to predict new product success in high technology business markets. Cooper's original 48 new product characteristics along with 10 new items measuring technical risk are used in examining 406 actual industrial new product success and failures. The findings show the importance of the addition of technical risk assessment in predicting the potential success or failure of new high technology industrial products.     

Upper management control of new product development projects and project performance

While some degree of freedom and flexibility is an essential ingredient to productive cross‐functional NPD teams, upper‐managers are faced with the challenge of instituting effective control mechanisms which head projects in the right strategic direction, monitor progress toward organizational and project goals, and allow for adjustments in the project if necessary. But too much or the wrong type of control may constrain the team's creativity, impede their progress, and injure their ultimate performance. Therefore, this study examines formal and interactive control mechanisms available to upper‐managers in controlling new product development (NPD) projects, and the relationship between these mechanisms and NPD project performance. Formal output and process controls are examined which consist of the setting and monitoring of outcomes, such as goals, schedule and budgets, and of processes and procedures, respectively. This study also looks at how the effectiveness of these control mechanisms may be contingent upon the degree of innovativeness in the project and the degree to which the project is part of a broad product program. In addition, the use of formal rewards for achieving team performance as opposed to rewards for individual achievement is investigated. Lastly, interactive controls are examined which consist of upper‐managers interacting directly with project members in the development of strategy and operational goals and procedures prior to the start of the project, and upper‐managers intervening in project decision‐making. Questionnaire data are collected on 95 projects across a variety of industries. The findings suggest that while NPD projects teams need some level of strategic direction concerning the objectives to be accomplished and the procedures to be followed, upper‐level managers can exert too much control. In particular, the findings showed a negative association between the use of upper manager‐imposed process controls and project performance. The findings also indicated that the degree to which upper‐managers intervened in project‐level decisions during the project was negatively related to project performance. However, the results showed support for the notion that early and interactive decision‐making on control mechanisms is important for effective projects. In particular, early team member and upper‐management involvement in the setting of operational controls, such as goals and procedures for monitoring and evaluating the project, was positively associated with project performance. This study provides additional insight into our understanding of upper‐management support in new product development. The study suggests that upper‐managers can over control with the wrong type of controls, and suggests effective ways of implementing participative and interactive control mechanisms.     

Managerial trust in new product development projects: its antecedents and consequences

This research examines the impacts of relationship-based antecedents (e.g., procedural justice) and character-based antecedents (e.g., transactional leadership) on managerial trust in new product development (NPD) teams. The moderating impact of environmental turbulence on team performance is also investigated. Using data from 107 NPD projects in Turkey, we find that procedural justice, distributive justice, and transformational leadership are significantly related, and conflict is negatively related to managerial trust. We also find that managerial trust is significantly related to product success and team learning under both high and low environmental conditions, but it is significantly related to speed-to-market only under high-turbulent conditions. We conclude by discussing the theoretical and managerial implications.     

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.     

Psychosocial antecedents of communication,trust, and relationship effectiveness in new product development projects: a functional manager perspective

The basic differences between marketing managers and their technically trained counterpart managers [e.g., research and development (R&D), engineering, and manufacturing managers] in terms of work experience, training, and differing decision‐making styles have often been suggested as a source of conflict, which acts as a barrier to effective working relationships and integration during new product development (NPD) work. In this paper, we empirically explore this issue by developing and testing a model of psychosocial differences (thought worlds and psychological distance) between the two groups of managers and their effect on communication, trust, and relationship effectiveness during NPD projects. We find that while thought world differences do still matter, it was from a marketing perspective that they had a stronger effect. These findings have implications for top management trying to manage the functional manager interface during NPD projects. We propose a semi‐formalized approach to relationship building that may speed up the acquisition of social data that is often necessary to elevate working relationships to trusting ones and improve the efficiency of NPD work. Our model is tested using data from two samples, 184 technically trained managers and 145 marketing managers from Australian companies involved in NPD work.     

The transition from product to service in business markets: An agenda for academic inquiry

In recent years, industrial manufacturers around the world have deployed growing efforts in developing services in addition to their traditional product business in order to secure long-term growth and to remain competitive in the marketplace. Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging service-dominant logic of marketing and examines how it relates to the business marketing field. It then illustrates the challenges faced by top executives of industrial companies in the transition from a product-centric to a service-centric business perspective through an interview with the managing director of ThyssenKrupp Service AG. After discussing how the articles included in this special issue advance the extant literature on industrial services marketing, the article finally develops a number of directions for future research on services in business markets.     

Management of development projects: how to meet corporate business goals?

Two contradictory elements affect development projects in the modern era. New advanced development projects require huge resources and long schedules. On the other hand, the resources available for development projects are decreasing, and intensive competition between companies results in increased required performance and new products which must be developed with short schedules. Development projects have a significant effect on a company's business goals, and therefore attract the attention of corporate managers. A significant part of managers' time is devoted to the control of development projects. Support tools are therefore developed and used to assist managers in controlling their projects. This paper describes a control tool to help managers make decisions on development projects. The tool described is based on Microsoft's 'Project' software package, and was developed in-house. The package performs real-time calculations and simultaneously presents several control parameters. These parameters provide a comprehensive picture of project status. The major benefits of the control tools described are: (1) The 'Project' package provides the ability to work with small and combined work packages. It allows attention to be focused on small programs as well as on entire programs. (2) It complies fully with modern decentralised computer systems consisting of a central computer, local computerised networks, parallel PCs and work stations. It provides an interactive quick response ability to follow changes in project status, which result from design changes or progress updates. The control system was implemented by RAFAEL's Missiles Division two years ago, and impressive results in terms of project efficiency were achieved. These achievements play a major role in meeting the Division's business goals. The control tools described are general and can fit a large variety of projects and companies.     

The fuzzy front end of Japanese new product development projects: impact on success and differences between incremental and radical projects

This study of Japanese New Product Development (NPD) projects explores the fuzzy front end of innovation. The goal of the paper is twofold: First, we analyse the impact of the fuzzy front end on the success of all the NPD projects. We develop a conceptual model based on the information-processing approach. A structural equation model was fitted to data from 497 NPD projects in Japanese manufacturing firms to test the proposed model. The empirical analysis suggests that an early reduction of market and technical uncertainty as well as an initial planning before development have a positive impact on NPD project success. The model accounts for 17% of the variance of the efficiency and 24% of the variance of the effectiveness-dependent variable. Thus, the front end phase is an important driver of NPD project success. Second, we compare the fuzzy front end of incremental to radical NPD projects. Although these projects differ in many aspects of newness, we found only a few differences with regard to the fuzzy front end. For instance, it was more difficult to estimate the market size and price sensitivity of the customers during the fuzzy front end of the radical NPD projects compared with the incremental projects. Implications of the empirical results and limitations of the study are discussed.     

Antecedents and consequences of team sensemaking capability in product development projects

With the increasing popularity of organizational sensemaking in the literature, sensemaking capability of firms attracts many researchers and practitioners from different fields. Nevertheless, sensemaking capability is rarely addressed in the new product development (NPD) project teams in the technology and innovation management literature. Specifically, we know little about what team sensemaking capability is, its ingredients and benefits, and how it works in NPD projects (e.g., its antecedents and consequences). By investigating 92 NPD project teams, we found that (1) team sensemaking capability, which is composed of internal and external communication, information gathering, information classification, building shared mental models, and taking experimental actions, has a positive impact on the information implementation and speed‐to‐market; (2) information implementation and speed‐to‐market mediate the relationship between team sensemaking capability and new product success; and (3) team sensemaking capability mediates the relationship between team processes and information implementation and partially mediates the relationship between team processes and speed‐to‐market. We also found that team autonomy, interpersonal trust among team members, and open‐mindedness of team members positively influence the development of team sensemaking capability. Theoretical and managerial implications of the study findings are discussed.     

Strategic flexibility, rigidity and barriers to the development of absorptive capacity in business markets: Themes and research perspectives

The marketing and strategy literature hail strategic flexibility as a key success factor in creating continuously customer value and generating competitive advantage. However, empirical evidence indicates that rigidity in market strategies and actions is more the rule than the exception in organizations. The focus of this special issue is on better understanding rigidity and flexibility in business markets. This lead article seeks to elaborate on why companies face rigidity and how they can create flexibility. To do this, we relate rigidity in organizations to the concepts of dominant logic, industry recipe and persistence. The case illustrations highlight barriers to the development of absorptive capacity in business organizations. Identifying such barriers is a first step in better understanding how companies can remain agile and flexible in demanding and fast changing markets. The paper then proceeds with a brief introduction to the other contributions of this special issue and concludes with a research agenda.     

Predicting new product success with prediction markets in online communities

The prediction of new product success is still a challenging task. Traditional market research tools are expensive, time consuming, and error prone. Prediction markets have been introduced as a viable alternative. Utilizing inputs from various participants in game‐like environments, they have been shown to produce accurate results by combining dispersed knowledge via market‐based aggregation mechanisms. While most previous studies use employees or experts as a sample, we test whether online consumer communities can be used to predict the sale of new skis via prediction markets. Sixty‐two users took part in the study. The prediction market was open for 12 days before the main skiing season 2010/2011 began. The outcomes of the prediction markets were compared with the actual sales numbers provided by the ski producers. The mean average errors were between 2.74% and 9.09% in the four markets. Overall, it can be concluded that the prediction markets based on consumer communities produce accurate results.     

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.     

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.     

Initial relationship development in new business ventures

This paper seeks to investigate some of the issues faced by an existing company when developing the initial customer relationships for a new venture. All companies face the challenge of new-relationship development in order to achieve growth and to replace relationships which have been lost or are in decline. But the challenge of developing the first customer relationships of a new venture is likely to be particularly acute because the new venture's marketing function and its offering to customers are likely to be undefined and undeveloped. This paper is based on a case study of initial customer relationship development in a new venture of an established business. The paper analyses the issues that the company faced in developing these initial relationships and the approaches to relationship development that it took. The case analysis leads to the conclusion that the development of initial relationships can be facilitated by an ‘open marketing function’ involving a number of functional areas both in the supplier and in the initial customers. The paper draws managerial implications from the case analysis for the task of marketing in this situation.     

Improvement reviews in new product development

This research examines how organizations can use improvement reviews to enhance learning from product development experiences. We review learning related literature and highlight learning barriers that firms should attempt to minimize when conducting reviews. We then discuss two studies aimed at better understanding the effectiveness of improvement reviews. The first study suggests that improvement reviews can facilitate learning by leading to a reduction in the recurrence of people-related problems, though reviews had no impact on reducing market or product related problems. The second study involved depth interviews with new product developers. Interview comments provide insights into improvement review best practices and shed light on why improvement reviews are sometimes ineffective. A set of managerial recommendations is provided.     

From strategy to tactics: Building, implementing, and managing brand equity in business markets

Industrial marketers have long argued that brands play little role in the decision making process. Several macro-level changes have occurred challenging these notions some of which are reviewed. We review past research on brand building and brand management in business markets and identify that less research has focused on key strategic and tactical issues in relation to building, managing, and refreshing business brands. We then introduce six studies that add to our understanding of the nature and importance of branding in the business-to-business context. Finally, these studies provide important avenues for further research.     

Buyer animosity in business to business markets: Evidence from the French nuclear tests

Academic studies of buyer reaction to unpopular political events in the country of origin of products have focused on consumer markets. This paper aims to extend Klein, Ettenson and Morris' [Klein, J., Ettenson, R., & Morris, M. (1998). The animosity model of foreign product purchase: An empirical test in the People's Republic of China. Journal of Marketing, 62(1), 89-101] concept of consumer animosity to industrial markets by comparing industrial and consumer buyer reaction to the nuclear tests conducted by France in the Pacific in the mid-1990s. It investigates whether firms in the B2B sector were affected more than those in B2C markets, whether entry mode was significant, and examines the way in which firms in the two market sectors responded. The results show that buyer animosity was less pronounced in industrial than in consumer markets. They also show that entry mode can influence the experience of animosity.     

Extending continuous improvement to the new product development process

As the benefits of applying continuous improvement (CI) are reported and the pressure on companies to improve their processes for new product development (NPD) increases, there is growing interest in how these two developments can be brought together. This paper presents a model for CI and suggests how it may be used as a framework for looking at CI within the context of NPD. The final section raises some of the issues and challenges companies face as they attempt to extend CI to the NPD process.     

The effect of new product development techniques on new product success in Spanish firms

The rate of market and technological changes has accelerated in the last years. This turbulent environment requires new methods and techniques to bring successful new products to the marketplace. Much attention has focused on new development techniques, but little empirical research has been conducted to validate these techniques. In this study, the relationship between popular new development techniques and new product success is examined. Our findings suggest that only a subset of these popular techniques is significantly related with new product success in Spanish firms. The study also identifies the main contributors to new product development (NPD) effectiveness in Spanish firms.     

The new product development process: part 2. Improving the process of new product development

This paper describes work on evaluating and improving the New Product Development Process (NPDP). The relevant results of a survey of current practice in NPDP within 149 companies are presented. The development and experimental application, within a commercial company, of a methodology for evaluating and improving the NPDP is also described.