Balancing Development Costs and Sales to Optimize the Development Time of Product Line Additions*

Development teams often use mental models to simplify development time decision making because a comprehensive empirical assessment of the trade‐offs across the metrics of development time, development costs, proficiency in market‐entry timing, and new product sales is simply not feasible. Surprisingly, these mental models have not been studied in prior research on the trade‐offs among the aforementioned metrics. These mental models are important to consider, however, because they define reality, specify what team members attend to, and guide their decision making. As such, these models influence how development teams make trade‐offs across the four metrics to try to optimize new product profitability. Teams with such an objective should manage to a development time that minimizes development costs and to a proficient market‐entry timing that maximizes new product sales. Yet many teams use mental models for development time decision making that focus either just on development costs or on proficiency in market‐entry timing. This survey‐based study uses data from 115 completed NPD projects, all product line additions from manufacturers in The Netherlands, to demonstrate that there is a cost to simplifying decision making. Making development time decisions without taking into account the contingency between development time and proficiency in market‐entry timing can be misleading, and using either a sales‐maximization or a cost‐minimization simplified decision‐making model may result in a cost penalty or a sales loss. The results from this study show that the development time that maximizes new product profitability is longer than the time that maximizes new product sales and is shorter than the development time that minimizes development costs. Furthermore, the results reveal that the cost penalty of sales maximization is smaller than the sales loss of development costs minimization. An important implication of the results is that, to determine the optimal development time, teams need to distinguish between cost and sales effects of development time reductions. To determine the relative impact of these effects this study also estimates the elasticities of development costs, new product sales, and new product profitability with regard to development time. Armed with this knowledge, development teams should be better equipped to make trade‐offs among the four metrics of development time, development costs, proficiency in market‐entry timing, and new product sales.     

PERSPECTIVE: Ranking Business Schools on the Management of Technology

Current centers of active research on the management of technology and innovation (MOT) are identified through the use of a publication‐based study. This article develops a methodology for ranking centers of MOT research and in doing so identifies 120 centers of MOT research in different parts of the world. Centers of research are identified in Africa, Asia, Australia, Europe, and North America. Detailed assessment is offered for the 21 U.S.‐based schools with three or more active MOT researchers present. The nature and quality of research activity is assessed with a series of 21 metrics. These metrics consider the number of active faculty, the number of publications researchers have in the base journals during the study period, total publication history, MOT publication history, number of equivalent articles, number of pages published, frequency of citations, and a series of metrics that are a combination of two or more of these factors. The assessment identifies four groups of schools that have MOT research capabilities. Schools with substantial research capability are divided into three tiers based on their rankings in different metrics. Each of the schools ranked in the first tier placed first on at least two of the 21 metrics considered in this study. A reasonable argument can be made that any one of the schools ranking in the first tier is the strongest school in terms of MOT research capabilities. These U.S.‐based schools in alphabetical order are Georgia Tech, MIT, Rensselaer, Rutgers, and Stanford. An important point to note is that there are clear differences in research focus between the different first‐tier schools; therefore, it is quite likely that different types of students, faculties, and practitioners will find each of the first‐tier schools most attractive based on personal fit with these differences in specialization. The schools in the second and third tier have substantial MOT research capability. The fourth tier identifies 18 additional U.S.‐based schools that have some capability due to a core of two researchers. This core could be the springboard to a national ranking or a transitory state due to departure of a faculty member. Future research should consider the stability of the results over time and should explore the links among research capabilities, program structure, student output, and placement.     

Lean planning in the semi-process industry, a case study

The lean approach is an idealizing improvement approach that has an enormous impact in the field of operations management. It started in the automotive industry and has since been widely applied in discrete manufacturing. However, extensions to the (semi-) process industry have been much slower. Resource characteristics of the (semi-) process industry obstruct a straightforward application. The notion of the point of discretization for the (semi-) process industry is helpful here. This notion builds on the fact that in most (semi-) process industries there is a point in production where process production turns into discrete production. Downstream of this point lean principles are applicable in a straightforward manner, while upstream lean needs to be interpreted in a more liberal way. In this article we address this issue by a case study. The study considers how the principles of ‘flow’ and ‘pull’ production - suggesting a regular, demand-driven product flow - may be implemented for the (semi-) process industry by introducing cyclic schedules. The conjectures guiding the case study are: (i) Cyclic schedules fit in a lean improvement approach for the semi-process industry, (ii) Cyclic schedules help to improve production quality and supply-chain coordination and (iii) Discrete event simulation is a useful tool in facilitating a participative design of a cyclic schedule. The case study is extensively described to be able to judge how the context of the changes and the intervention process contribute to the results of the intervention.     

Factors influencing employee perceptions in lean transformations

The purpose of the study was to investigate employee perceptions during a lean transformation.¹ The combination of case study and survey methodologies was used to define elements influencing the perceived lean success of shop floor employees. According to our findings, belief, commitment, work method and communication all have a considerable direct impact on workers' perceptions of lean success. However, their effects are very different based on the scope and focus of changes that is influenced by process characteristics. Perceptions regarding successful lean transformation during a moderate reorganisation of the company's welding plant, where mainly males work, are affected only by commitment and work method, whereas the deep reorganisation of the sewing plant (populated by female employees) is only influenced by belief and communication.     

Integration of Finance with Marketing and R&D in New Product Development: The Role of Project Stage

While the interfaces of marketing, research and development (R&D), and manufacturing in product development have been extensively studied, no large‐scale empirical study has focused on finance's role in the product development team. The present research investigates the role of finance in cross‐functional product development teams, thereby extending existing research on cross‐functional integration in product development. A set of hypotheses is tested with a survey of 389 project team leaders and top management team members from companies in the United States, Australia, New Zealand, Germany, and Austria. The findings suggest that the integration of finance in cross‐functional teams positively impacts project performance and that the importance of the finance interface depends on the project development stage and the innovativeness of the product developed. The results indicate that the R&D–finance interface is most critical at the early stage of a project, while the marketing–finance interface is most important at the late stage, and that the integration between R&D and finance is especially useful in the development of less innovative products.     

Measuring Involvement of a Network of Customers in NPD

The new product development (NPD) literature is rife with suggestions to involve customers in the innovation process, and many firms collaborate with customers. But the extant literature does not offer much guidance concerning the nature and quality of involving such a network of customers. This paper contributes to the extant literature on customer involvement by identifying a comprehensive set of metrics to measure the involvement of a network of customers in NPD. It introduces metrics describing three aspects of customer involvement: (1) the rationale for involving a network of customers in NPD, (2) the network of customers involved in NPD, and (3) the interaction process between manufacturer and customers at the level of individual customers. These metrics help to understand the roles of customers, the timing of their involvement at each stage in the development process, the type and number of customers that are involved, as well as the frequency and intensity of their involvement. The use of these metrics is illustrated by a study of customer network involvement by Irish business‐to‐business companies. Forty‐six percent of the sampled firms (n = 1400) were actively involved in NPD, but very few of them involved customers in the early stages (n = 77). The involvement of customers in early NPD stages is significant, although manufacturers tend to go back to the same customers repeatedly. The intensity of customer involvement is also extensive, but even more so during the later NPD stages, especially for new products as opposed to product improvements. By incorporating a network perspective, the proposed metrics for customer network involvement provide a new approach for researchers to study the involvement of customers in NPD.     

Marketing metrics: Insights from Brazilian managers

This study examines how managers approach marketing measures in a Brazilian context. Using data from a large-scale empirical study in Brazil, we focus on managers' views of the practices in marketing measurement and identify which indicators they emphasize. The findings, which reflect Brazilian managerial practice, indicate that managers use a combination of metrics. Items such as total number of customers, number of complaints, and customer satisfaction are among the most known and most used metrics. When addressing the 10 most relevant metrics results yield 4 groups, including customer vision, financial, product vision, and market and innovation. Indicators pertaining to customer vision are the most important to Brazilian managers. Furthermore, we discuss the results and draw comparisons with similar studies conducted in the United Kingdom and China. Finally, we present conclusions and avenues for future research.     

Making tax and social security decisions: lean and deskilling in the UK Civil Service

Lean working has had a significant impact on the work skills of civil servants. This study examines the impact of lean specifically focusing on ‘decision‐makers’, those civil servants engaged in deciding tax and social security claims. Using qualitative data from trade union members and stewards in two major government departments, this study found significant evidence of deskilling often in the face of dealing with potentially complex legal and factual issues. Using Mashaw's framework of administrative justice, the article argues that management's use of lean was evidence of an accelerated shift to a managerial model of administering tax and benefits where the administrative processes of decision‐making become paramount at the expense of the quality of the decisions made.     

A Model of Time‐on‐Market and Real Estate Price Under Sequential Search with Recall

This article develops a model and provides a closed‐form formula to uncover the theoretical relationship between real estate price and time on market (TOM). Our model shows a nonlinear positive price‐TOM relationship, and it identifies three economic factors that affect the impact of TOM on sale price. We demonstrate that conventional metrics for real estate return and risk, which are borrowed in a naïve fashion from finance theory, do not account for marketing period risk and tend to overestimate real estate returns and underestimate real estate risks. Our model provides a simple way to correct such bias. This theory helps to explain the apparent “risk‐premium puzzle” in real estate.     

Usage, barriers and measurement of social media marketing: An exploratory investigation of small and medium B2B brands

Previous research has established the benefits of branding for business-to-business (B2B) organizations. Various tools can be used to support B2B brands, including the internet and other interactive technologies. Yet research on how organizations use Social Networking Sites (SNS) to achieve brand objectives remains limited. This study addresses the gap by focusing on B2B SMEs and their social networking practices, particularly, usage, perceived barriers, and the measurement of effectiveness of SNS as a marketing tool. Findings from a mail survey show that over a quarter of B2B SMEs in the UK are currently using SNS to achieve brand objectives, the most popular of which is to attract new customers. On the other hand, the most significant barrier is the lack of perceived relevance for particular sectors. Notably, the overwhelming majority of users do not adopt any metrics to assess SNS effectiveness. Almost half of the sample of SMEs that currently use SNS have indicated their intention to increase their marketing spending on this channel, highlighting the growing importance of SNS in a B2B context.     

On leanness, agility and leagile supply chains

In 1999 a paper by Naylor, Naim and Berry on ‘leagility’ was published in international journal of production economics. The paper has attracted over 100 independent citations from over 60 journals of international standing. This paper explores the testing, exploitation and extension of the original work. Via a systematic literature review the notable findings are that the 1999 paper has been exploited in terms of its classification of supply chains into lean, agile and ‘leagile’; those terms have been tested via survey and case based empirical research; has been extended beyond the original stock decoupling point exploitation of lean and agile to encompass other forms of ‘leagility’. This paper concludes that further robust testing of ‘leagility’ and the definitions of leanness and agility are still required to encompass different market sectors and ensure triangulation of research methods.     

Who wants the Contrat de Travail Unique? Social Support for Labor Market Flexibilization in France

In France, a proposal was made to substitute a unique labor contract with a degree of employment protection increasing with tenure to the existing open‐end and fixed‐term contracts. Using survey data, this paper analyzes the social support for this contrat de travail unique (CTU). Contrary to the prediction of insider/outsider theories, support for the CTU comes from insider groups, whereas most outsider groups oppose it. This result may be the consequence of the job protection increasing with tenure. This mechanism could reinforce certain types of market segmentation instead of abolishing employment precariousness.     

Customer attitudes of stayers and defectors in B2B services: Are they really different?

Identifying attitudinal differences between stayers and defectors is important in establishing a deeper understanding of customer satisfaction and loyalty research. Both managers and academics often use global customer attitudes, such as customer satisfaction and behavioral intentions, as determinants of customer loyalty. The implicit assumption is that customer satisfaction and/or behavioral intentions are valid, and accurate, predictors of actual loyalty behaviors. This study compares customer attitudes of stayers and defectors in B2B services using respondents (primary decision makers) from a Fortune 100 company. The results show that the commonly used customer metrics of service quality, satisfaction, and behavioral intentions have some differences between stayers and defectors. However, these metrics are shown to be relatively weak differentiators of actual customer defection. The stayers and defectors are much more similar, than different, on most metrics. The most notable difference is price perceptions, where defectors appear to be more price sensitive than stayers. These findings have significant implications for the design and use of customer-focused research by managers.     

How Elephants Learn the New Dance When Headquarters Changes the Music: Three Case Studies on Innovation Strategy Change

Does a product innovation strategy change at company headquarters resonate the same way at different strategic business units (SBUs)? What factors play a role in differing implementation of new innovation strategies? A collective case study was conducted at three SBUs of an international conglomerate to investigate why the SBUs implement the same corporate innovation charter in vastly different manners, both in strategic processes and in organizing for new product development (NPD). This study's contribution to the literature is twofold. First, it develops initial insights into how three SBUs implement diverse SBU‐level innovation strategies in response to the same product innovation charter. Second, it extends the findings of previous studies on NPD strategy by presenting how three SBUs reshape their structure and resource allocation, changing various dimensions of their innovation strategy while also fitting the competitive structure in their individual, non‐high‐tech, traditional manufacturing industries as they respond to the corporate mandate. In this study, several factors were observed to influence a firm when formulating a new product innovation strategy. First, past performance and strategic typology constrain the innovation paths available. Poor past performance limits available resources whereas the strategic typology managers use limits their ability to recognize other opportunities. Next, capacity constraints provide a catalyst in moving toward process improvements. Third, management involvement in the day‐to‐day implementation of change is necessary to ensure that the new processes are implemented. Finally, corporate performance metrics are quite influential in how SBUs adapt to change. This study identifies that even with the immense power corporate has over these SBUs, some still dance to their own tune, ignorant of their deviation from the corporate mandate because the metric is not sufficient to detect these deviations. This study suggests the use of multiple types of metrics to minimize the likelihood of nearsighted responses to innovation charter changes.     

Issues and Challenges in Energy Benchmarking

近两年来国内少数石化及炼油企业通过参数与美国Ｓｏｌｏｍｏｎ管理咨询公司（ＳＡＩ）的业绩分析评估活动，直接了解到国际上烯烃生产及炼油行业的运行水平及各自企业在所属行业中所居的位次、与先进的标杆水平的差距，从而不仅为本企业提高运行业绩指明了方向和途径，也为国内石油化工行业管理与国际全面接轨确立了良好的开端。在此“入世”和融和世界经济体系之际，在引进国外先进科技知识的同时，引进先进的管理思想、理念和方法     

Are There Gains to Joining a Union? Evidence from Mexico

Union density in Mexico has been in decline since the 1980s. This article provides evidence on the worker compensation gains (losses) made by males upon joining (leaving) a union. These are estimated using a nationally representative labour market survey covering 2005q1–2016q1. The transitions between non‐union and union status are investigated using a difference‐in‐difference estimator. The findings suggest that joining a union is associated with modest wage gains, contrary to what the literature has shown for most industrialized nations. However, in contrast to this, some union leavers are found to experience a decrease in wages. This article also contributes to the wider literature by providing the first estimates of the longitudinal gain (loss) associated with joining (leaving) a union with respect to non‐wage benefits. The findings show joining (leaving) a union increases (decreases) the probability of being in receipt of legally guaranteed benefits such as bonuses and paid holidays. This suggests that although union density may be in decline, unions still have an important role to play in voicing worker's preferences with respect to compensation and ensuring that employers comply with the law.     

Twenty Years of the Journal of Product Innovation Management: History, Participants, and Knowledge Stock and Flows

The Journal of Product Innovation Management (JPIM) serves as a marketplace for science‐based, innovative ideas that are produced and consumed by scholars and businesspeople. Now that JPIM has existed for 20 years, two intriguing questions emerge: (1) How has the journal evolved over time in terms of knowledge stock, that is, what are the characteristics of the growing stock of knowledge published by JPIM over the years; and (2) how has the journal evolved in knowledge flow, that is, how is JPIM influenced by other scientific publications and what is its impact on other journals? In terms of knowledge stock, over 35% of the articles published over the 20 years investigate processes and metrics for performance management. The next most frequently published area was strategy, planning, and decision making (20%), followed by customer and market research (17%). The dominant research method used was a cross‐sectional large‐sample survey, and the focus most usually is at the project level of the firm. The large majority of JPIM authors (60%) have a marketing background, with the remaining 40% representing numerous functional domains. Academics at all levels publish in JPIM, and though most authors hail from North America, the Dutch are a significant second group. JPIM was analyzed from a knowledge‐flow perspective by looking at the scientific sources used by JPIM authors to develop their ideas and articles. To this end a bibliometric analysis was performed by analyzing all references in articles published in JPIM. During 1984–2003 JPIM published 488 articles, containing 10,314 references to journals and 6,533 references to other sources. Some 20% of these references (2,020) were self‐references to JPIM articles. The remaining 8,294 journal references were to articles in 287 journals in the fields of management (25%), marketing (24%), and management of technology (14%). However, it should be pointed out that many domains were dominated by a limited number of journals. The second component of knowledge flow concerns the extent to which the ideas developed in JPIM are consumed by other authors. Again, bibliometric analysis was used to analyze data from the Social Sciences Citation Index (SSCI) about citations to JPIM in other journals. For the period 1984–2005, the SSCI registered 7,773 citations to JPIM in 2,067 articles published in 278 journals (including the 2,020 self‐citations in JPIM). The functional areas most frequently citing JPIM are management of technology (25%), marketing (15%), management (14%), and operations management and management science (9%). Again, several domains were found to be dominated by a limited number of journals. At the level of individual journals the analysis shows a growing impact of JPIM on management of technology journals. The knowledge‐flow analysis demonstrates how JPIM functions as a bridge between the knowledge from various domains and the body of knowledge on management of technology. It suggests a growing specialization of the field of technology innovation management, with JPIM being firmly entrenched as the acknowledged leading journal.     

Leaving our comfort zone: Integrating established practices with unique adaptations to conduct survey‐based strategy research in nontraditional contexts

Accepted practices for survey research in medium and large firms in developed economies are well established. However, as scholars explore fine‐grained phenomena in nontraditional contexts, sampling, survey design, and administration tasks may need adjusting. Through three case studies and an analysis of a decade of published work, we find that sample frame creation and survey administration require the greatest degree of adaptation, while survey instrument creation most closely follows established practices. We recommend using context‐specific sampling frames and administration techniques, though established survey instruments and scales may be used. The conclusions highlight the importance of overlaying unique adaptations onto established practices to achieve acceptable response rates, obtain accurate and robust data, and provide the basis for subsequent meaningful analysis. Copyright © 2011 John Wiley & Sons, Ltd.     

Metrics thermostat⋆

The explosion of information and information technology has led many firms to evolve a dispersed product development process with people and organizations spread throughout the world. To coordinate such dispersed processes a critical role of managers is to establish and foster a culture that implicitly rewards and motivates product development teams to perform against a set of strategic metrics such as customer satisfaction, time to market, defect reduction, or platform reuse. We focus on a practical method to fine‐tune a firm's relative emphasis on these metrics. In particular, we seek to advise a firm how to modify their emphasis on each metric in order to improve profits. We use a thermostat analogy based on an adaptive control feedback mechanism in which we estimate the incremental improvements in priorities that will increase profits. Iterations seek to maximize profits even if the environment is changing. In developing the metric thermostat we recognize that there are hundreds of detailed actions, such as the use of the house of quality and the use of robust design, among which the product development team must choose. We also recognize that team members will act in their own best interests to choose the actions that maximize their own implicit rewards as determined by the metrics. Management need not observe or dictate these detailed actions, but rather can control the process by establishing implicit weights on the metrics. The thermostat works by changing those implicit weights. We define the problem, introduce the adaptive control mechanism, modify “agency” theory to deal with incremental changes about an operating point, and derive methods that are practical and robust in light of the data that firms have available. Our methods include statistical estimation and internal surveys. The mathematics identify the critical few parameters that need be determined and highlight how to estimate them. Both the measures and the estimation are illustrated in an initial application to a large office‐equipment firm with $20 billion in revenue. The metrics thermostat suggests that this firm has about the right emphasis on time‐to‐market, but has overshot on platform reuse and has lost its focus on customer satisfaction. We describe how the firm reacted to the recommendations and changed its organization.