Sourcing,Filtering, and Evaluating New Product Ideas: An Empirical Exploration of the Performance of Idea Markets

The proliferation of interconnectivity and interactivity through Internet‐based technologies enables new forms of support for new product development. This paper analyzes idea markets, which use widely distributed knowledge, the power of markets, and the Internet to support the crucial initial tasks of the new product development process, including the sourcing, filtering, and evaluation of new product ideas. Idea markets employ virtual stocks to represent new product ideas and allow participants to suggest and trade new product ideas in a virtual marketplace. This paper empirically explores the performance of idea markets in a real‐world field study at a large, high‐tech business‐to‐business company that includes more than 500 participants from 17 countries and features various idea sourcing tasks. The results indicate that idea markets are a feasible and promising method to support the fuzzy front end of the new product development process. Idea markets offer a platform and formal process to capture, select, and distribute ideas in an organization, which motivates employees to communicate their ideas to management. By effectively sourcing and contemporaneously filtering, idea markets help reduce the number of ideas brought to management's attention to those that seem worthy of further consideration. Because idea markets also have the ability to source many ideas, they can increase efficiency at the fuzzy front end of the new product development process.     

Commercial Innovations from Consulting Engineering Firms: An Empirical Exploration of a Novel Source of New Product Ideas

Industrial firms interact with many outside organizations such as the customers, suppliers, competitors, and universities to obtain input for their new product development (NPD) programs. The importance of interfirm interactions is reflected in a large number of interdisciplinary studies reported in a wide variety of literature bases. As a result, several sources of new product ideas have been investigated in the extant literature. Yet given the growing complexity and risks in new product development, there seems to be a need for managers to obtain input from new and unutilized sources. Apparently, one source that industry has not tapped adequately for its NPD efforts is the consulting engineering firms (CEFs). To fill the aforementioned gap in the literature, this article explores the roles and suitability of CEFs in new product development by conducting a rigorous in‐depth case research of new product idea generation in a large Australian firm manufacturing a variety of industrial products. To generate ideas for the sponsoring firm, longitudinal field interviews with 64 managers and engineers from 32 large CEFs were conducted over a one‐and‐one‐half year period. The findings of the field interviews were combined with the documentary evidences and the archival data. This longitudinal data collection enabled the author to generate new product ideas over real time and to gain access to the information that otherwise might have been difficult to obtain. The results suggest that CEFs are a rich source of new product ideas of potential commercial value. However, industry is making little use of CEFs, which underscores the need for industrial firms to collaborate and to establish an effective idea transfer relationship with them. Moreover, the services of CEFs are not restricted to idea generation but can stretch across the entire NPD process. These findings of the study encourage product managers to conceptualize NPD as a highly synergistic mutually interdependent process between CEFs and industrial firms rather than simply an arm's‐length consulting transactions. Given the dearth of research on idea generation with CEFs, this study highlights the findings that are novel and that go beyond the techniques of new product idea generation established in the extant literature.     

A Survey of New Product Evaluation Models

New product development is a dynamic and lengthy process ranging from idea generation through product launch. It is quite important that product managers evaluate the viability of a new product at every stage of its development. Previous literature provides a large number of models that can be used to evaluate new products at different stages of the new product development process. These models vary with respect to their objectives, applicability to different products, data requirements, suitable environments and time frames, and diagnostics. This article presents a critical review of the models with an emphasis on these factors. The article also outlines other emerging methods that companies are using today. It concludes with managerial and research implications. © 1999 Elsevier Science Inc.     

The new product process: an empirically-based classification scheme

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

Using the Analytic Hierarchy Process in New Product Screening

The initial screening of a new product idea is critically important. Risky projects (i.e., those with high probabilities of failure) need to be eliminated early before significant investments are made and opportunity costs incurred. Unfortunately, previous research suggests that it is often difficult for managers to "kill" new product development projects once they have begun. Furthermore, recent studies (including some centering on PDMA members) suggest there is much room for improving new product screening, because this decision often is taken informally or unsystematically. Whereas tools such as Cooper's NewProd software are available to aid in the screening decision, management science decision support models for screening are not used frequently. In the present study, the authors illustrate the use of the Analytic Hierarchy Process (AHP) as a decision support model to aid managers in selecting new product ideas to pursue. The need for flexible models that are highly customized to each firm's challenges (such as AHP) to support the screening decision and to generate knowledge that will be used as input for a firm's expert support system is emphasized. The authors then present an in-depth example of an actual application of AHP in new product screening and discuss the usefulness of this process in gathering and processing knowledge for making new product screening decisions. Finally, the authors explain how a customized AHP process can be incorporated into a sophisticated information system or used as standalone support. © 1999 Elsevier Science Inc.     

Overhauling the new product process

The three cornerstones of successful product development are process, strategy, and resources, according to the benchmarking study reported in this article. Of the three, having a high quality new product process had the strongest impact on business's new product performance. A high quality new product process meant: an emphasis on up-front homework; sharp, early product definition; the voice of the customer evident throughout; tough go/kill decision points; a focus on quality of execution; and a thorough yet flexible process. The research results point strongly to a need to overhaul firms' new product processes—from idea to launch—to incorporate these and other key success drivers, such as the quest for real product superiority, and the need for true cross-functional teams. The goals of an effective new product process—that is, the specifications or key elements of a high quality process—are outlined, a vital starting point to any process reengineering exercise. The article ends with a quick look at a third generation stage-gate or new product process, together with some tips and hints on how to proceed to overhaul your company's new product process.     

FROM EXPERIENCE: Developing New Product Concepts Via the Lead User Method: A Case Study in a "Low-Tech" Field

Conventional market research methods do not work well in the instance of many industrial goods and services, and yet, accurate understanding of user need is essential for successful product innovation. Cornelius Herstatt and Eric von Hippel report on a successful field application of a "lead user" method for developing concepts for needed new products. This method is built around the idea that the richest understanding of needed new products is held by just a few users. It is possible to identify these "lead users" and then draw them into a process of joint development of new product concepts with manufacturer personnel. In the application described, the lead user method was found to be much faster than traditional ways of identifying promising new product concepts as well as less costly. It also was judged to provide better outcomes by the firm participating in the case. The article includes practical detail on the steps that were used to implement the method at Hilti AG, a leading manufacturer of products and materials used in construction.     

Third-Generation New Product Processes

New product processes—formal "stage-gate" systems for driving new product projects from idea through to launch—have been widely adopted in the last decade, and have generally had a strong and positive impact on firms' new product efforts. While these Second-Generation roadmaps represent a major improvement over the NASA-based first generation process of the 1960s, they too have weaknesses: too time consuming and too many time wasters, too bureaucratic, and no provision for focus. Here, Robert Cooper speculates about the nature of an emerging next generation of new product processes. He proposes fundamental changes to today's "stage-gate" systems that revolve around four Fs: they will be fluid and adaptable; they will incorporate fuzzy gates which are both situational and conditional; they will provide for much sharper focus of resources and management of the portfolio of projects; and they will be much more flexible than today's process. The end results should provide companies with a much more efficient road-map, bringing products to market faster and improving their use of scarce resources. But pitfalls are never far away in our evolution towards these Third-Generation Processes.     

Nature of the R&D/Marketing co-operation in the design of technologically advanced new industrial products

Many studies have consistently reported that success in industrial new product innovation is linked with the degree of interfacing between R&D and Marketing in the early stages of the product development process. However, very little evidence of such an interface has been reported in advanced technology firms and the relevant literature provides little empirical material on the matter.
Based on a pilot study of 23 new product projects in ten firms in the U.K. it is argued that, in many instances, firms are missing a fundamental issue in the R&D/Marketing cooperation. Too often, the interface is limited to the identification of general market need for a particular new product idea.
The paper emphasises the fact that the interface should provide the means for an efficient product design procedure between R&D and Marketing. This design link should, in turn, profit both the engineering design of the product and its future marketability. The paper also outlines the advantages and the problems inherent in the exercise and proposes a framework for implementation.     

The Impact of User‐Oriented Design on New Product Development: An Examination of Fundamental Relationships*

Design offers a potent way to position and to differentiate products and can play a significant role in their success. In many ways it is the focus on deep understanding of the customer or user—what may be termed user‐oriented design (UOD)—that transforms a bundle of technology with the ability to provide functionality into a “product” that people desire to interact with and from which they derive benefits. Even though the importance of this type of design is gaining recognition, several fundamental relationships between user‐oriented design contributions and the new product development (NPD) process and outcomes (i.e., product) remain unresearched, although they are assumed. This article examines the fundamental relationships underlying the incorporation of a user orientation into the NPD process. The discussion is organized around UOD's impact in terms of enhancing collaborative new product development (process oriented), improving idea generation (process oriented), producing superior product or service solutions (product oriented), and facilitating product appropriateness and adoption (product oriented). Each of these is developed and presented in the form of a research proposition relating to the impact of user‐oriented design on product development. The fundamental relationships articulated concerning UOD's impact on NPD form a conceptual framework for this approach to product design and development. For practitioners, the article suggests how user‐oriented design can improve NPD through its more grounded and comprehensive approach, along with the elevated appreciation of design challenges and heightened sense of possibilities for a product being developed. For scholars, the article identifies four important areas for UOD research. In addition to the rich avenues offered for research by each of these, the framework presented provides a foundation for further study as well as the development of new measures and tools for enhancing NPD efforts.     

The eye of the beholder: The influence of intuition,rationality, and leeway on the assessment of an Idea's market-creation potential

Paradoxically, mature firms facing competition in mature markets attempt to enter new markets, yet often pursue incremental ideas in their new product development process (NPD), abandoning ideas with market-creating potential in the idea evaluation phase at the fuzzy front end of NPD. We assume that idea evaluators' information-processing style (rational or intuitive) plays a dominant role in this context. Previous research has shown that the holistic information-processing style of intuitive individuals helps them with tasks that involve generating creative ideas, and we expect it to also be beneficial during idea evaluation for sensing an idea's potential to create new markets. In addition, we predict that the systematic procedure to be followed in formalized NPD idea evaluation will stifle this ability. Drawing on data from 138 corporate idea evaluators, we show that evaluators with an intuitive cognitive style are more likely to emphasize new market creation than those with a rational style, and that leeway serves as a moderator. By linking information-processing style and leeway we provide a potential explanation for why highly formalized organizations find it difficult to develop innovations with a high market-creation potential, and we discuss the practical implications of this.     

Internal vs. external learning in new product development: effects on speed, costs and competitive advantage

The purpose of this study was to investigate how different technology sourcing strategies throughout the new product development process influenced innovation speed, development costs, and competitive advantage. We studied 75 new product development projects from ten large, U.S.-based companies in several industries. Results indicated that: (1) more external sourcing during the early (i.e., idea generation) stage was related with lower competitive success; (2) more external sourcing during the later (i.e., technological development stage was related with slower innovation speed; and (3) development costs tended to rise with greater reliance on external sources of technology, but this result was not statistically significant.     

New product process activities and project outcomes

The new product process comprises the set of activities that move the product from idea to launch. The authors investigated the new product process activities of firms in Australia, England and Belgium. Objectives of the research were to determine—what activities are undertaken in the new product process? How proficiently are these activities performed and what improvements are needed? whether the sorts of activities undertaken and their proficiency affect project success or failure. Since these activities are largely under the control of management, the deeper is our understanding of new product process activities, the greater the scope for improved product innovation management.     

Development Resource Planning: Complexity of Product Development and the Capacity to Launch New Products

Overcommitment of development capacity or development resource deficiencies are important problems in new product development (NPD). Existing approaches to development resource planning have largely neglected the issue of resource magnitude required for NPD. This research aims to fill the void by developing a simple higher‐level aggregate model based on an intuitive idea: The number of new product families that a firm can effectively undertake is bound by the complexity of its products or systems and the total amount of resources allocated to NPD. This study examines three manufacturing companies to verify the proposed model. The empirical results confirm the study's initial hypothesis: The more complex the product family, the smaller the number of product families that are launched per unit of revenue. Several suggestions and implications for managing NPD resources are discussed, such as how this study's model can establish an upper limit for the capacity to develop and launch new product families.     

Managing requirements capture within a global telecommunications company

Many firms engage in research activities with the purpose of finding information about the future state of technology, competition and the market. In parallel, companies absorb knowledge through a variety of social and political processes that also influence decision‐making. Such activities enhance understanding of a firm's internal and external environment, so that it can develop and evaluate new product or service ideas more effectively. How firms manage this process is critical to define and prioritise new product development ideas – how organisations find the 'right' idea is critical to ensure future market success. This paper seeks to gain a better understanding of how the knowledge used to create new products and services is acquired, what organisational structures facilitate or impinge this process and how individuals and groups within organisations behave in the very early stages of new product development. An in-depth case study of a global telecommunications company is presented and the management processes for a number of different projects in various divisions of the company are compared and discussed.     

Implementing the lead user method in a high technology firm: A longitudinal study of intentions versus actions

The customer or user's role in the new product development process is limited or nonexistent in many high technology firms, despite evidence that suggests customers are frequently an excellent source for new product ideas with great market potential. This article examines the implementation of the Lead User method for gathering new product ideas from leading edge customers by an IT firm that had not previously done much customer research during their new product development efforts. This case study follows the decision‐makers of the firm through the process, where the end result is the generation of a number of useful product concepts. Besides the ideas generated, management at the firm is also impressed with the way the method makes their new product development process more cross‐functional and they plan to make it a part of their future new product development practices. Approximately one year later the firm is revisited to find out if the Lead User method has become a permanent part of their new product development process. The authors find, however, that the firm has abandoned research on the customer despite the fact that several of the lead‐user derived product concepts had been successfully implemented. Management explanations for their return to a technology push process for developing new products include personnel turnover and lack of time. Using organizational learning theory to examine the case, the authors suggest that the nontechnology specific product concepts generated by the lead users were seen as ambiguous and hence overly simplistic and less valuable by the new product development personnel. The technical language spoken by the new product personnel also increased the inertia of old technology push development process by making it more prestigious and comfortable to plan new products with their technology suppliers. The fact that the firm was doing well throughout this process also decreased the pressure to change from their established new product development routine. The implications for these finding are that: 1) it is necessary to pressure or reward personnel in order to make permanent changes to established routines, and 2) researchers should be careful at taking managers at their word when asking them about their future intentions.     

Principles of New Product Management: Exploring the Beliefs of Product Practitioners

Conventional wisdom might lead us to conclude that the various disciplines involved in product development and management are often at cross-purposes. For example, practitioners from R&D and engineering have been known to suggest that marketing fails to understand the technical trade-offs involved in product management decisions. Conversely, marketing professionals sometimes complain that their technology-oriented colleagues pursue product development initiatives without adequate market awareness. And practitioners from both sides of this debate have asserted that research on new product development tends to be of the ivory tower variety, with little or no relevance for industry. Are such complaints valid? Perhaps it is time for a reality check. By searching academic literature on product development, Roger J. Calantone, C. Anthony Di Benedetto, and Ted Haggblom have compiled a list of 40 fundamental principles of new product development. This list forms the basis for a survey of new product practitioners from marketing and technical disciplines. The study provides a means for assessing whether practitioners agree with the fundamental principles of new product development that are identified in current academic literature. By obtaining responses from both marketing and technical professionals, the survey also sheds light on whether those two groups hold fundamentally different beliefs regarding new product development. The survey results reveal strong overall agreement among practitioners regarding these fundamental principles of new product management. Managers believe that 80% of the principles are either usually or almost always true. In other words, the survey results support the idea that the academic community is pursuing research issues that are relevant to practitioners, and that they are reaching valid conclusions. There are only a few cases in which the responses from the technical and marketing practitioners differ. Those disagreements probably result from differences in the basic orientations of the two groups. For example, it is not surprising that marketing managers would be more likely to agree that “product users and the marketplace form the most important source for new product ideas,” while technical managers more strongly support the idea that “radically new technologies constitute an important source of new product ideas.” The respondents noted overall disagreement with only a few of the 40 principles. In many of these cases, the academic literature has reached mixed conclusions. In other words, these “principles” might actually be oversimplifications, and further research is probably needed before we can fully understand the issues involved.     

Breakeven Time on New Product Launches: An Investigation of the Drivers and Impact on Firm Performance

The ability to break even faster on new product projects is becoming increasingly critical for firms in fast‐moving industries where continually reinvesting in research and development efforts matters greatly for survival. However, most research to date has focused on studying the impact of two primary innovation outcomes: sales and profits. The exclusive emphasis on sales and profit may be warranted for certain types of goods such as durable goods, but when examining the effects of new products in fast‐moving consumer goods or in the entrepreneurial sphere, where cash to cash matters greatly for survival, it is critical for both researchers and practitioners to not only consider the profits and sales generated by the new product but also the time to breakeven. This paper develops a theoretical framework using the competency‐based literature to examine the effects of innovation drivers (customer idea source, speed to market, product quality, and product newness) on breakeven time (BET) and project profits, and their subsequent impact on firm performance. A three‐stage least square estimation method was employed using longitudinal data on 945 new product development projects and launches in the morning (breakfast) foods category. The results clearly pinpoint that for successful product innovation, managers need to consider the time taken to breakeven on new product development. Specifically, the results demonstrate that speed to market and product quality shorten BET, but customer idea source extends BET. Second, the analysis also empirically demonstrates that BET is an equally effective predictor of firm performance as project profits in the short run, but significantly a stronger predictor of firm performance in the long run (t + four years), suggesting that BET should be regarded as a superior leading indicator of firm performance versus product profitability for fast‐moving consumer goods segment. This is an important finding that suggests firms that recoup their cash investments more quickly experience greater short‐term and significantly more long‐term success.