Benchmarking the Firm's Critical Success Factors in New Product Development

Managing new product development (NPD) is, to a great extent, a process of separating the winners from the losers. At the project level, tough go/no-go decisions must be made throughout each development effort to ensure that resources are being allocated appropriately. At the company level, benchmarking is helpful for identifying the critical success factors that set the most successful firms apart from their competitors. This company- or macro-level analysis also has the potential for uncovering success factors that are not readily apparent through examination of specific projects. To improve our understanding of the company-level drivers of NPD success, Robert Cooper and Elko Kleinschmidt describe the results of a multi-firm benchmarking study. They propose that a company's overall new product performance depends on the following elements: the NPD process and the specific activities within this process; the organization of the NPD program; the firm's NPD strategy; the firm's culture and climate for innovation; and senior management commitment to NPD. Given the multidimensional nature of NPD performance, the study involves 10 performance measures of a company's new product program: success rate, percent of sales, profitability relative to spending, technical success rating, sales impact, profit impact, success in meeting sales objectives, success in meeting profit objectives, profitability relative to competitors, and overall success. The 10 performance metrics are reduced to two underlying dimensions: program profitability and program impact. These performance factors become theX-and Y-ax.es of a performance map, a visual summary of the relative performance of the 135 companies responding to the survey. The performance map further breaks down the respondents into four groups: solid performers, high-impact technical winners, low-impact performers, and dogs. Again, the objective of this analysis is to determine what separates the solid performers from the companies in the other groups. The analysis identifies nine constructs that drive performance. In rank order of their impact on performance, the main performance drivers that separate the solid performers from the dogs are: a high-quality new product process; a clear, well-communicated new product strategy for the company; adequate resources for new products; senior management commitment to new products; an entrepreneurial climate for product innovation; senior management accountability; strategic focus and synergy (i.e., new products close to the firm's existing markets and leveraging existing technologies); high-quality development teams; and cross-functional teams.     

When Product Development Performance Makes a Difference: A Statistical Analysis in the Electronics Industry

Throughout the pages of JPIM and other publications, researchers and practitioners devote considerable effort to identifying the dimensions of new-product development (NPD) performance that relate most closely to business success. Although we may hope to unveil a set of universal truths about the relationship between NPD performance and business success, the relevant NPD performance measures appear to depend on the industry in which a firm competes. In fact, Christian Terwiesch, Christoph Loch, and Martin Niederkofler suggest that the overall relevance of NPD performance to business success depends on the firm's competitive market environment. In a study of 86 business units operating in 12 different electronics industries worldwide, they develop a market contingency framework for understanding the impact of NPD performance on a firm's profitability. Their study uses data from the “Excellence in Electronics” project, a joint research effort by Stanford University, the University of Augsburg, and McKinsey & Co. They describe market context in terms of three dimensions: market share, market growth, and external stability—that is, the average product life cycle duration in the market. Looking at all 86 business units in the study, they find that industry membership accounts for 23% of the variance in profits, with 18 percent of the variance determined by industry profitability and 5% by the three dimensions of market context. For the firms in the study, development performance has the most significant effect in slow-growth markets and in markets with long product life cycles. In these stable industries, low development intensity, product line freshness, and technical product performance increase profitability. The results indicate that NPD performance plays a much more important role for explaining the profitability of dominant firms than that of the low-market-share firms in the study. NPD performance explains 30% of the profitability variance among the high-market-share business units in the study, but none of the variance for the low-market-share business units. Although the profitability of the smaller firms in the study is driven primarily by the industry environment, these firms can compete on the basis of superior technical performance.     

New Product Activities and Performance: The Moderating Role of Environmental Hostility

In the race to bring new products to market, a company may be tempted to cut corners in the new product development (NPD) process. And a hostile environment—that is, one marked by intense competition and rapid technological change—only heightens the pressure to reduce NPD cycle time. However, hasty completion of the NPD process may actually jeopardize a product's chances for success. In a study of Fortune 500 manufacturers of industrial products, Roger J. Calantone, Jeffrey B. Schmidt, and C. Anthony Di Benedetto explore the relationships among new product success rates, proficiency in the execution of NPD activities, and the perceived level of hostility in the competitve environment. Their study examines how proficiency in NPD activities affects the odds of success for industrial new products. Adding environmental hostility to the mix, they also investigate whether the perceived level of hostility in the competitive environment affects the relationship between NPD proficiency and success. In this way, they provide insight into the factors managers must consider when attempting to accelerate cycle time in a hostile competitive environment. The respondents to their survey—142 senior managers involved in NPD or product innovation rated environmental hostility in terms of the extent to which the firm perceives its industry as safe, rich in investment opportunity, and controllable. To assess NPD proficiency, respondents were asked about their firms' performance in predevelopment marketing and technical activities, development marketing and technical activities, and financial analysis. Respondents assessed new product performance in terms of product profitability. As expected, the responses indicate that proficiency in the performance of NPD activities increases the likelihood of new product success. Proficiency in development marketing activities produced the largest increase in likelihood of success—nearly 25 percent over that of projects in which respondents rated performance of these activities at any level below “most proficient.” More importantly, the responses indicate that a hostile competitive environment increases the impact of NPD proficiency. In other words, by improving performance of key NPD activities under hostile environmental conditions, a firm can greatly increase the likelihood of success for a new industrial product. Rather than simply cut corners in the NPD process, a firm faced with a hostile environment must strike a balance between speed and quality of execution.     

The Role of Sales in NPD: An Investigation of the U.S. Health‐Care Industry

The new product development (NPD) literature emphasizes that the success of new products strongly depends on a firm's capability to understand customer needs and translate them into new products. Because of their close relationships with customers, salespeople are in the ideal position to connect the firm's NPD efforts to its customers. The extant literature on the role of sales in NPD focuses on either sales’ contribution to generating new product ideas or the adoption of new products by salespeople, while a systematic study of sales’ contribution during all NPD stages is lacking. In addition, the role of sales is typically studied in isolation, while in practice, the role of sales depends on the relationship between sales and marketing. This article addresses these gaps in the literature by reporting on an empirical investigation of the role of sales during the entire NPD process in the U.S. health‐care industry, taking into account the complexities of the sales‐marketing dynamic. The article is based on interviews with 21 sales and 15 marketing informants from the U.S. health‐care industry, both pharmaceutical firms (selling drugs to physicians) and device manufacturing firms. Our findings highlight how salespeople are distant from NPD process during the discovery stage. Salespeople are focused on selling to customers, and marketing keeps sales distant from the NPD process. During the development stage, sales is still only indirectly involved in NPD through its relationship with marketing. During commercialization, however, marketing takes the driver's seat and strongly involves sales in the various (pre)launch activities. But while salespeople are mostly indirectly involved in NPD, sales managers have a closer relationship with sales and are more directly involved. The findings also show how the involvement of sales is influenced by characteristics of the health‐care industry. Thus, this article contributes to our understanding of the role of sales in NPD by integrating theoretical perspectives from the sales‐marketing interface literature into the NPD literature.     

Critical Development Activities for Really New versus Incremental Products

Does the development of really new products require a different approach from that of incremental new products? Current research and management practice seem to suggest that any successful new product development (NPD) process comprises a set of key activities, regardless of a product's innovativeness. It seems almost foolhardy to suggest that NPD could proceed without proficiency in all of the following tasks: strategic planning, idea development and screening, business and market opportunity analysis, technical development, product testing, and product commercialization. Suggesting that the difference may be in the details, X. Michael Song and Mitzi Montoya-Weiss present the results of a study that examines the development of 163 really new products and 169 incremental new products. The study's objective is to compare the NPD processes and performance outcomes of really new and incremental products. In other words, the study examines the interplay between a product's innovativeness, the NPD process, and the product's performance in the marketplace. For the firms in the study, four sets of NPD activities—strategic planning, market analysis, technical development, and product commercialization—are key determinants of new product success for both really new products and incremental products. However, strategic planning and business and market opportunity analysis activities play contrasting roles for the two types of products. Working to improve proficiency in business and market opportunity analysis may be counterproductive for really new products, but it can increase the profitability of incremental products. Conversely, improving the proficiency of strategic planning activities has a positive effect on the profitability of the really new products, but it has a negative effect for the incremental products. Overall, the really new products in the study surpass the incremental products in meeting profit objectives. Comparing current practice to best practice, the firms in the study have room for improvement. For both really new and incremental products, the firms in the study do not place sufficient emphasis on product commercialization activities. The participants also need to reassess the relative emphasis they place on strategic planning activities. The projects involving really new products do not place sufficient emphasis on strategic planning, while the incremental projects exhibit a relatively high level of proficiency in this area—exactly the opposite of the order that this study recommends.     

New Product Strategy, Structure, Process, and Performance in the Telecommunications Industry

A continuous flow of new products is the lifeblood for firms that hope to remain competitive in high-technology industries such as telecommunications. Faced with rapidly shrinking product life cycles, these firms must aggressively pursue the quest for more effective new product development (NPD). Ongoing success in such industries is dependent on choosing the right mix of new product strategy, organizational structure, and NPD processes. Rather than considering the interrelationships among these success factors, however, most previous studies of NPD have examined these issues individually. This shortcoming is compounded by the fact that past studies of NPD have typically cut across industry lines. Gloria Barczak addresses these problems by proposing that a firm's choice of new product strategy, structure, and process are interrelated, as are the effects of those choices on NPD performance. Because these choices and their effects also may be dependent on the unique characteristics of the industry in which a firm competes, her study focuses exclusively on firms in a specific, high-technology industry, telecommunications. The study finds that no single NPD strategy, in and of itself, stands out as being better than any other for the telecommunications industry. Instead, it appears that a company's focus should be on ensuring the best possible fit between its chosen NPD strategy and its corporate goals and capabilities. In keeping with the current focus on cross-functional teams, the study results indicate that project teams and R&D teams are the most effective means for organizing NPD efforts in the telecommunications industry. Perhaps not surprisingly, R&D teams are more important for first-to-market firms than they are for fast followers and late entrants. An R&D team provides the technical skills necessary for playing the role of pioneer. Regardless of the firm's NPD strategy and structure, the presence of a product champion is an important element in the success of new product efforts. In an era of rapid, technological advances, idea generation and screening efforts are essential to the success of telecommunications firms. To ensure that they do not fall into the trap of introducing technology for technology's sake, pioneering and fast-follower firms in particular must recognize the importance of staying in touch with their markets. Such market-oriented activities as customer prototype testing and concept definition and testing can help these firms ensure that their technological developments are in line with customer needs and requirements.     

Firm Characteristics and NPD Program Success: The Significant Influence of Global Discovery Management

Managing new product development (NPD) with a global point of view is argued to be essential in current business more than ever. Accordingly, many firms are trying to revitalize their NPD processes to make them more global. Therefore, examining global NPD management is one of the top priorities for research. While scholars have examined global launch management, there has been scant attention on the direct effect of global discovery management on NPD success. Therefore, this study investigates how a globally managed discovery phase enhances a firm's overall NPD success. Drawing upon the resource‐based view (RBV) and using Kotabe's ( 1990 ) generic model for market success in global competition as the overarching framework, this study examines four drivers of NPD success: global discovery management, the firm's “global footprint,” its inbound knowledge sourcing practices (i.e., “open innovation proclivity”), and nationality of the teams (i.e., “cross‐national global NPD team use”). The hypotheses are tested using a sample of 255 business units from multiple industries, headquartered worldwide, and surveyed during the 2012 PDMA Comparative Performance Assessment Study (CPAS). The PLM‐SEM analyses show that, of the four drivers examined, only global discovery management strongly influences a firm's NPD program success. The findings enhance our understanding of the particularities in global NPD. Based on the study's results, suggestions are provided as to how multinationals can leverage their international operations in the course of their front‐end activities.     

Business Performance and Strategic New Product Development Activities: An Empirical Investigation

Despite the ongoing search for the so-called silver bullet that provides the ultimate competitive advantage, there is no roadmap showing the “right” way to perform new product development (NPD). What's more, it is highly unlikely that such a formula could be developed. Given the diversity of firms and industries as well as the complexity of the NPD process, no single set of NPD activities or steps can be defined that will be appropriate for all firms. However, Roger J. Calantone, Shawnee K. Vickery, and Cornelia Droge propose that it is possible to develop such a framework within the confines of a specific industry. They suggest that successful companies within an industry are likely to focus on certain essential NPD activities that allow them to achieve the best possible results within the constraints of their market. Their research is directed toward identifying the relationship between the performance of specific innovation-related activities and overall business performance in the furniture industry. This study also assesses the relationship between a firm's performance on an NPD activity and the importance assigned to that activity by the firm's chief executive officer (CEO). With the current emphasis on cross-functional teams, the study also seeks to determine whether performance on a given NPD activity is related to the assignment of responsibility for that activity. The following NPD activities were evaluated for their effect on corporate performance: customization, new product introduction, design innovation, product development cycle time, product technological innovation, product improvement, new product development, and original product development. Compared to their competitors, top performers consistently put more strategic emphasis on each of these activities. All of these activities have a strong positive influence on return on investment (ROI) and ROI growth. What's more, most of the activities also clearly relate to stronger market share, market share growth, return on sales (ROS), and ROS growth. The vision and focus on these essential NPD activities must begin with CEOs who recognize their strategic value. Such leaders will direct appropriate staff and technical resources toward performance of the necessary activities. They will also ensure that the organization is sufficiently flexible to accept the changes in responsibilities for coordination and leadership that are necessary during different stages in the NPD process. To gain the product flexibility necessary for competing in numerous market segments, top performers require greater input and leadership from design, engineering, and manufacturing.     

Performance of Global New Product Development Programs: A Resource-Based View

Gaining a competitive edge in today's turbulent business environment calls for a commitment by firms to two highly interrelated strategies: globalization and new product development (NPD). Although much research has focused on how companies achieve NPD success, little of this deals with NPD in the global setting. The authors use resource‐based theory (RBT)—a model emphasizing the resources and capabilities of the firm as primary determinants of competitive advantage—to explain how companies involved in international NPD realize superior performance. The capabilities RBT model is used to test how firms achieve superior performance by deploying organizational capabilities to take advantage of key organizational resources relevant for developing new products for global markets. Specifically, the study evaluates (1) organizational NPD resources (i.e., the firm's global innovation culture, attitude to resource commitment, top‐management involvement, and NPD process formality); (2) NPD process capabilities or routines for identifying and exploiting new product opportunities (i.e., global knowledge integration, NPD homework activities, and launch preparation); and (3) global NPD program performance. Based on data from 387 global NPD programs (North America and Europe, business‐to‐business), a structural model testing for the hypothesized mediation effects of NPD process capabilities on organizational NPD resources was largely supported. The findings indicate that all four resources considered relevant for effective deployment of global NPD process capabilities play a significant role. Specifically, a positive attitude toward resource commitment as well as NPD process formality is essential for the effective deployment of the three NPD process routines linked to achieving superior global NPD program performance; a strong global innovation culture is needed for ensuring effective global knowledge integration; and top‐management involvement plays a key role in deploying both knowledge integration and launch preparation. Of the three NPD process capabilities, global knowledge integration is the most important, whereas homework and launch preparation also play a significant role in bringing about global NPD program success. Tests for partial mediation suggest that too much process formality may be negative and that top‐management involvement requires careful focus.     

Perspective—Riding the Wind: Managing New Product Development in an Age of Change

New product development (NPD) has never been more challenging or rewarding than it is today. With the dawning of the new millennium, new product developers now find themselves in an “age of change,” the likes of which the world has never known. The rate of change is numbing, if not stupefying for many business people. With the winds of change blowing at near gale force intensity levels, this is clearly a time for NPD professionals to pursue new product and market strategies that are anchored on sound business fundamentals. This article begins with a brief review of the Product Development & Management Association's 1998 International Research Conference held in Atlanta. The theme for the conference was “Achieving Excellence in New Product Development and Management.” The article then offers a reflective look at seven NPD themes that could dominate new millennium business thinking and offer guidance to those seeking new product success. The article's first theme discusses why NPD is increasing in importance. The second theme outlines key NPD building blocks which NPD champions must bolster for new product success. The third theme explores the value in conceptualizing NPD output in items of “turns per decade.” The fourth theme champions the notion that continuous quality improvement is an integral part of NPD's contribution to a firm. The fifth theme explains why product elimination is an essential element in the innovation process. Theme number six reminds readers that fun and optimism are essential and commonly overlooked ingredients for sustaining NPD achievement. The seventh theme states that product development professionals build credibility and successful careers by delivering on promises made. Innovation opportunities embedded within each theme are explored from both firm‐level and individual developer‐level perspectives. In building the case for their themes, the authors initially provide a rationale for NPD's growing stature and importance. Then they suggest NPD strategies that firms can implement with high likelihood of success. The article concludes with suggested actions that individual developers can undertake to bolster their own careers while simultaneously strengthening the NPD profession.     

Leveraging Social Network Sites in New Product Development: Opportunity or Hype?

Leveraging social network sites is high on the list of priorities for a lot of businesses that are eager to find more effective ways to reach, learn about, and engage customers in new product development (NPD). However, the rapidly changing landscape of social network sites can be difficult to navigate successfully and doubts remain about whether and how they can be used to good effect. In fact, empirical research confirming a positive relationship between the use of social network sites in NPD and business performance is scarce. This paper reports on research examining the use of social network sites for three purposes, namely for market research guiding the development of new products, for getting customers to collaborate in the NPD process, and for new product launch. The results of this research suggest that the benefits expected from using social network sites in NPD are largely not being realized by businesses. Using social network sites to conduct market research leading into the NPD process was not found to contribute to business performance, and in fact was found to have negative relationships with both profitability and market growth. Using social network sites to get customers to collaborate in the NPD process was found to be positively related with innovativeness but not with market growth or profitability. Finally, using social network sites for new product launch was where the most positive indications were seen, since this was found to be positively related with innovativeness, market growth, and profitability. Thus, it appears that while businesses may get good results from using social network sites for product launch, they still have a learning curve to traverse before they can successfully use them for market research or customer collaboration in NPD. While there is currently a great deal of enthusiasm—even hype—about the potential opportunities of using social network sites for NPD, this research suggests that businesses should move carefully and recognize that just jumping on the social network bandwagon will not insure success.     

Absorptive capacity and performance: The role of customer relationship and technological capabilities in high-tech SMEs

This study focuses on how the interplay between a firm's absorptive capacity (ACAP), and its technological and customer relationship capability contributes to its overall performance. Using structural equation modeling in a sample of 158 firms (316 questionnaires, two respondents per firm) from South Korea's semiconductor industry, we find that a firm's ACAP leads to better performance in terms of new product development, market performance and profitability when used in combination with the firm's capability to engage state of the art technologies in its new product development program (NPD) (technological capability) as well as cultivate strong customer relationships to gain customer insight in NPD (customer relationship capability). By highlighting the interactive nature of absorptive capacity's antecedents and how these relate to firms' performance, this study contributes to the understanding of the role of ACAP as a mechanism for translating external knowledge into tangible benefits in high-tech SMEs, thus leading to important theoretical and practical implications.     

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.     

The drivers of success in new-product development

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

Rolling Out New Products Across Country Markets: An Empirical Study of Causes of Delays

Faced with the challenge of launching a new product into numerous countries, managers may view a sequential rollout as the prudent course of action. Rather than launching the product simultaneously in diverse countries, they may believe they can reduce risk by launching first in one or two countries, and then in others. However, this strategy overlooks the interplay between timeliness in international new product rollouts (INPR) and product success. George M. Chryssochoidis and Veronica Wong explore these issues in a study of 30 high-tech products launched into multiple European markets. Their study has three objectives: examining the incidence of timeliness and delays in simultaneous and sequential INPR; exploring the causes of delays in INPR; and assessing the effects that INPR timeliness and delays have on new product outcomes. They define timeliness in INPR as the availability of the new product to the firm's multiple target markets within the time frame planned by the company's managers. In other words, timeliness in this study reflects a company's capability for adhering to the schedule that management has established. Contrary to expectations, the results of this study do not reveal direct effects on timeliness in INPR from such sources as diversity of target markets or the firm's external environment. These results suggest that firms can achieve on-time, multicountry rollout of new products notwithstanding the legal, technological, and competitive environment. For the firms in this study, timeliness in INPR depends on such factors as sufficiency of marketing and technological resources (for example, to train sales staff, provide after-sales service, and adapt the product for multiple markets), proficiency in executing new product development activities, and effective communication between a company's headquarters and its business units and customers in different countries. Among the 22 product launches categorized as sequential rollouts in this study, 15 experienced delays. All eight of the simultaneous launches were timely. The results of this study indicate a positive relationship between timeliness in INPR and new-product success. Conversely, for the firms in this study, delays in INPR resulted in lower-than-expected product sales and profitability. In other words, the seemingly less risky sequential launch strategy may actually increase the risk of new product failure by delaying product rollout in multiple markets.     

The Effects of Decentralization in Strategy‐Making and National Culture on NPD Portfolio Planning

Traditionally, the understanding among scholars and practitioners has been that a portfolio of NPD projects is the expression of a firm's strategy and thus it must support the strategy. In keeping with this view, the current study focuses on new product development (NPD) portfolio planning, which is defined as a firm's effort to formulate portfolio decisions using a defined innovation strategy. Connecting portfolio decisions to a defined innovation strategy has been associated with higher innovation success. Surprisingly, empirical research indicates that portfolio decisions do not always support the company's innovation strategy. Furthermore, during recent years, an increasing number of authors underscore the importance of responsiveness and adaptability in portfolio decision‐making. The current study addresses these two issues by examining a direct effect of decentralization in strategy‐making on NPD portfolio planning, and a moderating effect of decentralization in strategy‐making on the relationship between NPD portfolio planning and NPD program success. The study also examines the influence of national culture on the proposed relationships. The theoretical model was tested using data from the 2012 PDMA Comparative Performance Assessment Study. Findings indicate that NPD portfolio planning positively influences NPD program success. Also, results revealed inverted U‐shaped direct and moderating effects, respectively, of decentralization in strategy‐making on NPD portfolio planning, and of decentralization in strategy‐making on the relationship between NPD portfolio planning and NPD program success. With regard to the moderating effect of national culture, results indicate that uncertainty avoidance does not moderate the relationship between NPD portfolio planning and NPD program success. Nonetheless, we found significant moderating effects of individualism and power distance on the curvilinear relationship between decentralization in strategy‐making and NPD portfolio planning.     

Managing New Product Development Teams in a Globally Dispersed NPD Program

Globalization is a major market trend today, one characterized by both increased international competition as well as extensive opportunities for firms to expand their operations beyond current boundaries. Effectively dealing with this important change, however, makes the management of global new product development (NPD) a major concern. To ensure success in this complex and competitive endeavor, companies must rely on global NPD teams that make use of the talents and knowledge available in different parts of the global organization. Thus, cohesive and well‐functioning global NPD teams become a critical capability by which firms can effectively leverage this much more diverse set of perspectives, experiences, and cultural sensitivities for the global NPD effort. The present research addresses the global NPD team and its impact on performance from both an antecedent and a contingency perspective. Using the resource‐based view (RBV) as a theoretical framework, the study clarifies how the internal, or behavioral, environment of the firm—specifically, resource commitment and senior management involvement—and the global NPD team are interrelated and contribute to global NPD program performance. In addition, the proposed performance relationships are viewed as being contingent on certain explicit, or strategic, factors. In particular, the degree of global dispersion of the firm's NPD effort is seen as influencing the management approach and thus altering the relationships among company background resources, team, and performance. For the empirical analysis, data are collected through a survey of 467 corporate global new product programs (North America and Europe, business‐to‐business). A structural model testing for the hypothesized effects was substantially supported. The results show that creating and effectively managing global NPD teams offers opportunities for leveraging a diverse but unique combination of talents and knowledge‐based resources, thereby enhancing the firm's ability to achieve a sustained competitive advantage in international markets. To function effectively, the global NPD team must be nested in a corporate environment in which there is a commitment of sufficient resources and where senior management plays an active role in leading, championing, and coordinating the global NPD effort. This need for commitment and global team integration becomes even more important for success as the NPD effort becomes more globally dispersed.     

Your new product development (NPD) is only as good as your process: an exploratory analysis of new NPD process design and implementation

Given industry competitiveness, how do firms' new product development (NPD) process designs differ when responding to an innovation mandate? How do NPD design elements differ across firms when implementing NPD processes? These design elements are strategic business unit (SBU) senior management involvement, business case content, customer interactions, and cross‐functional integration. What are the consequences of different combinations of NPD process design elements for innovation productivity? We explore these questions via a collective case study of newly implemented NPD process designs at three different SBUs of a major US‐based international conglomerate, 1 year after receiving the mandate to grow through innovation. Our analysis suggests that industry competitiveness and firm characteristics influence the NPD process design as SBUs employ distinct combinations of NPD design elements. The differential emphasis on design elements leads to variation in process design and divergence in innovation productivity.     

Successful Product Development after Firm Acquisitions: The Role of Research and Development

A major reason for carrying out a merger and acquisition (M&A) is to gain access to technological knowledge and to increase new product development (NPD) capabilities. To achieve the desired effect of improving a firm's capacity for innovation, this knowledge must be combined with the acquiring firm's existing resources. Previous research, however, has made it clear that M&A transactions tend to disrupt a company's innovation processes, resulting in reduced investment in research and development (R&D) activities as well as a lower innovative output in terms of patents and new products introduced to the market. In this regard, a successful postmerger integration of the firms' R&D units plays a decisive role. Conceptually, this exploratory article distinguishes between the strategic approach to integration and the integration instruments or measures to be employed within the approach. Whereas the former sets the general strategic direction of the integration or, in other words, establishes some kind of acquisition posture, the latter describe the relevant fields or dimensions to be addressed during integration. These integration strategies and instruments are subsequently investigated in a sample of 35 M&A transactions. It is shown that companies typically revert to three distinct integration strategies, depending on the need for strategic interdependence and organizational autonomy: symbiosis, absorption, and adjustment. Together with the integration instruments that relate to structural linking, process redesign, systems standardization, and culture building, the integration strategies are analyzed using seemingly unrelated regression models. It turns out that technological success and, hence, NPD capabilities benefit most from a symbiosis and an absorption strategy. Apparently, only wide‐ranging reorganization efforts in R&D focussing on common structures, processes, and systems can fully realize the benefits from a combination of resources. To achieve economic success or high integration quality, an adjustment strategy appears to be the best choice as reorganization efforts are rather limited. With respect to the integration instruments, the research shows that the structural linking exhibits a great impact on technological and economic success but no effect on integration quality. Obviously, common structural patterns and interlinked structures within the R&D units have a positive effect in that they facilitate better collaboration and research outcomes. A common organizational structure hence serves as a basis for realizing innovative resource combinations and streamlining the NPD process. A standardization of systems exhibits strong positive links with all success variables. Apparently, a consistent unification, offering orientation and comparability, is of high importance to achieve the best possible implementation of the integration and to foster innovative capabilities. Significant effects of culture building can be substantiated for economic success. Moreover, there tends to be a positive effect on integration quality. This underpins the importance of measures to encourage the build‐up of a common corporate culture. To sum up, the research provides a couple of insights on how to strengthen NPD capabilities following a merger.     

Measuring New Product Success: The Difference that Time Perspective Makes

Management is often criticized for overemphasizing short-term profits at the expense of long-term growth. On the other hand, although numerous studies have explored the factors underlying new product success and failure, such studies rarely distinguish between short- and long-term success. In fact, little research has been conducted to explore the relationship between a company's time perspective and its choice of criteria for measuring new product success. For that matter, little consensus exists as to just what we mean by the term success. Expanding on work done by a PDMA task force on measurement of new product success and failure, Erik Jan Hultink and Henry S.J. Robben identify 16 core measures of new product success. In a survey of large Dutch companies, they explore managers' perceptions of new product success, hypothesizing that the importance attached to each of the 16 core measures depends on the company's time perspective. For example, they propose that criteria such as development cost and speed-to-market are more important in the short term, and return-on-investiment (ROI) is more important in the long term. The study also examines the type of market served, the innovation strategy, and the perceived innovativeness of the company's products. It is hypothesized that these factors will influence the importance the company attaches to the core measures of new product success. For example, it is expected that speed-to-market is probably more important for technological innovators than for fast imitators or cost minimizers. The findings support the hypothesis that the firm's time perspective influences the perceived importance of the core measures of success. For the short term, the respondents emphasize product-level measures such as speed-to-market and whether the product was launched on time. In the long term, the focus is on customer acceptance and financial performance, including attaining goals for profitability, margins, and ROI. Four factors are perceived as being equally important for short-term and long-term success: customer satisfaction, customer acceptance, meeting quality guidelines, and product performance level. Customer satisfaction was found to be the most important measure, regardless of a company's time perspective. Contrary to expectations, the perceived importance of the 16 core measures does not differ on the basis of the type of market, the innovation strategy, or the product's perceived innovativeness. In addition, the firm's functional orientation—technology push or market pull—does not affect the importance attached to the core measures of new product success.