New Product Development: Impact of Project Characteristics and Development Practices on Performance

Concurrent product development process and integrated product development teams have emerged as the two dominant new product development (NPD) “best practices” in the literature. Yet empirical evidence of their impact on product development success remains inconclusive. This paper draws upon organizational information processing theory (OIPT) to explore how these two dominant NPD best practices and two key aspects of NPD project characteristics (i.e., project uncertainty and project complexity) directly and jointly affect the NPD performance. Contrary to the “best practice” literature, the analysis, based on 266 NPD projects from three industries (i.e., automotive, electronics, and machinery) across nine countries (i.e., Austria, Finland, Germany, Italy, Japan, Korea, Spain, Sweden, and the United States), found no evidence of any direct impact of process concurrency or team integration on overall NPD performance. Instead, there is evidence of negative impact of the interaction between project uncertainty and concurrent NPD process and positive impact of the interaction between project complexity and team integration on overall NPD performance. Moreover, the study found no evidence of any direct negative impact of project uncertainty or complexity on overall NPD performance as suggested in the literature, but found evidence of a direct positive relationship between project complexity and overall NPD performance. The practical implications of these results are significant. First, neither process concurrency nor team integration should be embraced universally as best practice. Second, process concurrency should be avoided in projects with high uncertainty (i.e., when working with unfamiliar product, market, or technology). Finally, team integration should be encouraged for complex product development projects. For a simple product a loosely integrated team or a more centralized decision process may work well. However, as project complexity increases, team integration becomes essential for improved product development. There is no one‐size‐fits‐all solution for managing NPD projects. The choice of a product development practice should be determined by the project characteristics.     

How Today's Consumers Perceive Tomorrow's Smart Products*

This paper investigates consumer responses to new smart products. Due to the application of information technology, smart products are able to collect, process, and produce information and can be described as “thinking” for themselves. In this study, 184 consumers respond to smart products that are characterized by two different combinations of smartness dimensions. One group of products shows the smartness dimensions of autonomy, adaptability, and reactivity. Another group of smart products are multifunctional and able to cooperate with other products. Consumer responses to these smart products are measured in terms of the innovation attributes of relative advantage, compatibility, observability, complexity, and perceived risk. The study shows that products with higher levels of smartness are perceived to have both advantages and disadvantages. Higher levels of product smartness are mainly associated with higher levels of observability and perceived risk. The effects of product smartness on relative advantage, compatibility, and complexity vary across product smartness dimensions and across product categories. For example, higher levels of product autonomy are perceived as increasingly advantageous whereas a high level of multifunctionality is perceived disadvantageous. The paper discusses the advantages and pitfalls for each of the five product smartness dimensions and their implications for new product development and concludes with a discussion of the limitations of the study and suggestions for further research.     

Platform-Driven Development of Product Families: Linking Theory with Practice

Firms in many industries increasingly are considering platform-based approaches to reduce complexity and to better leverage investments in new product development, manufacturing, and marketing. However, a clear gap in literature still exists when it comes to discussing the problems and risks related to implementing and managing product families and their underlying platforms. Using a multiple-case approach, we compare three technology-driven companies in their definition of platform-based product families, investigate their reasons for changing to platform-driven development, and analyze how they implemented platform thinking in their development process and which risks they encountered in the process of creating and managing platform-based product families. The field study shows that the companies involved in the study use a homogeneous concept of platform-based product families and that they have similar reasons to turn to platform thinking and to encounter comparable risks. However, the companies analyzed use mainly product architecture as a basis for their platforms (and ignore many of the platform types advocated in literature), while on the other hand they show divergent applications of the platform concept regarding the combinations of product families and market applications. Through this exploratory study, some important white spots in literature became evident as well. In the discussion part of this article these white spots are discussed and directions for future platform research are proposed. The article concludes that given its importance, platform-driven development of product families clearly deserves further research to provide more insight into strategic planning for new products.     

Patterns of market research timing for new industrial products

The importance of market research to new industrial product ventures has been widely noted, and some evidence has suggested that failure of managers to carry out effective research can increase the probability of new product failure. In planning for market research, a problem facing managers is when market research should be done during the new product development process. In this study, patterns of timing of market research resource expenditures in 112 industrial new product situations were measured, and differences in these patterns related to seven major situational characteristics, marketing task similarity, distribution complexity, competitive advantage, buyer risk, development complexity, project downsides and project payoffs.
Data analysis using MDA revealed significant differences between the patterns of research timing in different new product situations, and related these differences most strongly to marketing task similarity, competitive advantage, and buyer risk. The findings have important implications for managers involved in planning market research activities and resource allocations in new industrial product situations.     

Harnessing Product Complexity: Step 2—Measuring and Evaluating Complexity Levels

In today's market, companies are forced to balance the requirements of sales growth through increased product complexity against the requirements of cost control and operational efficiency. Therefore, how to meet the increasing needs of customers while managing the impact of product complexity becomes a great challenge for a company to gain competitive advantage.

Although some have tackled the issue of product complexity, it still remains a theoretical concept. There is yet no generalized approach to identify complexity sources, measure complexity levels, and manage its impact throughout the different stages of the product's lifecycle. Our work seeks to help formulate strategies to manage the cost impacts of product complexity. This article builds on prior work that identified sources and indicators of product complexity, categorized them into five dimensions, and linked the indicators to direct and indirect costs. Now, we develop a product complexity measurement framework as a second step in establishing the overall methodology and support tool. The article also describes the application of the developed framework to existing product lines.     

Product proliferation strategies and firm performance: The moderating role of product space complexity

In the Spanish automobile market between 1990 and 2000, significant reductions in tariff and nontariff protections increased the complexity of the product space, through the penetration of new car brands and models. Acknowledging these environmental dynamics, this study details conditions in which across‐niche (product breadth or intraindustry diversification) and within‐niche (product depth or versioning) product proliferation exerts a positive relationship on firm performance, as well as how key relationships change according to the complexity of the product space in the industry. Copyright © 2013 John Wiley & Sons, Ltd.     

Experience-based learning in innovation and production

How can we model and document the impact of experience in product innovation? We use data on the innovation and production histories of 294 product platforms to explore experience‐based learning. We extend learning curve concepts from their traditional domain – the production process – into the product innovation process to build and test a richer, quantitative model of learning. The results suggest that learning occurs differently in the innovation process than in production. They also suggest that how and where a firm learns depend in part on the complexity of product components and sub‐systems. Finally, we discuss the competitive implications for product innovation.     

The impact of structural and contextual factors on trust formation in product development teams

This study examines antecedents of trust formation in new product development (NPD) teams and the effects of trust on NPD team performance. A theoretical framework relating structural and contextual factors to interpersonal trust and project outcomes was built, including task complexity as a moderating variable. Hypotheses from this model were tested with data on 93 product development projects carried out in Turkey. The findings showed that structural factors such as moderate level of demographic diversity, proximity of team members, team longevity, and contextual factors (procedural and interactional justices) were positively related to the development of interpersonal trust in NPD teams. The findings also revealed that interpersonal trust had an impact on team learning and new product success, but not on speed-to-market. Further, the findings showed that the impact of interpersonal trust on team learning and new product success was higher when there was higher task complexity. Theoretical and managerial implications of the study findings are discussed.     

Impact of Knowledge Type and Strategic Orientation on New Product Creativity and Advantage in High‐Technology Firms

As different types of knowledge may have different effects on new product positional advantage, knowledge portfolio management in concert with the firm's strategic orientation is indispensable for new product success. However, previous research has not dealt with the knowledge resources and strategic implementations that affect new product development (NPD). To fill in this gap, the current study focuses on two dimensions of knowledge type (knowledge complexity and knowledge tacitness) and two forms of strategic orientation (technological orientation and market orientation), which influence the positional advantages as determinants of NPD outcomes. Drawing on the resource‐based view, this study explains how these knowledge and strategic orientation variables influence new product creativity, which comprised the novel and meaningful characteristics of new products. Finally, it demonstrates how these two dimensions of new product creativity differentially provide product advantages in terms of customer satisfaction and product differentiation, which lead to superior new product performance. A conceptual framework is developed and the related hypotheses provided to incorporate the study variables and to test their relationships in a sample based on data collected from both marketing and project managers from 100 U.S. high‐technology firms. The model estimation results from path analysis demonstrate that reliance on knowledge of high tacitness harms meaningfulness, while reliance on knowledge of high complexity increases both novelty and meaningfulness of new product. As expected, market orientation and technological orientation improve the meaningfulness and novelty dimensions of the new product, respectively. New product novelty and meaningfulness are shown to enhance new product advantage in terms of product differentiation and customer satisfaction, both of which contribute to new product performance. It is also found that the combinative use of market orientation and knowledge complexity, and technological orientation and knowledge tacitness positively influence both the novelty and meaningfulness of new products. This study, using the product‐level analysis, contributes to the literature by clarifying how the firm's different knowledge properties and strategic orientations both play a role as a source of new product creativity, and how new product creativity, as a valuable and rare resource, enhances new product advantage. The study results suggest that project/product managers should increase the transferability and codifiability of unstructured knowledge by stimulating intraorganizational knowledge sharing among NPD team members, and that they should promote both technology and market‐orientated practices to fully develop creativity of new products.     

Empowering Management in New Product Development Units

In a study of management in new product development units, Josef Frischer compared managers who primarily intend empowering subordinates for the benefit of the whole organization (managers with the leadership motive pattern) with those who essentially are concerned with the establishment and maintenance of a friendly relationship with subordinates (managers high in need for affiliation). Thirty-five managers, heading new product development functions or units in four high-technology plants, were assessed along with their subordinates. When managers exhibited a leadership motive pattern, their subordinates perceived their work groups, their managers, and themselves as more influential (empowered). They also reported a more innovative climate as compared with subordinates of managers high in need for affiliation. Beside, those in subordinate positions, who are affected by the empowering managers, are given the opportunity to successfully influence and manage the turbulence and complexity arising from the development of new products, thus helping to establish an organizational climate that supports innovative pursuits.     

Improving the quality of corporate technical planning: dynamic analogues of QFD

This paper proposes a forecasting methodology based on a combination of QFD and S-curve analysis, In process industries there is a need to strengthen the linkages between process attributes, product attributes, and customer requirements. Industry planning processes accept the relationship between technological positioning, project portfolios, and market life cycles, but specific methods are seldom discussed.
QFD(Quality Function Deployment) can be used to translate customer requirements into product specifications and in turn to specify the process capabilities required to meet those customer requirements. The paper recommends that managements use analogues of QFD adapted to the need for dynamic changes in process capability.
This approach would focus on the interaction between key variables of customer requirements and the technological capabilities of the firm and its competitors, at present and in the future. Historical industry-wide capabilities would be projected through S-curve analysis, while customer requirements can be related to these capabilities through information from QFD studies focused on future customer requirements. Because of their potential complexity, these analyses should deal with only a very limited number of interacting attributes and special care should be given to the management of their implementation.     

The R&D/Production Interface: A Case Study of New Product Commercialization

The R&D/production interface is a key component of the innovation process. Effective transfer of technology across this interface has a direct bearing on the success of commercializing new technologies. Martin Ginn and Albert Rubenstein intensively studied three strategic business units of a major chemical company to examine how behavioral and performance variables interrelate for the key participants. The interface was found to be a key focus for interpersonal conflict. The conflict was found to be exacerbated by such factors as goal incompatibility, manufacturing complexity, uncertainty of product outcomes, exercises of power, and imperatives for action. Interestingly, projects which were more successful, both technically and commercially, tended to have higher levels of conflict and more superordinate goals than those that were less successful. Increasing compatibility of goals among participating groups is suggested as a means for improving interface relations.     

Radical Product Innovation Capability: Literature Review,Synthesis, and Illustrative Research Propositions

Product innovation is a key to organizational renewal and success. Relative to other forms of innovation, radical product innovations offer unprecedented customer benefits, substantial cost reductions, or the ability to create new businesses, any of which should lead to superior organizational performance. In other words, a radical product innovation capability is a dynamic capability, one that enables the organization to maintain alignment with rapidly evolving customer needs in high‐velocity environments. Extensive research has been conducted on the antecedents to an incremental/general product innovation capability, and meta‐analyses have been conducted to integrate the results from the various studies. However, whether and how a radical product innovation capability differs from an incremental product innovation capability is also critical. The purpose of this work is to develop a testable model of the antecedents to radical product innovation success. Based on an extensive literature review, a comprehensive set of organizational components that comprise a firm's radical product innovation capability is identified. These organizational components include senior leadership, organizational culture, organizational architecture, the radical product innovation development process, and the product launch strategy. Of course, each of these components has subcomponents that provide even more texture. This review highlights how the components of a radical innovation capability function differently from those for an incremental capability. In addition, this review strongly suggests that the direct effects models that dominate this literature underestimate the complexity of the interplay of components that comprise a radical product innovation capability. Thus, a model to demonstrate this interplay of these organizational components is provided. Illustrative research propositions are offered to provide guidance to researchers. Suggestions for executives and managers who are involved in the product development process and for scholars who seek to advance the state of knowledge in this area are offered in the conclusion.     

Product variety,sourcing complexity,and the bottleneck of coordination

Research summary: This paper studies the coordination burden for firms that pursue variety as their main product strategy. We propose that product variety magnifies the tension between scale economies in production and scope economies in distribution, giving rise to complex sourcing relationships. Sourcing complexity worsens performance and poses a dilemma for organization design: A hierarchical structure with intermediate coordinating units such as sourcing hubs reduces sourcing complexity for downstream distribution but creates bottlenecks at the hubs, hurting performance for both the hubs and downstream distribution. We empirically examine operations data for about 300 distribution centers within a major soft drink bottling company in 2010–2011. Results support our hypotheses, illuminating the source of complexity in multi‐product firms and the challenge for organization design in managing complexity. Managerial summary: This paper uses data for about 300 distribution centers within a major soft drink bottling company to study how a large product variety creates complex sourcing networks. We find that, in addition to poor performance (e.g., increased stockouts), complex sourcing networks can cause challenges for organization design. In particular, the benefits of converting an existing distribution center into a sourcing hub (i.e., reduction in sourcing complexity for downstream distribution) and the costs of doing so (i.e., reduction in performance for both the hubs and downstream distribution) are both real and significant. The design of an efficient sourcing network despite its complexity involves important managerial decisions. Experiences in building and managing such networks can be the basis of a dynamic capability. © 2016 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.     

Product line strategies of new entrants in an established industry: evidence from the U.S. bicycle industry

A firm's product line breadth in a given market has both benefits and costs; these effects can be more clearly seen by examining not only the number of products a firm offers, but also the degree of complexity that the product line represents. The effects of breadth are particularly important for new entrants in a relatively mature industry and I examine the breadth–survival relation on new entrants in the bicycle industry in the period 1993–98. I find that firms offering a greater number of products, those with very simple and very complex product lines, and those whose product lines have a moderate degree of overlap with rivals have the highest survival rates. Copyright © 2006 John Wiley & Sons, Ltd.     

Success factors for collaborative product development: a study of suppliers of information and communication technology

It is apparent that more and more organizations are embarking on collaborative ventures to develop products. This is particularly evident in Information and Communication Technology (ICT) sectors, so much so that part of the 'received wisdom' of ICT companies is that collaboration is the preferred route for product development. The benefits of collaboration have been well documented and are linked to the complexity and costliness of product development and the need for inputs from wide and varied areas of expertise as well as shorter lead times for product development. But the risks and costs of collsborative product development have been less well defined. In this paper, it is argued that the alleged rewards of collaboration may not be experienced in practice and that collaboration can lengthen the product development process, add to the cost of product development and prove difficult to control. However, management practice can facilitate the effective outcome of collaborative product development and the critical factors affecting the likelihood of successful management practice are presented here.     

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.     

The Role of Globalization, Time Acceleration, and Virtual Global Teams in Fostering Successful Global Product Launches

The present article presents a conceptualization of how firms can respond to the issues of globalization and time‐based competition through the use of virtual global teams to foster successful global product launches. It is argued that by combining input, managerial, and transformation‐based competencies effectively, the firm can configure a repertoire of strategic choices (e.g., marketing plans throughout the product development process) based on the national competitive environment, while at the same time being mindful of the need to maintain consistency within the firm's intermediaries operations—both in product development and global product launch. It is further argued that the linkages between globalization and time‐based competition necessitate managerial adjustments in decision frameworks to incorporate accelerated timescapes to maximize effectiveness in global product launch. In an effort to capture the varying impact of time on global decision makers a timescapes perspective is employed, where timescapes are analogous to landscapes because they include the temporal features of socioeconomic events in a variety of socially constructed contexts inclusive of timeframe, tempo, degree of path dependency, synchronization of events, sequence, anticipation, and ubiquity. The recognition of timescapes accentuates the contextual complexity of competition and creates the interface among events, environments, and individuals beyond the traditional numeric concept of clock time, thus requiring modification of a manager's decision‐making perspective. Further, it is argued that due to the rapid pace of globalization, many multinationals in their global product launches require that products, services, technical support, and prices throughout the world need to be coordinated. To effectively accomplish this goal of coordination as an accommodation, firms and their networks can form global virtual teams (i.e., culturally diverse, geographically dispersed, electronically communicating work group of members, who think and act in concert with the diversity of the global environment and intermediary needs–expectations) to enhance global product launch success. Lastly, it is argued that the hypercompetitive global marketplace cannot be managed ex post due to the level of cognitive complexity but must be managed ex ante by developing strategies capable of maintaining flexibility. To accomplish the task of competing in a hypercompetitive landscape, management must understand and incorporate a timescape of events that integrates the various perspectives of those involved in the global product development and launch decision‐making processes. Without a well‐articulated perspective of social time, managers will limit their ability to effectively coordinate global product development and launch across markets, thus hindering the firm's ability to maximize returns.     

New industrial product performance: The effects of market characteristics and strategy

There's no need to state again the complexity of the problem of achieving high performance in the new product process. What we do need is a framework to help sort out the complexity, and that is what Eunsang Yoon and Gary Lilien provide in this article. They first differentiate between original and reformulated new products. Then they examine how patterns of R&D and marketing activities determine short and long-run success.