An Interim Report on Measuring Product Development Success and Failure

This article represents findings of a PDMA task force studying measures of product development success and failure. This investigation sought to identify all currently used measures, organize them into categories of similar measures that perform roughly the same function, and contrast the measures used by academics and companies to evaluate new product development performance. The authors compared the measures used in over seventy-five published studies of new product development to those surveyed companies say they use. The concept of product development success has many dimensions and each may be measured in a variety of ways. Firms generally use about four measures from two different categories in determining product development success. Academics and managers tend to focus on rather different sets of product development success/failure measures. Academics tend to investigate product development performance at the firm level, whereas managers currently measure, and indicate that they want to understand more completely, individual product success.     

Impact of Strategic Type on Success Measures for Product Development Projects*

Does the strategic type of firm affect which success measures should be used for product development (PD) projects? This paper theorizes that it should and finds that it does because the PD projects undertaken are usually an expression of the strategic type of the firm. The purpose of this research is to affirm a 1996 survey of members of the Product Development & Management Association (PDMA) that proposes that firms' PD performance measures should vary by their strategic type. Thus, for example, prospectors, the strategic type most likely to introduce new products to new markets, should place greater importance on PD success measures consistent with their characteristic strategies of changing product lines and early market entry. In contrast, defenders, the strategic type most likely to maintain stable product lines for existing markets, should place greater importance on PD success measures consistent with their characteristic strategies of stable product lines and market penetration. Analyzers, a hybrid type between prospectors and defenders, should prefer measures consistent with their characteristic strategies for improving products and being early followers in newer markets. To relate strategic types to specific success measures for PD projects, this paper proposes a model of the relationship based on the degree of project newness to the firm and then catalogs measures of PD project success and groups them according to degree of project newness. The research findings are based on survey responses from 222 individuals who are employed by financial service providers, who identified their firms by strategic type and rated the importance of PD success measures to their firms. The importance of 21 performance measures is compared by strategic type to find significant differences among prospectors, analyzers, and defenders. This research finds several significant relationships. prospectors, for example, attach greater importance to customer satisfaction, launch timeliness, and product return on investment, all of which may be characterized as relating to a higher degree of project newness to the firm. defenders and analyzers, on the other hand, attach more importance than prospectors to measures of unit volume, cost reduction, and margin goals, all of which relate to a lower degree of project newness to the firm. In short, because prospectors seek to introduce new products to new markets, they consider important those measures, which accord with greater product and market newness. The major conclusion of this paper is that strategic type affects the importance of project performance measures and that all firms should not use the same success measures. Firms should contextualize their success in PD projects based on their strategic type. This conclusion resonates with previous findings that strategy is a key determinant of PD success, though it is infrequently included in PD success studies. This paper, therefore, challenges the implicit assumption in the mainstream of PD success literature that success can be determined without regard to firm strategy.     

PDMA Research on New Product Development Practices: Updating Trends and Benchmarking Best Practices

Product development professionals may have the feeling that yet another buzzword or magic bullet always lurks just around the corner. However, researchers have devoted considerable effort to helping practioners determine which tools, techniques, and methods really do offer a competitive edge. Starting 30 years ago, research efforts have aimed at understanding NPD practices and identifying those which are deemed “best practices.” During the past five years, pursuit of this goal has produced numerous privately available reports and two research efforts sponsored by the PDMA. Abbie Griffin summarizes the results of research efforts undertaken during the past five years and presents findings from the most recent PDMA survey on NPD best practices. This survey, conducted slightly more than five years after PDMA's first best-practices survey, updates trends in processes, organizations, and outcomes for NPD in the U.S., and determines which practices are more commonly associated with firms that are more successsful in developing new products. The survey has the following objectives: determining the current status of NPD practices and performance; understanding how product development has changed from five years ago; determining whether NPD practice and performance differ across industry segments; and, investigating process and product development tools that differentiate product development success. The survey findings indicate that NPD processes continue to evolve and become more sophisticated. NPD changes continually on multiple fronts, and firms that fail to keep their NPD practices up to date will suffer an increasingly marked competitive disadvantage. Interestingly, although more than half of the respondents use a cross-functional stage-gate process for NPD, more than one-third of all firms in the study still use no formal process for managing NPD. The findings suggest that firms are not adequately handling the issue of team-based rewards. Project-completion dinners are for the most frequently used NPD reward; they are also the only reward used more by best-practice firms than by the rest of the respondents. The best-practice firms participating in the study do not use financial rewards for NPD. Compared to the other firms in the study, best-practice firms use more multifunctional teams, are more likely to measure NPD processes and outcomes, and expect more from their NPD programs.     

Success Factors for Integrating Suppliers into New Product Development

Faster, better, cheaper—these marching orders summarize the challenge facing new product development (NPD). In other words, NPD teams must find the means for speeding time to market while also improving product quality and reducing product costs. Cross-functional teams have proved effective for meeting these challenges, and such teams may extend beyond company boundaries to include key materials suppliers. Effective integration of suppliers into NPD can yield such benefits as reduced cost and improved quality of purchased materials, reduced product development time, and improved access to and application of technology. As Gary Ragatz, Robert Handfield, and Thomas Scannell point out, however, those benefits do not automatically accrue to any NPD team that includes representatives from a supplier's company. In a study of 60 member companies from the Michigan State University Global Procurement and Supply Chain Electronic Benchmarking Network, they explore the management practices and the environmental factors that relate most closely to successful integration of suppliers into the NPD process. The study identifies supplier membership on the NPD project team as the greatest differentiator between most and least successful integration efforts. Although the respondents reported only moderate use of shared education and training, the study cites this management factor as another significant differentiator between most and least successful efforts. Respondents listed direct, cross-functional, intercompany communication as the most widely used technique for integrating suppliers into NPD. To integrate suppliers into NPD, a company must overcome such barriers as resistance to sharing proprietary information, and the not-invented-here syndrome. The results of this study suggest that overcoming such barriers depends on relationship structuring—that is, shared education and training, formal trust development processes, formalized risk/reward sharing agreements, joint agreement on performance measurements, top management commitment from both companies, and confidence in the supplier's capabilities. Overcoming these barriers also depends on assett sharing, including intellectual assets such as customer requirements, technology information, and cross-functional communication; physical assets such as linked information systems, technology, and shared plant and equipment; and human assets such as supplier participation on the project team and co-location of personnel.     

Marketing/R&D Interaction in New Product Development: Implications for New Product Success Rates

A growing body of literature has evolved which deals with the interaction between marketing and R&D in new product development. Much of this research, unfortunately, fails to associate various variables with new product success levels. Thus, it cannot suggest consensus guidelines for marketing's involvement to increase the performance levels of new products in the market place. Richard Hise, Larry O'Neal, A. Parasuraman and James McNeal report results of their analysis of the new product development procedures of 252 large manufacturing companies. The authors conclude that collaborative efforts between marketing and R&D during the actual designing of new products appear to be a key factor in explaining the success levels of new products, that management effort should focus on the design stage of the new product development process rather than on the earlier and later stages and that R&D's contributions cannot be ignored while decisions are made about marketing's role in developing new consumer and industrial products.     

Customization of Product Technology and International New Product Success: Mediating Effects of New Product Development and Rollout Timeliness

Offering a standardized product for different country markets may enable companies to accomplish fast product development and multicountry rollout, whereas also enjoying substantial cost benefits. However, not all manufacturers serving multicountry markets can adopt a standardized product strategy. Where technological requirements, standards, and approval procedures vary substantially across countries, manufacturers invariably must adapt the product's technology to fit individual country requirements. Extensive customization may lead to longer new product development and rollout times and increase the likelihood of delays in the entire project, hence adversely affecting overall new product outcome. This study examines the relationships between product technology customization, the timeliness in completion of both the new product development effort and international market launches, and new product success. The study that reports on new product launches across European markets, is based on personal interviews with senior managers in 30 multinational companies. The authors show that timeliness in new product development and timeliness in rolling out the new product into different country markets mediate the link between product technology customization and overall new product success. Customization of product technology increases the likelihood of delays in the completion of new product development projects and multicountry rollout. Additionally, the timeliness in new product development mediates the relationship between product technology customization and timeliness in international new product rollout. This means that if the NPD project runs behind schedule, a fault‐free multicountry rollout program becomes increasingly unlikely, as problems encountered during product development spillover into the rollout program. The results imply that international product managers must assign greater priority to assessing the relative advantages of customizing new product technology and to consider the timing implications for both the NPD effort and subsequent rollout. Managers must set realistic schedules and allocate sufficient resources to ensure both tasks can be accomplished within planned time scales. Finally, managers should not underestimate the complexities and time involved in customizing new product technologies, including the completion of disparate country technical approval procedures.     

The Role of Market Information in New Product Success/Failure

Although no single variable holds the key to new product performance, many of the widely recognized success factors share a common thread: the processing of market information. Understanding customer wants and needs ultimately comes down to a company's capabilities for gathering and using market information. And another well-acknowledged success factor the integration of marketing, R&D, and manufacturing focuses on the sharing of information. In other words, a firm's effectiveness in market information processing—the gathering, sharing, and use of market information—plays a pivotal role in determining the success or failure of its new products. Brian D. Ottum and William L. Moore describe the results of a study that examines the relationship between market information processing and new product success. They also explore the organizational factors that facilitate successful processing of market information, and thus offer ideas for better managing the development of new products. The respondents—marketing, R&D, and manufacturing managers from Utah-based computer and medical device manufacturers—provided information about 58 new products, including equal numbers of successes and failures. The survey responses reveal strong relationships between product success and market information processing, with success most closely linked to information use. In other words, the gathering and sharing of information are important, but only if the information is used effectively. In 80 percent of the product successes studied, the respondents ultimately possessed and used a greater than average amount of market information. And in 75 percent of the failures, the respondents knew less than average about the market at project inception, and gathered or used less than the average amount of market information during the project. For the projects in this study, the integration of marketing, R&D, and manufacturing contributed not only to the sharing and use of information, but also to overall project success. However, the results of the study suggest that the way in which a project is organized plays only an indirect role in determining new product success—most likely by improving the processing of market information. From a managerial perspective, the most important variables identified in the study are market information shared, market information used, and financial success.     

程序公平对新产品开发成功的影响——跨职能整合的中介作用

本文通过对中外汽车合资企业的实地调研,提出将程序公平引入现有关于跨职能整合与新产品开发成功的模型中,并进一步提出跨职能整合在合资企业程序公平与新产品开发成功关系中的中介作用。通过对获取数据的分析,发现合资企业程序公平不仅可以直接影响合资企业的新产品开发成功,而且也可以通过跨职能整合间接影响新产品开发成功,而跨职能整合在程序公平与新产品开发成功关系中起中介作用。     

The Impact of Failure and Success Experience on Drug Development

It is unclear whether the common belief that experience benefits new product development is driven by decision-makers allocating more attention to success experience or more attention to failure experience. This article differentiates between the two aforementioned types of experience in order to explore their separate effects on new product development. We find that only late-stage failure experience improves new product development, that success experience is more beneficial than late-stage failure experience and that, while others’ related failure experience increases the likelihood of failure, others’ related success experience decreases it. We conducted our research in the context of drug development in the biotech industry and obtained our data from Pharma Projects. We employ logistic regression analysis to model the likelihood that a drug development project results in failure.     

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.     

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.     

Contingent Product Design and Marketing Strategies Influencing New Product Success and Failure in U.S. and Japanese Electronics Firms

The commercial success or failure of a product doesn't rest solely on the whims of the marketplace. The myriad, often interdependent, strategic trade-offs made throughout the product development process go a long way toward determining whether a product succeeds or fails. The key to success often rests in finding the right combination of product design and market choice decisions. Toward that end, William E. Souder and X. Michael Song examine the relationship between product success and several product design and market choice strategies. In particular, they explore the possibility that the correct strategy combination differs depending on a firm's perception of market uncertainty, which they measure in terms of the respondents' perceived familiarity with the market for a product, perceived understanding of customer needs, and perceived capability to translate those needs into product performance specifications. Recognizing that the correct combination of strategic choices may also depend on firm size, industry, and culture, the study focuses on small U.S. suppliers of electronics components. Fortune 500 producers of electronics final products, and Japanese producers of electronics final products. For the small U.S. firms in the study, an emphasis on performance superiority, technical superiority, or radically new products provides a recipe for failure under low market uncertainty. Even under high market uncertainty, these characteristics do not equate to success for the small U.S. firms in this study. The findings suggest that these firms should focus on design compatibility with a purchaser's installed base. The responses from Fortune 500 firms and Japanese companies indicate that under low market uncertainty these larger organizations should consider emphasizing compatibility and avoiding radical designs. For markets that the larger firms perceive to be highly uncertain, the results suggest that these companies should emphasize performance superiority, technical superiority, and radical designs. The findings related to market choice strategies also support the notion that the correct combination of strategic decisions depends on firm size, culture, and the perceived level of market uncertainty. However, the guidelines presented in this study should not be construed as hard-and-fast rules for formulating product strategy. Instead, the results presented here will be helpful for challenging assumptions and guiding actions, as one element in the effort to shape an effective product strategy.     

Management Practices Influencing New Product Success and Failure in the United States and Scandinavia: A Cross-Cultural Comparative Study

This comparative cross-cultural study of United States (U.S.) and Scandinavian telecommunications products found both similarities and differences in the successful new product development (NPD) management practices within the U.S. and Scandinavia. Proficiencies in conducting development, marketing, and customer service activities were identified as important to NPD success in both Scandinavia and the U.S. However, differences between the U.S. and Scandinavia were found with regard to the importance of research and development/marketing integration and project manager competency, with these aspects being more important to NPD success in the U.S. Additional differences between Scandinavia and the U.S. were found in the successful NPD strategies for entering familiar versus unfamiliar markets, with the Scandinavian systems being more oriented toward product design strategies. The overall results characterized U.S. NPD management systems as product-market oriented, task focused, and project management driven. By comparison, the Scandinavian NPD management systems were characterized as product-service oriented, driven by enduring interpersonal relationships and socially oriented to helping others. These characterizations were found to be consistent with dissimilarities in the national cultures of the U.S. and Scandinavia, suggesting that some core NPD management principles may be generally important to success, whereas others may be culturally dependent. The importance of recognizing these differences is pointed out in a discussion of their implications for NPD theory and practice in today's global economy. © 1999 Elsevier Science Inc.     

The Relative Importance of Interfirm Relationships and Knowledge Transfer for New Product Development Success*

The relationship and network literature has primarily focused on particular partner types, for example, buyer–supplier relationships or competitor interaction. This article explores the nature and relative importance of different types of interfirm relationships for new product development (NPD) success. The underlying premise of the study is that not only the type of interfirm relationships but also the combination of relationships are important for NPD performance. The interaction with a specific type of partner is expected to influence innovative performance by means of appropriate knowledge transfer. Varying needs for external knowledge, and thus types of relationships, are observed depending on the particular stages in the NPD process, the character of the knowledge base of the firm, and the industrial conditions. The absorption of external knowledge is discussed using the degree of redundancy in knowledge, which is defined as the degree of overlap in the knowledge base of the sender and the recipient of knowledge. Hence, the degree of redundancy has direct implications for the ease and, hence, use of knowledge shared with an external partner. The article is based on data from the Know for Innovation survey on innovative activities among European firms, which was carried out in 2000 in seven European countries covering five industries. The article explores the extent of use of external relationships in collaborative product development and finds that customers are involved more frequently in joint development efforts. Second, the industry association of the most important relationship is studied, and the results show that firms tend to partner with firms from their own industry. The danger in this approach is that firms from their own industry tend to contribute similar knowledge, which ultimately may endanger the creation of new knowledge and therefore more radical product developments. The analyses combine the finding that relationships with customers are used most frequently at both early and late stages of the product development process, with a second and more contradictory finding that at the same time customer relationships have a negative impact on innovative success. Moreover, the combination of customers, with both universities and competitors, has a significant negative effect on innovative performance. The potential causes of this apparent paradox can be narrowed down to two: (1) the average customer may be unable to articulate needs for advanced technology‐based products; and (2) the average customer may be unable to conceptualize ideas beyond the realm of his or her own experience. Based on this evidence the article cautions product development managers to think explicitly about what certain customers can contribute with and, more importantly, to match this contribution directly with their own sense of what direction product development should go in the future. Finally, the role of complementary as well as supplementary knowledge is investigated for innovative success finding that sharing of supplementary knowledge with external partners in NPD leads to a positive effect on innovative performance. The article is concluded by a discussion of the implication of this finding for building knowledge within the firm and for selecting external partners for NPD.     

PERSPECTIVE: Trends and Drivers of Success in NPD Practices: Results of the 2003 PDMA Best Practices Study*

Since 1990, the Product Development & Management Association (PDMA) has sponsored best practice research projects to identify trends in new product development (NPD) management practices and to discern which practices are associated with higher degrees of success. The objective of this ongoing research is to assist managers in determining how to improve their own product development methods and practices. This paper presents results, recommendations, and implications for NPD practice stemming from PDMA's third best practices study, which was conducted in 2003. In the eight years since the previous best practices study was conducted, firms have become slightly more conservative in the portfolio of projects, with lower percentages of the total number of projects in the new‐to‐the‐world and new‐to‐the‐firm categories. Although success rates and development efficiencies have remained stable, this more conservative approach to NPD seems to have negatively impacted the sales and profits impact of the new products that have been commercialized. As formal processes for NPD are now the norm, attention is moving to managing the multiple projects across the portfolio in a more orchestrated manner. Finally, firms are implementing a wide variety of software support tools for various aspects of NPD. NPD areas still seriously in need of improved management include idea management, project leadership and training, cross‐functional training and team communication support, and innovation support and leadership by management. In terms of aspects of NPD management that differentiate the “best from the rest,” the findings indicate that the best firms emphasize and integrate their innovation strategy across all the levels of the firm, better support their people and team communications, conduct extensive experimentation, and use numerous kinds of new methods and techniques to support NPD. All companies appear to continue to struggle with the recording of ideas and making them readily available to others in the organization, even the best. What remains unclear is whether there is a preferable approach for organizing the NPD endeavor, as no one organizational approach distinguished top NPD performers.     

The Impact of Organizational Integration and Product Development Proficiency on Market Success

This research investigates three major hypotheses important to new product market success: the greater organizational integration during the development of new products, the greater the market success; the greater organizational integration during the development of new products, the greater new product development proficiency; and the greater new product development proficiency, the greater the market success. “Organizational integration” is defined as the degree of cooperation and communication between internal and external NPD “support” groups and NPD teams. “NPD process proficiency” is defined as how well new product development stages and the new product development process as a whole is performed. “New product market success” is represented by four measures: the degree to which profits and sales exceeded or fell short of what was expected, and the degree to which the new product was perceived to exceed or fall short of expectations related to entering existing and new markets. Information was obtained concerning the most and least successful new products of U.S. firms in the medical instruments, the electrical equipment, and the heavy construction equipment industries. The field survey approach was utilized in which surveys were mailed to recipients such as new product development managers who already had been designated by executives of the sample firms. Several important findings were uncovered during this research. Overall organizational integration was found to be significantly associated with new product market success. Internal integration, the coordination between new product development teams and functional departments, was found to be significantly related to product market success. A significant relationship between new product development proficiency during the NPD “post-launch stage” and the degree of integration between an NPD team and external NPD organizations, such as customers and suppliers, was detected. During the post-launch stage, new product development proficiency also was found to be significantly related to new product market success. These findings suggest several important implications for new product development managers and scholars.     

Factors Affecting New Product Success: Cross-Country Comparisons

Although considerable effort has been devoted to identifying the factors that contribute to new product success and failure, plenty of work remains to be done in this area. For example, many studies of this subject focus on companies in specific parts of the world (in particular, North America, Europe, and Japan). It remains to be seen whether the findings from these studies apply to the new product development (NPD) efforts of companies in other regions, let alone on a global basis. Sanjay Mishra, Dongwook Kim, and Dae Hoon Lee address this issue in a study of the factors that contribute to the success or failure of NPD efforts in South Korean firms. To explore the question of whether a global set of success factors can be identified, they compare their findings with those of similar studies conducted in Canada and China. Classifying these countries in terms of stages of economic development (with China and Canada at opposite extremes and Korea in the middle), they expect to find the greatest dissimilarities in their comparisons of China and Canada. Marketing managers from 144 Korean firms provided in formation about 288 successful and unsuccessful products. Their responses indicate that the factors most closely related to new product outcomes in Korea are market intelligence, product-firm compatibility, the nature of the new product idea (for example, whether the product idea was market derived, whether the product specifications were clearly defined by the marketplace), launch effort, and general characteristics of the new product venture (such as the product's innovativeness to the market and its technical complexity). Several of these factors were emphasized in studies of Canadian and Chinese NPD success, though respondents to those studies also highlighted the importance of the product offering and proficiency of formal NPD activities. Contrary to expectations, China and Canada show the greatest similarity among the three countries studied, in terms of the relative importance of the various NPD success factors. On the other hand, China and Korea are more similar in terms of the effects of the variables studied. In other words, if a variable is related to new product failure in Korea, that variable is most likely also related to failure in China. Although some similarities are evident among all three countries, the findings in this study do not point toward a single, global formula for NPD success.     

Decomposing Product Innovativeness and Its Effects on New Product Success

Does product innovativeness affect new product success? The current research proposes that the ambiguity in findings may be due to an overly holistic conceptualization of product innovativeness that has erroneously included the concepts of product advantage and customer familiarity. This article illustrates how the same measures have often been used to assess product advantage with product innovativeness and product innovativeness with customer familiarity. These paired overlaps in measurement use are clarified in this research, which decomposes dimensions of product innovativeness along conceptual lines into distinct product innovativeness, product advantage, and customer familiarity constructs. To further support this decomposition, structural equation modeling is used to empirically test the distinctions. The measurement model supports the conceptual separation, and the path model reveals contingent effects of product innovativeness. Although product innovativeness enhances product advantage, a high level of innovativeness reduces customer familiarity, indicating that product innovativeness can be detrimental to new product success if customers are not sufficiently familiar with the nature of the new product and if innovativeness fails to improve product advantage. This exercise in metric development also reveals that after controlling for product advantage and customer familiarity, product innovativeness has no direct effect on new product profitability. This finding has strong implications for firms that mistakenly pursue innovation for its own sake. Consideration of both distribution and technical synergy as driving antecedents demonstrates how firms can still enhance new product success even if an inappropriate level of innovativeness is present. This leads to a simple but powerful two‐step approach to bringing highly innovative products to market. First, firms should only emphasize product innovativeness when it relates to the market relevant concepts of product advantage and customer familiarity. Second, existing technical and distribution abilities can be used to enhance product quality and customer understanding. Distribution channels in particular should be exploited to counter customer uncertainty toward newly introduced products.