From Experience: Japanese Product Development Process

Writing from his experiences as Monsanto's business development director for Asia, Robert Kennard shares some important insights into the complex relationships between culture, values and business practices. He notes the high priority assigned to innovation, along with a commitment to concentration of resources at critical early phases of the developmental effort. While some of these practices are being used by successful companies outside Japan, others represent challenges to the traditional ways in which business is practiced in Western economies.     

Back‐loading: A Potential Side Effect of Employing Digital Design Tools in New Product Development

Over the past 20 years, the use of digital design tools such as Computer‐Aided‐Design (CAD) has increased dramatically. Today, almost no product development project is conducted without the use of CAD models. Major advantages typically ascribed to using CAD include better solutions through broader exploration of the solution space as well as faster and less expensive projects through faster and earlier iterations. This latter effect, the shifting of simulation and testing traditionally accomplished with the help of physical prototypes late in the process—a slow and expensive activity—to doing similar activities with virtual prototypes faster and earlier in the process, has been identified as a key aspect of front‐loading, an activity shift promising to enable superior product development (PD) performance. Given CAD's recent pervasive use, the research questions for this paper became “how has CAD use actually changed the way in which product development is conducted, and through which mechanisms and pathways can CAD impact PD performance, especially with respect to the idea of front‐loading?” This paper addresses these questions by studying in a longitudinal comparison in detail two similar product development projects, one conducted in 2001, the other in 2009. The projects were carefully selected to isolate the substantially higher levels of CAD use of the second project while controlling for most other input factors that influence project performance. The project with substantially higher use of CAD exhibited significant improvements in prototyping costs but only marginal changes in project time and project engineering labor cost relative to the project with lower CAD use. In‐depth intra‐project analysis on the phase level reveals that the use of CAD affected how the product development was executed, with both positive and negative consequences. In addition to, and separate from positive aspects of front‐loading, unintended consequences in the form of back‐loading work are also observed. Back‐loading can occur in two places in the product development process: First, the availability of CAD systems can cause an early jump into detail design, effectively shortcutting concept development. Second, the ability to relatively quickly conduct small changes virtually to the design can erode process discipline; late changes are made simply because they are possible. Both of these effects back‐load work in the opposite direction of the positive front‐loading. The theoretical implications of our observations are discussed, and a simple framework to convert our findings into managerial advice is proposed.     

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.     

Cross‐Cultural Creativity: Conceptualization and Propositions for Global New Product Development

In today's global business environment, where multinational companies are pressed to increase revenues in order to survive, creativity may hold the key to ensuring their new product development (NPD) efforts lead to innovations with worldwide appeal, such as Apple's iPad and Gillette's Fusion Razor. To leverage creativity for effective global NPD, businesses want to know how cultures differ in their concepts of creativity and the impact of those differences on approaches to developing new products. Because global new products are increasingly developed in, by, and for multiple cultures, a particular need is for a culturally reflective understanding, or conceptualization, of creativity. While creativity is believed to be culturally tied, the dominant framework of creativity used in business and management assumes that creativity is culturally indifferent or insensitive. This knowledge gap is addressed by studying the role of creativity in NPD practices in a cross‐cultural or global context. The study begins by first developing a culturally anchored conceptualization of creativity. Called cross‐cultural creativity, the concept draws on creativity insights from the field of art and aesthetics. The concept specifies two modes of creativity, neither of which is superior to the other, called the spontaneous or S route and the divergent or D route. The S route emphasizes adaptiveness, processes, intuitiveness, and metamorphism, while the D route focuses on disruptiveness, results, rationality, and literalism. Next, this new concept is applied to NPD by positing how creativity in distinct cultures may shape NPD practices, as illustrated by Japanese and U.S. firms. Research propositions are formulated to capture these patterns, and thereafter, theoretical and practical implications of the framework and propositions are discussed. The implications center on global NPD, which is a complex enterprise involving typically more than one culture to design and develop new products for several geographic markets. The study is of interest to researchers needing a globally situated, culturally attached framework of creativity for international NPD studies, and managers seeking to exploit creativity in multinational and multicultural innovation projects.     

Improving Supplier New Product Development Performance: The Role of Supplier Development

Suppliers play an increasingly central role in helping firms achieve their new product development (NPD) goals. The literature implicitly assumes that suppliers are able to meet or exceed the quality standards and technological expectations of the firm, and yet, in practice, suppliers often lack the technological capabilities needed to undertake collaborative NPD. In such situations, a firm may choose to intervene and actively develop the supplier's technological and product development capabilities. We develop a theoretical framework that conceptualizes supplier development activities within interorganizational NPD projects as part of a bilateral knowledge‐sharing process: design recommendations, technical specifications, and new technology flow from supplier to the firm, and in turn, the firm can implement supplier development activities to upgrade the supplier's technological capabilities. Antecedents (supplier responsibility, skills similarity, single sourcing strategy) and consequences of supplier development activities (on supplier, product, and project performance) are examined using a sample of 153 interorganizational NPD projects within UK manufacturers. We find broad support for our hypotheses. In particular, we show that the relational rents (in the form of improved product and project performance) attained from supplier development activities in new product development are not achieved directly, but rather indirectly, via improvements in the supplier's creative and technological capabilities. Our results emphasize the importance of adopting a strategic view of the potential returns available from investing in the NPD capabilities of key suppliers, and provide clues about underlying reasons for the suboptimal experiences of many companies' collaborative NPD projects.     

New Product Development Process: A Perspective for Reexamination

In spite of the increased sophistication of new product development processes, the percentage of successful new product introductions has not improved significantly in the last two decades. This calls for a reexamination of the new products development process. Yoram Wind and Vijay Mahajan suggest 13 strategic guidelines for the development of new or modified products. These guidelines, if followed, could improve a firm's chances of developing and introducing successful new 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.     

新产品研制问题及改进建议

<正>新产品研制是将科技成果转变为现实可靠产品的重要阶段,对新技术的实现和应用具有至关重要的作用。新产品采用了较多具有创造性的新技术、新工艺、新材料、新工装等,在技术认识、工程实践方面存在一定的不确定性,因此在新产品研制生产过程中存在风险。笔者从新产品设计和制造等环节分析可能存在的问题并提出改进建议,为高效开展新产品研制、实现精细化管理提供参考。     

Social Networks for Innovation and New Product Development

In this article we first provide a brief introduction into social network analysis, focusing on the measures and approaches that are used in the empirical contributions in this special issue. Second, we discuss the role of social networks in new product development. Social networks are inherently multilevel; we consider four “levels”: networks inside a firm, networks that cross firm boundaries, networks between firms, and networks that reside outside of the firm. Third, we discuss these four levels and highlight some of the extant research. We summarize and position the eight papers in this special issue along these four levels. Together, we argue, these papers provide an interesting coverage of this burgeoning field.     

Changing Strategies and Tactics for New Product Development

There has been a considerable amount of effort and writing devoted to improving the new product development process during the last two decades. Although there have been some surprises in this literature and in reports from the field on how to manage this complex business process, we now have a good view of the state-of-the-art practices that work and do not work to accelerate commercial success of new ventures. We know much less about how firms change their strategies for new product development.
In this article, we report on a study to investigate how companies change the way they originate and develop new products in manufacturing. We made no prior assumptions about what best practices might be for changing the direction of the new product development process, but we reasonably were sure there would be trends in how companies were attempting to create this strategic change. Even though one size does not fit all, there were significant trends in our findings.
We studied eight manufacturing firms using in-depth, open-ended interviews and were surprised to find that most of these companies are beginning to develop products that are new to the firm, industry, and the world (nearly half, or 10 of 21 new product projects), where they had not been eager for radical change in the past. These newer products likely are to be driven by a combination of market and technology forces, with general requirements being directed by internal forces: middle and top management. Results also indicate significantly that being able to marshal resources and capabilities is easier if change is less demanding and less radical, but when middle managers are driving the conversion of general requirements into specifications, resource issues have yet to be resolved. Implications of these findings are discussed for companies aspiring to change the entire process of new product development in their firms based on these significant results.     

Consequences of New Product Development Speed: A Meta‐Analysis

Five meta‐analyses previously have been published on the topic of new product development involving the concept of new product development speed. Three of these studies have investigated antecedents to new product development success, of which just one was new product development speed. The other two studies used new product development speed as the dependent variable, and analyzed antecedents to achieving speed. This article extends previous empirical generalizations in this domain by using a meta‐analytic methodology to understand the link between new product development speed and new product success at a more granular level. Specifically, it considers the relationship with different dimensions of success as measured overall or compositely, operationally (i.e., the process measures of decreasing development costs and proficiently managing market entry timing and the product measures of technical product performance and product competitive advantage), and relative to external success outcomes (i.e., customer based and financial success). While the results indicate that, in general, new product development speed is associated with improving success outcomes, those relationships may diminish or even disappear depending upon a number of methodological design decisions and research contexts. A subsequent meta‐analysis of the antecedents of development speed provides a more holistic picture of development speed. These results are broadly consistent with those produced by another recent meta‐analytic investigation of the issue. Together, these findings have important implications for academics pursuing further research in this domain, as well as for managers considering implementing a program to increase new product development speed.     

New Product Development Processes and New Product Profitability: Exploring the Mediating Role of Speed to Market and Product Quality

In new product development, faster is not always better. Conceptually, being faster to market should improve financial performance by improving product quality and reducing development expenses. Empirical support is mixed, however, demonstrating that higher speed to market exhibits an inverted U‐shaped relationship with product profitability. Conventional wisdom and empirical research suggest managers make speed to market–product quality–development expense trade‐offs. A particular concern regarding speed to market is that extreme speed may jeopardize product quality. Some researchers suggest that speed to market improves product quality while others suggest firms must balance both speed to market and product quality. Also, shorter lead times may be associated with reduced development expenses, but empirical evidence is conflicting. This research attempts to reconcile conflicting results regarding the speed to market–product quality relationship, their joint impact on product profitability, and their mediation role in the effects of development expenses and cross‐functional integration on product profitability. Partial least squares (PLS) is used to analyze multiplexed archival and survey data collected from NPD managers for 1115 different NPD projects in several firms. The results support the hypothesized equations, explaining 27% of speed to market variance, 35% of product quality variance, and 45% of product profitability variance. This study makes two contributions. First, because speed to market and product quality are related, simultaneous consideration of both factors enhances insight into their joint effect. Second, it provides evidence that speed to market and product quality jointly mediate development expense by NPD phase and cross‐functional integration effects on product profitability. Key results from the large sample data analysis include the following. Speed to market and product quality both enhance product profitability, but the impact of speed to market is larger than that of product quality. Speed to market and product quality partially mediate the impact of fuzzy front end phase expenses on product profitability, while expenses in the latter phases exhibit no impact on the mediators or profitability. Thus, the results suggest that trade‐offs are made not only between time, quality, and expense (i.e., if additional expenses are incurred at all), but also that trade‐offs relate to when (i.e., in which NPD phase) additional development expenses are incurred. Finally, cross‐functional integration (both internal and external) substantially impacts product profitability through a mix of direct and mediated effects.     

Marketing–Industrial Design Integration in New Product Development: The Case of China*

Despite the acknowledgement of functional integration as an important driver of new product development (NPD) success and the growing recognition of the significance of industrial design (ID), the integration between industrial design and other functional units in NPD has been rarely researched. In this article, we examine the marketing and ID integration in NPD in the context of China. Mainly based on Cooper's (1994) stage‐gate phases of NPD process and Gupta, Raj, and Wilemon's (1985) categorization of NPD activities, we develop a conceptual framework that identifies 29 areas that might require integration or where integration might occur between marketing and ID. Specifically, we investigate and compare the current and the ideal integration between marketing and ID perceived by the two functions. An analysis of data from 113 companies reveals that the current level of integration fell short of the ideal level of integration in all the phases of NPD. Both managers believed in the descending trend of integration along the stage‐gate NPD phases and were dissatisfied with the current level of integration in all the NPD phases. Except for a few areas of agreement, marketing and ID managers showed significant differences with each other in their perceptions of the current and the ideal integration in most of the 29 areas. Despite the disagreements however, the two functions agreed with each other on the most important areas that require integration and achieved the highest level of marketing–ID integration. These findings suggest that firms should improve the marketing–ID integration in all the NPD phases and that management could improve the effectiveness of marketing–ID integration by prioritizing and focusing on the most important areas. Research and managerial implications, limitations, and future research directions are presented in the paper.     

Project Suspensions and Failures in New Product Development: Returns for Entrepreneurial Firms in Co‐Development Alliances

Entrepreneurial biotech and large pharmaceutical firms often form alliances to co‐develop new products. Yet, new product development (NPD) is fraught with challenges that often result in project suspensions and failures. Considering this, how can firms increase the chances that their co‐development alliances will create value? To answer this question, the authors build on insights from signaling theory to argue that prior project suspensions provide positive signals leading to an increase in value creation, while project failures have the opposite effect. In addition, drawing on insights from temporal construal theory, this research predicts that the strength of these effects is contingent on the stage along the exploration–exploitation continuum at which the alliance is formed. The authors undertook event study analyses of 248 alliances formed by 104 biotechnology firms from the United States and Europe listed on eight stock exchanges over an 8‐year period between 1996 and 2003. The results confirm that prior NPD project suspensions have a stronger value creation effect (or prior failures have a weaker value destruction effect) in the case of exploration alliances in the upstream of NPD processes than in the case of moderate‐scale exploitation alliances in the downstream of NPD. This study is among the first to examine how both prior NPD project suspensions and failures of firms affect the abnormal returns achieved from co‐development alliances. This research therefore contributes to the innovation literature by honing a better understanding of setbacks and failures in NPD. Moreover, the findings contribute to the literature on strategic alliances by identifying new conditions under which firms can create or preserve value. This research also contributes to signaling theory by providing evidence of the moderation effect caused by the signaling environment. Finally, this study contributes to the entrepreneurial literature on value creation for entrepreneurial firms in alliances following adverse events.     

The Risk Pyramid for New Product Development: An Application to Complex Aerospace Hardware

All new product developments are inherently characterized by risk, as a result of various uncertainties that surround them. Risk assessment techniques can be used to help clarify these uncertainties, as a basis for systematic decision making and organizational consensus. This article develops the risk pyramid, a new approach to risk assessment that dynamically combines concept assessments with multi-dimensional risk evaluations. William Souder and David Bethay illustrate the use of the risk pyramid with an application to SPACEHAB, a commercial space habitat module designed to enhance NASA's manned space program. The application illustrates the utility of risk assessment in general and the risk pyramid in particular. The results demonstrate how formally following the risk pyramid approach can potentially enhance the quality of new product decisions.