Leonard Lynn

Trends in Japanese Management: Continuing Strengths, Current Problems and Changing Priorities

The Context of Japanese Management Corporate Governance and Top Management Goals and Philosophies Product Mix and New Product Development Strategic Alliance and Vertical Integration Multinational Management Competition Strategy Planning and Decision Making Organizational Structure and Process Human Resource Management Concluding Remarks

Why New Products Fail

Often a new product development (NPD) process does not result in a new product. This may mean that the NPD process should be considered a failure. The company may desperately need the new product. But sometimes a NPD process can be considered successful because it prevents a money-losing product from being launched. Discontinuing development at an early stage may be the right decision. It may keep the company from spending a lot of money on a product that has poor prospects. In any case, no one should expect that every NPD process, or even most of them, will result in a product. To take an extreme example, the pharmaceutical industry screens an average of 10,000 molecules to find 250 suitable for preclinical testing. Of the 250 undergoing testing, only ten make it through to clinical trials, and only one is approved to go on the market. An effective NPD process is not one that makes a new product out of each new idea, but rather one that efficiently selects and develops the ideas that result in products that best fit the needs of the corporation and its customers.

Strategic new product development for the global economy

What Is a New Product? Why New Products Fail New Product Development in a Global Economy Three Models of New Product Development Exploration of New Opportunities and Creation of Concepts Organizing for New Product Development Strategic Creativity in the R&D Organization Evaluation of New Products The New Product Launch New Challenges in New Product Development When to Stop: Suspending Development of New Products and Dropping Old Products Success Factors in New Product Development

New Product Development Processes

The successful development of different types of products requires that different NPD processes be used. Some products, for example, are technology intensive, such as copiers and pharmaceuticals. Some are market intensive, but in markets where consumer preferences are relatively stable, such as cosmetics and mayonnaise. And for some products, consumer preferences are crucial, but are highly dynamic. An example is fashionable women’s clothing. The successful development of new technology intensive products requires considerable technological testing. With market intensive products extensive market testing is needed. And, when the product involves a high level of demand uncertainty, it is necessary to use a trial and error experimental approach involving several cycles of short production runs and dynamic market feedback.

Success Factors in New Product Development

Each new product is unique, and no two new products are developed in quite the same way. Part of the challenge for those involved in managing NPD is finding commonalities that make it possible to learn from their own experiences and those of others. In Chapter 3 we described how different processes should be used, depending on whether the new product is technology intensive, market intensive where consumer preferences are stable, or market intensive where consumer preferences are highly dynamic. The development of a new drug or copying Figure 12.1 Success factors in new product development machine should be approached very differently from the development of a new mayonnaise or a new line of women’s clothing. But, even though there are major differences in new product processes, certain success factors are generally applicable. These factors, and how they fit together, are shown schematically in Figure 12.1.

Organizing for Effective New Product Development

Some companies, alliances of companies, and project teams are more effective than others at NPD, even though they do not necessarily have staff members who are any smarter or more creative. In this chapter we draw on our own research and on our observations of a large number of companies, as well as the research and observations of others, to describe some of the characteristics that make some companies, alliances and project teams particularly effective at NPD.

Evaluating New Products During the Development Process

So far we have looked at the various stages of the NPD process, why the process sometimes fails, and how organizations can be structured to increase the chance of success. In this chapter we will look at how new products can be evaluated during the various stages of the NPD process.

The Globalization of New Product Development

One of the most dramatic developments in NPD over the past 10 to 15 years has been the globalization of new product development. Today some of the largest and fastest growing markets for new products are in countries that were not truly part of the global economy a generation ago. China, for example, is now the largest market for cellular telephones. China and India are the world’s fastest growing markets for automobiles and many consumer appliances. China, India and other emerging economies are also, increasingly, centers of excellence for the technologies key to certain products. Major new challenges for managers of NPD include both finding ways to develop products for a wider range of global markets than ever before, and drawing on the capabilities of human and technological resources that were largely ignored in the past. This chapter deals with these challenges.

Creating a New Product Concept

New product success depends heavily on the compatibility of the product with corporate strategy, and on the formulation of a new product concept that meets market needs. Information on the market must be collected and evaluated. At the same time the NPD team must not be so constrained by current market demands that it overlooks opportunities in new markets. This chapter takes up these aspects of the creation of a new product concept.

Stopping an NPD Process and Changing Product Mixes

Managers sometimes face the painful necessity of having to stop an NPD process. On other occasions, they may have to divest or discontinue a current product that is no longer successful or that no longer fits the company’s strategy. This chapter takes up these situations.