THE SUCCESS AND FAILURE OF NEW PROD

THE SUCCESS AND FAILURE OF NEW PRODUCT DEVELOPMENT – A STUDY WITH FOCUS ON THE EARLY PHASES
Matts Björklund, Institute of Economic Research at Lund University John Gibe, Institute of Economic Research at Lund University Thomas Kalling, Institute of Economic Research at Lund University Sten Setterberg, Fenix, Chalmers University of Technology
15 June, 2007
ABSTRACT
What factors affects New Product Development (NPD) and are the factors the same in different industries? These are two of the main questions explored when three organizations in different industries are studied from the perspectives of knowledge, motivation and organizational context. Focus is on the early phases of NPD, however the entire NPD process is included to better understand the results of the actions and factors throughout the process. The indications that knowledge and knowledge management are key tools in order to stay competitive in the market place are looked closer at and the empirical cases illustrate the use of knowledge within the given sub-cases and the implications thereof.
TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................................1 the case companies...............................................................................................................................2 LITERATURE...............................................................................................................................................2 METHOD.....................................................................................................................................................5 EMPIRICAL FINDINGS .................................................................................................................................5 Success Factors.....................................................................................................................................6 Knowledge............................................................................................................................................7 Motivation.............................................................................................................................................8 Organizational Context.........................................................................................................................9 Structure............................................................................................................................................................9 Risk.................................................................................................................................................................10 Management....................................................................................................................................................11 DISCUSSION / CONCLUSION...................................................................................................................... 11 REFERENCES.............................................................................................................................................13 Appendix 1: Critical success factors related to the framework..........................................................15 Appendix 2: Selection of NPD processes and their steps....................................................................19 Appendix 3: Study Guide .................................................................................................................... 20
The success and failure of new product development - a focus on the early phases
Björklund, Gibe, Kalling, Setterberg 1
INTRODUCTION
The purpose of this paper is to explore the new product development (NPD) process in different industries to examine similarities and differences with a particular focus on the early phases of NPD. The crucial first steps in the process is where ideas are filtered by the organization and as a result both potentially “good” and “bad” ideas are either accepted into the NPD process or rejected. Chesbrough (2004) refers to this as true and false, positives and negatives.
Today, NPD is a prerequisite more than a strategic option as firms operate in markets with “shorter product life cycles; heightened competition from home and abroad; maturing industries and flat markets; and the quickening pace of technological developments” (Cooper and Kleinschmidt , 1987a, p. 175). 74% of companies in a UK study by Bain & Co. (1990) regarded innovation as “very important” to firm survival and the other 26% rated it “quite important”. However, NPD is associated with risk and thereby also failures. Crawford (1977) found failure rates of NPD to range from 20 to 90%. Other studies like Booz el al. (1982) found that 35% of the products introduced between 1963 and 1981 failed. Cooper (1990) in his study confirmed these failure rates.
One of the cornerstones in NPD research is the view on “success” and “failure”. There are numerous definitions of what “success” and “failure”, ranging from financial measures, sales measures to more “soft” factors (e.g. the opening up of new markets) (Cooper and Kleinschmidt , 1987a). Additionally there is an ongoing discussion on the long term gains and the notion of paradox “the success of failure and the failure of success” (Farson and Keyes, 2002). Within the framework of this paper there will be no attempt to further add to the discussion but rather accepting the success measures drawn up for each sub-case.
The early screening process is used to weed out what potentially will be “failures”. Cooper and Kleinschmidt (1987b) draw special attention to the importance of the evaluation activities in the early phase of the NPD process; “initial screening, preliminary market assessment, preliminary technical assessment, detailed market study or marketing research, and business/financial analysis”.
The success and failure of new product development - a focus on the early phases
Björklund, Gibe, Kalling, Setterberg 2
THE CASE COMPANIES
The case companies are large multinational companies in three different industries operating in competitive markets – Alfa, Beta and Gamma. In Alfa the main focus has been on the design function of the organization and five sub-cases were included in the study, which all were product innovations of more incremental nature. In Beta, the three sub-cases were two product innovations of a slightly more radical type than in Alfa, and a radical process innovation. Two new products in line with the industry practice were studied in Gamma.
The heterogeneity of the case companies and their approach to NPD was chosen both to explore similarities and differences between industries.
LITERATURE
“The potential for new ideas arising from the stock of knowledge in any firm is practically limitless – particularly if people in the firm are given the opportunity to think, to learn, and to talk to each other” (Davenport & Prusak, 1998, p.17). Organizational innovation can be viewed as a result of the combination of existing and new knowledge (Kogut and Zander, 1992). The organizations that can source and integrate new knowledge are more likely to be successful innovators.
Dutton and Thomas (1984) show that learning rates differ not only between industries and organizations, but also within the same or similar process and product areas. Studies have shown that there are more variations within organizations producing the same product (eg. Searly & Gody, 1945 on shipyards producing same vs. different ships during World War II). Similar results from other industries were found by Chew, Bresnahan and Clark (1990). In the search for the factors explaining these variations there has been several contributions. The productivity gains do not automatically come with experience. Hence the importance of understanding which variables actually leads to productivity gains are of interest.
D’Aveni (1994) and Lance et al (1998) highlight that very few firms can develop and master the wide range of knowledge and skills needed independently to be competitive. In relation to the knowledge needed, Szulanski and Rosella (2003) stress the importance of motivation in the transfer of knowledge by both from the source and the recipient of the knowledge. The role of the organizational structure related to knowledge and NPD is further explored by Kim (1993) describing that learning often is rooted in the knowledge structure of top management and the organizational structures and processes (Kim, 1993).
The importance of learning as a factor for competitiveness is stressed by Stata (1989) who argues that the rate at which individuals and organizations learn may become the only sustainable competitive advantage, especially in knowledge-intensive industries.
The success and failure of new product development - a focus on the early phases
Björklund, Gibe, Kalling, Setterberg 3
Together with previous research and the literature review in appendix 1 (summarized in table 1), the categories for the study emerged; knowledge factors, motivational factors and organizational contextual factors. The categories are not always mutually exclusive resulting in some of the factors in table 1 have fallen into more than one category. The main purpose of this type of framework is to create an initial order to the heterogeneous flora of factors from studies suggested to contribute to productivity. The aim of this study is to continue the quest for understanding how NPD can be improved.
All of the studies included knowledge factors which was the most common type of factor. Factors relating to the organizational context (structure, risk and management) were represented in most of the studies. Motivational factors on the other hand were rarely d

Kết quả (Việt) 1:

SỰ THÀNH CÔNG VÀ THẤT BẠI CỦA PHÁT TRIỂN SẢN PHẨM MỚI-MỘT NGHIÊN CỨU VỚI TẬP TRUNG VÀO CÁC GIAI ĐOẠN ĐẦU Matts Björklund, viện nghiên cứu kinh tế tại Đại học Lund John Gibe, viện nghiên cứu kinh tế tại Đại học Lund Thomas Kalling, viện nghiên cứu kinh tế tại Đại học Lund Sten Setterberg, Fenix, đại học công nghệ Chalmers 15 tháng 6, năm 2007 TÓM TẮT Những yếu tố ảnh hưởng đến phát triển sản phẩm mới (NPD) và là những yếu tố giống nhau trong ngành công nghiệp khác nhau? Đây là hai trong số những câu hỏi chính khám phá khi ba tổ chức trong ngành công nghiệp khác nhau được nghiên cứu từ các quan điểm của kiến thức, động lực và bối cảnh tổ chức. Tập trung vào giai đoạn đầu của NPD, Tuy nhiên NPD toàn bộ quá trình được bao gồm để hiểu rõ hơn về các kết quả của hành động và các yếu tố trong suốt quá trình. Các chỉ dẫn rằng kiến thức và kiến thức quản lý là công cụ quan trọng để cạnh tranh trong thị trường nơi được nhìn gần hơn và các trường hợp thực nghiệm minh họa cho việc sử dụng các kiến thức trong các trường hợp nhất định phụ và những tác động đó. BẢNG NỘI DUNG INTRODUCTION........................................................................................................................................... 1 the case companies............................................................................................................................... 2 LITERATURE............................................................................................................................................... 2 METHOD..................................................................................................................................................... 5 EMPIRICAL FINDINGS ................................................................................................................................. 5 Success Factors..................................................................................................................................... 6 Knowledge............................................................................................................................................ 7 Motivation............................................................................................................................................. 8 Organizational Context......................................................................................................................... 9 Structure............................................................................................................................................................ 9 Risk................................................................................................................................................................. 10 Management.................................................................................................................................................... 11 DISCUSSION / CONCLUSION...................................................................................................................... 11 REFERENCES............................................................................................................................................. 13 phụ lục 1: yếu tố thành công quan trọng liên quan đến khuôn khổ... 15 phụ lục 2: lựa chọn của NPD quy trình và các bước của họ... 19 Appendix 3: Study Guide .................................................................................................................... 20 Sự thành công và thất bại của phát triển sản phẩm mới - một tập trung vào giai đoạn đầu Björklund, Gibe, Kalling, Setterberg 1 GIỚI THIỆU Mục đích của giấy này là để khám phá quá trình phát triển (NPD) sản phẩm mới trong ngành công nghiệp khác nhau để kiểm tra các điểm tương đồng và khác biệt với một tập trung cụ thể vào giai đoạn đầu của NPD. Những bước đầu tiên rất quan trọng trong quá trình là nơi mà những ý tưởng được lọc bởi tổ chức và kết quả là cả hai có khả năng "tốt" và "xấu" ý tưởng được chấp nhận vào quá trình NPD hoặc bị từ chối. Chesbrough (2004) đề cập đến điều này là đúng và sai, tích cực và tiêu cực. Hôm nay, NPD là một điều kiện tiên quyết nhiều hơn một lựa chọn chiến lược như công ty hoạt động trong thị trường với "sản phẩm cuộc sống chu kỳ ngắn hơn; sự cạnh tranh cao từ nhà và ở nước ngoài; trưởng thành ngành công nghiệp và thị trường căn hộ; và tốc độ nhịp của phát triển công nghệ"(Cooper và Kleinschmidt, 1987a, p. 175). 74% của sự đổi mới công ty trong một nghiên cứu UK Bain & Co (1990), được coi là "rất quan trọng" cho sự sống còn của công ty và 26% khác xếp "khá quan trọng". Tuy nhiên, NPD là liên quan đến rủi ro và do đó cũng có thể thất bại. Crawford (1977) tỷ lệ tìm thấy thất bại của NPD phạm vi từ 20 đến 90%. Các nghiên cứu khác như Booz el al. (1982) tìm thấy rằng 35% của các sản phẩm giới thiệu từ năm 1963 đến năm 1981 đã thất bại. Cooper (1990) trong nghiên cứu của ông đã xác nhận những tỷ lệ thất bại. One of the cornerstones in NPD research is the view on “success” and “failure”. There are numerous definitions of what “success” and “failure”, ranging from financial measures, sales measures to more “soft” factors (e.g. the opening up of new markets) (Cooper and Kleinschmidt , 1987a). Additionally there is an ongoing discussion on the long term gains and the notion of paradox “the success of failure and the failure of success” (Farson and Keyes, 2002). Within the framework of this paper there will be no attempt to further add to the discussion but rather accepting the success measures drawn up for each sub-case. The early screening process is used to weed out what potentially will be “failures”. Cooper and Kleinschmidt (1987b) draw special attention to the importance of the evaluation activities in the early phase of the NPD process; “initial screening, preliminary market assessment, preliminary technical assessment, detailed market study or marketing research, and business/financial analysis”. The success and failure of new product development - a focus on the early phases Björklund, Gibe, Kalling, Setterberg 2 THE CASE COMPANIES The case companies are large multinational companies in three different industries operating in competitive markets – Alfa, Beta and Gamma. In Alfa the main focus has been on the design function of the organization and five sub-cases were included in the study, which all were product innovations of more incremental nature. In Beta, the three sub-cases were two product innovations of a slightly more radical type than in Alfa, and a radical process innovation. Two new products in line with the industry practice were studied in Gamma. The heterogeneity of the case companies and their approach to NPD was chosen both to explore similarities and differences between industries. LITERATURE “The potential for new ideas arising from the stock of knowledge in any firm is practically limitless – particularly if people in the firm are given the opportunity to think, to learn, and to talk to each other” (Davenport & Prusak, 1998, p.17). Organizational innovation can be viewed as a result of the combination of existing and new knowledge (Kogut and Zander, 1992). The organizations that can source and integrate new knowledge are more likely to be successful innovators. Dutton and Thomas (1984) show that learning rates differ not only between industries and organizations, but also within the same or similar process and product areas. Studies have shown that there are more variations within organizations producing the same product (eg. Searly & Gody, 1945 on shipyards producing same vs. different ships during World War II). Similar results from other industries were found by Chew, Bresnahan and Clark (1990). In the search for the factors explaining these variations there has been several contributions. The productivity gains do not automatically come with experience. Hence the importance of understanding which variables actually leads to productivity gains are of interest. D’Aveni (1994) and Lance et al (1998) highlight that very few firms can develop and master the wide range of knowledge and skills needed independently to be competitive. In relation to the knowledge needed, Szulanski and Rosella (2003) stress the importance of motivation in the transfer of knowledge by both from the source and the recipient of the knowledge. The role of the organizational structure related to knowledge and NPD is further explored by Kim (1993) describing that learning often is rooted in the knowledge structure of top management and the organizational structures and processes (Kim, 1993).
The importance of learning as a factor for competitiveness is stressed by Stata (1989) who argues that the rate at which individuals and organizations learn may become the only sustainable competitive advantage, especially in knowledge-intensive industries.
The success and failure of new product development - a focus on the early phases
Björklund, Gibe, Kalling, Setterberg 3
Together with previous research and the literature review in appendix 1 (summarized in table 1), the categories for the study emerged; knowledge factors, motivational factors and organizational contextual factors. The categories are not always mutually exclusive resulting in some of the factors in table 1 have fallen into more than one category. The main purpose of this type of framework is to create an initial order to the heterogeneous flora of factors from studies suggested to contribute to productivity. The aim of this study is to continue the quest for understanding how NPD can be improved.
All of the studies included knowledge factors which was the most common type of factor. Factors relating to the organizational context (structure, risk and management) were represented in most of the studies. Motivational factors on the other hand were rarely d