The first comprehensive forecast of technological trends and social implications by the U.S. government was published by the National Resources Committee in 1937. It focused on 13 major innovations. In their article, Steven Schnaars, Swee Chia and Cesar Maloles examine the accuracy of those forecasts and draw some conclusions based on their review of that report.
Rapid changes in manufacturing and design technologies coupled with increased competition domestically and internationally have led to shorter product life cycles and compressed lead times for product introductions in the technology sector. Traditional cost accounting systems, which assume labor to be the major cost component in the production process, have resulted in distortions in cost information. Samuel Rabino and Arnold Wright describe emerging cost accounting approaches that more adequately address the changing competitive and technological environments and facilitate an improved evaluation of product launch programs.
Rarely has a strategic managemnt option captured American industry as has the thrust of accelerated product development. When accompanied by the goals of lowered cost and increased new product equality, it seems almost ustoppable. However, industry may have been swept up in the enthusiasm. Any strategic optic so tempting (with long lists of advantages and no suggested limitations) needs to be viewed critically. Merle Crawford reveals several “hidden costs” of accelarated development. He does not oppose the new strategy, and indeed endorses it highly, but urges that it can be considered carefully before application. His analysis suggests that acceleration is far more widely applied than is good for any industrialized economic system.
In many established product categories, a large component of sales is due to the replacement of existing units. Because of the long expected lifetime of durables, replacement decisions can often be postponed by the consumer. In light of this, one marketing strategy for manufacturers of such products may be to accelerate the timing of product replacement decisions for buyers planning to replace. In this article, Barry Bayus presents the results of his investigation of the effect of marketing efforts on shortening the replacement cycle. Such information can be used by new product managers to forecast more accurately long-term sales and to help decide when to introduce new products (e.g., with enhanced features). Using data on color television purchases, he shows that the marketing variables of price, advertising, new features and styling are related to the timing of discretionary replacements. Further, these data suggest that price has the most impact in accelerating replacement purchases.
Product life-cycles are becoming shorter, leading firms to reduce the time to bring new products to market. Being early can provide a significant competitive advantage, making the acceleration of new product development (NPD) an important area for research and inquiry. Based on their review of a wide range of literatures in business strategy, marketing, new product development, manufacturing and organization management, Murray Millson, S.P. Raj and David Wilemon report a general set of techniques for reducing the developmental cycle time for new products. The article develops a hierarchy of available NPD acceleration approaches and discusses potential benefits, limitations and significant challenges to successful implementation.
How can organizations shorten the length of the new products development process? This is undoubtedly one of the key questions facing managers today. One important goal is early market entry, maximizing competitive advantage in the process. Bela Gold draws on his experience with product and process development in a wide array of industries to identify eight approaches to accelerating development. Drawing on his field research, he briefly appraises the potentials, limitations, and risks of each and then discusses implications for a more promising strategy.
This article reports the conclusions from a study of crossfunctional product development teams with emphasis on the implications for altering organizational structure to accomodate team process. A comparative study of teams in four U.S. firms, using anthropological and sociolinguistic methods, found that team work is inherently paradoxical. It poses numerous contradictions and paradoxes for individuals, teams, and organizations. At one of the research sites, tacit recognition of this reality and a conviction that teams were critical to product development led to a continuous accomodation of the organization to the requirements of team work and to impressive organizational outcomes. Conceptual and managerial lessons are drawn from this successful case and are offered here to help guide both future research and the actual implementation of team work in firms.
This study identifies factors that seem to influence a new firm's ability to accurately forecast new product sales. William Gartner and Robert Thomas present a conceptual model and develop hypothesis that specify antecedent factors prior to new product launch, such as the founder's expertise and the marketing research methods used, as well as environmental factors occuring after product launch, such as competitive factors and market volatility, that influence new product forecasting accuracy. The hypotheses were tested with data collected from a survey of 113 new U.S. software firms. Some tentative guidelines for improving sales forecast accuracy among new firms are offered. Directions for future research are discussed.
Most companies' product development process (PDP) is inefficient and slow. Consequently, products are often late-to-market, over cost and not well-aligned with customer's needs. Because it involves all levels of the organization and crosses all functional boundaries, the PDP is very difficult to control. Unbalanced control is at the root of many of the symptoms of a troubled PDP. Michael T. Anthony and Jonathan McKay investigate the four primary unbalanced PDP behaviors exhibited by organizations and present four balancing mechanisms to correct these flaws. In their view, a balanced PDP contains a structured development methodology and project reviews at specific, high-impact points that involves top management appropriately while still allowing empowerment of the project teams.
Many firms acquire other firms with well-known and proven brands to hedge against the high costs and risks of new product development. A critical question in these acquisition decisions involves the assessment of the importance of brand equity to the acquiring firm. Since the brand equity benefits can vary by firm (and also by the decision maker within a firm) a critical question is how can one systematically decipher the effect of brand equity in acquisition decisions. Using the balance model [8,15], Vijay Mahajan, Vithala Rao, and Rajendra Srivastava present a methodology to determine the importance of brand equity in acquisition decisions. By capturing the idiosyncratic perceived importance of brand equity of every decision maker involved in acquisition decisions, the methodology enables members of a committee within a firm to understand and reconcile their differences in evaluating potential acquisitions. This methodology is applied in a pilot study for the all-suites segment of the hotel industry with data collected from senior executives of five major hotel chains. The authors also discuss benefits, limitations, and further extensions of the suggested approach.
In a previous article, Norman McGuinness developed a model of idea generation processes used by small firms. Here he reports similar patterns for larger firms but adds a stage he labels problem definition. Since his model describes the progress of ideas through various predevelopment stages, this article yields additional insight into better management practices. It emphasizes that search involves a system of social activities within the organization and also distinguishes between planned and unplanned search, structured versus unstructured procedures and top-down versus bottom-up orientation.
Recent trends in industrial distribution suggest that distributors may perform an important role in various stages of product innovation from idea generation, through product design, to product launch and subsequent marketing. In this article, Eunsang Yoon and Gary Lilien review the literature and discuss the potential role of the industrial distributor as an innovation participant. An exploratory study with an Australian data base suggests that the industrial distributor performs tasks associated with market-driven product innovation (reformulation and imitative new products in particular) as effectively as the industrial manufacturer.
Sales for radically new products often depend on the development of an associated infrastructure. This is particularly true in the case of high- technology innovations. This infrastructure reflects society's and/or industry's adaptation to the new product's potential or capability. Supportive infrastructure developments can hasten product growth in early stages of the product life cycle or retard growth in their absence. Shelby McIntyre shares his thoughts about the role of infrastructure in this perspective and presents useful guidelines for evaluating its impact. A radical innovation lives or dies, in part, by a company's vision and commitment to developing its long term potential. It is in this sense that a product or innovation can be “ahead of its time” (i.e., ahead of its infrastructure).
In a dynamic marketplace, managers need more than tactical demand analysis techniques and capital budgeting models to fully evaluate proposed product line additions. In this article, Joseph Guiltinan offers a descriptive framework to guide strategic thinking about the length of a product line. Specifically, his framework allows managers to identify the situations in which variety is an important competitive variable, examine the relationship between variety and cost, understand the underlying determinants of cannibalization and complementarity, and assess the consequences of not responding to competitive innovations. The article also shows how the relative importance of the various elements in the framework depends on the expectations that top management has established for the business unit or product line in question.
This research uses innovation characteristics to assess product potential at two points in time. The two phases of the study consist of: (1) proposing and estimating purchase intention models and (2) reconciling predicted success with actual product performance. The investigation focuses on the impact of perceived product attributes, environmental variables, and consumer traits on the purchase intention of actual innovations within several technologically intensive product categories. Differences in model specification and parameter values are noted across product types. Results indicate consistency in the impact of product attributes across categories on an innovation's acceptability, but suggest differences in model specification with respect to environmental variables and consumer traits. The existence of a generic-to-specialized innovation continuum is a possible cause of the heterogeneity in results across products. An ex post analysis of the innovations indicates that, while success can be predicted quite accurately using perceived product attribute ratings, consumer and environmental variables should not be ignored for particular categories. The study has implications for the early screening of innovative durables, specifically with respect to forecasting model potential, determining product design and positioning, and developing promotional messages.
The diffusion of a technological innovation often follows the pattern of the familiar ‘S’-curve—the classic smooth, cumulative adoption curve. Yet, an individual firm's decision to adopt or reject an innovation may be filled with discontinuous events, represented by familiar concepts like diffusion thresholds, bandwagon effects and the sudden rejection or displacement of an existing innovation. Paul Herbig reports how catastrophe theory can be used to describe many of these sudden changes and discontinuities. His article describes a model for a firm's adoption or rejection of an innovation via the cusp catastrophe, which he illustrates with a number of possible examples.
The financial services sector is becoming increasingly competitive. Deregulation allows formerly nonoverlapping financial institutions to compete. To survive and succeed, financial institutions must develop strong positions. A position summarizes the distinctive competence that a company seeks to convey to the marketplace to establish its competitive advantage. In this article, Christopher Easingwood and Vijay Mahajan describe a number of positioning attempts in the financial services sector. They are guided by two central objectives.
The first is to show how the special characteristics of services give rise to eight different positioning possibilities for financial services organizations. These positions present a range of potential options from which the manager may choose. For instance, an “extra service” position is one option, a “performance” position is another.
The second objective is to demonstrate the use of the positioning framework, with examples taken from the insurance sector to provide illustrations rather than a complete picture of insurance positioning.
The article concludes with a number of recommendations. For instance, financial institutions should avoid overcrowded positions and occupy underexploited positions. If accepted, these recommendations should help the financial services executive develop a competitive positioning strategy.
In this article, Michael Lawless and Robert Fisher propose a conceptual framework for analyzing durable sources of competitive advantage for new products. They assess various components of new product introduction strategies in terms of their degrees of competitive “imitability” (i.e., the ease with which competitors can imitate). The less imitable the component, the more durable the profits it generates. The authors identify seven strategic components based on bodies of research in strategy and promotion, distribution and firm characteristics. By selectively managing these components, an innovating firm can affect a new product's imitability and the duration of returns. Using a “resource mobility” perspective, the authors develop propositions that should lead to a more systematic focus on long-term profits in new product introductions.
In spite of the fact that product appearance would not seem to bear upon performance, this article provides evidence that the appearance of an industrial product may have an impact on its evaluation. Utilizing a conjoint scaling approach, Mel Yamamoto and David R. Lambert find that industrial product appearance exerts an influence, which in some circumstances exceeds the influence of certain product performance or price attributes. They suggest that attention paid to product aesthetics may have a payoff in terms of sales performance. And further, the impact of product appearance affects people in different organizational functions, across a range of technical orientations.
Conventional concept testing methodologies are based on the simple assumption that respondents understand the concept when they offer their evaluation of it. Obviously it's an assumption that often will not hold. What happens to the quality of the evaluation at different levels of concept knowledge is the issue addressed in this article by Eric Reidenbach and Sharon Grimes. Their research shows that the level of concept knowledge affects certain elements of the evaluation more than others, and that the evaluation is moderated by the type of innovation and the way it is presented.
One of the most critical steps in the development of a professional field is the development of a research tradition. The Product Development and Management Association has long been committed to the stimulation of quality research efforts in the field of new products management. Accordingly, to begin the development of a research agenda, PDMA sponsored a colloquium of academic and practitioner researchers. Philip C. Burger, then serving as PDMA's Vice President of Research, organized the meeting and reports on the results of a two and a half day discussion. Some of the topics emphasized include organizational behavior and leadership, dissemination of good practice and the importance of a benchmark study of new product success and failure as starting points.
Alliance formation is often described as a mechanism used by firms to increase voluntary knowledge transfers. Access to external knowledge has been increasingly recognized as a main source of a firm's innovativeness. A phenomenon that has recently emerged is alliance portfolio complexity. In line with recent studies this article develops a measure of portfolio complexity in technology partnerships in terms of diversity of elements of the alliance portfolio with which a firm must interact. The analysis considers an alliance portfolio that includes different partnership types (competitor, customer, supplier, and university and research center). So far factors that determine portfolio complexity and its impact on technological performance of firms have remained largely unexplored. This article examines firms' decisions to form alliance portfolios of foreign and domestic partners by two groups of firms: innovators (firms that are successful in introducing new products to the market), and imitators (firms that are successful at introducing products which are not new to the market). This study also assesses a nonlinear impact of the portfolio complexity measure on firms' innovative performance.
The empirical models are estimated using data on more than 1800 firms from two consecutive Community Innovation Surveys conducted in 1998 and 2000 in the Netherlands. The results suggest that alliance portfolios of innovators are broader in terms of the different types of alliance partners as compared to those of imitators. This finding underlines the importance of establishing a “radar function” of links to various different partners in accessing novel information. Specifically, the results indicate that foremost innovators have a strong propensity to form portfolios consisting of international alliances. This underlines the importance of this type of partnership in the face of the growing internationalization of R&D and global technology sourcing. Being an innovator or imitator also increases the propensity to form a portfolio of domestic alliances, relative to non-innovators; but this propensity is not stronger for innovators. Innovators appear to derive benefit from both intensive (exploitative) and broad (explorative) use of external information sources. The former type of sourcing is more important for innovators, while the latter is more important for imitators. Finally, alliance complexity is found to have an inverse U-shape relationship to innovative performance. On the one hand, complexity facilitates learning and innovativeness; on the other hand, each organization has a certain management capacity to deal with complexity which sets limits on the amount of alliance portfolio complexity that can be managed within the firm. This clearly suggests that firms face a certain cognitive limit in terms of the degree of complexity they can handle. Despite the noted advantages of an increasing level of alliance portfolio complexity firms will at a certain stage reach a specific inflection point after which marginal costs of managing complexity are higher than the expected benefits from this increased complexity.
Proper allocation of R&D resources across strategic business units is a challenge that has long been faced by executives of diversified business enterprises. Igal Ayal and Robert Rothberg have chosen to address this issue, applying a distinction between effectiveness and efficiency of R&D spending. Most companies seem to overcontrol such allocations in terms of tactical detail or efficiency considerations, and undercontrol in terms of strategic significance or effectiveness. Attention to the effectiveness of allocations requires that management assess the linkage between R&D spending and the attainment of overall corporate goals. The article draws conclusions about the design of appropriate R&D proposal generation and evaluation procedures and project control systems in strategically decentralized companies.
The life cycle model has become part of the everyday vocabulary of management and is used as a rough simplification of rather complex phenomena. Chris DeBresson and Joseph Lampel have undertaken a thorough re-examination of the underlying assumptions of the model and propose a reformulation that they believe gives a better approximation of the dynamics of technological and organizational change. The basis for their reformulation is a survey of 4000 British and Canadian innovations in many industries over some 30 years.
In a companion article immediately following this one, the authors illustrate their reformulation by a detailed analysis of one firm in one industry.
This article addresses issues linked to the sales of manufacturing technology and know-how through licensing by British companies to unaffiliated firms located overseas. It identifies a number of characteristics that make these companies more likely to license abroad. The authors test a model of foreign licensing on data gathered from 145 firms based in the United Kingdom. Many companies do evaluate licensing to unaffiliated firms as an alternative to foreign direct investment when they consider manufacturing in foreign markets. These firms tend to be relatively large in their industry, highly diversified, spend a relatively higher proportion of their value-added on research and development, and have less foreign experience.
Many marketing practitioners and authors already accept that inward technology licensing (ITL) can be a viable alternative source of new products to internal R&D. Yet, new product development research focuses mainly on internal development with little attention to external methods. Kwaku Atuahene-Gima reviews the small body of literature on ITL and examines the factors that may influence a firm to adopt ITL as an alternative to internal R&D. Using a conceptual framework to provide additional insights, he argues that the ITL adoption decision is an organizational behavioral response to internal and external environmental stimuli.
The Wal-Mart Innovation Network (WIN) is a cooperative experiment designed to test an infrastructure for stimulating American innovations—new products invented and manufactured in the U.S.A. The WIN venture focuses on independent and small business inventors because it is here that WIN is likely to have the greatest impact. Contrary to the opinions of many, inventors continue to be a major source of new products, processes and services. Unlike their corporate rate and institutional counterparts, noncorporate inventors suffer from the lack of viable channels for getting their creative efforts to the marketplace and often are lacking in some essential resource or expertise. Rather than attempt to stimulate invention, the WIN strategy is simply to make it easier for existing ideas and inventions to reach the marketplace. In addition to other resources, WIN draws on the expertise of some 160 volunteer Wal-Mart executives, buyers and marketing specialists who provide an assessment of marketability. Although innovation is the primary focus of the WIN venture, the bottom line objective is the creation of new, domestic manufacturing jobs.
There has been a lot of interest in diffusion models as a basis for prelaunch estimates of the sales of new products, and indeed there have been several models developed that have achieved fairly good acceptance by new product managers. One of the limitations of such models, however, has been the requirement that a sales history for the new product, even a short one from a test market, for example, be available to derive the parameters of the model. For some types of products—consumer durables, services, industrial products, for example— a sales history isn't available. In this article, Professor Robert Thomas suggests some steps toward the development of models that incorporate the attractive features of diffusion models. His approach is to use, in a systematic way, the sales histories of products that can be considered to have analogous features from a buyer's point of view. He illustrates the approach by forecasting the sales of a new service.
The importance of knowledge dissemination for the strategic planning was investigated. 17 important factors in enhancing knowledge dissemination were identified and 10 factors were validated empirically and their relative impact were determined. It was suggested that individual commitment is not the easiest factor to control and management should find new ways to control this factor. It was also suggested that the individual commitment to the firm is very important to facilitate knowledge dissemination as well as organizational crises and risk-taking behavior.
For many durable consumer products, the conditions needed for sustained growth in sales seem to have disappeared. Some of these products have reached saturation levels of ownership; others seem to have plateaued at lower levels of ownership. The authors of this article, Professors Clark, Freeman, and Hanssens, have taken a multidisciplinary approach to the analysis of one portion of the consumer durables market—household appliances—to detect the underlying components of demand. They speculate on how these demand components will fare in the coming years and draw implications for the way these markets can be stimulated.
It is widely believed that setting industry-wide standards of uniformity for technological products hastens their diffusion. In this article, Barry Rosen, Steven Schnaars and David Shani examine whether standards merely make markets less competitive, or whether they promote economic growth through the accelerated diffusion of certain new products. The authors also examine conditions which are most conducive to setting standards and reflect on alternative approaches to achieving technical standards. Finally, they ask who should set industry standards? The article presents opposing arguments for allowing industry to cooperate in the setting of standards and for letting the marketplace be the ultimate arbiter of standards—acting to weed out the weak and promote the strongest technological entry.
This article presents a comprehensive review of the current state of invention evaluation services in the United States. Gerald Udell critically examines technical evaluation programs at the National Institute of Standards and Technology and discusses the Preliminary Innovation Evaluation System (PIES) developed during the Oregon Innovation Center Experiment. He reports that most evaluation services using the PIES format are operating below the state of the art reached by the Oregon experiment and that the quality of some evaluations is suspect. Some of these programs appear to have adopted portions of the PIES format without considering PIES' substance and the five years of research and experimentation that went into PIES' development. Inasmuch as invention evaluation activity is now part of public policy in the United States, invention evaluation activity is likely to increase. Replication and extension of either the technical evaluation procedures of the National Institute of Standards and Technology or the PIES format should be undertaken with careful attention to past experiences.
In 1968 and 1982 cross-sectional studies of the conduct and performance of new product development were reported, the wide-ranging results of which have been widely reproduced and cited as norms for product development. Since the more recent study, many changes in the practice and environment of product development have occured. Albert Page describes the findings of a new cross-sectional study, sponsored by PDMA, which reports on the current status of new product development and updates those commonly referred to norms. On the one hand, this article reports that the state of practce, covering both structure and process, has improved, although there is still substantial room for further improvement. On the other hand, the results for five different measures of firm and program performance indicate these practice improvements have not resulted in notable improvements in the overall performance of the new product development activity within the responding companies.
Firms and governments are increasingly interested in learning to exploit the value of lead user innovations for commercial advantage. Improvements to lead user theory are needed to inform and guide these efforts. In this paper we empirically test and confirm the basic tenants of lead user theory. We also discover some new refinements and related practical applications. Using a sample of users and user-innovators drawn from the extreme sport of kite surfing, we analyze the relationship between the commercial attractiveness of innovations developed by users and the intensity of the lead user characteristics those users display. We provide a first empirical analysis of the independent effects of its two key component variables. In our empirical study of user modifications to kite surfing equipment, we find that both components independently contribute to identifying commercially attractive user innovations. Component 1 (the "high expected benefits" dimension) predicts innovation likelihood, and component 2 (the "ahead of the trend" dimension) predicts both the commercial attractiveness of a given set of user-developed innovations and innovation likelihood due to a newly-proposed innovation supply side effect. We conclude that the component variables in the lead user definition are indeed independent dimensions and so neither can be dropped without loss of information - an important matter for lead user theory. We also find that adding measures of users' local resources can improve the ability of the lead user construct to identify commercially-attractive innovations under some conditions. The findings we report have practical as well as theoretical import. Product modification and development has been found to be a relatively common user behavior in many fields. Thus, from 10% to nearly 40% of users report having modified or developed a product for in-house use in the case of industrial products, or for personal use in the case of consumer products, in fields sampled to date. As a practical matter, therefore, it is important to find ways to selectively identify the user innovations that manufacturers will find to be the basis for commercially attractive products in the collectivity of user-developed innovations. We discuss the implications of these findings for theory and also for practical applications of the lead user construct, i.e. how variables used in lead user studies can profitably be adapted to fit specific study contexts and purposes.
This article empirically examines the factors that affect Australian engineering firms' propensities or intentions to adopt inward technology licensing (ITL) as a new product development method. Kwaku Atuahene-Gima reports results indicating that the major factors that influence the firm's propensity to adopt ITL are previous ITL experience, perceived relative costs and benefits of ITL, awareness of ITL opportunities, and the firm's internal new product development and R&D capabilities. The findings afford managerial insights into the firm's technology acquisition and marketing strategies.
Even though the many hardware and software components that comprise a useful computer system are developed and offered as individual products, the required technical integration of these provides unique challenges for R&D management. New function, especially that provided by software, usually results from prototypes that are not well integrated with the existing product line. This article examines the problems of managing the conflicting demands of market-based autonomy and systems requirements for integration. The idea about software innovation is an interesting complement to the two articles that follow.
Competition among product manufacturers is intensifying in many industries. The nature of this competition forces firms to manage the product supply process for speed to avoid product obsolescence and decreased competitiveness. Rene Cordero describes a number of time-saving techniques and develops a framework for managing the product supply process for speed: making speed a central objective of the firm, selecting faster product strategies, managing for the speedy implementation of these product strategies, and managing human resources for speed. Although speeding the product supply process requires significant changes in the traditional management of product development, managing for speed can bring benefits such as faster response to market needs, reduced product cost, and increased product quality.
Based on their survey, Eric Reidenbach and Donald Moak report that various aspects of new product development practices are associated with different levels of retail bank performance. Such practices and activities as the existence of a formal evaluation process, the existence of new product managers, the length of time a product spends in development, and the percentage of the operating budget spent on new product development tend to vary according to bank performance. Top performers have decidedly different new product development processes, structures, and practices than do average or negative performers.
Many companies regularly use beta tests as part of their product development program. Beta testing can validate the product concept, eliminate performance problems prior to market introduction, and serve as an effective sales promotion device. The risks are significant, however, in that a poorly designed test can destroy account relationship, generate inaccurate data on product performance, and stimulate negative publicity. Robert Dolan and John Matthews present guidelines for effective management of beta test programs. They develop these guidelines based on a literature review, an analysis of twenty-one beta test programs as described in secondary sources, and four in-depth field investigations with cooperating firms.
Much has been written about information gatekeepers, mostly describing how gatekeepers function within organizations. There has been less consideration of the gatekeeper's activities beyond the organization's boundary, though the gathering of external information is fundamental to gatekeeping. Stuart Macdonald and Christine Williams examine gatekeeping from an information perspective, starting with external information and following it into the organization. With only primitive networking and a range of occasional contacts in the outside world, the gatekeeper is something of a scavenger of external information. The gatekeeper certainly transfers information from the external environment to colleagues within the organization, but primary interest is in personal use of the information gathered. Seniority within the organization may allow the gatekeeper the latitude to function in ways that would not be tolerated in more junior employees. The article is wholly concerned with informal gatekeeping and concludes that organizations may condone or even inhibit such activity, but are constrained by the nature of information, and of organization itself, from encouraging it.
In the preceding article, Chris DeBresson and Joseph Lampel propose a new, nonlinear view of technological evolution. In this article, they use their new model to take us through the changes in one firm over a period of more than 50 years. Their model emerges as less constraining in strategic options than in the traditional view, and richer in its representation of technological change.
Data gathered on 62 products from 26 biomedical firms founded in Massachusetts between 1968 and 1975 show a positive relationship between the level of technological sophistication of a firm's products and the risk associated with the use of those products. Oscar Hauptman and Edward Roberts report the results of their study of the impact of the U.S. Food and Drug Administration's approval process on these firms' resources and time. They found that young firms dealing with medical devices and pharmaceuticals were more sensitive to this regulatory process than those producing medical auxiliary products. Enactment of the 1976 FDA regulations amendment affecting medical devices apparently created a precarious environment for the marketing of new products. The amendment was found to have significant impact beyond its target product area, medical devices and supplies. It also challenged the management of firms producing drugs and pharmaceuticals.
While researchers have probed predictors of product managers' performance in consumer good firms, few have looked at the performance of the industrial product manager. In this article, Steven Lysonski and Arch Woodside use path analysis to examine causal models of industrial product managers' performance during periods of rapid technological change. Key variables are analyzed, including the effects of environmental uncertainty, boundary spanning behavior, role pressures, role outcomes and two performance measures. A total of 69 industrial product managers from New Zealand Telecom completed a questionnaire that included both operational measures of the key variables and their overall job performance. The results suggest that most of the hypothesized relationships are supportable empirically. Performance was hindered by environmental uncertainty, role conflict, role ambiguity, tension and dissatisfaction. The authors discuss their study's implications for improving the effectiveness of product management practices.
The success of failure of a new product is an issue of continuing concern to management in the 1990s. Little research, however, has been conducted on this issue from a British perspective. In this article, Scott Edgett, David Shipley and Giles Forbes report the findings of an investigation into success and failure in Japanese- and British-owned firms that conduct business in the United Kingdom. The results from this comparative study illustrate that new product failure rates are still high, with the Japanese firms only marginally outperforming British owned firms.
Based on an analogy to the physical phenomenon of Brownian motion, Venkatesh Padmanabhan and Wm. E. Souder present a general purpose model to assist in the successful transfer of newly developed technologies. The model, named Techtran II, is successfully demonstrated with ten case studies showing how it helps managers develop a priori intervention strategies for improving transfer likelihoods. The results suggest that Techtran II can assist in overcoming problems in successful new product development, commercialization, transfer and user adoption. The Techtran II computer program is available to interested users and researchers.
During the past decade, the public has become fascinated both by the impact of technological change on our daily lives and also by the management of the companies working to create these changes. Perhaps no other issues in current business practice have been discussed so frequently in the mass media. Francisco-Javier Olleros has taken an insightful look at an interesting yet much ignored phenomenon, namely, the frequent demise of firms which pioneer the commercialization of radically new technologies. Against the background of today's high-tech fever, the discussion presented here should help us develop a more realistic and sober view of new, emerging industries and of the merits and limitations of technology-driven competitive strategies.
As their product life cycles continue to shorten even further, high-tech firms can be expected to seek more external product research and development assistance. At the same time, as university budgets tighten, aggressive universities will seek more industry funds. These trends lead Don Snyder and David Blevins to predict more business-university cooperation. A nationwide U.S. survey indicates that universities that successfully attract industry funds promote their willingness and capability to develop new commercial products. They do not insist on a minimum project size and are willing to delay publication of research results. There are, however, some ethical issues that need resolution. Commercial laboratories operated on a for-profit basis have questioned such ventures, citing unfair competition and an inappropriate interpretation of the role of universities.
Studies of new product innovations and new product strategy have traditionally abstracted from the impact of general economic conditions on marketing decision making. Despite the obvious importance of the role that the business cycle plays in determining product profitability, it is relegated to ancillary discussion. Timothy Devinney feels that part of this neglect is due to a lack of academic study of the influence of macroeconomic influences in the determination of marketing strategy. This article attempts to fill a portion of this gap by examining the role that the business cycle plays in new product introductions. The results show that new product introductions, in the aggregate, vary systematically over the business cycle, where the cycle is defined as having income, price, and investment components.
To help us understand the massive complexity of the chemical industry, Robert A. Linn breaks it down into product/market sectors that show differing business requirements, and hence, differing new product development requirements. This is an important industry that has struggled through the 1970s with sharp changes in external pressures and very little technological excitement. Where are the new product opportunities in an industry such as this? How do you pursue them? On the basis of his years of experience in the industry, Linn offers some suggestions and some challenges for managers.
A key decision faced by marketing managers is the development of entry strategies for new markets. In addition to selecting which product market to enter, the manager must make decisions about the entry strategy itself. The entry strategy, whether managed actively or passively, affects the entrant's performance. In this article, Donna Green and Adrian Ryans discuss the three major components of an entry strategy: the timing of entry, the magnitude and areas of investment and the basis for competitive emphasis. They report that very little empirical research has focused on relationships between entry strategy and eventual product performance.This study examines the relationship between certain aspects of market performance and various firms' entry strategies into a simulated market environment. The results were generally supportive of hypotheses that were generated from a review of the literature.