Winning Businesses in Product Development: The Critical Success Factors: A Formal New Product Process Isn't Enough-You Need a High-Quality Process, a Clear and Visible Strategy, Enough People and Money, and a Respectable R&D Budget. How Does Your Program Rate on These 10 Metrics?

Abstract

What are the critical success factors that underlie excellent new product performance? Our benchmarking study was designed to uncover the drivers of performance by studying business units within corporations, and linking their new product performance to various practices. We measured performance in different ways, including profitability, success rates and percentage sales by new products. Some of the business units studied boasted superb performance; others had a more mediocre new product track record. By benchmarking against both the good and the bad, we were able to obtain much greater insights into the factors and practices that really discriminate between the top and poorer performers. In short, we were able to link specific practices to high performance. The results of this study of 161 businesses are provocative. Here is a sample: * The strongest driver of profitability is the existence of a high-quality, rigorous new product process--one that emphasizes up-front homework, tough Go/Kill decision points, sharp early product definition, and flexibility. By contrast, merely having a formal new product process has no impact at all on performance! * The role of new product strategy in the business unit--whether or not there is one, what it contains and whether it is clearly communicated--has a pronounced effect on performance. * Resources--both people and money--are strongly tied to new product performance. RD but overall, these projects have relatively little impact on the firm, and so the business's total new product effort is judged to be mediocre. 2. Next, often important practices--for example, creating an innovative climate and culture--are not readily apparent or measurable at the product level. Consequently, they are missed in such success/failure studies. 3. A more subtle and final reason for omissions is the way the research is designed. When pairs of successes and failures are selected from each firm, company characteristics that may have a strong impact on success will be common to both projects. And so these company characteristics do not emerge in an analysis of factors that distinguish the successes. In recent years, benchmarking against other companies has become popular, and has in part overcome some of the deficiencies listed above. …

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