Accelerating New Product Development and Successful Market Introduction

Article excerpt

In today's markets, the speed of product introduction can spell the difference between success and failure. It is important to acquire market share and establish industry leadership. The company with the first product to the market can usually capture premium segments, build a strong name recognition, and control a large market share (Duffy & Kelly, 1989). This share can lead to significant economies that are useful in keeping rivals from entering the market.

Quick innovation and product introduction also increase a company's ability to respond to a fast changing marketplace. AT&T reduced the time required to develop a cordless telephone to meet global demand for the product. Similarly, Hewlett Packard cut its computer printer development cycle from 60 months down to 22, thus responding to the need for higher quality and speed in its printers. And, building on advances in electronics and growing market demands, Matsushta developed and introduced a washing machine that uses advances in fuzzy logic research in only one year. Similarly, Daewoo took only 15 months to develop and market its popular Leading Edge personal computer. European companies have also followed a similar approach. Recognizing the importance of this issue, The Conference Board--Europe has recently established The European Council on Corporate Strategy to promote exchange of ideas among executives on ways to accelerate new product development (Tank, 1991).

Speedy new product development (SNPD) and timely introduction have other crucial implications for successful competition in today's markets. Successive, quick new product or technology introductions help a company sustain its lead in a new market. This strategy enables the company to learn about its markets, make changes, and then position the revised products (Hamel & Prahalad, 1991). American, European, Japanese, and Korean companies have applied this approach successfully. In today's constantly changing markets, the rewards of product pioneering go to firms that are committed to introducing products fast and making changes or modifications as quickly.

Ironically, in some companies bureaucracy, rigid structures, and outdated managerial decision-making processes conspire against the speedy introduction of new products and technology (Kanter, 1989). To succeed, these companies must demolish old product design and development patterns by applying new ways of organizing. They must experiment with new philosophies of management.

This article focuses on the managerial practices that enhance SNPD and timely market introduction, first reviewing the role of SNPD in determining a company's competitive advantage, and next relating it to breakthrough and incremental innovation patterns. Third, the article identifies effective approaches for redesigning innovation and managerial decision-making processes to promote SNPD. These three approaches stress the importance of cohesive, cross-functional approaches to SNPD. Finally, the article concludes with several recommendations for leveraging the advantages of SNPD.

Speedy New Product Development and Competitive Advantage

SNPD can provide an enduring competitive advantage as highlighted in Figure 1. A company gains a competitive advantage when it develops and maintains superior skills and competencies over its rivals. General Electric gained considerable experience from transferring its "best practices" across different projects. As a result, GE responded more quickly to its markets than its rivals, helping to establish the company as one of the top two competitors in each of its 15 business fields (Tichy & Charan, 1989).

Advantages from SNPD fall into two categories: strategic and operational. Strategic advantages include: preventing competitors from entering a segment or flanking a company's products or technology models; giving the firm an opportunity to set the standard for a segment, especially when the product is radically new; creating an initial monopoly for a firm in a given market; and establishing a firm's name recognition. …