A Comparative Analysis of the New Product Development Practices Trends: U.S.A. versus Korean Companies

By Yun, Hwangbo; Yang, Seok Young | Academy of Entrepreneurship Journal, August 2013 | Go to article overview

A Comparative Analysis of the New Product Development Practices Trends: U.S.A. versus Korean Companies


Yun, Hwangbo, Yang, Seok Young, Academy of Entrepreneurship Journal


INTRODUCTION

These days the business and competitive environments have continued to change-sometimes in an evolutionary manner and sometimes in a much more revolutionary one. Competition has continued to be more globalized. Korean firms also meet the same situation as much as global first movers. They have to develop new product to be met to their clients who change so speedy in preference trends and also focus on new product development (NPD) management to survive in their environment.

The objective of research on firms' new product development (NPD) management practices is to assist managers in determining how to improve their own product development methods and practices (Barczak et al., 2009). This paper presents results, implications and recommendations for Korean NPD practice by comparing with results between Korean survey (2013) and PDMA's third survey (2003).

LITERATURE REVIEW

THE HISTORY OF TRACKING PRODUCT DEVELOPMENT PRACTICES

Issues in new product development practices were first investigated in the aggregate by Booz, Allen and Hamilton (BAH) in 1968, with the effort repeated in 1982. Their groundbreaking results were privately published in managerially-targeted brochures (BAH, 1968, 1982, Griffin, 1997). Booz, Allen and Hamilton's 1968 report, based on knowledge accrued from over 800 client assignments and data obtained from just over 49 firms, reported that almost 1/3 of all product development projects commercialized by firms were failures, with this rate essentially independent of industry (BAH, 1968, Griffin, 1997). This report delineated a common six-stage process for product development which they found most typically used by firms. Although aspects of the process were slightly modified by firm to cater to the needs of the industry, product type, and corporate culture, the basic process consists of exploration, screening, business analysis, development, testing, and commercialization. This study concluded that heavy attention should be focused on the first three stages of the process to minimize failure. The authors of the report also found that new products departments, product teams, and a new product committee were organizational forms which, singly or in combination, were found in companies where more consistent NPD success had been achieved (Griffin, 1997).

Booz, Allen and Hamilton's 1982 report is based on in-depth interviews with more than 150 NPD executives and survey responses from more than 700 US manufacturers (BAH, 1982, Griffin, 1997). From the analysis of the these data, and based on the recommendations from research on the use of strategic planning techniques to guide NPD by Crawford (Crawford, 1980), they recommended adding a seventh step to the front of the process delineated in their 1968 publication. This step has the NPD process beginning with identifying the new product strategy, then moving into exploration. In 1982, BAH claimed that 77% of the respondent firms used product strategy development as the first step in their product development process. They again found, in this round of research, that most firms used multiple organizational structure used tied to product-specific requirements. In addition, they found that since the previous study more management attention and financial resources were being given to the early steps in the NPD process (as they had previously recommended), firms were becoming more efficient at product development (spending a larger percentage of their NPD expenditures on successes rather than failures), and needed only seven new products ideas to generate one success in the marketplace. However, the average success rate from NPD had not improved, even with these operational improvements which had been made (Griffin, 1997).

Product Development Management Association (PDMA) has accepted the challenge of periodically providing information about the process and management changes in product development through sponsoring regularly-scheduled research on this topic which is both managerially interesting and academically rigorous. …

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