The purpose of this paper is to review the uct failure rates are still very high. Through this synthesis, a number omies of scale. Our fo- product offerings to the demands of fairly narrowly cus is on how the firm may increase the likelihood defined customer groups, thereby out-focusing of new product success, emphasizing the manage- their competitors.
A prime example is Nike, which ment of projects once the ideas have been pro- produces over variants of its popular athletic posed. Our objec- market for each variant of a product declines be- tive is to provide a working guide for managers to cause of the rise of niche marketing. Minimizing time to market—or cycle time—is nec- essary for a number of reasons.
This phenomenon is particularly vivid in back to the globalization of markets, and dynamic industries such as electronics, where life the fragmentation of markets into ever cycles of personal computers and semiconductors can be twelve months. Indeed, companies that are smaller niches. The result has been embody new technologies.
As such, they are better a substantial increase in foreign competition. The positioned to capture first mover advantages.
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As a tial competitors, preempt scarce assets, and create result, new product development has become cen- switching costs that tie consumers to the compa- tral to achieving meaningful differentiation. Prod- ny. Schumpeter's "gale of creative destruction," blow- In many industries, issues of dominant design ing at full force, fosters shorter product life cycles are paramount.
8 Elements Of A Robust Product Launch Strategy
Different kets have also fragmented into smaller niches. Companies with reduced cycle time pany constructs its new product development port- have a greater probability of establishing their folio. Strategic Issue 2 is the organizational context design as the dominant standard. Strategic Companies with short cycle times can continu- Issue 3 involves the construction and use of teams, ally upgrade their products, incorporating state of and Strategic Issue 4 addresses the use of tools for the art technology when it becomes available.
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This improving the NPD process. It also enables them to offer a wider range of TechnoJogy Strategy new products to better serve niches. A crucial step in optimizing the NPD process is to Some researchers have pointed out problems ensure that the company has a clear and consis- with rushing new products to market. For example, tent technology strategy. The purpose of technol- Dhebar points out that rapid product introductions ogy strategy is to identify, develop, and nurture may cause adverse consumer reactions; consum- those technologies that will be crucial for the long ers may regret past purchases and be wary of new run competitive position of the company.
These purchases for fear of obsolescence. A coherent technological ment may come at the expense of quality. For a new product to achieve significant and rapid market penetration, it must match such customer Many companies lack a well-articulated tech- requirements as new features, superior quality, nology strategy. A northwestern company that and attractive pricing. Despite the obvious impor- recently implemented a project tracking system tance of this imperative, numerous studies have found to its dismay that there were many more documented the lack of fit between new product projects underway than the company could sup- attributes and customer requirements as a major port.
As one engineer put it, "We never saw a cause of new product failure. Furthermore, because development re- can be attributed to the failure of Lotus for sources were stretched too thin, projects were Windows to satisfy customer requirements with delayed and several had been abandoned.
8 Elements Of A Robust Product Launch Strategy
Similarly, Philips' CD-Interactive home enter- months in development had stretched to three tainment system failed because of a lack of under- and half years, and by the time the product was standing of its customers' needs. The product was released, it was no longer clear that a market overly complex and expensive, and required al- existed.
Optimizing the New Product Development Strategic Imperative 1: Articulate the company's Process strategic intent Successful NPD requires attention to four strategic An ambitious strategic intent should create a gap issues see Figure 1. Articulate the company's Issue 1: strategic intent Technology Strategy 2. Use strategic alliances to gain rapid access to enabling technologies 4.
Choose and monitor alliance partners very carefully 5. Include strategic implications Issue 2: of technology development in Organizational Context the project selection and screening process 6. Use a parallel development process 7.
Include a diverse range of functions in project teams 9. Involve customers and suppliers in the development process. Issue 3: Match team structure to Teams project type Match team leader attributes to type of team Establish mission, charter, and contract book for project team Issue 4: Once the strategic intent has been articulated, the New product development must be managed as a company is able to identify the resources and ca- balanced portfolio of projects at different stages in pabilities required to close the gap between intent development.
This includes identification of any similar to that depicted in Figure 2 to aid this pro- technological gap and enables the company to cess. Over time, a particular ogies and incorporate them into the company's technology may migrate through these different new products. Bevolutionizing Product Developmenf. New York: Free Press commercial development projects and are necessary tomer requirements and new product attributes to develop cutting edge strategic technologies.
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Platform projects typically of- ation and screening mechanisms, 4 the develop- fer fundamental improvements in the cost, quality, ment process scheme used by the firm sequential and performance of a technology over preceding process versus partly parallel process , and 5 the generations. Derivative projects involve incremental involvement of executive champions. A platform project is designed to serve a core group of consum- Strategic Imperative 3: Use strategic alliances to ers, whereas derivative projects represent modifica- gain rapid access to enabling technologies tions of the basic platform design to appeal to differ- ent niches within that core group.
Consider a map and then allocate resources accordingly. It is company that has developed a body of technolog- important that the mix of projects represented on ical knowledge with commercial possibilities, such a map be consistent both with the company's such as the pen-based computer company, GO resources, and with its expression of strategic intent. To transform this knowledge into a viable Along with a coherent technology strategy, a product, the company had to assemble a set of company must establish an organizational envi- assets that included complementary technological ronment that enables it to optimize its likelihood of knowledge, market knowledge, manufacturing new product development success.
The product was also too heavy, slow, and too expensive. The company Strategic Imperative 5: Include strategic spent several years improving the product and try- implications of technology development in the ing to figure out the appropriate target markets, pzoject selection and scieening process but eventually ran out of capital and failed.
Methods used to evaluate and choose investment It is not unusual for a company to lack some of projects range from informal to highly structured, the complementary assets required to transform a and from entirely qualitative to strictly quantita- body of technological knowledge into a commer- tive. Quantitative methods such as net present cial product. The company can develop such as- value NPV techniques provide concrete financial sets internally, at the expense of cycle time.
Alter- estimates that facilitate strategic planning and natively, the company might gain rapid access to trade-off decisions.
However, NPV may fail to cap- important complementary assets by entering into ture the strategic importance of the investment strategic alliances. By the time negative NPV may prevent a company from taking Microsoft realized the importance of offering inter- advantage of profitable future projects that build net utilities such as a web server and a web on the first development effort.
For instance, NPV browser, it had lost considerable ground to analysis may value platform projects or derivative Netscape Communications Corp. To are more likely to result in immediate revenues rapidly deploy Internet Explorer and increase its from product sales. However, a firm that forgoes exposure, Microsoft set up an exclusive contract basic research or development of breakthrough with AOL, the largest online service provider in the projects may quickly find itself behind the technol- US.
Microsoft's web browser. If Microsoft had taken the Some research has suggested that these prob- time to build a better online service itself, it might lems might be addressed by treating new product have never been able to catch up with the market development decisions as real options. It is the technology before a firm can determine if the also possible that an alliance partner will exploit technology will be successful. Furthermore, while an alliance, expropriating knowledge while giving stock option holders can wait and exercise their little in return. Furthermore, since managers can option once its value is clear, a firm considering monitor and effectively manage only a limited new product development may not have this lux- number of alliances, the firm's effectiveness will ury.
By the time it becomes clear that the technol- decline with the number of alliances to which it is ogy will be profitable, the firm may be locked out of committed. This raises not only the possibility of the market by a competitor's dominant standard. These risks can be minimized if the com- investment decision, it does provide a useful per- pany undertakes a detailed search of potential spective for evaluating a firm's strategic alterna- partners before entering an alliance, establishes tives.
While work, or kill the project.
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