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Drriving Ne
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Robert G.
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Complim
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BENCHMARKING BEST NPD PRACTICES–III
Driving new-product projects to market success
is the focus of this third in a three-part series.
Robert G. Cooper, Scott J. Edgett and Elko J. Kleinschmidt
OVERVIEW: The new product process by which firms
drive new product projects from inception through to
commercialization, and the methods, practices and
tactics embedded within that process, are the focus of
this final of three articles reporting the results of the
recent American Productivity and Quality Center study
on performance and best practices in new product development. Many of the decisive activities that were identified turn out to be poorly executed, while a handful of
tasks emerge as pivotal to NPD performance. Most firms
now employ a systematic, formal, new product process,
but the nature of the process and the way it is implemented are the true keys to success. For instance, delivering a differentiated, superior product is one practice
that strongly separates the Best and Worst Performers.
Market information, up-front homework, stable product
definition, and voice-of-customer research are found to
be relatively weak practices in businesses’ new product
efforts, but all strongly discriminate between the Best
and Worst Performers.
Success in new product development depends on the
tactics that project teams employ to drive new product
projects from the idea stage through to launch. These
tactics are the focus of this final article of our three-part
report on the results of a benchmarking study of NPD
practices in 105 U.S. businesses.
Robert Cooper is president of the Product Development
Institute Inc., in Ancaster, Ontario, Canada, and
professor of marketing at McMaster University’s M. G.
de Groote School of Business, Hamilton, Ontario. He is
also Crawford Fellow of the Product Development and
Management Association, and ISBM Distinguished
Research Fellow at Penn State University’s Smeal
College of Business Administration. The developer of the
Stage-Gate威 new product process, his latest book (coauthored with Scott Edgett and Elko Kleinschmidt) is
Portfolio Management for New Products, 2nd edition
(Perseus Books, Cambridge, MA, 2001).
[email protected]; www.prod-dev.com
Scott Edgett is CEO and co-founder of the Product
Development Institute. A specialist in new product devel-
Part I reported NPD performance results of these businesses, and identified a group of Best Performing businesses, which become the “benchmark businesses.” A
large number of practices were considered, and those that
separated the Best from Worst Performing businesses
were identified as “best practices” (see RTM, Jan.–Feb.
2004, pp. 31–44).
Part II of the series moved to strategic issues, namely the
role and elements of a product innovation strategy for the
business, resource sufficiency and resource allocation
for NPD, and portfolio management (see RTM, May–
June 2004, pp. 50–59).
In this final Part III, we focus on tactics and the following
issues:
• Quality of execution of key activities—from idea generation through to market launch—and their impact on
performance.
• Firms’ new product processes and their components.
• Best practices built into this NPD process.
• The impact of voice-of-customer research, solid
market information, product advantage, and getting the
product definition nailed down early.
opment and portfolio management, he has consulted and
written extensively in the field with over 50 published
articles and four books, including co-authoring Portfolio
Management for New Products.
[email protected]; www.prod-dev.com
Elko Kleinschmidt is professor of marketing and international business at McMaster University’s M. G. de
Groote School of Business. He is an authority on the
process of new product development, portfolio management of new products, and success factors for
new product development programs. He has published
over 60 publications and co-authored Portfolio Management for New Products.
[email protected]
In order to identify best practices, we probe what distinguishes best performing businesses, and what they do
differently from the rest. Best Performers are those businesses that assessed their NPD effort as profitable,
meeting objectives, successful versus competitors, time
efficient, and opening up new markets, technologies and
product categories.
Performance Drivers: Distinguishing Best
from Worst
A systematic process
A new product process that guides projects from idea to
launch is a well-recognized key to NPD success (1). By
“new product process,” we mean more than just a flowchart; the term includes all process elements: the stages,
stage activities, gates, deliverables, and gate criteria that
constitute a well-defined new product process. Having
such a process is the strongest practice observed in our
sample of businesses:
• 73.7 percent of businesses claim to have such an NPD
process, with 66.7 percent indicating that it is welldocumented and visible.
• 72.4 percent have defined stages in their NPD process,
complete with activities spelled out for each stage.
• 73.8 percent have built gates into their NPD process,
and 46.7 percent have well-defined Go/Kill gate criteria.
• 71.0 percent have an explicit menu of deliverables for
gates.
• 71.9 percent have designated gatekeepers who make
the Go/Kill decisions.
• 52.4 percent of businesses really make use of their
NPD process, but only 43.8 percent report that their
process is an enabling one.
• 65.2 percent view their NPD process as flexible,
adaptable and scalable.
• 41 percent have put a Process Manager in place to
oversee the process.
Not surprisingly, all five of the best-practices companies
singled out for site visits have in place a well-designed
NPD process, such as Stage-Gate威 (2). An outline of
each company’s process is provided in the full American
Productivity and Quality Center report (3). Each
company indicated that a solid, well-defined process
with clearly defined activities in each stage and a welldefined decision framework for the gates (decision
points) was a critical best practice. For example:
• ExxonMobil Chemical—“This process, a companywide stage-gate framework, has become institutionalized
and is ingrained in the language and culture of the
company.”
Conducting
post-launch reviews
is a standout best
practice.
• Bausch & Lomb—“B&L’s new product development
process, called the product development management
process (PDMP), is simple, easy to follow, and built on
internal and external successes and best practices. The
NPD team has built a process with stages/phases and
gates that is practical, but not restrictive.”
• Air Products and Chemicals best practice.—“An integrated work process for technology innovation involves
integration along two axes: business and technology, and
development pipeline.”
The results of such processes have been impressive. For
example, Bausch & Lomb’s management observed, “A
contact lens project would typically have taken three
years before the PDMP was implemented. Today we are
looking at 18 months to two years. The payback is real.”
Conclusions
Putting a formal NPD process such as Stage-Gate威 in
place is clearly a strong practice among better performers. But merely having this NPD process does not
separate the Best from the Worst Performers, because
almost every business has such a process. Rather it is how
the process and its activities and recommended practices
are implemented that makes the difference. As we shall
see next, in spite of the fact that most businesses do have
a formal NPD process, quality of execution of the activities within that process varies considerably between Best
and Worst Performers—some companies really do
practice their process, others do not!
Quality of execution
How well NPD projects are executed proves to be pivotal
to performance. Figure 1 shows the quality-of-execution
results for 18 commonly-cited activities in NPD projects.
Note that most of the 18 activities strongly differentiate
between the Best and Worst Performing businesses; the
eight activities with the greatest impact on performance
are (in descending order, and based on correlations with
a number of performance metrics):
1. Conducting a Post-Launch Review.—The PLR is a
weak area overall, with only 22.1 percent of businesses
conducting a solid and formal post-launch review.
However, twice as many Best Performing businesses
undertake this PLR very well; they review results
achieved versus targets and hold the project team
accountable; they learn from their mistakes and strive to
do the next project better; and they formally terminate
the project while Worst Performers do not. This is a
standout best practice.
2. Value assessment.—This is the weakest area overall;
only 16.5 percent of businesses do a solid assessment of
the project’s value to the business, while 28.2 percent
claim they do this very poorly! (not shown). Best Performers are nine times more likely than Worst Performers
to undertake a solid assessment of the value of the
product to the business.
3. Test market or trial sell to a limited set of
customers.—Again a weak area, especially for Worst
Performers.
How the Research Was Conducted
The research reported in this series was undertaken by
the APQC (American Productivity and Quality Center)
with the authors as subject matter experts. The study
used the APQC’s standard methodology, including both
qualitative and quantitative methods.
Qualitative: Site visits were organized with five businesses identified as having best practices in new product
development. The APQC research team—consisting of
the subject matter experts, a number of sponsor
companies and APQC personnel—conducted the
meetings. The five companies visited were:
• Air Products and Chemicals Inc.
• Bausch & Lomb
• EXFO Electro-Optical Engineering Inc.
• ExxonMobil Chemical Company
• Kraft Foods Inc.
Quantitative: A detailed quantitative questionnaire was
also constructed. A total of 113 measures were used to
capture the existence and proficiency of NPD practices
and approaches within businesses, as well as questions
to gauge businesses’ new product performance.
The quantitative sample: 105 business units responded
to the detailed quantitative questionnaire:
• Businesses are in a number of different industries,
with 51 percent in the manufacturing sector.
• The size of the businesses—average sales: $2.5 billion
(median: $400 million); average employees: 4,711
(median: 1,500).
• R&D spending—average: $58.4 million per business
or 5.2 percent of sales; of this, the proportion going to
NPD is 52.3 percent on average, for a NPD spending rate
of 2.89 percent of sales.—R.G.C., S.J.E. and E.J.K.
4. Concept testing (to determine the customer/user
reaction to the proposed new product and gauging
purchase intent before Development begins).—This is
yet another weak area, with only 27 percent of businesses
undertaking proficient concept testing, and 32.1 percent
of Best Performers doing well here.
5. Idea generation.—Another area needing improvement, with 25 percent of businesses claiming that they do
a very poor job here; and only 19 percent are proficient.
6. Customer tests of product under real-life
conditions.—A fairly strong activity overall, with
51.5 percent of businesses doing it well. Best Performers
excel (70.4 percent are proficient), while Worst Performers fare poorly.
7. Detailed market study/research, or Voice of
Customer.—One of the weakest areas (only 18.3 percent
of businesses fare well here). Best Performers are five
times more likely than Worst Performers to handle this
activity proficiently.
8. Pre-Launch business analysis.—Best Performers
also excel here, with 51.9 percent undertaking a proficient pre-launch analysis, versus 16.0 percent for Worst
Performers.
What we witness is that the most important activities in
the NPD process—those that separate the Best from the
Worst Performers—are also those activities that, on
average, are executed most poorly! This is solid evidence
of a quality-of-execution crisis in NPD, and that too
many businesses are under-emphasizing decisive activities.
Conclusions
First, quality of execution remains an elusive goal, at
least for many of the activities that comprise the new
product process, and for the overwhelming proportion
of businesses that rated themselves low. Note how
few businesses proficiently execute many of the key
activities in Figure 1! Senior managements must redouble their efforts to demand and promote higher
quality of execution in NPD projects from idea through
to launch.
Second, the business and marketing activities are far
weaker than the technical ones. For example, of the eight
exceptionally weak activities in Figures 1A and B, four
are marketing, business or customer related. By contrast,
the technical work appears much stronger: the three bestrated activities are the technical development of the
product, in-house product testing, and production startup. Clearly there are major deficiencies on one side of the
field in the new product arena.
Third, activities are generally more poorly executed in
the front half of the project. Only 24 percent of busi-
Figure 1A.—Quality of execution for key front-end NPD activities.
Figure 1B.—Quality of execution for key back-end NPD activities.
nesses, on average, execute well for the front-end of
projects (those activities listed in Figure 1A. By contrast,
42.3 percent are proficient for the back-end of the process
(activities in Figure 1B). Indeed, all three of the top-rated
activities occur in the back half of the project, while five of
the eight worst-rated occur in the front half. More time and
attention must be devoted to the front-end of NPD projects.
Finally and most important, quality of execution is
critical to NPD success, across the entire range of activities from Idea Generation to Post Launch Review.
The most decisive activities listed above, however, are
among the most poorly executed.
The message is clear: managements must get back to
basics in NPD, and begin to emphasize quality-ofexecution—doing it right the first time. Many of the root
causes of poor quality of execution have been highlighted in Parts I and II of this article series: a lack of
resources, too many projects, and not enough time or
resources to do a quality job. Note also that a disciplined
adherence to an NPD process should yield better quality
of execution, because best practices, quality-ofexecution standards and prescribed deliverables are laid
out in such world-class NPD processes.
Best practices built into the NPD process
Four potential best practices, that are part of the new
product process were initially identified in a focus group
discussion with those firms sponsoring and overseeing
the research. These are areas where the sponsor firms
were particularly weak, yet it was hypothesized that they
might prove important to success. Thus, they were
included in the research, and all four proved to be
decisive to performance. These are, in descending order
of impact (Figure 2):
1. Emphasis on pre-Development homework—The
front end of the NPD process has been identified as the
most problematic phase (4). It is here that the new
product idea is fleshed out into a clear product definition;
that the magnitude of the opportunity is assessed and the
business case constructed; and the action plan for the
project is mapped. Solid up-front homework is clearly a
best practice: 62.1 percent of Best Performers place considerable emphasis on this homework phase, while only
38.5 percent of Worst Performers do.
2. Performance measurement—The use of metrics to
gauge how projects perform—success, profitability,
NPV, etc.—is a major weakness in NPD processes, with
only 30 percent of businesses having such metrics; most
firms don’t keep score when it comes to new product
projects! While 44.8 percent of Best Performers keep
score only 15.4 percent of the Worst do.
“People are mobilized by what is measured,” claims the
VP of R&D at EXFO Engineering, a small but bestpractice company. NPD metrics, however, are often not
well instituted in many businesses. Not so for the benchmarked best-in-class companies. For example:
• ExxonMobil conducts two post-launch reviews that
capture metrics. The first is 1–3 months after launch and
includes comparisons of the project cost and timing
targets with actual performance. The second occurs 3–
12 months later and captures early commercial results,
such as market receptivity and manufacturing and technology performance.
• EXFO Engineering measures time-to-volume, project
cost, earned value, and ROI of each completed project.
3. Metrics on how well the NPD process is working—
These metrics focus on whether or not the NPD process is
working well—whether projects are following the
process, effective gates are being held, etc. These metrics
are also a major weakness in NPD processes, with
34.6 percent of businesses scoring poorly, and only
26.9 percent using such metrics effectively. Again, Best
Performers tend to have such metrics in place three times
as often as Worst Performers.
Air Products, for example, has a quarterly metrics review
for the process. The metrics highlight projects performing well, projects behind schedule, and potential
impacts—a broad view of the process.
4. Tough and demanding Go/No-Go decision points,
where projects really do get killed—Some businesses
Figure 2.—Four NPD process best practices decisive to performance.
claim to have gates in their NPD processes, but a closer
inspection reveals that these are largely “project review
points” with no tough decisions, with the result that
projects are rarely killed. For 18.1 percent of the businesses, this lack of rigor at the gates is the case; but onethird of businesses have tough, demanding gates where
projects really are killed. Although Best Performers fare
much better here, with 51.7 percent having tough Go/Kill
gates, this is still a relatively weak area.
Conclusions
These best practices, included at the suggestion of
sponsor firms, are missing in a great many companies.
They are embraced much more by the Best Performers,
however. Thus, when implementing or overhauling your
new product process, make certain to emulate the Best
Performers:
• Put metrics in place to gauge both how successful or
profitable your projects are (as part of a Post-Launch
Review), and how well your NPD process is working.
• Build in tough Go/Kill decision points or gates, where
bad projects really do get killed.
Both of the above are very weak areas, yet strongly
separate the Best from Worst Performers.
• Emphasize the up-front or homework phase in your
NPD process—solid homework is a common practice
among the Best Performers.
Spending on up-front homework
A frequently-asked question is, How much homework is
enough? How much should be spent on the predevelopment or homework stages of the project—on
those activities that occur in its first few phases? The
spending breakdown by the sample of businesses
provides a guide (Figure 3):
• On average, 12.1 percent of the project’s total costs—
labor, material, equipment—is spent on the up-front,
homework, stages before Development begins.
• But this 12.1 percent is skewed by the 17.9 percent of
businesses that spend more than 20 percent of the project
cost on the homework stages!
• By contrast, 59 percent spend less than 10 percent on
up-front homework, and one-third spend only 5 percent
or less.
Does spending more on the early phases pay off? Note
that the average business spends 12.1 percent of the
project’s total costs on the up-front homework—a fairly
limited amount of effort. The Worst Performers spend
10.7 percent (see Figure 3), Best Performers spend
13.4 percent—not a large amount, but 25 percent more
than the Worst.
Conclusions
Spending more on up-front homework appears to be a
better practice. Still, we are somewhat surprised by:
Figure 3.—Spending on the homework, or, pre-development phase.
• How little the amount is overall (12.1 percent of the
project cost, on average); and
• The fact that there is only 25 percent difference
between the Worst and Best performers,
Yet Best Performers do a much better job on all eight of
the up-front homework activities listed in Figure 1A, and
in the next section, we see that they do a superior job on
voice-of-customer work and get much better market
information. The conclusion is that it is the nature and
quality of the work they do in the early stages (and not so
much the money and time spent) that matters. Most
important, Best Performers place far more emphasis on
the business/marketing side of projects early on; thus,
instead of moving too far ahead on the technical side,
they adopt a more balanced approach—balancing
technical assessment activities with market information
activities in the early stages of the project.
A possible solution: Air Products recognizes how
important the front-end activities are; thus, it allows a
person to work on concept development (20–30 hours of
budgeted time) and to be dedicated to only one idea at a
time. This ensures that the idea gets the necessary focus,
and that the required front-end activities receive
attention and effort.
Voice-of-Customer information
Countless studies have cited the need for better voice-ofcustomer information as one key to NPD success (5).
Thus, voice-of-customer studies are proposed as a best
practice, and were investigated in this study.
Voice-of-customer and market input is one of the
strongest discriminators between the Best and Worst
Performing businesses (Figure 4). Thus, given their
impact on performance, all five items below must be considered “best practices”:
1. Market and buyer-behavior studies are a valuable
source of information for planning the market launch.—
Such studies are noticeable for their absence, with only
17.3 percent of businesses conducting such market
studies. This is the second weakest area among the five in
Figure 4, but a very strong best practice and a key discriminator between the Best and Worst Performers.
2. Market research as a tool to help define the product—
its requirements, features, functionality of, and high-level
specs—is a key recommendation of studies of new
product success and failure. Again, we witness deficiencies here, with only 11.4 percent of businesses claiming
that their product definitions are truly based on market
research of the customer or user. Best Performers,
however, generally do employ such market research to
define the product, and this activity separates the Best
from the Worst Performers in a strong way.
Voice-of-customer
and market input is
one of the strongest
discriminators
between Best and
Worst performers.
3. The customer or user ought to be an integral part of
the Development process.—Each iteration of the product
should be tested with the customer as it is being
developed. “Spiral development” or a series of “buildand-test” iterations is the proposed scheme; for example,
rapid prototypes-and-tests. But only 23.8 percent of businesses report that the project team constantly interfaces
with key users of a new product during the entire Development stage to validate product acceptance. This is also
a strong activity in terms of separating the Best from
Worst Performers.
4. Identification of customers’ or users’ real or unarticulated needs and their problems is considered fundamental to voice-of-customer research, and should be a
key input to product design.—Only 33.4 percent of businesses, however, work closely with customers. This is a
most important activity, and we rate the identification of
customers’ real needs via voice-of-customer research as
a strong best practice, with Best Performers embracing
this method more than the four other approaches in
Figure 4.
5. Working with highly innovative users or customers—
This is yet another tool employed by voice-of-customer
practitioners. The argument is that if one works with
average customers, one gets average ideas, but innovative customers are likely to be the source of much more
innovative ideas (6). This is a relatively weak practice,
with only 33.4 percent of businesses indicating strengths
here. Again, this is a critical practice: Best Performers
generally use this approach, and it helps to discriminate
between the Best and Worst Performers.
Conclusions
This study confirms what many voice-of-customer
advocates have been arguing for years: voice-ofcustomer research and market inputs are vital to a successful NPD effort. Not only is this one of the strongest
factors to separate Best from Worst Performers, it is also
Figure 4.—Voice of customer and market input—impact on performance.
Figure 5.—Quality of market information—impact on performance.
an area where major deficiencies were identified.
Seeking market inputs and building voice-of-customer
into your NPD process must become an area of top
priority if stellar results are the goal.
Quality of market information on entering development
Much has been written about the need for better market
information in NPD (7), while other studies show that the
lack of solid market and customer information is a major
cause of new product failure (8). Thus, the quality of
market information is an area of focus of the current
study—just how good or solid is that market data?
Seven different types of market information were investigated, ranging from market size and market potential
data to knowledge about customer needs in a new
product (Figure 5). On average, market information
across the seven types is rated as poor-to-moderate.
Additionally, there are major differences among the
businesses in terms of quality of market information,
with a sizable majority making decisions based on
limited market information.
7. Expected sales revenue from the new product.—also
moderately-rated.
Some types of market information appear vital to NPD
performance: Best Performing businesses seek and
obtain this vital market information while Poor Performers do not (Figure 5). In rank order, the key market information is:
Conclusions
1. Information on customer needs, wants and
problems—While only 33.4 percent of businesses gain
good information here, this is a key discriminator
between Best and Worst performers; it is also an area
where the Best Performers are particularly strong.
For example: ExxonMobil reports that customer
alliances are an effective vehicle for voice-of-customer
research in order to gain insights into customer needs.
With these alliances, regular exchanges and face-to-face
meetings occur. And EXFO Engineering views seeking
information on customer needs, wants and problems to
be so important that 20–25 percent of product and
marketing managers’ time is spent visiting clients to seek
insights.
2. Competitive information (products, pricing and
strategies)—This is the strongest area across all businesses, but still only 38.1 percent of businesses gain solid
information here. Best Performers rate very high on this
information area, and solid competitive information also
separates the Best from the Worst Performers.
3. Information on the customer’s reaction to the
proposed product (e.g., degree of liking or purchase
intent)—This is a weak area (only 23.8 percent of businesses obtain good information here), but a strong discriminator between Best and Worst Performers in Figure
5. Seeking such information is a clear best practice.
For example: Kraft Foods seeks customer input as early
as possible in its NPD process to gain quick, initial
reactions to the new product concept, and to identify
ways to improve the concept. The company conducts
qualitative research using early prototypes so that
consumers can experience how the product might look or
taste.
4. Information on customer price sensitivity for the new
product—This is another weak area, with only
20.0 percent of businesses proficient here. It is also a discriminator between Best and Worst; but even the Best
Performers are weak, although much better than the
Worst.
5. Data on expected non-revenue performance of the
product—This is a very weak area, but another strong
discriminator between Best and Worst businesses.
6. Data on market size and potential.—a moderatelyrated area.
The results here parallel those in previous sections:
market information is lacking in many areas in NPD. The
only information areas that are rated moderatelyproficient are quantitative information on market size
and expected sales, and competitive information. But
qualitative information on customer needs and wants,
price sensitivity and reaction to the proposed product are
quite weak. These weaknesses are closely linked to the
lack of voice-of-customer work identified previously.
Sharp, early product definition
The need for early, fact-based definition of the product
prior to moving into the Development stage has been
well documented in previous studies of new product performance (9). But have managements heeded the
message? The results (Figure 6) show that some businesses do quite well on some elements of product definition before Development begins; in a considerable
minority of businesses, however, this product definition
needs to be sharpened in major ways. In order of impact,
they are:
1. The benefits to be delivered to the customer—the
value proposition—clearly defined—Only 37.1 percent
of businesses spell out the value proposition well before
Development starts. Best Performers excel here, while
only 15.4 percent of Worst Performers manage to define
the product benefits.
2. The target market defined—the segment at which the
product will be targeted—“From market segmentation,
all else flows” claim the marketing gurus; thus, an
important element of product definition is to specify the
target market or intended user for the new product. Surprisingly, this element of product definition is quite
deficient, with only 30.5 percent of businesses defining
the target market before Development begins.
3. The positioning strategy defined—how the product
will be positioned in the eyes of the customers/users
versus competitive products.—Again there are weaknesses, with only 36.5 percent of businesses doing a solid
job on defining the positioning strategy, while
65.5 percent of Best Performers do well.
4. The product concept defined—what the product will
be and do—While the majority of Best Performers
define the product concept well, only 15.4 percent of the
Worst do.
5. Maintaining stable product specifications throughout
the Development stage—“Unstable specs” and “scope
creep” are phrases often used to describe problems
Figure 6.—Product definition—impact on performance.
Figure 7.—Product advantage—impact on performance.
project teams face that lead to longer time to market. The
businesses studied generally fail in terms of stable
products specs, with 22.5 percent scoring poorly here
and only 30.0 percent rating well. Almost half of the Best
Performers do achieve stable specs—a clear best
practice.
6. The product’s features, requirements and specifications defined—The technical side of the product defini-
tion is undertaken somewhat better, with 48.6 percent of
businesses doing an excellent job specifying the product
requirements and features before Development starts.
7. Using a “teaming contract” between the project team
and management to define the product, the project and
expectations before the Development phase begins—
This too is considered a better practice by some businesses in an attempt to bring stability and rigor to the
product and project definition. But 40 percent of businesses
have no such teaming contract and only 30.8 percent do;
however, 44.8 percent of Best Performers do.
The concept of a “teaming contract” is one that is gaining
increasing popularity. For example, 3M relies on a “team
charter” to gain agreement between project team
members and their executives, while Bausch & Lomb
uses a “project strategic decision package.” Once signed,
any subsequent changes must be approved by all team
members and management who have signed the original
agreement. This contract, coupled with the essential signatures, prevents unnecessary scope creep in the project.
Conclusions
Overall, product definition and its elements remain
weak facets of NPD practices. Not only are businesses
failing to get the necessary market and voice-ofcustomer inputs, but perhaps as a result, the product is
not well defined before Development begins. The target
market, product concept, value proposition, and positioning strategy are all moderately weak elements of
product definition. Only the technical facet—the
technical specs and requirements—scores well. Furthermore, the stability of these specifications remains a
serious challenge, with many businesses faring poorly.
The use of teaming contracts to nail down this product
definition may be a partial solution, but it is not practiced
widely among the businesses studied.
Managements in best-practice companies demand and
get sharp, early product definition prior to the commencement of the Development stage. This definition
includes some or all of the seven elements listed in Figure
6, and is typically a deliverable as part of the project
team’s Business Case. Moreover, the product definition
is fact-based and signed off on by all members of the
project team. No project should enter Development
without this definition in place.
Competitive and product advantage
One of the strongest drivers of NPD performance found
in numerous studies is the product itself—developing a
differentiated product with a superior value proposition.
The current study investigates some of the dimensions of
product advantage and how businesses fare on these
(Figure 7). In order of impact, they are:
1. Offers customers/users main benefits that are
important to them—This is the strongest element of competitive advantage, with 52.4 percent of businesses
claiming that their products do indeed deliver important
benefits to customers. It is also a strong discriminator
between Best and Worst Performers, with 86.2 percent of
Best Performers and only 23.1 percent of Worst
providing important product benefits.
Emphasize product
advantage and
superiority in your
NPD process.
2. Offers customers/users new and unique benefits (not
found in competitive products)—Businesses perform
moderately well here, on average, with 34.3 percent of
businesses claiming strengths in terms of new/unique
benefits in their products. Best Performers excel when
compared to Worst Performers.
3. Better value for money for the customer—a superior
value proposition—The result is again similar, with
44.1 percent of businesses claiming proficiency in terms
of value propositions offered and Best Performers again
scoring well.
One best practice observed is the use of a specific gate
deliverable to ensure that the project team has indeed
created a winning product concept: The project team
must provide the gatekeepers with a demonstrated confirmation from potential customers that the product will
deliver a true value to them. The team chooses the most
appropriate approach to demonstrate this value. The best
practice is not the techniques used, but rather the discipline of the procedure. This approach has also been
credited with creating better product definitions, as they
are now fact-based and verified by the target user.
4. Superior to competitors’ products in terms of meeting
customer needs—Businesses perform moderately well
here, with 58.6 percent of Best Performers and
38.8 percent of all businesses developing superior
products.
5. Offering product with superior quality to competitive
products (however the customer measures quality)—
Again, businesses perform moderately well here, with
the majority of Best Performers and 40.6 percent of all
businesses scoring well on this dimension.
Conclusions
Overall, the sample of businesses appear to have internalized the message from previous studies of NPD
success factors: that product advantage is critical to profitability and success. Note that businesses, on average,
fare moderately well across the five dimensions in Figure
7. The only disconcerting evidence is that, with the
exception of the first item—offering important benefits
to customer—still less than 50 percent of businesses
The Quest for Superior New Product Results:
Series Summary
Discovering the secret to better new product performance—
greater success rates, faster to market, and higher-value
projects—remains an elusive goal for too many businesses.
This three-part series has shed light on over 100 practices—
ranging from ways to improve the climate for innovation to
focusing on key activities in the new product process. Each of
the items that we identify as a “best practice” was common to
the top performing businesses and most often separated the
Best Performers from the rest in a strong way. These best
practices boil down to four major themes—themes that
underpin superior NPD performance:
project teams, establish the right climate and culture for innovation in your business, and define the appropriate role for an
engaged senior management team.
3. Process.—Implement a world-class, systematic, new
product process to drive new product projects from idea
through to launch, quickly and effectively. Make sure that
your process incorporates the best practices outlined in the
three articles, and then ensure that it is really implemented
and executed!
4. Resources:—Put the necessary resources in place—from
all functional areas. Then allocate these resources via an
effective portfolio management system to the right innova1. Strategy.—Have an articulated product innovation and tion areas and to the right projects.
technology strategy for your business. This strategy should
Each theme is elaborated on in the three articles. We
be closely linked to your overall business objectives and spell
recommend that you review them, note those areas where
out your NPD goals, delineate your strategic arenas or areas
your business is weak, and implement those practices that are
of focus, define strategic buckets and resources, and lay out
right for you. By emulating the Best Performers’ practices,
your new product roadmap or major initiatives.
our hope is that you will approach their performance
2. Focus on people.—Organize effective cross-functional results.—R.G.C., S.J.E. and E.J.K.
score exceptionally well; however, very few businesses
score exceptionally poorly.
Product and competitive advantage—delivering new
products with unique customer benefits, a superior value
proposition (better value for money), with important
customer benefits, better quality, and meeting customer
needs better—is one of the top best practices we
uncovered. There are two main recommendations here:
䡲 First, emphasize product advantage and superiority in
your NPD process. For example, the items in Figure 7
should become part of your check-list of criteria at
Go/Kill decision points; they should be key topics of discussion at project reviews; and senior management
should challenge project teams when they fail to deliver
a product definition that scores well on the items in
Figure 7.
䡲 Next, arriving at unique, superior value products is not
easy. Occasionally it is the result of inspiration or a technological breakthrough—an “aha.” But most often it
comes from tough work, including some of the activities
and tasks we have highlighted above: undertaking
excellent voice-of-customer research to correctly
identify needs, problems, benefits sought, and functionality desired; building solid market information into the
NPD process and projects; and executing the up-front
homework activities superbly. This work does not
guarantee product superiority, but it provides a solid
foundation.
Making the NPD Process Work
The results outlined in this third-of-the-series article
yield new challenges for management. Almost every
proficient company has implemented an idea-to-launch
new product process; such a process seems almost fundamental to NPD performance. In too many businesses,
however, the process is not working well, and that is
leading to disappointing performance. As evidence,
consider the quality-of-execution results, where many
businesses are sub-standard—many key activities are not
executed very well! Yet these same activities (Figures
1A and B) are strongly connected to NPD performance.
Also, a lack of voice-of-customer research, solid market
information, and sharp, early product definition continue
to plague many projects and businesses, in spite of the
evidence in Figures 2–7 that these are critical best
practices with strong links to performance.
Even more disturbing is the fact that performance
metrics, evaluation and feedback are missing for most
NPD projects. Note the lack of a post-launch review step
for almost 80 percent of businesses, coupled with the
evidence that this is a clear best practice. And recall from
the first article in this series that a significant minority of
businesses don’t even keep score—they don’t measure
new product results at all!
One might speculate about why the new product process
is so deficient in practice. Earlier articles in this series
have hinted that a lack of resources, doing too many
projects, and a failure of senior management to be
properly engaged may underlie some of the problems.
There are no doubt other reasons as well: management
overly-focused on “doing it fast” rather than “doing it
right”; a significant under-resourcing of the NPD
function; and simply a lack of knowledge of how to do it
right in the first place (10,11).
The evidence in support of an effective, world-class NPD
idea-to-launch process is overwhelming: many
companies are doing it right and they achieve positive
NPD results. Our recommendation: make sure that your
process is indeed a first-class one, incorporating the
many activities and best practices we have outlined in
this article. But most important, ensure that the process is
really implemented—that everyone in the business buys
in, embraces the spirit and detail of the process (including an emphasis on proficiently executing the best
practices outlined in Figures 2–7), and really uses the
process as an effective guide to getting new products to
market. 䡩
䊱
References and Notes
1. See: Griffin, A. Drivers of NPD Success: The 1997 PDMA Report.
Chicago: Product Development & Management Association 1997;
Menke, M. “Essentials of R&D Strategic Excellence.”
Research 䡠 Technology Management, 40, 5, Sept.–Oct. 1997, pp.
42–47; Cooper, R.G. Winning at New Products: Accelerating the
Process from Idea to Launch, 3rd edition. Cambridge, Mass: Perseus
Books, 2001.
2. Stage-Gate威 is a registered trademark of Product Development
Institute Inc. www.prod-dev.com
3. This article is based on an American Productivity & Quality
Center study, involving the APQC (Houston, Texas), the ISBM
(Institute for the Study of Business Markets, Penn State University),
and Product Development Institute Inc. (Ancaster, Ontario, Canada).
The APQC report is available as: Cooper, R. G., Edgett, S. J. and
Kleinschmidt, E. J. An Investigation into Best Practices in Product
Innovation: What Distinguishes the Top Performers? Product Development Institute, April 2003, www.prod-dev.com; also from the
APQC: www.apqc.org/pubs/NPD2003
4. Cooper, R. G. and Kleinschmidt, E. J. “An investigation into the
new product process: Steps, deficiencies and impact.” Journal of
Product Innovation Management 3, 2, 1986, pp. 71–85; Song X. M. and
Parry M. E. “What separates Japanese new product winners from
losers.” Journal of Product Innovation Management 13, 5, Sept. 1996,
pp. 422–439; Thomke S. and Fujimoto T. “The effect of ‘front-loading’
problem solving on product development performance.” Journal of
Product Innovation Management 17, 2, March 2000, pp. 128–142.
5. Griffin, A. and Hauser, J. R. “The marketing and R&D interface.”
Handbook: MS/OR in Marketing, eds.: Lilian, G. L. and Eliashberg, J.
Amsterdam: Elsevier Science Publishing, 1992; McQuarrie, E. F.
“Customer Visits,” in The Market Research Toolbox: A Concise
Guide for Beginners. Thousand Oaks: Sage Publications, 1996, pp.
51–65; Miller, C. and Swaddling, D. C. “Focusing NPD research on
customer-perceived value,” in The PDMA Toolbook for New Product
Development, ed.: Belliveau, P., Griffin, A. and Somermeyer, S. New
York: John Wiley & Sons, 2002, pp. 87–114.
6. Von Hippel, E. A., Thomke, S. and Sonnack, M. “Creating breakthroughs at 3M.” Harvard Business Review, Sept.–Oct. 1999, pp.
47–57.
7. See Cooper, R. G. Winning at New Products: Accelerating the
Process from Idea to Launch, 3rd edition. Cambridge, Mass: Perseus
Books, 2001; Di Benedetto C. A., “Identifying the key success factors
in new product launch.” Journal of Product Innovation Management
16, 6, Nov. 1999, pp. 530–544; Mishra S., Kim D. and Lee D. H.
“Factors affecting new product success: cross country comparisons.”
Journal of Product Innovation Management 13, 6, Nov. 1996, pp.
530–550; Montoya-Weiss, M. M. and Calantone, R. J. “Determinants
of new product performance: a review and meta analysis.” Journal of
Product Innovation Management 11, 5, Nov. 1994, pp. 397–417;
Song X. M. and Parry M. E. “What separates Japanese new product
winners from losers.” Journal of Product Innovation Management
13, 5, Sept. 1996, pp. 422–439.
8. Cooper, R. G. Winning at New Products: Accelerating the Process
from Idea to Launch, 3rd edition. Cambridge, Mass: Perseus Books,
2001.
9. See review of success/failure studies: Montoya-Weiss, M. M. and
Calantone, R. J. “Determinants of new product performance: a review
and meta analysis.” Journal of Product Innovation Management 11,
5, Nov. 1994, pp. 397–417; and: Cooper, R. G., “New products: what
separates the winners from the losers,” in PDMA Handbook for New
Product Development, ed.: Rosenau, M. D. New York, NY: John
Wiley & Sons Inc, 1996.
10. See for example: Cooper, R. G., “The invisible success factors in
product innovation.” Journal of Product Innovation Management 16,
2, 1999, pp. 115–133.
11. R. G. Cooper and S. J. Edgett, “Overcoming the Crunch in
Resources for New Product Development.” Research 䡠 Technology
Management, 46, 3, May–June 2003, pp. 48–58.
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