A Composite Model of Product Development Effectiveness: Application to Services

Abstract

This paper explores the extent to which an enlarged, generic version of a composite model of concurrent product development previously tested for goods industries also applies to services. The model is comprised of four types of building blocks commonly used in theories of organization design. The operating core of the model includes a troika of practice sets dealing with the organization of cross-functional teams, discipline by structured development processes, and the use of enabling tools/technologies. Concurrent strategy focuses core operations on fast, reiterative cycles of product development. The model postulates that synergy among its constructs have an impact on product development effectiveness. This postulate is tested by multiple regression analysis of 62 large service enterprises in the New York area. All four components of the model had main effects on performance measured as time compression and cost reduction in product development, signature indicators of the effectiveness of concurrent methods of product development. Interaction effects were observed among the constructs of strategy, organization, and process, which suggest synergies. However, tools/technologies lacked significant interactions. With this exception, the results for services parallel those of other studies of goods industries. These findings suggest that concurrent methods of product development are robust, as well as reliable. A generic model of product development is important for managing innovation because goods and services are increasingly commingled in many enterprises and sold as a bundle. Thus, the four building blocks of the model are important for managers to consider deploying in synergistic ways to speed time to market and achieve cost efficiencies.