America's Edge in New Product R&D

Abstract

OVERVIEW:“Controlled scrimping” involves the containment of selected development costs and time-to-market by being less than thorough in non-critical areas. Resources marshalled from scrimping can be redeployed to increase the number of projects undertaken, diversify the project portfolio or increase the number of products developed. A comparative study of 60 U.S. and 60 Japanese products revealed that although overall new product success rates were not significantly lower when U.S. firms scrimped, Japanese firms that scrimped experienced significantly lower success rates. The explanation for these differences is rooted in the dissimilar U.S. and Japanese cultures that inhibit Japanese firms from engaging in successful scrimping. However, U.S. managers are advised to use scrimping strategies cautiously, as scrimping necessarily increases the risk of product failure. The challenge is to manage the tradeoffs between scrimping, time-to-market, product quality, and the risk of product failure within a portfolio of new product R&D efforts.