Deciding on scheduling, secrecy, and patenting during the new product development process: The relevance of project planning models

Abstract

We develop project planning models to integrate scheduling and appropriation decisions for new product development projects. In addition to the decisions related to the timing of development tasks, we focus on whether and when to use secrecy and patenting. We model the setting as a Markov decision process and develop a state-of-the-art dynamic program that enables companies to arrive at an optimal policy for realistically sized instances. By combining an exact analytical characterization of an optimal policy for serial and parallel project networks with extensive numerical experiments for general project networks, we infer that the innovator can benefit from using both secrecy and patenting during different phases of the development project. This contrasts with the traditional view that secrecy and patenting are seen as mutually exclusive appropriation methods. Our results also indicate that opting for secrecy can prolong the project’s lead time, and it might therefore conflict with lead-time advantages. Somewhat surprisingly, we find that it might well be optimal to initiate first (rather than to postpone) those tasks that are most likely to expose the project. Combined, these insights highlight the relevancy of an analytical approach that considers decisions related to secrecy, patenting, and the timing of development tasks simultaneously.