Success factors in product innovation

Abstract

Management of the 1980s and 1990s faces a dilemma in product innovation. On the one hand, there is increasing pressure to develop and launch more new products; Booz-Allen and Hamilton report that firms expect new products to grow from 33% of corporate sales to 40% in the 198Os, and that the number of new products introduced will double [l]. On the other hand, product innovation remains a very high-risk endeavor, fraught with difficulties and littered with failures. New product failure rates remain high (estimated to be about 33% at launch [2, 3, 7]), while almost half the resources that U.S. industry devotes to product innovation is spent on innovation duds-products that fail commercially or never make it to the marketplace [ 1, 2]! If businesses are to survive and prosper, managers must become more astute at selecting new product winners, and at effectively managing the new product process from product idea through to launch. These two challengesbetter project selection and more effective process management-point to the need for a greater understanding of the components of success in product innovation. We set out to gather evidence to help answer the question, “What makes a new product a success?” by looking at the new product experiences of a large number of firms.