Tailoring product development to strategy: case of a European technology manufacturer

Abstract

A large body of work on new product development (NPD) has identified a number of general success drivers, which imply `best practice' approaches in NPD. In particular, a newer market or a newer technology renders a project riskier and, therefore, requires a higher hurdle rate on returns. Furthermore, a good NPD process exhibits customer orientation and demand pull, cross-functional co-operation, top management support, existence of a champion, good planning and execution with a strong project manager, and the use of a well-defined process with formal measures. Radically new NPD projects require less structure and more exploration than incremental projects. This article examines whether such general `best practices' are directly applicable to a specific company. We study 90 NPD projects across many different business units in a large diversified European technology manufacturer. We find that the market positioning of new products depends more on the specific portfolio needs of our host company than on general principles of riskiness. In addition, we identify three predominant NPD process approaches in the company, but success differences among them are `muddled' by the non-targeted way they are used. We conclude that there is no `best practice' NPD process. Rather, a company should develop a customized NPD project portfolio and a corresponding mixture of processes, which together meet its strategic innovation needs. We develop a systematic procedure that can help a company to achieve such strategic alignment.