The Quick-Fix Effect: Understanding the Role of Mean Time between Failures on the Related Reliability of Subsequent New Products

Abstract

Much evidence documents the high failure rates of new product introductions. Some of these product failures can provide opportunities for learning and improvement of subsequent products. In this study, we examine the role of mean time between product failures and their influence on subsequent product introductions and their related reliability. Our panel data analysis of 136 firms from 1998 to 2012 in the medical devices industry provides evidence of myopia in learning from failures that happen too close-in-time. There are two parts to what we call the quick-fix effect in new product development. First, firms have a greater probability of introducing a new product when they experience a low mean time between product failures (MTBF) than a high MTBF. However, there is also a greater probability of introducing a new product when the MTBF reaches a certain inflection point. Second, the related reliability of future new product development activities is contingent on this past MTBF. We believe the findings suggest that fast innovation and short-cycle times in product development can lead to chronic quality and operational problems if firms do not afford enough time to fix the underlying causes to the failures.