New Product Development Systems Research Articles

OUTSOURCING OF NEW PRODUCT DEVELOPMENT AND THE OPENING OF INNOVATION IN MATURE INDUSTRIES: A LONGITUDINAL STUDY OF FIAT DURING CRISIS AND RECOVERY

During the 1990s mature industries, such as car manufacturing, restructured their production and innovation processes, changing from vertical integration to high outsourcing. Open innovation is antithetic to vertical integration. Analyzing whether this restructuring influenced the emergence of open innovation is an important step towards improving our understanding of open innovation (Chesbrough and Crowther, 2006).During the 1990s, Fiat, one the largest European car producers, increased the extent to which it involved external firms in new product development (NPD). Unlike its competitors, Fiat outsourced the NPD of core products, resembling the opening of innovation that "radical innovators" implement in high technology industry (Laursen and Salter, 2006, 137). However, it failed to transition towards open innovation because its "opening" to external firms also entailed downsizing in-house NPD divisions, which caused a "hollowing out" of its knowledge (Becker and Zirpoli, 2003). The products developed through this system did not perform well. After a dramatic decline in market shares, Fiat changed its NPD system: it reduced outsourcing of NPD, whilst opening it to customers for the first time. This contributed to the development of highly successful models, which fuelled Fiat's recovery after 2004.The paper explains the Fiat case by looking at the drivers of its organizational changes from a historical perspective. It argues that Fiat's cost-cutting routines, developed because of its intangible specialization in small vehicles, explain why it opened NPD to suppliers but failed to adopt open innovation. The case study is relevant for the study of open innovation because it provides evidence of the relationships between outsourcing and open of innovation in a mature industry that went through a profound process of restructuring during the 1990s.

The Impact of Misalignment of Organizational Structure and Product Architecture on Quality in Complex Product Development

Product architecture and organizational communication play significant roles in complex product development efforts. By using networks to characterize both product structure and communication patterns, we examine the impact of mismatches between these on new product development (NPD) performance. Specifically, we study the vehicle development process of a major auto company and use vehicle quality (warranty repairs) as our NPD performance metric. Our empirical results indicate that centrality in a product architecture network is related to quality according to an inverted-U relationship, which suggests that vehicle subsystems of intermediate complexity exhibit abnormally high levels of quality problems. To identify specific subsystems in danger of excessive quality problems, we characterize mismatches between product architecture and organizational structure by defining a new metric, called coordination deficit, and show that it is positively associated with quality problems. These results deepen our understanding of the impact of organizational structure and product architecture on the NPD process and provide tools with which managers can diagnose and improve their NPD systems.

Operational effectiveness and strategic flexibility: scales for performance assessment of new product development systems

Many firms attribute a central role to their New Product Development (NPD) function, in speeding up time to market, improving product quality, increasing manufacturing efficiency, building core competence and increasing innovative ability, often all within one and the same NPD system. This balancing of short-term operational effectiveness and longer-term strategic flexibility requires accurate insight in NPD performance on both dimensions. This paper reports on the operationalisation of these constructs based on NPD success literature, using a subdivision in product concept effectiveness and NPD process effectiveness. A validation test of the subjective scales shows good reliability results. Preliminary analysis of test results (n = 29) seems to point at firms trying to both exploit and explore by adapting the NPD process, and the building of dynamic capabilities.

Web‐Based Product Development Systems Integration and New Product Outcomes: A Conceptual Framework

In hopes of improving the effectiveness of their new product development (NPD) processes, many firms increasingly are eager to adopt integrated web‐based NPD systems for NPD. However, few would argue that the mere use of web‐based NPD systems substantially will improve the NPD process. But we know little about how and when these systems can be used for enhancing NPD.An organization desiring to employ the web in its NPD process can use it at varying levels of functionality and sophistication, ranging from a tool for automating manual tasks and exchanging data to a means of integrating various intra‐ and interorganizational NPD functions and processes. At higher levels of technology sophistication or integration, an organization's NPD processes will get more integrated internally, i.e., between different stages of the NPD process and with the processes of its suppliers, technology providers, etc. Such integration of both internal and external NPD processes is considered important for successful innovation. Thus, on the surface, higher levels of web‐based systems integration may seem universally desirable. However, each increasing level of integration brings with it higher costs—not only the costs of expensive technology but also costs of implementing a complicated system, redesigning intra‐ and interorganizational processes, disrupting the status quo, and spending management time and energy during implementation. Therefore, it may not be wise for firms to jump blindly on the web‐based NPD bandwagon. High levels of web‐based NPD systems integration may be created when low levels of integration may not deliver the desired results. Further, if such systems are installed without appropriate conditions within and outside the firm, it may not be possible to exploit their full potential. As such, it is important to know how much web‐based NPD systems integration is suitable for different conditions.In this article, we develop a conceptual framework that focuses on how web‐based NPD systems integration can influence the outcome of NPD and how the relationship between systems integration and outcomes can be affected by various contextual factors. For this purpose, we draw on research in areas such as NPD, web‐based information systems, and organization theory and on many discussions we had with professionals and software vendors who deal with NPD and web‐based NPD systems. The contextual factors of interest in this framework are strategic orientation of the firm, product‐related factors, business environment, organizational factors, information technology factors, and partner‐characteristics. Managerial and research implications of the framework are discussed.

Implementing the new product development process

Much discussion in the new product development (NPD) literature is concerned with describing blueprints for more effective systems for managing the process. Features of the emergent pattern of good practice in NPD include cross-functional team working, early involvement, effective project management arrangements and learning systems. However, there is relatively little in the literature on the implementation question; how a particular organisation can articulate and embed the necessary behaviour patterns and accompanying structures and processes needed to make good-practice NPD work for them. This paper reports on a case study of an electronics firm designing and implementing a new NPD system. In particular, it emphasises the organisational development processes required to implement and develop ownership of the system. The paper concludes with some comments on transferring this approach to other organisations, and on research issues arising from the experience.