PD_The Patterns of Success in Product Development a Case Study

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The patterns of successin productdevelopment: a casestudy

Petri Suomala and

Ilkka J okioinen

The authors

Petri Suomala is Senior Researcher, Institute of Industrial

Management, Tampere University of Technology, Tampere,

Finland.

Ilkka Jokioinen is based at Metso Paper Inc. Turku, Turku,

Finland.

Keywords

Research, Product development,

Performance measurement (quality), Case studies,

Metalworking industry

Abstract

Success in product development can be considered ageneral aim for any R&D activity. Unfortunately, success is

very multidimensional. Which dimensions of success one

should include and how one can measure these

dimensions is a n essential question that must be resolved

within R&D management. The aim of the paper is to

analyse the multidimensionality of success at R&D project

level. Using the evidence from three industrial cases, the

paper shows the versatility of the concept of success in

product development. On the basis of the evidence, the

paper concludes that there is often only a vague

correlation between three aspects of R&D success

nancial, technical and project management. The focus ofthe paper is on the development of investment goods for

the paper industry.

Electronic access

The Emerald Research Register for this journal is

available at

http://www.emeraldinsight.com/researchregister

The current issue and full text archive of this journal is

available at

http://www.emeraldinsight.com/1460-1060.htm

Introduction

Industrial research and development (R&D)

utilizes science and technology to construct

new or improved products or processes for

prot-seeking companies (IRI, 2000). Product

development, which is an essential part of

R&D, can be seen as an activity that is expected

to improve a companys competitive advantage

and future success in terms, for example, of

protability and market share. Based on the

hope and trust that tangible returns will be

greater than expenditure, considerable sums of

money are spent on R&D (Batty, 1988).

According to IRI, in US companies alone,

representing over one-third of the entire worlds

allocation in R&D, US$185.9 billion was

invested in industrial research and development

in 1999 (IRI, 2000). For comparison, US R&D

expenditure in 1950 was US$2.5 billion

(Jackson and Spurlock, 1966).

With the increase in investments, the

question of R&D management and

measurement has gained in interest.

Performance measurement has been

considered a relevant aid in the pursuit of

success in product development. Therefore, a

wide body of literature concerning the

measurement of R&D performance and

success has been produced. Some writers

(McGrath and Romeri, 1994; Chiesa and

Masella, 1996; Kerssens-van Drongelen and

Bilderbeek, 1999; Szakonyi, 1994a, b) have

established holistic approaches for the

assessment of R&D effectiveness, while others

have concentrated on project level (Ormala,

1986; Rouhiainen, 1997). There are

advocates of continuous or in-process

monitoring of development as well as end-of-

process evaluation (Schumann et al., 1995).

There is a variety of methods available for

R&D project selection (Cooper, 1985;

Hollander, 2000), performance evaluation for

managerial purposes, customer perspective

(Hirons et al., 1998; Nixon, 1998) and

benchmarking. Many creditable reports that

describe the state-of-the-art of R&D

measurement have been published (Brown

and Svenson, 1998; EIRMA, 1985, 1995;

Werner and Souder, 1997a, b; Grifn, 1997).

While several decades of R&D studies have

produced a good deal of data with respect tovariables associated with the success and

failure of new products, the research has not

been able to resolve a practical problem: how

should R&D actually be managed in order to

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Volume 6 Number 4 2003 pp. 213-227

q MCB UP Limited ISSN 1460-1060

DOI 10.1108/14601060310500931

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promote high new product success rates.

Poolton and Barclay conclude that managers

are still relying on gut-feelings regarding best

practice in new product development

(NPD). Analogously, research has tended to

be theory-driven instead of being applications-

based (Poolton and Barclay, 1998). Driva et al.

conclude that in most cases companies do not

measure R&D activity very well, but that they

are striving to determine how to do so

effectively (Driva et al., 2000). In this respect,

it seems fair to claim that a good deal of work is

still needed to improve the efciency of the

interface between industrial R&D

management and academic R&D research.

Success in product development can be

considered a general aim for any R&D activity.

Unfortunately, success is very

multidimensional. The question of which

dimensions of success one should include and

how one can measure these dimensions is an

essential question that must be resolved

within R&D management (Hultink and

Robben, 1995). However, relatively little

discussion has focused on the resolution of

this question. Yet, as Hart (1993) puts it:

Clearly, the way in which NPD success is dened

inuences the ndings which describe the factors

contributing to NPD success.

Grifn and Page recognize that success is

elusive, multifaceted and difcult to measure.

Still, companies and academics use over 75

measures of success in product development

(Grifn and Page, 1996). Basically, hand in

hand with determining and selecting R&D

performance measures for a company, one

should also consider the concept of success.

What is the form of success that is primarily

pursued? Are there any other success

dimensions that would be important for us?

Knowing the type of success pursued wouldlikely be helpful in choosing the appropriate

set of R&D metrics.

R&D processes contributing to newproduct success

From the perspective of R&D management,

in practice, seeking new product success

might be challenging, seeing that prospects of

success likely vary from phase to phase in the

R&D process. In this study, the model

presented in Figure 1 (Matthews, 1991) has

been adopted as a basis that describes the

fundamental processes of research and

product development. In Matthews model,

R&D is a process that consists of three mainphases. It starts with technology development

and ends with actual product development

that results in a marketable product. Two

essential dimensions are established:

(1) technological uncertainty; and

(2) the amount of allocated resources.

If the R&D process proceeds, it is assumed

that the technological uncertainty will

decrease i.e. the prospects of new product

success should be improved. Typically, as the

product gets closer to the market moreresources are allocated to the development

project. According to Matthews, completing

the whole R&D process requires answering

ve questions:

(1) Is it possible:

(2) Is it attractive?

(3) Is it practical?

(4) Is it desirable?

(5) How do we do it?

The challenges of R&D are likely to differ

from phase to phase. Projects belonging to

category C have to be managed differently

than projects belonging, for instance, to

category A. This is because research projects

(category C) typically have somewhat

different goals, objectives and restrictions

than specic product (category A) or concept

development projects (category B). Research

projects may often deal with technological

issues that cannot yet be attached to certain

industrial and marketable products they are

mainly serving as a breeding ground for

promising tadpoles. Only time will tell

whether these technologies will lead to

commercial products that is, technological

uncertainty is rather high. According to

Figure 1 The process of R&D

The patterns of success in product development: a case study

Petri Suomala and Ilkka Jokioinen


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Matthews (1991), the costs of these types of

projects are typically seen as overheads, and

the projects are allowed to yield results over a

rather long time scale, if ever. On the other

hand, the technological uncertainty of

product development projects (category A)

should be signicantly lower, but at the same

time the o bjectives of the projects should have

more concrete goals, including the nancial

ones, than research projects. As Matthews

(1991) puts it: short-term development (in a

typical company) is seen as investment. The

most problematic area, however, is the gap

between overhead and investment. These

category B projects may often fail to show

sufcient justication for funding, since they

neither represent a pure breeding ground

any more, nor have they yet reached the status

of investments that could be assessed using

sound nancial measures. These projects can

be seen as strategic options and the

challenge is to identify the most promising

and practical ones that have the potential to

proceed to actual product development.

Matthews work provides one valuable

insight into the classication of R&D projects

or activities, but traditional classications

need to be discussed as well. Batty, for

example, has provided a traditional denition

of R&D by recognizing three elements:(1) basic research;

(2) applied research; and

(3) product development (Batty, 1988).

McLeod (1988) also adds a fourth element

design, which starts after development. A

slightly different categorization is proposed by

Jackson and Spurlock (1966). They have

identied fundamental research, applied

research and developmental research (Jackson

and Spurlock, 1966). R&D projects, as seen in

this case study, mostly belong to the

development, design or applied research

category. Fundamental or basic research is

not so typically conducted at company level.

However, many of the applied research or

development projects are originally triggered

by co-operation with a company and a

university or research institute in the basic

research area.

Dening a detailed research and product

development process is a complicated task.

Sometimes it is difcult to distinguish which

activities should be conducted in a certain

R&D process step. However, Ulrich and

Eppinger (1995) have established a generic

development process that consists of ve

phases. The process starts with concept

development, as the writers exclude research

activities from the actual development

process. The four sequential phases are:

(1) system level design;

(2) detail design;

(3) testing and renement; and

(4) production ramp up (Ulrich and

Eppinger, 1995, p. 15).

According to Ulrich and Eppinger (1995), in

the concept development phase many

functions of a rm are allotted several tasks

and responsibilities. The following concept

development related tasks are recognized by

function (Ulrich and Eppinger, 1995):

(1) Marketing:. dene market segments; and.

identify lead users and competitiveproducts.

(2) Design:. investigate feasibility of product

concepts; and. develop industrial design concepts.

(3) Manufacturing:. estimate manufacturing costs; and. assess production feasibility.

(4) Other:. nance, facilitate economic analysis;

and. legal, investigate patent issues.

Concept development, as seen from the

previous list, should put emphasis on

economic issues in analyzing and resolving the

potential of a product or solution for the

companys business. In this analysis,

customers and production are to be taken into

account. Issues not explicitly mentioned

above, but still worth investigating in the

concept development phase, are corporatestrategy and business as a whole. Questions

such as Does the product t well into our

strategy? and How exactly will the product

strengthen our overall business? should be

the concern in concept development.

If a development project passes the

assessments conducted in the concept

development phase, it will proceed to product

development. The main input to product

development is the outcome of concept

development, the main objective of activitiesbeing a commercial and marketable

(protable) product. Thus, product

development resolves the detailed nal design

and prepares the whole company for the





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product launch. In real life, organizing an

R&D process may not be as straightforward as

described above. Phases are likely to be mixed

and partly overlap each other. Importantly,

new product success is not something that is

considered only in the product development

phase. Success should be seen rather as a goal

that is striven for in all the phases that

constitute the R&D process in the company.

Each phase may make a contribution to the

overall success.

Selecting development projects that willlead to success

Often the number of potential research,

development and design projects is greater than

it is possible to carry out. The limited resources

and skills compel the managers to select projects

from those proposed. A comprehensive

description of different selection methods is

presented by Martino (1995).

Ellis (1997) argues that without objectively

measuring the process of innovation one is not

able to determine whether the expenditures on

R&D are benecial or not. Both the desired

outcomes as well as the inputs and R&D

processes that contribute to these outcomes

should be measured (Ellis, 1997, p. 3).

Cooper (1985) has developed the NewProd

model for separating probable successful

projects from probable losers. He remarks

that project selection is pivotal to effective

risk reduction in product development. A

scoring model could be a valuable tool in

screening proposals. According to the

NewProd model, product superiority/

quality, market need, growth and size and

product scope are the factors that have the

strongest impact on probability of success

(Cooper, 1985).

Hollander (2000) has reported the

potential of the Genesis model for project

assessment. His study is based on Coopers

NewProd studies. The objective of both of

these models is to provide support for the

product development team, especially for go

or no go decisions. The Genesis model is

focused on development projects and teams;

the question is does the team have the

necessary resources and skills and how the

product is positioned in respect of markets

and competitors products (Hollander, 2000).

McLeod (1988) suggests several factors

that should be taken into account when

selecting R&D projects, including: probability

of success; time to rst sales; protability; and

compatibility with the companys long-term

plans (strategy). However, it is argued that

there is little point in trying to give the factors

any order of priority. According to McLeod

(1988, p. 254), all these factors should be

considered as a whole. The construction of

numerical indices, struggling with gures and

scoring the projects is not seen as benecial.

Cooper and Kleinschmidt (1995) point out

that new product performance is a

multidimensional concept. Therefore, a single

measure for NPD performance monitoring

may not be enough. However, many companies

still use only one or two measures. Having said

that multiple measures are better than a single

one, Cooper and Kleinschmidt (1995)

continues that many of the measures may not

be totally independent of each other. A holistic

view of new product performance can be

reached with a limited number of measures.

The body of literature on new product

success suggests that there is a rather versatile

set of factors affecting this success. To

structure the eld, different domains of

groups of factors related to NPD success are

illustrated in Figure 2. The brackets refer to

literature that supports a particular

perspective. In this synthesis, the success

factors are collected into four perspectives

that demonstrate not only the elusive nature

of success factors but also the different

viewpoints of various stakeholders in the NPD

process. The top management of the

company, for instance, may assess the NPD

activities and outputs through a strategic

framework: is there a sufcient t between the

NPD and the corporate or technology

strategy, or does the NPD produce essential

strategic value for the company. At the level of

business units the concerns of management

Figure 2 Perspectives having a contribution to new product success





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may include the consistency between the

present business and potential produced by

NPD: what are the anticipated business

impacts caused by or the risks posed by the

NPD. Furthermore, inside the technology

and product development unit there might be

pure technological interests in addition to the

economic ones. Throughout the company

there are or at least should be an interest

in maintaining and developing the capability

of NPD to produce value for the customer

through innovative and competitive new

products and services.

With regard to the practical organizational

context, strategy is one of the core issues

related to the success of NPD. The

management of NPD has to take into account

the corporate strategy and its implications.

Projects that are consistent with the strategy

are likely to receive the most support from top

management. On the other hand, strategy

should be exible enough to enable the

initiation of projects that seem to be very

promising but that may not yet be at the core

of corporate strategy. In addition to corporate

level strategy, an R&D strategy may provide

arguments for internal marketing of a project,

thus facilitating, e.g. a sufcient resource

allocation for the project. Second, a products

relative position with respect to the target

market seems to be an important determinant

of success. The new products competitive

position the products competitiveness

against competitors products should be

therefore carefully considered. Timing of the

product launch is one of the things that affect

the products competitive position. The third

perspective affecting the products success is

technology. Is the new technology mature

enough to be manufactured and delivered?

Does the customer have the ability to adopt

the new technology, and what is the additional

value of innovation for the customer? The

fourth area is company business. A

development project may have synergies with

other projects, or it may lead to cannibalizing

some existing business. Thus, the business

impact of the new product should also be

considered. Also, in order to be able to extract

fully the success potential of the new product,

some t between the new product and the

companys present business is required.Otherwise, the supply chain, manufacturing

process and customer base would have to be

subjected to a dramatic adjustment for the

new product.

It is suggested that there is a relevant link

between the ideas presented in Figures 1 and

2. As Matthews (Matthews, 1991) has stated,

for the projects that are neither pure research

(category C) nor actual product development

(category A) it might be challenging to

establish sound arguments that either support

or oppose further development efforts. As one

solution for this managerial problem, a

holistic framework such as the one

presented in Figure 2 including the

identied success factors of NPD might be a

useful tool for structuring the issue. Especially

in the assessment and in the prioritization of

the category B development projects, a

decision-maker should consider various

factors that represent the viewpoints of

different stakeholders in the NPD process. If

each of the projects at hand is evaluated from

the perspectives presented in Figure 2, it

should be possible to more rationally or at

least more explicitly rank the projects based

on the anticipated success factors. Of course,

this kind of assessment can probably never be

totally objective or denite; however, it is

supposed to be an attempt to systematize

organizational discussion and decision-

making regarding projects:. whose justication is not self-evident; and.

that cannot be (yet) evaluated using directnancial criteria.

Objective and methods

The aim of the paper is to analyse the

multidimensionality of success at the R&D

project level. Success is considered as a

variable that is connected with the NPD

process and its phases. That is, success as a

goal of NPD can be seen very differently,

depending on the phase of the R&D process.

The paper also addresses the issue that there

are practically meaningful patterns of success,

which are also very different from each other,

that pose challenges for R&D managers who

are striving for effective and generally

successful NPD. A core problem is related to

the correlation between different success

domains: good performance in one success

domain may or may not be related to success

in another.

The paper is based on a case study

conducted in the metal industry. All three

cases studied are product development

projects involving investment goods

products of the metal industry companies A





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and B serving customers in the papermaking

industry. In the customers business the

growth rate is typically between 2 and 4

percent. Big investments in production lines

affect the market demand for paper grades,

which results in some cyclical uctuations in

the market demand for production

machinery. Another essential characteristic o f

the business is the length of product life cycles

(PLCs), which typically vary between ten and

15 years. The challenge to PLC management

in this industry is underlined by the fact that

the introduction of totally new technology can

typically take ten years or more, mainly

because of the risks of ruining the payoff of the

entire production process when technology is

introduced too early. The difculty and

complexity of the technology transfer process

from phase C to A in this particular industry

area is reviewed with several cases in the paper

by Crotogino (2000) in IDS 2000. New

technological solutions are commonly

introduced in the industry rst by rebuilds of

paper machines and then nally by new

production line deliveries. Thus, feedback

from markets and learning by experience tend

to be slow and time to market long, at least in

the case of major components of the

production line. The learning process and the

process of managing the risks in thedevelopment of components for the

papermaking line are improved by

demonstrating the potential of equipment on

pilot machines.

All the product development cases in this

paper were carried out in the 1990s and the

market launch of products took place in the

late 1990s. In each case the following

components of success discussed by

Rouhiainen in his dissertation focusing on the

management of NPD project implementationin the metal industry (Rouhiainen, 1997)

were evaluated:. project management success;. technical success (businesspersons,

engineers and clients point of view); and. commercial success estimate.

Project management success has been

estimated utilizing the PIP questionnaire

constructed by Slevin and Pinto (1986).

Slevin and Pinto (1986) have identied ten

success factors, including for instance project

mission, top management support, client

consultation, communication and

troubleshooting, that are related to a projects

success. By studying 82 successful projects,

Slevin and Pinto have provided a reference

score scale for each success factor that enables

benchmarking a certain project performance

with the success proles of known successful

projects. (For instance regarding the factor of

communication, the 0th percentile of 12

points refers to the fact that none of the

studied success projects scored less than 12

points, and the 100th percentile of 99

indicates that the full score of 100 was not

achieved by any project.) If a projects

performance in the case of any factor is below

the 50th percentile, one should according to

Slevin and Pinto (1986) devote extra

attention to that factor to improve the odds of

success.

As regards the other success areas,

technical as well as commercial success has

been analysed in this study by interviewing the

key development personnel and management

of NPD projects as well as by studying the

companys NPD reporting and

documentation.

Concerning the theoretical

representativeness of the study, the cases

studied are quite different from each other.

Case 1 was basically a new technology

development project, the outcome of which

was a new product utilizing technologies

known in company A. Case 2 was a product

development project of company A aimed at

introducing a product similar to but better

than existing ones in the marketplace. Case 3

involved introducing an incrementally

improved product using technologies known

in the companies participating in the

development project (companies A and B). In

case 3, company B is a supplier of company A.

In Table I the cases are outlined in terms of

main development characteristics. The key

parameters utilized in Table I are dened and

discussed by EIRMA (1995); it also illustrates

the diversity of the cases in compact form.

The rationale for using a case study

approach is to provide holistic and meaningful

characteristics of real-life events (Yin, 1994).

According to Yin (1994), a case study is an

empirical inquiry that investigates a

contemporary phenomenon within its real-life

context. Typically, in case study research, the

boundaries between phenomenon and

context are not clearly evident. In this study, aproduct development project is the

phenomenon to be investigated and the

context is a companys product development

organization and its environment. A holistic





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view is needed when making R&D decisions

because the results of development work

would greatly inuence the whole company

and its business potential in the future.

Therefore, the interests of various

stakeholders should be somehow considered

in the research and development process.

Case evidence

Case 1

Case 1 was originally a technology

development project established to reduce the

investments in a paper production line. The

result of the technology and product

development project was a commercial

product making possible up to 30 percent

savings in machinery investments when the

product is utilized in full scale. The

development history (phases C, B, A

described by Matthews (1991)) can be

summarized as follows.

Phase C lasted four years. It can be

described as applied research aiming to study

if the technology could be utilized in an

application area. The research was conducted

both by the company and by external research

laboratories as well as technical universities.

This phase was focused on minimizing the

risks of choosing the wrong technology for the

concept and development phase.

Phase B lasted three years. The objective of

the concept development phase was to

evaluate the feasibility of the product concept

as a strategic option. During this period, pilot-

scale equipment for this technology was built

and tested. This was done to further minimize

the risk associated with the new technology

and to evaluate its applicability for several

customers. The most critical components of

the technology were tested and designed in

phase B.

Phase A lasted two years. It ended with the

rst customer delivery of the new technology

product. During this stage the product was

developed and designed mainly within the

delivery project. However, many design

features and solutions were based on the

detailed studies made in phase B.

Generally, passing a development project

from concept development to the actual

product development phase requires an

estimation that there is enough potential in

the concept in respect of risks associated

with it to achieve an acceptable level of

success. In this case, concept development for

the product included many (technical) risks

that were also identied:. the effect of the technological solutions

characteristic of the concept on the

quality of paper grade;. the implications of the concept for

runnability issues;. the effects of the concept especially on the

durability of core peripherals that are in

interaction with the product.

However, despite the risks, concept

development was encouraging to the extent

that it was decided to proceed to product

development. The selection of the project for

actual product development was mainly based

on the following criteria (estimated benets of

the product):. Possibility for the customer to have lower

investment costs.. The quality and runability of the paper

grade remains at the very least the same.. Positive impact on the efciency of the

production (customer process).. Simplicity: good product architecture,

low number of components.. Lowering energy consumption.

Project management success in case 1 was

studied by implementing a reduced PIPquestionnaire (see Slevin and Pinto, 1986)

among the key people of the development

personnel from phase B to phase A. The

questionnaire was supplemented by

Table I Characteristics of the cases as they were seen in the phase B when development decisions were made

Case 1 Case 2 Case 3

Technologies applied Known by company A Known by company A Known by companies A and B

Type of R&D Radical Incremental Incremental

Market Known Less known Known

Feedback from market Low Medium Medium

Time to market Long Medium MediumCompetition Medium High High

Innovation driver Technology push Regulati ons Market price/Technology push





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interviews conducted in the same target

group. The PIP questionnaire revealed the

perception that the project was fairly well

managed. The weakest identied critical

success areas were (see also Figure 3):. Client consultation and client acceptance;

evidently, this domain should have been

studied better and more comprehensively

in phase B. One reason for the poor or

absent customer consultation was the

condential nature of the project in this

phase.. The schedule/plan, which can be partially

explained by the length of the project and

changing personnel during the project.. The project mission, which was to some

extentunclear. This was mostly due to the

fact that the project dealt with fairly

radical development, which caused

difculties in specifying and

operationalizing the exact goals for the

project personnel.

What can be said about the technical success

on the basis of the inquiry and interviews?

From the technical point of view, the product

developed was a success in the rst delivery in

almost every respect. The technical

specication and process performance targets

set by the customer were met. The new

product created in the project made it possible

to cut the investment costs by 30 percent for

the production line when utilized in full scale.

From the businessmans point of view the

manufacturing costs of the product could

have been lower in order to be able to meet the

market price of competing technology.

The commercial success of the new

technology product so far has been poor: no

further references have been obtained two

years after the rst one. However, interest

among customers has been fairly high. The

lack of commercial success is also due to

competing products. Another reason isprobably the timing: the release of the new

technology product in case 1 took place too

early and was not properly synchronized with

other product releases. The product as such is

an outcome of long-term technology strategic

choices of the company as the technology

leader in the industry. The company is still

considering additional investments in order to

attain the strategic targets set many years ago

for the product.

Observations from the interviews (n 4)

with key development personnel and product

development management can be

summarized as follows:

. Strategy implications: in line with the

established strategy, but payoff is still a

question, even if the technology project

has lasted a very long time.

. Customer and competition: price

competitiveness of the product is the

major concern.. The business impact of the product is

rather fuzzy; there are also some

competing products within the same

company.

. The development project leader feels

unsure regarding the customers ability to

derive full benet from the product.

Figure 3 PIP proles of the studied cases





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. Technology: the protability of the

project appears weak although the

technology is considered mature enough.

Case 2

Case 2 was a spin-off of an applied research

project intended to reduce the environmental

impact of the papermaking process. The

partners of the research project were:. a machine supplier;. a customer in the paper industry; and. a commercial research centre.

During the project the machine supplier got

an opportunity to deliver new process

equipment tailored to the specic needs of the

client. The decision to develop and deliver

was, however, not very spontaneous because

the product concept was elaborated quite a

long time in the concept development phase.

At the time, market value and the major

competitors were still being evaluated. Some

early signals from customers had been

received, showing an emerging market

demand for the product.

The development history of case 2 can be

summarized as follows. Phase C lasted two

years and it was more or less a process

development using simulation tools. At this

stage no equipment development was

undertaken. During phase C the equipment

developer and supplier became familiar with a

new kind of production process environment

for the company.

Phase B lasted two years. At this time, the

product concept was planned and tested on

the pilot scale. The dimensioning of the

equipment was also studied for scale up to

industrial scale. The customer-partner worked

with the development team to tailor and

specify the product according to his needs.

Some other customers were also consulted,

but their inuence on the nal product

specication was minor. Phase A lasted for one

year and during that time the rst customer

delivery of the case product took place.

What was characteristic of the concept

development of this product? The

development project was very strongly

customer-driven: although there seemed to be

a general need for this type of product, the

concept was developed in close collaboration

with a customer. Thus, the product was

primarily tailored to full the customer-specic

needs. It can also be said that the very good

customer collaboration pushed the project

forward by giving a sufcient justication for

the work. Other grounds and criteria to

continue were not so much needed. A market

study was also conducted at the concept

development phase and a lot of effort was

expended to select the most appropriate

materials for the product. Still, the project

resulted in a product that was too expensive to

manufacture and whose market was

inadequately studied. Particularly, the market

for the product does not seem today as

tempting as when it was assessed and perceived

in the concept development phase. Afterwards,

R&D management has pointed out that the

concept development might have been too

rapid, thus preventing a versatile assessment of

different construction alternatives.

Project management success according to

the stakeholders in the case project was

reasonably good (see also Figure 3). Generally,

the project was thought to be well-managed

and organized. According to the project

manager, the weakest area was the lack of

comprehensive client consultation and market-

wide client acceptance, which was misleading

for the product concept choice. Also, the

project did not have fully satisfactory and

specic goals that would have enabled well-

founded project assessment and monitoring.

Regarding the technical success of the case,

two customer requirements were met in therst delivery both as regards the technical

specication and the service provided for the

customer within the delivery project. From

the businessmans point of view, the

manufacturing costs were too high in the rst

customer delivery. This was mainly due to the

heavy construction with expensive

construction materials. Also, there was only

minor experience of the type of

manufacturing involved. After the rst

delivery the technical specication of thedeveloped product was benchmarked more

carefully than in concept phase B. The

conclusion was that some technical

improvements had to be made to reach the

level of competition in the market segment

within the scope of company A.

Commercial success

The case product was marketed for a one-year

period. There were some customer inquiries

but no further discussions with the customers

because of the selling price, which seemed to

be too much above an acceptable market price

level. After positioning the new product in

respect to the main competitors and studying





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the market segment volume and availability

once again, the product launch was stopped.

The product concept was not competitive

enough and the best option was to withdraw

from the market. Catching up with the market

price level was not considered to be feasible.

The learning process would have been too

long and expensive compared to the expected

returns.


with key development personnel and product

development management can be

summarized as follows:. Strategy: no clear support from strategy in

this project.. Customer and competitive position: no

clear value added from the business or

customer perspective.. Companys business: Some additional

business and synergy contribution seen;

however, poor cost efciency of the

product.. Technology: customers capability to

exploit technology is fairly good.. Reliability of the technology was good.. Overall: one good area in scoring does not

make the product and project lucrative

from the perspective of business and

strategy.

Case 3

The case 3 product development was a

cooperation project between companies A and

B. The outcome of the development project

was a merger of two proven technologies in

the industry. Company A had the supporting

technology know-how and experience, while

company B had the main technology

regarding the new product.

Concerning the development history of

case 3, phase C is not applicable. Phases B

and A partially overlapped in the development

project. During phases A and B the product

concept was tested in the laboratory and on a

small scale on a pilot machine. This phase

lasted about one year and it ended with the

rst commercial order.

With regard to perspectives of future

success in this project, it was particularly

interesting that the concept development was

started in the belief that a potential new killer

product could be constructed by combining

two technologies. Therefore, company A

could not take the risk of totally opting out of

the project. In that case, if the product

succeeded, it would have provided the

competitors with an essential competitive

advantage. However, the R&D collaboration

between the two companies is a difcult

sport: different roles and interests of

companies, the question of sharing future

revenues, product management and marketing

principles, and the combination of different

organizational cultures set major challenges.

In line with this, the two companies, A and B,

did not totally agree on the performance (e.g.

breeding ratio) of the product. This caused

difculties sinceit led, for instance, to different

sales promotion argumentation.

Among the project personnel opinions

varied widely regarding the project

management success. Although the technical

results were satisfactory, there seemed to be

tension between the business interests of

companies A and B. Both companies

admitted that they had learnt a lot from each

other and the development group was

committed and knowledgeable. Another

common conclusion was that the

development project was fairly well managed

regarding schedule and budget. However, on

average, project implementation prole of this

project is far from excellent (see Figure 3).

The technical specication of the case 3

product was set at the beginning of the project

in phase B. A compromise specication was

nally accepted by both companies. CompanyBs expectations were higher before and

during the development project because it was

to be the owner of the product concept to be

developed and the supplier of the new

product. The specication set for the product

was not totally met in the development

project, but the gap was not expected to be

crucial marketing-wise.

Commercial success

Two years after the end of the development

project, company B has sold some 20 units of

the new product. Part of them were sold and

delivered through main supplier A. Time to

market was short and penetration in the

rebuild market was successful. The question

of whether the product can be exploited fully

on the market for new machines is still open

but the prospects seem encouraging.


with key development personnel can be

summarized as follows:. Strategy: the link to the strategy is

questionable or weak and not discussed

properly inside company A, in contrast

with the situation in company B.





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. Customer and competition: the product is

not believed to provide additional value in

a proven way in company A and

uncertainty also exists about the price

competitiveness.. Companys business perspective: there is

some synergy but the product does not

provide new business for company A. The

total economic effect is somewhat

unclear.. Technology: the customer is ready to

implement the technology and it is

manufacturing-wise all right. Reliability

in wide machines is still unsure after

implementation by several customers.

As a result of the development project, no

superior product was created compared to the

previous product generation from theperspective of company A. Company B has in

any case managed to differentiate the new

product in competition and it has sold a

considerable amount of case 3 products. The

solution developed has therefore

demonstrated its potential. It seems to have a

certain place in the market applications.

Analysis of cases

Figure 3 summarizes the project

implementation proles of the three cases

studied. The x-axis represents the important

parameters or success domains of a project

that are evaluated; and the y-axis illustrates

the percentage of known success projects (see

Slevin and Pinto, 1986) that perform more

weakly in that respective domain than projects

now studied. According to the PIP method,

the projects seem to be clearly different from

each other: the prole of case 2 is the most

positive, while that of case 3 is the worst. Case

1 lies in the middle. This observation suggests

that the PIP method, despite the fact that it

has proved to be a valid measure of success in

a larger data set, fails to interpret reliably the

odds of success concerning an individual

project. In an individual project, it seems that

a majority of necessary ingredients of success

might be present and still the nal success

remains poor, or vice versa. This would be one

reason to advocate holistic and versatile NPD

performance measurement, which is

discussed, e.g. by Cooper and Kleinschmidt

(1995).

The summary of all success perspectives

studied in three cases is presented in Figure 4.

In each case, the success prole consists of

three different success perspectives: R&D

project management, technical and

commercial success. Case 1 represents a case

that is project management-wise rather

neutral. Management of the R&D project

included some clear weaknesses but also clear

strengths. In terms of technical success, case 1

can be considered a positive project; no

serious doubts exist, except perhaps

concerning price competitiveness.

Importantly, however, the commercial

success of the product has been at least so

far too weak. The volume of business has

remained small. In case 2 the project

management received good grades. There

were no severe weaknesses identied

regarding the project management. Also the

technical success seemed to be more or less all

right. Concerns mainly lay with the

manufacturing costs. In contrast to this, there

was practically no commercial success at all

with this product. Due to the reasons

discussed in the case section of this paper, the

product was nally found to be not

competitive enough for the market. Case 3

represented R&D collaboration between two

companies. That resulted in a project, whose

management proved to be to some extent

problematic. Although the technical success

of the project was not according to the most

optimistic expectations, it was still acceptable.

Most importantly, the commercial success of

the product has been rather positive,

especially from the perspective of company B.

What is the picture of success of NPD

drawn by these cases? First, the three cases

most certainly do not constitute a

homogeneous prole. One of the three

projects has led to fairly successful business,

while the other two have remained somewhat

disappointing efforts for the companies. The

only commercially successful project (case 3),

however, was not a result of a development

project that ran smoothly and as planned.

Instead, the development work proved to be

rather problematic and even the technical

result of the project was to some extent a

compromise. Furthermore, the projects

connection with the strategy was questionable

and it was not discussed thoroughly either

before or during the active development. Inthe light of typical success factors discussed in

the literature, including product superiority/

quality, market need, product scope, high-

quality new product process, clear and well-





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communicated new product strategy for the

business unit and positioning in respect of

markets and competitors products (see

Cooper, 1985, 1996; Hollander, 2000), this

project is certainly interesting. The productcannot be characterized as superior, but it

may be labelled as a fairly good one that has

found its place in the market, indicating some

success in positioning the product. Also,

reasonable commercial success was achieved

without high-quality new product process and

a strategy connection.

In contrast, case 2, which proved to be a

commercial failure, was from the perspective

of project management an excellent example.

Also the technical success seemed to be allright. An important insight that helps to

understand these contradictory observations

made in case 2 is provided by Ottum and

Moore (1997) and Campbell and Cooper

(1999). Ottum and Moore (1997) have

investigated the role of market information in

new product success or failure in their study

and have shown that there is a strong

relationship between market information

processing and new product success. They

also stress that effective market informationprocessing requires not only the gathering of

good quality information but also the sharing

and using of that information (Ottum and

Moore, 1997). However, regarding customer

involvement in NPD there is also somewhat

surprising evidence available. Namely, it is

argued that there is no automatic short-term

commercial benet associated with customer

partnering compared to in-house

development (Campbell and Cooper, 1999).

Indeed, one should be very careful ingathering market information and integrating

it in the NPD process. Especially in

circumstances analogous to case 2, where

industrial investment goods were being

developed, on the basis of a very limited

number of customer opinions, it is too easy to

get the impression that the product and its

characteristics are based on market needs

even when this is not the case. One or twoactive customers in the development phase

may, as happened in case 2, lead the

developing company into areas which are far

from real market need.

Furthermore, case 1, which clearly

succeeded in terms of technological goals and

did not fail from the perspective of project

management, did not make a clear

commercial difference. In this light, it seems

that neither project management nor

technical success alone are measures thatshould be used to anticipate commercial

bottom-line success in this particular

environment. Partly this is due to a situation

analogous to that in case 2 regarding market

or customer information. Instead of being the

result of a market study, the product

specication was created mostly on the basis

of a strategic denition of company policy.

Still, the product seems to be able to deliver

value for the customer. It is, however,

noteworthy that the company has failed in thetask of value/cost assessment regarding this

product. To be able to compete in the market

successfully, product cost and value have to be

in balance. So far, this has not been the case.

As regards the problem presented by

Matthews (1991) according to which category

B projects may often fail to receive

justication for funding since they neither

represent pure breeding ground any more

nor have reached the status of investments

that could be assessed using nancialmeasures, the cases in this paper provide one

though a limited insight. Especially when

examining the nancial success of the project,

it is necessary to assess and to measure the

Figure 4 Summary of case results





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project from the perspectives of all relevant

stakeholders. Technological success or

strategic t is not enough if there is, for

instance, lack of understanding concerning

customers value creation or competitors

positions and offerings. Finally, to turn an

otherwise successful project or product into

good business, one has to consider also issues

such as cost efciency or manufacturability.

As Neely et al. (1995) among others, point

out, the main sources of inappropriateness of

performance measurement, in general, are

short-termism, lack of strategic focus and

local optimisation. A holistic view seems to be

required. In the light of the cases presented in

this paper, NPD is no exception to the other

application areas of performance

measurement: good performance

measurement captures a number of

dimensions that are associated with success in

a particular case. Regarding the perspectives

introduced earlier which make a contribution

to new product success, the observations of

the study can be summarized as follows:. Strategy: without some kind of strategy

connection, an R&D project is not likely

to receive the resources and support that

are an imperative in assuring the proper

conduction of a development project.

However, on the basis of all this case

evidence, a strategic t or strategic

supportdoes not seem to be able to secure

any success if the other fundamental

issues such as customer acceptance, right

timing or feasible costs are neglected. The

cases reported in this paper serve as good

examples of this.. Company business: the implications of

the project for the companys business

and competitive situation should be

evaluated well. Even if the primary target

is not the cost leadership, cost efciency

has to be at an acceptable level. A

technically good product with the wrong

price tag on it is not at the end of the

day a lucrative product.. Technology: the technologies used in the

products under development should be

well proven both separately and together

in the end-user environment. In the

development process itself it could be

wise strictly to separate different phasesfrom each other. That is, the development

of the product should be carried out

separately from the development of the

technology. It might also be very valuable

to explore fully the potential of existing

product technology before introducing

new technology.. Customer and competition: also, it is very

important for a better understanding of

customer expectations to consult several

customers in the selected market segment

during the product development phase.

Apparently, customer-driven R&D may

well be to some extent misleading if it is

based only on the identied needs of a

single customer.

This paper is not in a position to give denite

recommendations regarding the means for

implementing performance measurement or

evaluation. At least there is no lack of different

available methods (see Martino, 1995).

Whether the measurement is done byconstruction of numerical indices, struggling

with gures and scoring the projects

(McLeod, 1988) or by more subjective

assessments, the main challenge is not the

actual measurement but the process of

making the right decision on the basis of the

information available.

Discussion

The objective of the paper was to analyse the

dimensions of success at R&D project level.

Success was seen as a variable that is

connected with the NPD process and its

phases. An assumption behind the paper was

that there are different patterns of success for

R&D projects, which are also very different

from each other. A core dilemma was related

to the correlation between different success

domains: a good performance in one success

domain may or may not be related to success

in another one.

In line with the literature (see, e.g. Hart,

1993; Grifn and Page, 1996), the cases

investigated in the paper showed that success

in NPD is indeed a multifaceted and elusive

issue. Project management success, technical

success and nancial success seldom go hand

in hand as unwelcome as this may be from

the management point of view. In the process

of specifying and interpreting the meaning of

NPD success, this fact reinforces the

perception that success is both a context- and

stakeholder-specic issue. The very same

project can even with sound argumentation

be interpreted either as a failure or as a

success story, depending on who is evaluating





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the project, the situation or the timeframe

within which evaluation takes place. Also,

different product development projects often

represent quite different patterns of success:

one project may perform very well in nancial

terms, another may be protability-wise a

failure but in the technical sense by meeting

the state-of-the-art technical requirements a

big success story, while a third projects

outcome may be poor almost in every respect

but the project management has been efcient

and well organized, thereby providing the

company with a good example of outstanding

R&D project management also for the future.

The existence of different patterns of

success challenges R&D management.

Striving for success might include seeking

compromises between different forms of

success. If a project cannot be successful in

every domain, it still may be able to contribute

in some areas. Taking into account that

investments in R&D are expected to produce

returns, especially in the long term, an

individual project can be considered a success

to some extent if it can either produce a direct

impact or indirectly produce at least the

preconditions for future returns. Therefore, a

systematic demand for direct payoffs in each

NPD project that refuses to take into account

the importance of projects indirect impacts

on success may even be harmful in terms of

the overall success of NPD.

Although the three success perspectives

studied sufce to demonstrate the elusive and

varied nature of NPD success, this analysis

has excluded other issues that are also of

interest. For example, as seen in the context of

knowledge creation, the concept of product

development success receives one additional

interpretation: R&D activities can be

perceived as successful when they facilitate or

generate valuable knowledge. This seems to

be reasonably well in line with Lewis (2001)

notion that NPD can be seen as a specic

illustration of organizational learning. Lewis

(2001) argues that the interaction between

resources and processes is not uni-

dimensional:resources create value when they

are utilised in processes, which in turn helps to

create new resources or extend existing ones.

In NPD this means not only that skilled

resources are one of the prerequisites of agood NPD process, but a good process by

itself also generates valuable information,

knowledge or experience i.e. resources.

Drejer and Riis (1999) view competencies as a

system of human beings using technology in

an organized way and under the inuence of a

culture to create output that yields a

competitive advantage for the rm. Both of

these views are essentially similar: they

perceive competencies to some extent as

systems action and interaction are strongly

present, and both link competencies closely to

the creation of competitive advantage.

Competencies are not just any ability to

respond to random demands, but rather

building blocks for a rms competitive

advantage.

Since the concept of success is itself

difcult to dene, it is a difcult task indeed to

try to describe the road leading to success.

Therefore, on the basis of this study, it would

be questionable to present any standard

formula for new product success. However,

consistently with the ndings of this paper,

many variables that have an inuence on

success have been identied also in prior

studies: for instance, product superiority,

market need and competitive position (see,

e.g. Cooper, 1985; Cooper and Kleinschmidt,

1995; Hollander, 2000; Hultink et al., 2000).

Also, concerning the generalization of the

results, it is not claimed that all development

projects behave similarly to the projects

analysed in this paper. That is, a project could

possibly succeed in all domains or it could fail

in all three. However, it seems to be a

common of product development projects

that success often has something to do with

coincidences or chaos. Perhaps everything

cannot be rationalized.

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PD_The Patterns of Success in Product Development a Case Study

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