3 Structured processes for developing new products For most companies wanting to become more innovative, which they will almost certainly associate with the development of new products, the starting point is the introduction – or revision – of a new product development process. While structured processes for the development and management of new products are no guarantee for improving innovativeness they are nevertheless an important part in an organisation’s armoury to improve new product introduction rate and maximise the benefits from a company’s product portfolio. One of the key dilemmas is described by one interviewee, ‘‘The problem with process is, if you provide too much detail you create information overload; if you have too little detail – people make mistakes and lose perspective.’’ The processes should be about providing guidance, not dictating what needs to be done. The last few years have brought a couple of new insights into processes in the context of innovation. First, a structured process alone is often not sufficient; the behaviours of the people will have to change alongside. Second, many companies have realised that one process is not enough, particularly if innovation is to go beyond the incremental. Incremental and radical innovation require different conditions under which they flourish. Leading innovators have started to address this by either having different pathways or by establishing a pre-process phase. We will come back to that in more detail in Chapter 21. This chapter briefly reviews the evolution of the new product development process, expands on the stage-gate process and product portfolio management as well as the role of the project leader, concluding with some insights into best and worst practice. THE EVOLUTION OF THE NEW PRODUCT DEVELOPMENT PROCESS One of the biggest influences on how companies approach product development in the west has been a concept developed by NASA in the 1960s, introduced to make the management of large-scale, complex defence projects easier. The first version ‘Phased Project Planning’, as it was called, described a basically sequential approach consisting of four phases: • preliminary analysis (phase A) • definition (phase B) • design (phase C) • operation (phase D) 50 MANAGING INNOVATION, DESIGN AND CREATIVITY In addition checkpoint reviews were introduced to ensure that mistakes would not be carried forward into the next phase. While this approach was originally applied to complex, large-scale projects only, its principles were soon scaled down and translated for new product development in a more general way. The fundamental principles – phases and checks between them – are still valid today, and reflected in the now most commonly used kind of process, the stage-gate process, which we will look at in the following section. Figure 3.1 shows the NASA process as seen in Peter W.G. Morris’s book The Management of Projects. Preliminary Design Review (PDR) Critical Desig.

1. 3
Structured processes for
developing new products
For most companies wanting to become more innovative, which
they will almost certainly associate with the
development of new products, the starting point is the
introduction – or revision – of a new product development
process. While structured processes for the development and
management of new products are no guarantee for
improving innovativeness they are nevertheless an important
part in an organisation’s armoury to improve new
product introduction rate and maximise the benefits from a
company’s product portfolio. One of the key dilemmas
is described by one interviewee, ‘‘The problem with process is,
if you provide too much detail you create information
overload; if you have too little detail – people make mistakes
and lose perspective.’’ The processes should be about
providing guidance, not dictating what needs to be done.
The last few years have brought a couple of new insights into
processes in the context of innovation. First,
a structured process alone is often not sufficient; the behaviours
of the people will have to change alongside.
Second, many companies have realised that one process is not
enough, particularly if innovation is to go beyond
the incremental. Incremental and radical innovation require
different conditions under which they flourish. Leading
innovators have started to address this by either having
different pathways or by establishing a pre-process phase.
We will come back to that in more detail in Chapter 21.

2. This chapter briefly reviews the evolution of the new product
development process, expands on the stage-gate
process and product portfolio management as well as the role of
the project leader, concluding with some insights
into best and worst practice.
THE EVOLUTION OF THE NEW PRODUCT
DEVELOPMENT PROCESS
One of the biggest influences on how companies approach
product development in the west has been a concept
developed by NASA in the 1960s, introduced to make the
management of large-scale, complex defence projects
easier. The first version ‘Phased Project Planning’, as it was
called, described a basically sequential approach consisting
of four phases:
• preliminary analysis (phase A)
• definition (phase B)
• design (phase C)
• operation (phase D)
50 MANAGING INNOVATION, DESIGN AND CREATIVITY
In addition checkpoint reviews were introduced to ensure that
mistakes would not be carried forward into the next
phase. While this approach was originally applied to complex,
large-scale projects only, its principles were soon
scaled down and translated for new product development in a
more general way. The fundamental principles –
phases and checks between them – are still valid today, and
reflected in the now most commonly used kind of
process, the stage-gate process, which we will look at in the
following section. Figure 3.1 shows the NASA process

3. as seen in Peter W.G. Morris’s book The Management of
Projects.
Preliminary
Design
Review
(PDR)
Critical
Design
Review
(CDR)
First Article
Configuration
Inspection
(FACI)
Customer
Acceptance
Review
Readiness
(CARR)
Design
Certification
Review
(DCR)
Flight
Readiness

4. Review
(FRR)
Requirement
definition
Development
Design
Phase I
CARR
Phase II
CARR
Phase III
CARR
Manufacturing
Product
configuration
baseline
established
Drawing
baseline
established
Design
requirements
baseline
established

5. Verification of manufacturing vs
design specification and assessment
of test results
Test and checkout
Certify flight
and ground
systems for
manned flight
Drawing
baseline
established
Operations
Delivery
Launch Design
start
Figure 3.1 The NASA management process.
Source: Morris, P.W.G. (1994). The Management of Projects.
London: Thomas Telford. Reproduced
by permission of NASA.
A further influential study, with regards not only to the
development process but also to new product in general, was
undertaken by Booz Allen Hamilton (1982). When they
researched how companies define product development
stages they found the following steps:

6. 1. development of new product development strategy1
2. idea generation2
3. screening and evaluation3
4. business analysis
5. development
6. testing
7. commercialisation
1Aspects related to strategy are covered in Chapter 6.
2Aspects related to idea generation are covered in Chapter 21.
3More on the evaluation and measurement in Chapters 21 and
25, respectively.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 51
These categories are used with variations throughout the
literature and there is a body of literature discussing each
of the steps individually. If more steps are proposed, they are
generally a breakdown of one of the steps above.
Cooper (1986), for example, describes 13 steps whereby the
additional steps result from separating activities such
as market research and business analysis. Another, broader way
of segmenting the development process, identifying
three main stages, is provided again by Cooper (1988):
1. pre-development activities
2. product development and testing
3. commercialisation

7. In his 1992 article Rothwell provides a useful summary of how
the new product development process has evolved
over time (shown in Table 3.1).
In the shift from a linear, sequential development process
towards a more integrated and dynamic process the
need for increased speed has been one of the main drivers.
Takeuchi and Nonaka (1986) have written one of the
most influential articles on this subject, alerting companies to
the need to move away from the linear approach. The
sequential approach is described as a ‘relay race’ where the
baton is passed from one department to the next, often
requiring changes to accommodate requirements of a
downstream department. This approach could probably also
have been called ‘Chinese whispers’ as information passed on is
often incomplete or insufficiently explained, leading
to misunderstandings and confusion. One of my favourite
sketches on this subject stems from Michael Smith – see
Figure 3.2 (reproduced as seen in Lorenz, 1990).
Table 3.1 Five generations of new product development models
Generation Type of model Characteristics of model
First Technology push
model
Simple linear sequential process; emphasis on R&D, the market
is a
receptacle for the fruits of R&D
Second Need pull model Simple linear sequential process;
emphasis on marketing; the market is
the source of ideas for directing R&D; R&D has a reactive role
Third Coupling model Sequential but with feedback loops; push

8. or pull or push/pull
combinations; R&D and marketing more in balance; emphasis
on
integration at the R&D/marketing interface
Fourth Integrated model Parallel development with integrated
development teams; strong
upstream supplier linkages; close coupling with leading edge
customers;
emphasis on integration between R&D and
manufacturing/design for
makeability; horizontal collaboration (joint ventures)
Fifth Systems
integrating and
networking model
Fully integrated parallel development; use of expert systems
and
simulation modelling in R&D; strong linkages with leading
customers
(customer focus at the forefront of strategy); strategic
integration with
primary suppliers including co-development of new products
and linked
CAD systems; horizontal linkages; joint ventures; collaborative
research
groupings; collaborative marketing arrangements etc.; emphasis
on
corporate flexibility and speed of development (time-based
strategy);
increased focus on quality and other non-price factors
Source: Based on Rothwell, R. (1992). Successful industrial
innovation: critical factors for the 1990s. R&D
Management, 22, 221–39.

9. 52 MANAGING INNOVATION, DESIGN AND CREATIVITY
As sales requested it As the drawing office designed it As
production engineering saw it
As the works build it As the service engineers installed it As the
customer thought he
had described it to sales
Figure 3.2 Barking up the wrong tree?
Source: Smith in Lorenz, C. (1990). The Design Dimension.
Oxford: Basil Blackwell. Reproduced by
permission of Basil Blackwell.
Takeuchi and Nonaka (1986) contrast the relay race with a then
new approach they compare to a ‘rugby game’ in
which the product is passed back and forth between the
different departments, like the ball in rugby. They explain
that the advantages of the new approach include not only
increased speed but also lead to greater consistency
and integrity of the product because of the early consideration
of concerns and requirements from all departments
involved in a product’s development process.
Building on the insights and positive results that companies
experienced through early and continuous interaction
between all departments, a large number of articles in the early
1990s heralded the use of cross-functional teams
as the solution to many a development problem (e.g. Ancona &
Caldwell, 1990; Belbin, 1991; Faust, 1993; Nadler,
1991; Oakley 1990a). However, companies implementing teams
as a consequence were often disappointed. This

10. may have been attributable to a considerable extent to the fact
that teams were told to work in teams – without
being given any training or other kinds of support that would
aid the shift in working practices and behaviours. I
would also like to point out here that which is the most suitable
structure to drive a project forward will depend on
the level of innovativeness. Small changes can successfully be
executed by moving the project through the different
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 53
functions whereas highly innovative projects have more chances
of success if they are executed by a dedicated team.
We will come back to the subject of teams and structures in
Chapter 10.
A final aspect that has received a great deal of attention in the
literature is what is often described as the ‘fuzzy
front end’ of the development process. Particularly for highly
innovative concepts it tends to be difficult to predict
how long the development will take, what kind of resources will
be required and what exactly the outcome will
be. On the other hand, the early stages of product development
are quite fundamental as over 80% of a product’s
production costs are locked in during these early stages (e.g.
Dixon & Duffey, 1990; Smith & Reinertsen, 1995). A
lack of attention here can lead to costly and time-consuming
changes later in the development process. Smith and
Reinertsen point out, ‘‘The calculated cost of delay is often 500
to 5000 times higher than the visible cost of assigned
personnel. Managers unaware of these costs will tend to ignore
the fuzzy front end. Those who understand these
costs will instead focus a great deal of attention on this phase.’’

11. Khurana and Rosenthal (1997) who have undertaken
research into this fuzzy front end of new product development
found that success factors related to this stage can
be grouped under two headings:
1. Foundation – including aspects such as the existence of a
product strategy, the management of the product
portfolio (rather than individual projects), the existence of a
specific product development organisation
structure including a project leader, a core team, an executive
review group, and a good communication
structure.
2. Project-specific – referring to the existence of the following:
a concept statement, thorough evaluation, a
product definition, value chain considerations, front-end project
planning and definitions, and recognising
interrelationships.
However, there are also those who emphasise that different
stages of the development process require different
cultures, particularly if innovation rather than incremental
improvements are concerned. Zien and Buckler (1997)
describe what they call three micro-cultures of innovation:
1. The Fuzzy Front End (FFE): experimental and chaotic;
requires high tolerance for ambiguity and uncertainty;
for people with high structure needs it often seems
‘unreasonable’; but people who like it enjoy it for the
quest itself; it is unpredictable, and it depends on much
individual activity.4
2. The Product Development Process (PDP): which needs to be
disciplined and focused on numerous
quantitative goals and measurements; it requires commitment to
the goal; is schedule oriented and urgent;

12. can be trained, and is generally not receptive to new ideas;
teamwork is of paramount importance.
3. Market Operations (MO): here we seek predictability and
order; it has a strong financial orientation; it relies
on commitment to established values and businesses; is oriented
to rules and routine and slow to change;
has to be highly organised and does not welcome revolutionary
ideas; tends to be of large size compared to
FFE or PDP.
It is often at the intersections of the stages that problems arise.
People from one stage have often little sympathy or
even respect for those best suited to conduct the next stage.
Essential aspects of a project can get ‘lost in translation’
4This is very much the point made in the introduction about the
difference of creativity which relies on individuals, and
implementation which depends on teams.
54 MANAGING INNOVATION, DESIGN AND CREATIVITY
when a project is passed on. I sometimes suggest establishing
the role of ‘the keeper of the essence’, a person who
ensures that the key aspects of the concept are maintained and
protected through the different development stages.
Some companies have started to address this issue by
developing dedicated project leaders; however, disconnecting
the ideator from the project can also lead to a watering down of
the original idea.
THE STAGE-GATE PROCESS
Sunk cost:

13. past expenditure, which is often thought to
be irrelevant to future decisions as the best
decisions tend to maximise future cash flow.
The Oxford Concise Dictionary of Business, 1990
I have mentioned earlier that the principles of the stage-
gate process go back to the work undertaken by NASA
on project management. As the original NASA process,
the stage-gate process suggests that a project has to be
reviewed at certain points in its development, and a go/no-
go decision should be made. This way an organisation can
avoid throwing good money after bad – it is never advisable
to keep spending money on a project just because quite a
lot has been spent on it already (sunk cost).
The stage-gate process as now known and used in product
development has been devised by Robert G. Cooper.
Both Figure 3.3 and the overview in Box 3.1 are based on
Cooper and Kleinschmidt’s 2001 article ‘Stage-gate
process for new product success’.
In their article Cooper and Kleinschmidt also share some
insights into how to maximise changes for new product
success. This includes the already-mentioned necessity to pay
careful attention to the early stages, which includes
doing background research as well as a ‘sharp and early’
definition of the product, and other points such as the
Gate 1
Gate 3 Gate 4 Gate 5Stage 1 Gate 2 Stage 2 Stage 3 Stage 4
Stage 5
Ideation

14. 1. Preliminary 2. Build 3. Development 4. Testing & 5. Full
Production
Investigation Business Case Validation & Market Launch
Post
Implementation
Review
2. Second 3. Decision on 4. Post- 5. Testing &
Screen Business Case Development Validation
Review
1. Initial
Screen
The Stage-Gate New Product Process by Robert G Cooper
The Stage-Gate New Product Process by Robert G Cooper
Figure 3.3 Stage-gate process
Source: Reproduced from Cooper & Kleinschmidt, 2001.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 55
Box 3.1 Process overview
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5
First decision to
commit resources,
signalling tentative
commitment; criteria

15. tend to be qualitative
and few in number:
strategic alignment,
technical feasibility,
competitive
advantage,
opportunity
attractiveness; looking
at ‘musts’
More rigorous
screen; commitment
of resources more
substantial; often a
scoring model is
used to measure
synergies, market
attractiveness,
competitive
situation, product
advantage, profit
potential; looking at
‘musts’ and ‘shoulds’
Last point to kill
project before
heavy spending;
sign off of
product
specification; pass
criteria should be
tough and
rigorous; looking
at ‘musts’ and
‘shoulds’ again as
well as financial

16. and risk review
Recheck continued
attractiveness of
project; check
against product
specification and
performance
expectations
Criteria here are
largely on quality
of efforts to date,
appropriateness
of the production
and launch plans,
financial viability
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Quick review of
project, looking at
technical and
marketplace merits
Development of
business case to
verify attractiveness;
‘critical homework
stage’ that is often
neglected; studies
may include: user
needs/wants;
competitive analysis;
concept testing;
technical and

17. manufacturing
appraisal; legal,
patent and
regulatory
assessment; detailed
financial analysis
Deliverable at
end of this stage
is a lab-tested
prototype;
emphasis is on
technical work,
marketing and
manufacturing
activities run
parallel
Testing and
validating: the
product itself,
production
process, customer
acceptance,
economies;
activities may
include: in-house
product test
checks (quality and
performance); user
field trials; pilot
production;
pre-test market;
revised financial
analysis

18. Putting marketing
launch plan and
production or
operations plan in
motion
Post-implementation review
Often companies review the project and the products
performance about 6–18 months after launch to
draw out lessons learnt
Source: Cooper & Kleinschmidt, 2001. Reproduced by
permission of Cooper & Kleinschmidt.
56 MANAGING INNOVATION, DESIGN AND CREATIVITY
need for market orientation, teams and strong cross-functional
cooperation and, most importantly, the need for
a superior product. This last point is still the major
differentiator between a successful and a less successful
or even completely unsuccessful product. And finally, as we
mentioned speed earlier, it is interesting that the
authors warn to be careful with speed. Or rather, agreeing with
the idiom ‘speed not haste’, they say that
companies should be careful not to let speed become a goal in
itself. The goal should always remain the intro-
duction of a successful new product. Cutting corners,
particularly in the early stages, generally has to be paid for,
manifold, later.5
A further note of caution, in applying a stage-gate process
companies should be careful not to let the process
become an end in itself. If applied too strictly and rigidly it can
hinder rather than help the development of new

19. products; to quote one of my interviewees, ‘‘There can be a
tyranny of the process!’’
Leading-edge companies have come to realise this and now talk
about using the process as guideline, rather than a
‘bible’ or ‘rule book’. Gates become more fluid and more than
one stage can be worked on simultaneously. This
prevents individual gates from becoming bottle necks that delay
progress of a project unnecessarily. In fact, Robert
Cooper himself has pointed this out as early as 1994,
announcing it to be time for the third-generation new product
development process, one that is characterised by four ‘Fs’:
• Fluid: it is fluid and adaptable, with overlapping and fluid
stages for greater speed.
• Fuzzy gates: it features conditional go decisions (rather than
absolute ones) which are dependent on the
situation.
• Focused: it builds in prioritisation methods that look at the
entire portfolio of projects (rather than one project
at the time) and focuses resources on the ‘best bets’.
• Flexible: it is not a rigid stage-and-gate system; each project
is unique and has its own routing through the
process.
The four ‘Fs’ are not only important for the application of the
process, they also apply to the treatment of the
process itself. It is important to continuously assess and adjust a
company’s new product development process to
make sure it reflects latest insights, the context of the
organisation, and particularly its ambition. What I mean by the
latter is that a process for the development of incremental
improvements or routine projects should be different

20. from one that aims to produce radical ones – as alluded to
earlier. Changes in a company’s structure can also
have implications for the new product development process, for
example, product development in a functionally
oriented organisation is likely to be executed differently from
an organisation with a project or matrix structure (for
characteristics of functional, project and matrix-based
organisations see Table 3.2). Whichever process is chosen, it
is essential that reward systems support the behaviours required
to fill the process with life – in fact, all systems and
aspects of an organisation need to enhance and support each
other, a theme to which we will come back to again
and again throughout the book.
5Further articles on the stage-gate process are available on
www.stage-gate.com.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 57
Table 3.2 Types of organisational structure
Type How it works Appropriate for Problems
Functional
structure (basic
structure)
The project is planned and
executed within a
functional structure with
moves from department to
department in a
pre-arranged sequence

21. (relay race)
Responsibilities must be
clearly defined
Need for integration of
sequential activities
Improvements of existing
products
New products of low
innovation
Sequential processing
possible
Fosters deep specialisation
and expertise
Often strong pressure on the
departments to give top priority
to short-term projects
Conflicting demands on staff
(prioritisation of projects)
Balance between short-term
projects (order and discipline)
and innovative projects
(freedom and flexibility)
Integration of functions
Independent
project
organisation
Self-contained group,
full-time members from
various different functions
The project manager has
full responsibility for the
project and is given the

22. necessary resources for
planning and
implementation
Team should be co-located
Large projects which justify
employing experts from
different functions on a
full-time basis
For new solutions or new
products
Firms in dynamic markets
Issue of re-integration of staff
Isolation from the rest of the
organisation
Dispensing people to the
project full-time might cause
problems in the basic
organisation
How to maintain specialisation
and carry forward learning
from previous projects
Matrix
organisation
Decision-making
responsibility rests with
the project team
Project manager negotiates
with heads of functional
departments on necessary
resources (staff and
equipment)
Staff is assigned on a

23. part-time or full-time basis
Task often broken down
into independent activities
and allows simultaneous
processing
High demands on social
and political skills of
project manager
Clear goals and
well-understood
technology will result in
an effective balance of
power
Complex projects which
require simultaneous efforts
of experts from several
disciplines
Large projects, here the
project manager is often
supported by team leaders
within the individual
functions
Authority can be split between
the project manager and the
functional manager
Projects are cutting across the
authority lines of the functional
departments (leading to
authority ambiguity)
Conflict of loyalty of part-time
staff who work on more than
one project simultaneously
Problems of re-integration into
functional structure

24. If project is broken down into
sub-tasks the need for
coordination goes up
Competition for resources also
leads to an increased need for
coordination
Time consuming
decision-making process
Source: Based on Baker & Wilemon, 1977; Brown & Agnew,
1982; Davis & Lawrence, 1977; Earle, 1973; Greiner
& Schein, 1981; Holt, 1987; Kingdon, 1973; Kolodny, 1979,
1980; Rowen et al., 1980; Sayles, 1976; Ulrich &
Fluri, 1988; Vasconcellos, 1979.
58 MANAGING INNOVATION, DESIGN AND CREATIVITY
THE DEVELOPMENT FUNNEL AND PRODUCT
PORTFOLIO MANAGEMENT
Next to the stage-gate process the best-known and a popular
tool in the armoury to improve new product
development is the ‘development funnel’, a tool developed by
Harvard Business School professors Kim Clark
and Stephen Wheelwright in the early 1990s (see Figure 3.4). It
encourages managers to take an integrated
approach to new product development. Rather than making
decisions on individual projects, their approach suggests
the management and coordination of product development
activities from a company-wide perspective, starting
with a link to company strategy. It is interesting to note though
that much of the literature seems to treat
the development funnel as a variation on the theme of stage-
gate processes albeit with a strong emphasis on

25. the need to generate many ideas, and to narrow them down
quickly as the project is progressing through the
process. I believe that the main advantage of the development
funnel is the requirement to take a company-wide
perspective.
In the following we will look at the factors behind each of the
individual components of the development funnel.
Capabilities Strategy
Considering
Core competencies
Technological base/stage cycle
Technological integration
Product/Market
Strategy
Clarifying position and priorities on
new markets/existing markets
Derivative product/new concept
Financial contribution
Goals and
Development
Objectives
Project
Portfolio
Planning
Project

26. Management
and
Execution
Market
Assessment
and
Forecasting
Capabilities
Assessment
and
Forecasting
Post-Project
Learning and
Improvement
Business
Strategy
Figure 3.4 The development funnel.
Source: Reproduced from Clark, K.B. & Wheelwright, S.C.
(1993). Managing New Product and Process
Development: Text and Cases. New York: Free Press.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 59
For capabilities assessment and forecasting a company would
undertake an analysis of the current and future

27. product/service capacity, look at current and planned new
product/service developments, investigate the efficiency
of current processes and review technologies to determine the
company’s current position.
Market assessment and forecasting would involve an analysis of
existing clients to identify current needs and areas of
improvements as well as an analysis of competitors to identify
new areas of expansion, and finally, a trends analysis
to capture the direction of the industry.
Development goals and objectives comprises the development
of a set of specific measures and targets for key
portfolio criteria including:
• strategic fit
• revenues and profits
• client fit
• dates of new product/service introductions and technology
achievements
• new product/service performance objectives and criteria
This component also involves the establishment of targets for
entering new segments, developing new technology
and technical skills, or creating new markets as well as acting
as a guideline for investment decisions.
Project portfolio planning involves the definition of a set of
criteria against which projects are selected and resources
are allocated to them. Box 3.2 gives an example of the criteria
one particular company uses. There should generally
be a strong link between the portfolio criteria and an
organisation’s overall strategy. When selecting projects the
first question should always be, will it help us to achieve our
ambition, followed by a second, does this project help
us balance our portfolio or are we doing too much of one

28. particular kind.
Box 3.2 An FMCG company’s portfolio criteria
We balance out product portfolio at four levels:
1. Between brands/product portfolios – to make sure there is
enough innovation in each area.
2. Between developed/non-developed markets; recognising that
non-developed markets take longer for
pay-back.
3. Between three levels of horizon which equate to different
types of innovation: (a) product extension;
(b) existing product into new market or changed product into
existing market; (c) more of the blue-sky
stuff, not necessarily fitting in at present.
4. Against strategy.
Careful resource planning and management are critical, as
successful product development is prevented in many
organisations due to ‘project constipation’: too many projects
with too little resource. Clark and Wheelwright found
that a person operates at their best when being able to focus on
no more than two projects (Figure 3.5).
60 MANAGING INNOVATION, DESIGN AND CREATIVITY
100
90

29. 80
70
60
50
40
30
20
10
0
1 2 3 4 5
P
e
rc
e
n
t
o
f
T
im
e
S
p
e

30. n
t
o
f
V
a
lu
e
A
d
d
e
d
A
ct
iv
iti
e
s
Number of Development Projects Assigned Concurrently to a
Single Engineer
Figure 3.5 Value added per project.
Source: Reproduced from Clark, K.B. & Wheelwright, S.C.
(1993). Managing New Product and Process
Development: Text and Cases. New York: Free Press.
Companies should also consider:
• specifying the types and mix of projects along the key

31. portfolio criteria
• explicitly linking projects to firm and service line strategies
• identifying existing capacity for development
• identifying capability requirements for development of current
and future generation products/services
• providing a resource capacity plan for development efforts
• acting as the framework for communicating the portfolio
In the context of innovation it is particularly important to
review the product portfolio in terms of the mix between
radical and incremental innovation. Most organisations focus on
incremental innovation, thereby putting the future
of their organisation into jeopardy. Many organisations that
have started out with a major innovation or with being
very innovative become stale and complacent over time,
neglecting three out of the four quadrants that a company’s
product portfolio should address (see Figure 3.6). Unless an
organisation keeps putting new products into the far
three quadrants, over time all its products or services will end
up in the bottom left corner. What the appropriate
split between the four different quadrants will depend on each
company’s specific context and innovation ambition
– but without some activity in each, decline is certainly
preprogrammed. And, by the way, most organisations
concentrate their efforts with about 80% on incremental
innovation, and about 10% each on incremental innovations
for new markets and radical innovation for existing markets –
and none on radical innovation for new markets.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 61
Incremental Radical

32. Innovation
M
a
rk
e
ts
E
xi
st
in
g
N
e
w
Figure 3.6 Innovation categories.
Project management and execution implies the definition of
appropriate stages and gates a project must pass through.
This process has to facilitate ideation, guide projects efficiently
from idea to launch, ensure untenable product/service
projects are terminated, identify tasks for each stage, specify
clearly identified decision points, and provide information
on required documentation and decision criteria. While some
seem to view the development funnel as a substitute
for a stage-gate process, I rather see the stage-gate process as a
tool during the project management and execution
stage. And what Cooper (e.g. 2001) calls ‘post-implementation
review’, though not officially part of the stage-gate

33. process as such, covers Clark and Wheelwright’s last box,
‘post-project learning and improvement’. However, the
execution of a development funnel as described above seems to
be an ideal scenario, and is not matched by what
Clark and Wheelwright (1993) found (see Figure 3.7).
While their three scenarios certainly do not give the impression
of a happy ending, companies should also be
wary not to ‘overdo things’, particularly when it comes to
perfecting a product before launch. Interviewees in large
companies emphasised that working on the ‘100% right theory’
can delay product introduction indefinitely! ‘Failing
early and often’ is one of the mantras innovation consultancy
IDEO promotes. Rather than trying to get something
perfect they suggest getting exposure and feedback as early as
possible, so the concept can be improved before
being finalised.
One of the reasons for a lack of successful introduction of
stage-gate processes and development funnels is that
there is often insufficient support through training and holding
people accountable to adhering to the new process.
As one interviewee commented, ‘‘When the new product
development process was introduced, my question
was: where is the plan for the behavioural aspects? The
consultants did not have any advice on attitude or any
supporting training.’’ Leading by example and rewarding people
for the successful adaptation of new processes can
also help.
Another is that top management’s attention to any one particular
project seems to come at the most inconvenient
time: towards the end, when most parameters have been fixed
and changes are costly and time consuming – as
shown in another graph from the 1993 book by Clark and
Wheelwright (Figure 3.8).

34. 62 MANAGING INNOVATION, DESIGN AND CREATIVITY
Real Funnels: Group A
?
??
Marketing
Inputs
Final
Evaluation
Department
Changes
Start
Product A Filter
Senior
Management
Injector
Real Funnels: Group B
Research
Customer
Marketing
Engineering

35. Strategic
Planning
OEM
Quality
Control
Cont.
Real Funnels: Group C
Central
Researh
Local
Inputs
Board Heat
Product "A"
Competitor
Boot
NIH
Resistor
(abrasion ;
slows
down the flow)
Tech Prod'n Log Sales
LAUNCH
HERE

36. RELAUNCH
HERE
1½ – 2years 2– 3
hours
8 –12months
leaky
Figure 3.7 Development funnel realities.
Source: Reproduced from Clark, K.B. & Wheelwright, S.C.
(1993). Managing New Product and Process
Development: Text and Cases. New York: Free Press.
If management comes in towards the end, wanting to change
certain aspects of the project will have consequences
for project costs as well as project timing. Early involvement
and gaining buy-in can help prevent this from happening.
The responsibility for involving relevant parties and securing
their buy-in falls generally to the project manager, who
sits at the centre of the hour glass of management and the
project team. This makes the project manager’s role
particularly important.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 63
Knowledge
Acquisition
Concept

37. Investigation
Basic
Design
Prototype
Building
Pilot
Operations
Operations
Ramp-up
Ability to Influence
Outcome
Actual
Management
Activity
HIGH
LOW
Index of
Attention
and
Influence
Time
Figure 3.8 Senior management attention.
Source: Reproduced from Clark, K.B. & Wheelwright, S.C.
(1993). Managing New Product and Process

38. Development: Text and Cases. New York: Free Press.
THE ROLE OF THE PROJECT LEADER
‘‘I believe that it is often the person driving the project who
makes the difference between success and
failure, particularly for innovative projects.’’
Quote from the Innovation Best Practice interviews, 2003
The issue of ‘the project manager’ or ‘project leader’ has first
been brought onto management’s radar through a
1959 Harvard Business Review article by Paul Gaddis. He was
the first to alert management to the fact that a new
breed of corporate animal was required, the project manager.
In his book on project management Harvey Maylor (1996)
suggests that project managers should receive the
following from their organisation/management:
• responsibility
• authority
• accountability
• credibility
Explaining that the exact role a project manager takes on will
depend on aspects such as the nature of the project
(complexity, scale, position in hierarchy of projects), the nature
of the organisation that it is being carried out in (sector,
activities, organisational structure), the personality of the
project manager, and the specific constraints under which
the project team is working. He also provides a list of
characteristics desirable in a project manager (see Box 3.3).
That the project-specific context not only influences the role of
the project leader but also that the project

39. leader needs different characteristics depending on the context
has been pointed out by a colleague of Clark and
Wheelwright, Takahiro Fujimoto. In his 1991 article Fujimoto
categorises products by looking at two aspects: the
difficulty (a) of achieving internal product integrity and (b) of
achieving external product integrity, and suggests that
64 MANAGING INNOVATION, DESIGN AND CREATIVITY
Box 3.3 Characteristics of successful project leaders
• A desire not just to satisfy but to delight customers and
stakeholders alike.
• Accepting of both challenges and responsibility.
• Being focused on action, rather than procrastination – getting
the job done rather than avoiding critical
or difficult decisions.
• A desire to make the best use of all resources – minimise
waste in all activities.
• Does not lose sight of the light at the end of the tunnel – is
goal focused.
• Has personal integrity – people find it very difficult to respect
and take the authority of a person who has
low integrity.
• Is flexible about the route that must be taken to achieve the
stated end-goals.
• Has personal goals that are consistent with those of the project

40. organisation – the project team perceives
that the project manager and the organisation are going the
same way.
• Ability to determine the real needs/desires of the customer;
this is done through ‘getting close’ to the
customer via visits and both formal and informal discussions,
and asking the relevant questions.
• Analytical skills to turn data into information and break down
the project into comprehensible component
parts.
• Technical skills – the project manager need not be a technical
specialist, but must at least be capable of
comprehending the work that is being carried out and ‘speaking
the language’ of the people involved.
• Team skills – many battles have been won against poor odds
by the ability of an individual to motivate
and enthuse a team.
• Ability to delegate effectively – not try to do everything
personally.
• Ability to manage own time – you cannot expect to manage
other people unless you can show that you
can manage yourself.
• The balancing of stakeholders’ perceptions of project progress
(otherwise known as being able to ‘sell
ideas’).
• Negotiation skills – resolve potential conflict situations to
create a win–win.

41. • Problem solving/facilitating problem solving.
• Question all assumptions made by stakeholders at all stages of
activities.
Source: Maylor, H. (1996). Project Management. London:
Pitman
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 65
High Component-driven Complex products
products
(e.g. machine tools) (e.g. automobiles)
Coordination Engineer = Integrator? Manager = Integrator?
difficulty of internal
product structure Simple products Interface-driven
products
(e.g. packaged goods) (e.g. consumer electronics)
Low Marketing-type product Industrial designer
Manager = Integrator? = Integrator?
Low High
Coordination difficulty of
product-user interface
Figure 3.9 Types of products and project integrators.
Source: Fujimoto, T. (1991). Product integrity and the role of
designer-as-integrator. Design Manage-
ment Journal, 29–34. Reproduced by permission of Design
Management Journal.

42. each of the four possible project types requires a different type
of project manager, or ‘integrator’ as he calls them.6
The four product categories he defines are ‘Component-Driven
Products’, ‘Complex Products’, ‘Simple Products’,
and ‘Interface-Driven Products’ (see Figure 3.9). To manage
each product type a different set of skills is required; for
example, for highly complex projects a manager might be the
best integrator, that is someone with general, political
and negotiation skills – rather than someone with for example a
particular specialist technical expertise. The more
complex a project – or the more innovative – the greater also
the need for effective communication and internal
selling.
But the skill set required of a project leader may not only vary
from project to project, it may also change during
the course of the project, particularly for large and complex
projects. The following example from the Eurostar, the
high-speed train that connects the capitals of Belgium, France
and the UK, illustrates this (von Stamm, 1999a).
While the members of the central project team and most other
key people remained unchanged throughout the
project, the person for the manufacturing consortium changed
twice during the development process. The first
change took place in 1991 after time and cost overruns had
come out in the open, the second in 1993 when the
project went from the development stage into production. Each
of the three project managers had a different skill
set which was seen to be most appropriate at the time.
The first project manager had been responsible for the
development of the TGV Atlantique, the latest version of
the French high-speed train, which was seen to be the blueprint

43. for the Eurostar. However, he had not managed
international projects before and failed to acknowledge the
issues and complications arising from this. He also seems
to have underestimated the technical complexity arising from
the need to operate the train on four different railway
systems (Belgium, France, the UK, and the Eurotunnel). His
withdrawal from the project was also meant as a signal
6With ‘internal product integrity’ he refers to problems in
achieving consistency among the functions and structures of the
product
itself, and with ‘external product integrity’ he refers to the
difficulty in coordinating the interface (functions and features)
between
product and user.
66 MANAGING INNOVATION, DESIGN AND CREATIVITY
to the customers – the three national railways – that the
imminent problems regarding time and cost overruns had
been acknowledged, and that action for change and
improvement had been taken.
His successor was chosen for his technical competence – he had
high credibility with the engineers working on the
project – and his extensive experience in managing international
projects. His main aim was to bring the technical
problems under control and the project back on track.
When the third project manager took over, the major technical
problems had been solved and someone was
needed who could make sure that production would progress at
satisfactory speed. In fact, someone was needed
who had sufficient authority with the French factories to ensure

44. manufacturing would actually happen because here
the Eurostar had to compete for capacity with the various TGV
models.
An interesting insight from a workshop on project leaders in the
context of innovation was that understanding
and knowledge of an organisation’s culture – how things get
done and how to move through the system – was
considered to be the most important factor by workshop
participants; it was felt that this could not substituted by
anything, neither expertise nor otherwise relevant experience.7
So whether it is the structure and design of the new product
development process, or the choice of project leader,
the company or project-specific context and requirements need
to be taken into account. Off-the-shelf solutions
can only be a starting point, not the final solution.
Perhaps one final comment on project leaders. The choice of the
‘right’ project manager is important for another
reason: one of the key differentiators between projects that are
successfully introduced to market and those that fail,
or disappear into the black holes of an organisation is often
quite simply the enthusiasm and passion of the project
leader. This is particularly important for innovative projects
where there is inherently a lot of uncertainty as well
as potentially a lack of understanding of the concept, and
therefore a greater need for selling and communication.
And who is most likely to feel passionate about any particular
project, extremely keen to tell anyone who may
or may not want to hear about it? Who else but the originator of
the idea. This has led some organisations,
which have previously given innovative ideas to professional
project managers for development, to reconsider their
approach. They now provide the idea originators with the
training necessary to bring them up to speed with project

45. management best practice, or have a professional project
manager work alongside them to complement their skills.
READING SUGGESTIONS
On new product development
Clark, K. & Wheelwright, S. (1992). Revolutionizing Product
Development: Quantum Leaps in
Speed, Efficiency, and Quality. New York: Free Press.
Comment: A classic on tools and frameworks for new product
development, introducing the development
funnel, among other things.
7Innovation Exchange workshop held 16 October 2003 at the
London Business School.
STRUCTURED PROCESSES FOR DEVELOPING NEW
PRODUCTS 67
Baxter, M. (1995). Product Design, Practical Methods for the
Systematic Development of New
Products. London: Chapman & Hall.
Comment: While it is written primarily with designers in mind,
it provides useful insights into aspects
on and around product development, including creativity and
innovation. At the end of each
chapter Baxter provides a useful summary of key concepts, as
well as lists of ‘Design Toolkits’
for various aspects of the development process.
Smith, P.G. & Reinertsen, D.G. (1997). Developing Products in

46. Half the Time, 2nd edition. New
York: Van Nostrand Reinhold.
Comment: While focusing on the acceleration of new product
development, what problems are and how
they can be overcome, this book has lots of useful insights for
new product development in
general.
Bobrow, E.E. (1997). The Complete Idiot’s Guide to New
Product Development. New York: Alpha
Books.
Comment: A bit basic but a good introduction to lots of subjects
relevant to new product development.
On project management
Maylor, H. (1996). Project Management. London: Pitman.
Comment: I found this a very useful introduction to project
management with all sorts of evaluation and
assessment techniques.
SOME USEFUL WEBSITES
www.pdma.org
Comment: This website by the Product Development and
Management Association provides a useful
glossary on new product development terms, as well as book
recommendations on and
around the subject.
www.stage-gate.com

47. Comment: This is the website of the consultancy founded by
Robert G. Cooper and Scott G. Edgett
who are seen to be the originators of the stage-gate process: it
provides useful articles, book
references and latest insights on and around the stage-gate
process.