An Investigation into the New Product Process

1. AN INVESTIGATION INTO THE
NEW PRODUCT PROCESS:
STEPS, DEFICIENCIES, AND
IMPACT
Robert G. Cooper and Elko J. Kleinschmidt

2. ABSTRACT
A comprehensive study of 252 new product histories at 123
firms
Each company was shown a set of 13 activities which formed a
“skeleton” of a new product process
Certain activities were considered weak such as market studies,
initial screening activities and preliminary market assessment.

3. Previous literature and recent studies give a fairly
consistent picture and the follow factors are fundamental
to new product success
Product differential advantage
Understanding of user’s needs, wants and preferences
and a strong market orientation
Strong launch effort
Technological strength and synergy
Marketing synergy
An attractive market for the new product
Top management support and commitment

4. ISSUES
Many success factors appears to be beyond the control
of the project manager
Most of these success factors are general in nature and
they are not translated into details of what managers
and new product project teams should do

5. RESEARCH QUESTIONS
What happens as a new product project moves from
idea to launch? What occurs within each stage of the
process – what do people do?
How well are the tasks or activities undertake? And what
improvements are needed?
What is the impact of each of these activities on project
outcomes: commercial success or failure.
Does excellence in each of these tasks really matter?

6. METHODOLOGY
The sample of firms was restricted to industrial product
manufacturers who were known to be active in the field of
product development
Two or three new product projects were discussed in details
per firm: a commercial success, a commercial failure and a
“killed” project
Respondents were quizzed about each of the 13 activities
that were thought to comprise the new product process
A total of 203 projects, including 123 commercial success
and 80 commercial failure

7. New Product Process Activities

8. Results: The New Product Process
Reviews of what actually happened in these 203
projects revealed that many commonly accepted and
prescribed stages or activities are altogether omitted
from the process.

9. Results: Proficiency of Activities
In those cases where a certain activity had been
carried out, the researchers probed to determine how
well the activity was carried out and to what extent
improvements were thought to be required

10. Descriptive review of the
activities
The Idea
Typically, the new product process was initiated by a product
idea that was market derived-from a customer, salesperson,
or competitor. There was less tendency for ideas to be
technology drive
Initial Screening
Screening remains very much an informal decision, that is,
no consistently used checklist of criteria or scoring/rating
procedures. Initial screening was also pinpointed as one of
the activites where improvements were sorely needed

11. Descriptive review of the
activities
Preliminary market assessment
Preliminary market assessment was also rated as a weak
activity. It was omitted altogether in almost one quarter of the
projects and, when done, was rated a weak 5.47 out of 10,
on average.
Preliminary market assessment
This activity was rated moderately strongly: it was un-
dertaken in the great majority of projects (84. 9%) and was
rated as proficiently undertaken.

12. Descriptive review of the
activities
Market research
The detailed market study stage was among the weakest of
all 13 activities in the entire new product process. It was
undertaken in only one quarter of the projects and, when
carried out, was rated ''poorly handled,'' on average.
Business/ Financial analysis
there was a call for more multidisciplinary, multi
departmental inputs; more market information and input from
customers; more time and effort spent on business analysis;
and more formal, consistent procedures.

13. Descriptive review of the
activities
Product Development
This was the actual design and development of the product
and was perceived a well handled activity on average.
Product Testing-In House
Post development, the product was subjected to a set of in-
house tests. This stage was rated the strongest one, on
aberage. The various approaches included prototype testing,
specification testing, operating tests etc.

14. Descriptive review of the
activities
Product Testing with the Customer
This was a fairly well rated activity and undertaken in
majority of projects. It involved giving a sample or prototype
to customer at no charge and letting them try the product
Test Market/Trial sell
This activity was undertaken least frequently of all 13
activities but when undertaken, it was proficiently executed.
It involved selling the product to a sample of selected
customers only or in a specific geographic area only

15. Descriptive review of the
activities
Trial Production
This step was carried out in less than half the projects but,
when undertaken, was rated proficiently. It involved testing of
the production systems itself
Precommercialization Business Analysis
This involved doing a detailed business analysis to take a
final ‘go/no go’ decision before full launch. Only a minority of
projects were found to have such an analysis

16. Descriptive review of the
activities
Production Start-up
It was recognized as a distinct stage in 56% of the projects
and was rated proficiently. In most projects, it involves
acquisition and commissioning of significantly new
equipments and production facilities
Market Launch
This stage was rated moderately positively on average.
However, it was not formally recognized as a distinct stage in
over 30% of the projects

17. Impact on Success
Looking at how completeness--whether an activity was
carried out or not--is strongly related to project outcomes
•Preliminary market assessment & formal market launch
showed significant differences between successes & failures
•Activities like test markets and detailed market study were
found to make insignificant difference between the two
In general, successful projects were found to be more
complete than unsuccessful ones. A detailed analysis
showed that only 38.2% of all failure projects featured nine
or more activities

18. Impact on Success
Looking at how proficiency of steps is related to project
outcomes
•Three activities were strongly related to successful projects
and were found to be undertaken more proficiently —initial
screening, preliminary technical assessment and product
development
•Another six activities were also significantly related to
project outcomes—Preliminary market assessment, market
research, business/financial analysis, in-house production
tests, test market/trial sell, market launch

19. Impact on Success
Success and failure can be measured in different ways and
affect the outcome-activity link
•The different measures are:
- Overall project profitability rating on a 0 to 10 scale
- Payback period of the project
- Domestic Market share
- Foreign market share
•Proficiency rating of each activity was then related to each
of these four measures

20. Conclusions and Actions
Implications
New product process is found to be deficient in many
companies and require adequate actions
Actions Required
•New process Model: Need for standard activity plan
charting the steps to be undertaken from idea stage to launch
•Need for discipline: Making sure that the process model is
always followed
•More time, effort and resources: Proper allocation of
resources to different activities
•More focus on certain key activities: Activities which are
strongly related to success should be adequately focused
upon

21. Thank You