Research-Technology Management

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Maximizing Productivity in Product Innovation

Robert G. Cooper & Scott J. Edgett

To cite this article: Robert G. Cooper & Scott J. Edgett (2008) Maximizing Productivity in
Product Innovation, Research-Technology Management, 51:2, 47-58

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Published online: 22 Dec 2015.

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 MAXIMIZING PRODUCTIVITY
IN PRODUCT INNOVATION
If it’s time to take a hard look at the methods and systems you rely on to conceive,
develop and launch new products, then these seven principles are a good place to start.

Robert G. Cooper and Scott J. Edgett

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OVERVIEW: Recent evidence suggests that productiv- KEY CONCEPTS: NPD productivity, lean product
ity in new product development (NPD) is declining; that development, Stage-Gate威, portfolio management.
is, we are seeing less output (measured in terms of impact
The concept of productivity is simple: it is output over
on the business) for the same relative spending level.
input, or, “the most bang for the buck.” More specifi-
This article outlines seven practices or principles which,
cally, in the field of new product development (NPD),
according to studies of NPD practices and performance,
productivity is defined as output (measured as new
will increase NPD productivity after they are embraced.
product sales or profits) divided by input (measured as
These principles include familiar concepts such as
R&D or NPD costs and time). For example:
building in the voice of the customer, front-end loading
projects, and taking a more holistic approach to product Sales 共or Profits兲 from NPD
innovation. However, while they are familiar, it is sur- NPD Productivity =
R&D Spending
prising how many firms have yet to embrace them. Other,
less familiar, principles include: relying on spiral rather Because the concept of NPD productivity is relatively
than linear development; building in metrics, team new, there are few hard numbers on results achieved in
accountability and continuous improvement; and industry. Indeed, a best-practices American Productivity
portfolio management techniques to yield higher value and Quality Center (APQC) study reveals that almost no
projects. Finally, a number of best performers are rede- companies measure or report their NPD or R&D produc-
signing their idea-to-launch processes, moving to the tivity as a business metric (1).
next-generation Stage-Gate威 system; they employ There is strong evidence that NPD productivity is
methods borrowed from lean manufacturing to remove heading in the wrong direction, however. In the United
waste from their development processes, and they also States, the most recent Product Development & Manage-
make their processes scalable, flexible, adaptable, and ment Association (PDMA) best-practices study reveals
more open to the external environment. that sales from new products are off in a period when

Robert Cooper is president of the Product Develop- business administration from the University of Western
ment Institute and professor of marketing at McMaster Ontario.
University, Hamilton, Ontario, Canada, as well as robertcooper@[Link]; [Link]
Crawford Fellow of the Product Development and
Management Association, and ISBM Distinguished Scott Edgett is CEO and co-founder of the Product
Research Fellow at Penn State University’s Smeal Development Institute and Faculty Scholar with ISBM at
College of Business Administration. He has won two Penn State University’s Smeal College of Business
Maurice Holland awards for the best paper published Administration. A specialist in new product development
in Research-Technology Management (“New Products: and portfolio management, he received his Ph.D. in
What Distinguishes the Winners,” in 1990, and marketing from Bradford University. He has consulted
“Debunking the Myths of New Product Development,” and written extensively in the field, with over 60
in 1994) and has published over 100 articles and published articles and five books. His latest book (co-
six books. A thought leader in the field of product authored with Robert Cooper) is Generating Break-
innovation management and developer of the Stage- through New Product Ideas (PDI, Toronto, 2007).
Gate new product process, he received his Ph.D. in Edgett@[Link]; [Link].

March—April 2008 47
0895-6308/08/$5.00 © 2008 Industrial Research Institute, Inc.
 R&D spending has remained constant: New product
sales fell from 32.6 percent of total company sales in
the mid-1990s to 28.0 percent by 2004 (2). At the same There are huge
time, R&D spending in the U.S. remains unchanged:
for example, 2.76 percent of GNP in 1985 versus
2.70 percent in 2004. That is a 14 percent drop in output
differences in
per spending in less than a decade—quite a dramatic
downward shift in NPD productivity. productivity between
This significant decrease in just a handful of years is
cause for concern (3). What’s going on? There’s no the best and
evidence that people are doing a worse job today—
deficient design and development work, poor market
studies, or bad launches. Indeed, a comparison of the
worst performers.
quality-of-execution of key activities between 1985 and
today—from initial screening through to market tions, product tweaks, and minor responses to salespeo-
launch—reveals no change in quality-of-execution
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ple’s requests, while true product development has taken

ratings (4). On the other hand, product developers have a back seat (3).
not improved quality-of-execution at a time when most
pundits believe they should have, so that is a second Major Gaps in NPD Productivities
cause for concern. One recent Arthur D. Little study provides insights into
The one factor that does show a dramatic change, productivity by industry (5). The study looked at
however, and that explains the decrease in profitability, output—measured by five-year sales from new products
impact and productivity, is the balance in the portfolio of as a percentage of company sales—and input, measured
projects undertaken today versus in 1990. Simply stated, by R&D spending, also as a percentage of company sales
businesses today are preoccupied with minor modifica- (see Figure 1). One startling conclusion is how much pro-

Figure 1.—NPD productivity varies greatly among companies, with huge differences between the best and worst
companies in each industry. Source: A. D. Little Innovation Excellence Study (5).

48 Research 䡠 Technology Management

 ductivity varies by industry, from a high of 14:1 in do employ each of these seven principles to a far greater
consumer goods to a low of about 2:1 in the pharmaceu- extent than the rest of the businesses, and that poor per-
tical industry. A second revelation is how low the pro- formers in particular tend to ignore these principles. Note
ductivity numbers are; note that output was measured by that the research results have been widely published in
sales over five years. refereed journals, including RTM, lending credibility and
authenticity to what is presented; this is not simply a
When one compares the productivity of the most produc- treatise based on a handful of anecdotes, case studies or
tive companies versus the least productive, the results are home-grown research.
even more provocative (Figure 1). There are huge differ-
ences in productivity between the best and worst The message is clear—if you want your business to be
performers—on average, almost a 1,200 percent differ- among the best performers in NPD, do what the high-
ence! And in some industries, such as pharmaceutical, productivity businesses do: adopt and embrace these
the differences are even greater. For example, the top seven principles of lean, rapid and profitable NPD,
25 percent pharmaceutical firms are 31 times more pro- which lead to improved performance and higher NPD
ductive in NPD than the bottom 25 percent. productivity (7).
These huge productivity differences between top and 1. Customer Focused
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poor performers lead to the obvious question: why?

Developing and delivering new products that are differ-
What is it that these high-productivity businesses do so
entiated, solve major customer problems, and offer a
differently? And can your business learn from them?
compelling value proposition to the customer or user is
Data from a number of best practices studies helps us
the number one key to NPD success and profitability (see
gain insights into what the secrets to high productivity
Figure 2). Indeed, one of the reasons why NPD produc-
are—what the best performing companies do so differ-
tivity is down is because of the lack of breakthrough new
ently (see “Sources of the Data,” below).
products with a “wow” factor in most companies’ devel-
opment portfolios.
The Seven Principles
When one compares the practices of the high productiv-
These principles of lean, rapid and profitable NPD, with ity businesses (the top 20 percent) with the average and
the goal of improving productivity, have been developed poor productivity businesses in Figure 2, we see that:
from a long line of research investigations, culminating
in the most recent APQC study (1,6). Each of the seven • The great majority of high-productivity businesses
principles is very much fact-based; that is, research develop and launch new products that offer new and
investigations reveal that businesses or project teams that unique benefits to their customers or users (only
employ each principle achieve superior performance 7.7 percent of low-productivity businesses do this).
results. For example, in the sections to follow, you will • New products developed by high-productivity busi-
see bar chart results from the APQC study. What these nesses offer the customer or user better value for the
bar chart results show is that best-performing businesses money.

Sources of the Data In addition, most of these principles have been well-
researched in studies that probed large samples of
A number of studies of new product performance and
individual new product projects and project teams. The
of what drives this performance have been conducted by
results were clear in these studies as well: those project
the authors and co-workers over the last 20 years (6,10).
teams that employed each principle or practice were more
The seven principles outlined in this article are based
successful.
on the collective results of these many studies; that is,
they are those factors that consistently separate top per- These studies have shed much light into what makes new
formers from the rest over the years and appear to have the products a success and why some businesses are so much
strongest impact on performance (7). The general more effective at NPD than others.
approach in each study is to gauge the NPD performance
of a large sample of businesses on multiple metrics. Next, The specific data shown in the bar charts are from the most
a number of practices are also investigated within each recent study, namely the APQC (American Productiv-
business—what is done and how well it is executed. These ty & Quality Center) best practices study (1). NPD pro-
practices range from strategy development and portfolio ductivity was measured for 105 firms on a number of
management methods to which market studies are under- metrics including percentage of sales by new products,
taken and how project teams are organized. Finally, these new product success rates, percentage of projects
many practices are correlated with the various perfor- meetings sales and profit targets, time to market and
mance metrics to determine the most important drivers or slip rate, and profitability relative to spending.—R.G.C.
determinants of performance. and S.J.E.

March—April 2008 49
 • And their new products meet customers’ and users’
needs better than competing products, by about four-to-
one when compared to new products from low- High-productivity
productivity companies.
Conceiving such unique, superior products is no easy
businesses excel in
feat. On occasion, it is the result of a genuine technologi-
cal breakthrough or a disruptive technology. But most doing the right
often, coming up with a differentiated, superior product
begins with a thorough understanding of the customers’
and users’ unmet and often unarticulated needs through
up-front homework.
in-the-field voice-of-customer (VoC) work. Note that,
from Figure 2:
In short, the customer or user must be an integral part of
• More than two-thirds of high-productivity businesses the entire development process—from scoping, through
work closely with their customers and users to identify product definition, development and right on to valida-
their needs and problems (only 15 percent of low- tion and beyond. Here again, high-productivity busi-
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productivity companies do this). nesses excel, with five times as many high-productivity
firms building the customer into their development
• High-productivity businesses tend to rely on market processes.
research to define the product requirements much more
than do low-productivity businesses (although here even Note that VoC does not mean “voice of the salesperson”
the best performers are weak). or “voice of the product manager.” They are not the
customer or user and do not necessarily speak for them,
• And by a four-to-one ratio, the best performers use nor do they necessarily understand true customer needs.
concept testing with customers or users to gauge Further, responding to short-term requests from the sales
expected product acceptance before development begins force results in a series of small, incremental and reactive
(again this is a weak area, even for the high-productivity new products. Some of these small developments are
companies). necessary in order to keep the product line fresh and to

Figure 2.—A strong market focus with voice-of-customer work is key to achieving product advantage. Note how
much stronger the high-productivity firms are here. Source: APQC best practices study (1).

50 Research 䡠 Technology Management

 respond to key customers’ requests, but a steady diet of
such projects leads to a dearth of genuinely new
products, no game-changers and ultimately very Smart product teams
mediocre performance (3).
Six different methods of undertaking VoC work were move quickly by
identified among best performing businesses in the
APQC and other studies (1,6). These are: practicing spiral
1. Customer visits with in-depth interviews.—The entire
project team does face-to-face visitation and in-depth
interviews with customers or users. In the case of
development.
business-to-business (B2B) markets, the visit team is
usually three people—marketing, technical and sales—
As part of the day, attendees break out into teams with
and the customer is often represented by a group as well.
company people—marketing, sales and technical—
The interviews are set up by the sales force, and are based
intermingled. One team exercise is often a reverse or
on a carefully crafted interview guide that probes for
inverse brainstorming session, where the purpose is to rip
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unmet needs, unarticulated problems, and functions and

apart the current products. Other breakout sessions
benefits sought—probing well beyond what is normal in
include brainstorming or group creativity methods to
just a casual conversation.
yield possible solutions. This method is most appropriate
2. “Camping out” or ethnography.—This method is for B2B products.
essentially cultural anthropology, and involves camping
out with users in their homes, offices or factories. Here 6. Crowd sourcing using online or IT-based ap-
the visit team is non-intrusive and spends most of their proaches.—The advent of communities of users
time observing customers use, abuse and misuse combined with the widespread availability of high-speed
products as they go about their daily routine. An insight- Internet has enabled some companies to tap into the cre-
ful research team gains a much better understanding of ativity abilities of their customer base. They seek input,
the customers’ challenges and problems, and is thus in an ideas and, in some cases, partially completed product
excellent position to design the next great new product. designs. Whether you are a T-shirt maker in Chicago, a
This method sees many applications in consumer goods, furniture manufacturer (such as Muji in Japan), or a
but we also saw it effectively used to generate significant household products company (e.g., P&G with its
new products in B2B settings. Connect & Develop system), opening your doors to
external inputs and your customers’ wishes via company
3. Lead user analysis.—Your innovative customer has hosted webpage and the Internet is an increasingly
your next new product! In this method, the goal is to popular route in this trend toward open innovation (9).
identify particularly innovative customers or users—
those who are ahead of the wave (8). Working with 2. Front-End Loaded
them—for example, via a customer group meeting at an
off-site event—you are bound to come up with innova- Due diligence in the early days of a new product project
tive product designs and solutions. pays off—just ask a venture capitalist! A good dose of
the right up-front homework pays for itself in terms of
4. Focus group problem detection sessions.—Customers
saving time and also higher success rates. Consistently
and users are invited to a moderated roundtable discus-
and across the board, high-productivity businesses excel
sion or focus group session, not to evaluate new
here (see Figure 3).
concepts, but rather to articulate their problems and chal-
lenges. Understanding customer points of pain is often • About twice as many high-productivity businesses
the starting point for developing a breakthrough solution. undertake a preliminary market assessment early in the
In some cases, the host company also has a group of life of a development project when compared to low-
design engineers watching the customer focus groups on productivity firms.
closed-circuit TV; once a problem has been identified,
the engineers quickly brainstorm and propose solutions, • A much higher proportion of best performers conduct
which are promptly tested on the focus group. After some technical assessments, to assess technical risk and
iterations back and forth between the focus and brain- probable technical solutions, and source-of-supply
storming groups, an innovative solution often emerges. (manufacturability) assessments early in the project.
The methodology works with either B2B or consumer
• Although they are weak areas, market research (VoC),
products.
concept testing, and determining the value of the product
5. Brainstorming group events with customers.— to the customer are activities practiced by high-produc-
Customers are invited to a company “innovation day.” tivity businesses much more than by poor performers.

March—April 2008 51
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Figure 3.—High-productivity businesses do the front-end work much more than poor performers. But weaknesses
exist—front-end load your projects! Source: APQC best practices study (1).

• Finally, conducting a detailed financial and business about one business in five doing a solid job here. Too
analysis before development begins is a decidedly weak often, project teams do not involve the manufacturing or
area in low-productivity business, and much stronger operations people early enough in the project, when key
among high-productivity companies. decisions—such as product design decisions—are taken
The activities in Figure 3 are a good beginning list of that later impact strongly on the operations people.
what constitutes front-end work on a typical major • Market research: a more in-depth market investiga-
project. They should be built into one’s idea-to-launch tion, involving the project team doing VoC research,
system, and include: highlighted above. Market size and segmentation
• Preliminary market assessment: a quick assessment of analysis may be conducted here as well. This is also a
the market to determine market size and potential, very weak area, with only 18 percent of businesses
customer interest, initial insights into customer needs, judged to do this well, but again, best performers seem to
requirements and value, and the competitive situation. do better here, and by an almost five-to-one ratio versus
poor performers.
• Technical assessment: a pre-development assessment
of the technical challenge, identifying the probable • Concept testing: This is a different type of customer
technical solution (on paper), the development route, input, where the proposed product, perhaps as a model,
technical challenges, risks and potential “showstoppers,” concept or virtual prototype, is presented to customers,
the IP situation, and outside technology required and feedback is sought. Interest, liking and purchase
(including the need for technology alliances). This is the intent are established. This is good and necessary
best-executed activity in the front end, with almost half research, but no substitute for the VoC work outlined
of businesses rated well here. above as input.
• Source-of-supply assessment: an initial appraisal of • Value-to-the-customer assessment: a value-in-use
source of product supply, including operating require- analysis, whereby the product’s value is quantified. This
ments, probable materials and equipment needs, and activity usually involves looking at the economic impact
possible outsourcing needs, suppliers and partners or on customers’ operations versus how they solve their
alliances. This is judged to be a very weak area, with only problem now (for example, versus competitive solutions

52 Research 䡠 Technology Management

 and then considering competitive prices and their
products’ cost in use). This is perhaps the weakest of the
front-end activities with only one-in-six businesses Most businesses
doing this well. Again, best performers handle this value
assessment much better—by an eight-to-one ratio—but
still this is a task needing improvement in many busi-
have too many
nesses.
• Product definition: the entire project team integrating
development projects
the acquired information into a product definition. This
definition specifies the project scope, target market, underway, and often
product concept, benefits and value proposition, target
price and positioning, and features, requirements and
high-level specs.
the wrong ones.
• Business and financial analysis: integrating the data
obtained in the homework stage into a business case, early feedback, which they then use to produce the next
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which features a full financial and business analysis. For and more complete version, a working model or
major projects, this is usually a spreadsheet with net protocept. These fast-paced teams remove unnecessary
present value (NPV), internal rate of return (IRR) and the work and move quickly to a finalized product by building
payback period calculated, along with sensitivity a series of these iterative steps or “loops”—“build-test-
analysis. feedback-and-revise”—into their project. These iterative
loops begin early and become an integral part of the
Smart managements demand and get the right front-end
entire development process from early-stage scoping
homework done on projects—the right market, technical
through the Development stage and into testing. When
and business assessments. This homework is not
sketched on a flow diagram, these loops appear like
excessive, but is designed to yield just enough of the vital
spirals in Figure 4, hence the name “spiral development.”
information to make a Go-to-Development decision, and
to define the product and project sufficiently to proceed.
The right homework is also instrumental in yielding a 4. Holistic Approach Driven by
winning product and project definition. Effective Cross-Functional Teams
Product innovation is very much a business function—
3. Spiral Development not an R&D activity—and team-based endeavor. And
In traditional linear development, the project team the core team, an effective cross-functional project team,
charges into the Development stage with a product defi- is the primary key to cycle time reduction and to getting
nition based on information that might have been right at to market on time. Almost three-quarters of businesses
the time, and which they believed was accurate. Such a now use cross-functional teams for their major develop-
definition may even have been developed from solid ment projects.
VoC or customer visitation work done in the project’s Many firms miss the fine points in fostering a team
pre-Development stages. Months then go by as the culture, however. Let the high-productivity businesses
project team labors to design and develop the product model the way (see Figure 5). In best-performing busi-
consistent with the agreed definition. nesses, effective cross-functional teams consist of key
However, things invariably go wrong. The customer did players drawn from different parts of the organization,
not know what she wanted; or he changed his mind as the and players are assigned so that it is clear who is on the
product evolved; or the project team did not listen very team and who is not. Further, each team member has an
well; or the market shifted; or a competitive product was equal stake in and commitment to the project, and
introduced. Thus, when it comes time for field trials or remains on the field from end to end, not just for one
beta tests, everything has changed, and the product is not phase of the project. The team is led by a carefully-
what the customer or market wanted at all. So launch is selected leader or captain, driving his or her project down
delayed and it’s back to the drawing board! Indeed, the field to the goal line in entrepreneurial fashion, and
unstable product specs and project scope creep are two also remaining leader from beginning to end. And senior
of the main causes of long times to market, significant management provides strong support and commitment to
project delays, and even product failure (10). the team and its members. Team accountability—results
measured against success criteria—is also key to
By contrast, smart development teams practice spiral effective team performance.
development, shown in Figure 4. They develop a first
version of the product, perhaps a virtual prototype. And Note that, in Figure 5, high-productivity businesses con-
they test it with the customer, seeking immediate and sistently embrace these team practices, much more so

March—April 2008 53
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Figure 4.—Top performers build spiral development into their Stage-Gate威 system—a series of
“build-test-feedback-revise” iterations.

than poor-performing companies. Thus, how the team is measured. The project leader and team declare their pro-
organized, its composition, the roles and authority of key jections on key performance metrics as part of their
players, and the choice and role of the team leader or business case at the Go-to-Development gate. Example
captain make all the difference between efficient time- projections might be:
driven projects and those that languish forever.
• NPV ($000) (or some other profit metric such as EVA).
5. Metrics, Accountability and • Year 1 sales ($000 or units).
Continuous Improvement
• Launch date (or time-to-market).
You cannot manage what you do not measure. Many
businesses are guilty of not measuring their new product These are important numbers, and are a major input into
results—only 30 percent of businesses measure the per- the Go/Kill decision. On the basis of these and other data,
formance or outcomes of new product projects once senior management makes the decision to move the
launched (1). As a result, it’s not clear whether a spe- project into development, and these projections now
cific project was a success—met its profit targets or met become success criteria.
its launch targets. Further, the post-launch review The project team is then held accountable for delivering
is one of the worst-rated activities in the entire inno- promised results against these success criteria. For
vation process, and is executed proficiently by only example, Go/Kill decisions at successive gates are based
22.1 percent of businesses. Without metrics in place, in large part on whether or not the project and team
project teams cannot be held accountable for results, continue to meet the stated success criteria. The post-
while learning and continuous improvement are next to launch review is the final point of accountability for the
impossible. project team. Actual results achieved are determined: the
Best-performing businesses put metrics in place. Success first year’s sales realized; the actual date of launch; and
criteria are established for each project, and how well the the actual NPV based on latest expected results. These
project performs against these success criteria is numbers are then compared to the projections—the

54 Research 䡠 Technology Management

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Figure 5.—The best performers organize their NPD project teams for maximum productivity. Source: APQC best practices study (1).

original success criteria. When variances are spotted, portfolio (see Figure 6). Most companies do a poor job of
problem solving sessions that focus on root causes are ranking and prioritizing development projects; there are
held, and corrective actions designed to stop future recur- too many projects underway for the limited resources
rence are identified. Thus, learning and continuous available, and portfolios contain too many low-value
improvement become integral and routine facets of the projects. Not surprisingly, there is no formal portfolio
development process—“every project executed better management system in place. The result is that projects
than the one before.” take too long, key resources go to too many low-value
projects, and NPD productivity suffers.
The most popular metrics to gauge the performance of
individual new product projects are sales and profit Making the right Go/Kill decisions and effectively allo-
measures: revenue achieved versus forecasted revenue is cating development resources is fundamental to produc-
used the most (70.5 percent of businesses that measure tivity improvement in NPD. Recognize that every
project performance use this metric), followed by profit- development project is an investment, and like stock
ability (NPV or operating profits). Customer satisfaction market investments, these development investments
is also employed (64.8 percent of businesses) and must be carefully scrutinized and focused through an
includes a variety of tools, such as results from satisfac- effective portfolio management system. This is achieved
tion surveys, warrantee claims, returns and complaints through a funneling approach: start with many solid new
tracking. Additionally, over 80 percent of businesses rely product concepts, and successively remove the weak
on project metrics that capture time—either time to ones via a series of gates.
market or on-time performance.
While a formal portfolio management system is still rare
in even the best of firms, the tendencies in Figure 6 are
6. Focus and Effective Portfolio Management
evident: best-performers have such a system by a seven-
Most businesses have too many development projects to-one ratio when compared to poor-performing busi-
underway, and often the wrong ones. That is, they fail to nesses. Note also that high-productivity businesses—the
focus, spreading their resources too thinly across too ones with the best NPD performance overall—achieve a
many initiatives, and their project choices result in the much better balance between numbers of projects and
wrong mix and balance of development projects in the resources available; that is, they do not overload their

March—April 2008 55
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Figure 6.—Most NPD portfolios reveal major deficiencies: too many projects, wrong balance, low-value projects.
High-productivity firms fare better. Source: APQC best practices study (1).

development pipeline. Further, they have a much better 7. NexGen Stage-Gate威 Process
balance between small, short-term projects and major, Many businesses’ idea-to-launch processes contain
longer-term ones; and finally, they are more judicious much bureaucracy, time wasters and make-work activi-
about the specific projects they select, and end up with a ties. By contrast, smart companies have made their NPD
portfolio of much higher value-to-the-corporation or NexGen Stage-Gate process lean, removing waste and
projects. These portfolio management efforts combine to inefficiency at every opportunity. They have borrowed
yield a significant improvement in productivity. value stream analysis from lean manufacturing, and have
Some of the tools that best performers include in their applied it to their new product process. (In value stream
formal portfolio system and which they use to make analysis, one analyzes the development process from
better development portfolio decisions include (11): idea to launch and systematically removes all non-value-
added activities in order to streamline and accelerate
• Strategic buckets: setting up “buckets of resources” to development projects to market).
ensure the right mix and balance of projects (by project Stage-Gate has also morphed into a much more flexible
type, and across market segments and technologies). and adaptable innovation process, one that adapts to
• Product and technology roadmaps: to map out the changing conditions and fluid, unstable information. The
major development initiatives (major projects, technolo- notion of simultaneous execution is also built in,
gies, platforms) required over the next five-to-seven whereby key activities and even entire stages overlap,
years. not waiting for perfect information before moving
forward. The cost of delay must be weighed against the
• Scorecards: rigorous qualitative methods employed by cost of being wrong.
gatekeepers at gate meetings to help select and prioritize
the best development projects. NexGen Stage-Gate has become a scalable process, to
suit very different types and risk-levels of projects—
• The Productivity Index: a financial tool with a differ- from very risky and complex platform developments to
ence, which attempts to maximize the economic value of lower-risk extensions and modifications, and even to
the portfolio, subject to personnel or financial resource handle simple requests from the sales force. Each of
constraints. these projects has risk, consumes resources and thus

56 Research 䡠 Technology Management

 must be managed, but the nature of your Stage-Gate there is animated discussion to agree on the principles
process will vary greatly depending on the project type. that should underlie the model. After all, any innovation
One size of Stage-Gate does not fit all types of projects. model designed to change the behavior of the corpora-
tion should be founded on clearly spelled-out basic prin-
Stage-Gate has also been modified to accomodate open
ciples. Some examples:
innovation. Best performers have reinvented their NPD
process to accomodate the flow of ideas, IP, technology • Toyota has fashioned its NPD approach on its Seven
and even totally developed products into the company NPD Lean Principles (14). A review of Toyota’s prin-
from external sources, and also the flow outward. ciples of innovation sheds much light on why the
Companies such as P&G, Kimberly Clark and Air company is so successful at creating new products; inter-
Products have moved to open innovation, and they have estingly, there are many parallels to the list in Figure 7,
modified their Stage-Gate process—built in the but some of Toyota’s principles obviously apply only to
necessary flexibility, capability and systems—in order to the automotive industry (15).
enable this network of partners, alliances and • Procter & Gamble relies on Six Principles that
outsourced-vendors from idea generation right through underlie the company’s SIMPL™ approach to product
to launch (9,12). For example, P&G has released its development. SIMPL, which stands for “successful ini-
SIMPL 3.0 version of its Stage-Gate system, which is
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tiative management and product launch” model, has been

designed to handle externally-derived ideas, IP, tech- in part responsible for the company’s stellar product
nologies, and even fully developed products. innovation track record in recent years (16).
Finally, NexGen Stage-Gate has been automated. • At Danfoss, a major European company, the
Increasingly companies are utilizing software to company’s high-productivity product innovation system
underpin their development process and pipeline. And is predicated largely on lean principles borrowed from
there are indeed some excellent software tools designed the factory floor, and emphasizes continuous improve-
to accommodate and support a Stage-Gate system (13). ment designed to remove waste (17).
• At Apple Computer, cycle time reduction is achieved
Moving Forward
via a global new product process that clarifies roles, nails
Whenever a progressive company crafts its unique phi- down the timeline, and maps out the process end to end
losophy and model for product innovation, invariably (18).

Figure 7.—These are the seven principles of lean, rapid and profitable NPD. Note how much more the
high-productivity businesses practice each principle.

March—April 2008 57
 The point is that if you and your fellow executives are not Marketing Management Magazine, American Marketing Associa-
tion, March–April 2006, pp. 21–24.
satisfied with the results and performance from your 8. For more on the lead-user method, see: E. A. Von Hippel, Democ-
business’s product innovation efforts, now is the time to ratizing Innovation, Cambridge, MA: The MIT Press, 2005; also:
take a hard look at the methods and systems that you rely G. L. Lilien et al., “Performance assessment of the lead-user idea gen-
on to conceive, develop and launch new products. And eration process for new product development,” Management Science
48, 8, Aug. 2002, pp. 1042–1059.
when you do overhaul your methods and systems, be sure 9. Open innovation is described in: H. Chesbrough, Open Innova-
to base your new model on some solid principles. The list tion: The New Imperative for Creating and Profiting from Technol-
of seven principles in Figure 7, derived from practices in ogy, Harvard Business School Press, 2003; also: Docherty, M.,
best-performing companies, is a good place to start. 䡩 䊱
“Primer on ‘open innovation’: Principles and practice,” Visions, April
2006; and Chapter 5 in: R. G. Cooper and S. J. Edgett, Creating
Breakthrough New Product Ideas: Feeding the Innovation Funnel,
Product Development Institute Inc., 2007 ([Link]).
References and Notes 10. Reasons for new product failure and success have been widely
1. The initial APQC study results were published in RTM in a three- studied. For good summaries, see PDMA Handbook and Winning at
part series: R. G. Cooper, S. J. Edgett and E. J. Kleinschmidt, New Products, in endnote 6.
“Benchmarking best NPD practices—Part 1: Culture, climate, teams 11. These portfolio tools can be found in: R. G. Cooper and S. J.
and the senior management role,” Research-Technology Manage- Edgett, “Ten ways to make better portfolio and project selection
ment 47, 1, Jan.–Feb. 2004, pp. 31–43. Also Part 2: “Strategy, decisions,” PDMA Visions Magazine, XXX, 3, June 2006, pp. 11–15;
resources and portfolio management practices” in RTM 47, 3, May– and: R. G. Cooper, S. J. Edgett and E. J. Kleinschmidt, Portfolio
Downloaded by [NUS National University of Singapore] at 07:05 01 February 2016

June 2004, pp. 50–60; and Part 3: “The NPD process and key idea- Management for New Products, 2nd edition. New York, NY: Perseus
to-launch activities” in RTM 47, 6, Jan.–Feb. 2005, pp. 43–55. The Publishing, 2002.
full report is in Best Practices in Product Innovation: What Distin- 12. These open innovation company examples are in: L. Huston and
guishes Top Performers, Product Development Institute, 2003 N. Sakkab, “Connect and Develop: Inside Procter & Gamble’s new
([Link]). model for innovation,” Harvard Business Review 84, 3, March 2006,
2. M. Adams and D. Boike, “PDMA foundation CPAS study reveals pp. 58–66. also: P. Clusman and A. Achter, “How Kimberly-Clark
new trends,” Visions, XXVIII: 3, July 2004, pp. 26–29; and: The uses open innovation to enhance NPD success,” Visions XXX, 4,
PDMA Foundation’s 2004 Comparative Performance Assessment Sept. 2006, pp. 10–11; and: J. Tao, and V. Magnotta, “How Air
Study (CPAS). For mid-1990s data, see: A. Griffin, Drivers of NPD Products and Chemicals ‘identifies and accelerates’,” Research-
Success: The 1997 PDMA Report. PDMA 1997. Technology Management, Sept.–Oct. 2006, pp. 12–18.
3. Section taken from: R. G. Cooper, “Your NPD portfolio may be 13. See [Link] for a list of recommended suppliers of
harmful to your business’s health,” PDMA Visions, XXIX, 2, April Stage-Gate software.
2005, pp. 22–26. 14. M. N. Kennedy, Product Development for the Lean Enterprise,
4. For 1985 data, see: R. G. Cooper and E. J. Kleinschmidt, “An The Oakley Press, 2003. See also summary of University of Michigan
investigation into the new product process: steps, deficiencies and study on Toyota, reported in: J. Morgan, Applying Lean Principles to
impact,” Journal of Product Innovation Management 3, 2, 1986, pp. Product Development, report from SAE International Society of
71–85. For current data, see APQC study, endnote 1, Part 3. Mechanical Engineers, 2005 ([Link]).
5. Arthur D. Little, How Companies Use Innovation to Improve Prof-
itability and Growth. Innovation Excellence study, 2005. 15. J. Morgan, 14.
6. These studies are summarized in: R. G. Cooper, “New Products: 16. For P&G’s six NPD principles, see: R. G. Cooper and M. Mills,
What Separates the Winners from the Losers,” Chapter 1 in: The “Succeeding at new products the P&G way: A key element is using
PDMA Handbook of New Product Development, 2nd edition, New the ‘Innovation Diamond’,” PDMA Visions, XXIX, 4, Oct. 2005, pp.
York, NY: John Wiley & Sons 2004; also: R. G. Cooper, Winning at 9–13. SIMPL™ is a trademark of P&G and is their version of a Stage-
New Products: Accelerating the Process from Idea to Launch, 3rd Gate威 process. Stage-Gate威 is a registered trademark of Product
edition. Reading, MA: Perseus Books, 2001, Chapters 2 and 3. Development Institute: see [Link].
7. These seven principles are described in detail in: R. G. Cooper and 17. J. Messmer, “Increasing productivity with lean development,”
S. J. Edgett, Lean, Rapid and Profitable New Product Development, Danfoss A/S internal company document, 2004.
Product Development Institute, 2005 ([Link]). Parts of 18. Management Roundtable, Apple Rethinks Core Process:
this section are from: R. G. Cooper, “Formula for success,” Improves Cycle Time, Knowledge Roundtable, Waltham, MA, 2004.

Reprints
IMPROVING PRODUCT-DEVELOPMENT PROCESSES
Fifty-one RESEARCH ⭈ TECHNOLOGY MANAGEMENT articles on this subject are now available in
paperback. To order, see inside back cover.

Learning from the Best New Product Developers Speeding Development Cycles
Portfolio Management in New Product What First-to-Market Companies Do
Development: Lessons from the Leaders Differently
Best Practices for Managing R&D Portfolios Satisfy Customers While Speeding R&D and
New Problems, New Solutions: Making Staying Profitable
Portfolio Management More Effective Product Development—Faster, On-Time
Assessing Technology Projects Using Managing Risk as Product Development
Real Options Reasoning Schedules Shrink
Crafting R&D Project Portfolios . . . AND MORE

58 Research 䡠 Technology Management