Cooper, R.G. & Kleinschmidt, E.J. (2007). Winning Business in Product Development: The Critical Success Factors. Research Technology Management, 50(3), 52-66.

Format: Peer-reviewed article

Type: Research — Non-experimental

Experience level of reader: Fundamental

Annotation: The authors studied 161 business units from large companies across Europe and North America to determine the critical success factors that are related to successfully performing new products. The study set out to measure success using ten performance metrics, which were plotted along two performance dimensions- impact on the business unit and profitability. The study identified nine distinguishing factors related to success, four of which were considered key success factors, including: high quality new product process; defined new product strategy for the business unit; sufficient resources (including people and money); and R&D spending. However, the authors were careful to caution that the simple existence of a high quality new product process is not sufficient to create success. It must involve up-front technical and market assessments; require tough go/kill decision points; and be thoroughly executed at a sufficient level of quality.

Setting(s) to which the reported activities/findings are relevant: Large business, Small business (less than 500 employees)

Knowledge user(s) to whom the piece of literature may be relevant: Manufacturers, Policy Makers

Knowledge user level addressed by the literature: Organization

This article uses the Commercial Devices and Services version of the NtK Model

Measure: To measure the performance of individual business units, ten performance metrics were boiled down into two measures of performance: profitability of the business's total new product efforts; and impact of the total new product effort on the business.
Survey of 161 business units.
Occurrence of finding within the model: Step 9.3

• R&D spending for product development, as measured as a percentage of sales, is the strongest determinant of the impact of a product development effort. However, R&D spending does not have a significant effect on profitability.
  Survey of 161 business units.
  Occurrence of finding within the model: Step 4.9

• Positive innovative climate and culture have some impact on new product success. To achieve such a climate, the business unit's new product plans should include input from all employees, technical people should be given free time to work on non-project ideas, and resources should be made available for creative ventures.
  Survey of 161 business units.

• A high-quality new product process is a key factor among successful businesses. However, the process must possess a few key attributes. It must include early technical and market assessments, leading to the development of a business case, prior to the initiation of development activities. It must define all aspects of the product including the market and the product's position within competition. There must be tough go/kill decision points where weak projects are rejected. Quality of execution of the process is paramount, and deliverables for each gate should be pre-defined early on. The process must also be flexible.
  Survey of 161 business units.
  Occurrence of finding within the model: Stage 1, Stage 2, Stage 3

• High quality teams lead to higher new product success. They should include a team leader dedicated to a single project and frequent communication between members. Decisions made by people outside of the team should be made quickly and efficiently.
  Survey of 161 business units.
  Occurrence of finding within the model: Step 3.1, Step 4.1

• Senior management commitment is an essential component of successful new product efforts. It should involve a strong commitments to developing new products, funding those efforts with the necessary resources. Senior management should also be closely involved in go/kill and spending decisions.
  Survey of 161 business units.

• When developing a new product process, firms must take care to benchmark their performance against other firms. At the very least, firms should evaluate their own performance on a set of metrices — such as the ten metrics and 48 measures used in this paper's research. The metrics include success rate, percentage of sales by new products, profitability relative to spending, technical success rating, sales impact, profit impact, meeting sales objectives, meeting profit objectives, profitability versus competitors, and overall success.
  Survey of 161 business units.
  Occurrence of finding within the model: Stage 1

• Senior management accountability has a stronger effect on profitability than overall performance. To achieve accountability new product performance must be measured and evaluated against annual performance measures. To further encourage high quality performance, organizations may tie compensation to annual performance objectives.
  Survey of 161 business units.

• Each business unit should have a defined new product strategy to enhance their new product success. The strategy should outline goals and objectives for the entire business's new product effort, while also identifying each business unit's role in that effort. The strategy should include specific goals and have a long term focus.
  Survey of 161 business units.

• To succeed in new product development, a business must budget adequate resources of people and money. Resources should be committed by senior management, and must be aligned with the business's new product objectives and process. People must have a realistic amount of time for each project, and be free from conflicting priorities.
  Survey of 161 business units.
  Occurrence of finding within the model: Tip 3.1