The PDMA Handbook of New Product Development

1.1. Introduction

Product innovation—the development of new and improved products—is crucial to the survival and prosperity of the modern corporation. According to a recent American Productivity and Quality Control (APQC) benchmarking study, new products launched in the last three years currently account for 27.5 percent of company sales, on average (American Productivity & Quality Center, 2003; Cooper, 2003). And product life cycles are getting shorter: a 400 percent reduction over the last 50 years, the result of an accelerating pace of product innovation (Von Braun, 1997). But many products do not succeed: the same APQC study reports that just over half (56 percent) of businesses' new product development (NPD) projects achieve their financial goals, and only 51 percent are launched on time.

The central role of NPD in business strategy coupled with the poor NPD performance results in many firms has led to a quest for the factors that drive performance and product innovation success (see box). Understanding why new products succeed and why some businesses are so much better at NPD is central to effective new product management: it provides insights for managing new product projects (for example, are certain practices strongly linked to success?), and clues to new product selection (what are the telltale signs of a winner?). This chapter reports the findings from a myriad of studies into what makes new products winners and what makes some businesses more successful at NPD.