The PDMA Handbook of New Product Development

3.1. Introduction

Business leaders have two overarching objectives for their new product programs. First, they expect their investments in new products to create growth for the enterprise. Increases in revenue and profits created by a steady stream of new products are needed to fund growth of the business. Second, business leaders expect their new product efforts to increase the competitive strength of the firm, both now and in the future.

An effective new product program is, however, the result of many factors. New technology and R&D inventiveness are important, but these alone cannot ensure business success. Effective portfolio-planning and management activities are also needed to: (1) aim the new product program at a profitable and suitable future, and (2) ensure the continuing effectiveness of current projects.

New product expenses are often the largest investments that a business enterprise makes and, as with any investment, they should be managed carefully—with due diligence. Yet, in many firms, new product activities get too little mind share from business leaders. The discussion that follows will outline key activities related to the effective tracking and management of these investments, which the business leadership team must own and carry out effectively.