- Research Feature
- Read Time: 17 min
New product launches are highly complex and can pose major challenges to companies. But managing the interplay between product generations can greatly increase the chances for success.
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Many manufacturers have established product development activities in different countries around the world. Yet their senior managers often struggle to tie those decentralized organizations into a cohesive, unified operation that can efficiently drive growth and innovation. New empirical frameworks may help unlock practices with which managers can deploy well-coordinated global product development strategies.
Advances in development tools have tremendous potential for increasing productivity, cost savings and innovation. To reap the full benefits of such technologies, though, companies need to avoid some common pitfalls.
Many companies make incremental improvements to their service offerings, but few succeed in creating service innovations that generate new markets or reshape existing ones. To move in that direction, executives must understand the different types of market-creating service innovations as well as the nine factors that enable these innovations.
Companies should focus less on marketplace premiums for their innovations and more on opportunistically exploiting subsidies for innovations. Thus Microsoft‘s Windows 95 development effectively garnered a $900 million subsidy by drawing upon a valuable technical population to test and help improve the system. An innovation subsidy, says the author, is individuals‘ and institutions‘ cost-effective bartering of resources to reduce risk.
In a world of mobile talent, open markets and brutal competition, it’s increasingly difficult to maintain an advantage over competitors through product innovation. As a result, some companies have figured out how to outdistance rivals through customer-focused strategies that are virtually imitation-proof.
The product-development process is often seen as an undependable “black box” that rarely produces results that exceed business expectations. With an approach called “net present value, risk-adjusted,” the author offers an operational framework of quantitative tools that can be integrated into existing stage-gate methodologies to create a risk-adjusted NPV that considers the impacts of product portfolio, user needs, and technical and marketing risks.
Increasingly, information technology isn’t just for supporting the strategy, it is the strategy. Unfortunately, many CEOs send their managers negative signals about IT’s role. Only the “believer CEO,” who demonstrates through daily actions a belief in the strategic value of IT, can help others manage effectively in the Information Age. The authors offer examples of such CEOs and give some techniques for addressing blind spots to improve an organization’s competitiveness.
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