Coordinating new product development efforts with other companies in your industry can provide substantial benefits — but can be challenging.
For more than 30 years, Intel Corporation and Microsoft Corporation, two technology powerhouses, have closely synchronized many product development and launch activities in one of the most widely recognized corporate alliances. The early success of their collaboration set market expectations for a flow of coordinated semiconductor and software products. In some rapidly growing industries such as mobile telecommunications, such synchronization is more extensive, permeating the product development moves of dozens of young companies at once.1
Intercompany synchrony in product development and innovation is hardly new, and some research has shown that synchrony can generate performance benefits for companies. However, prior research largely centered on the relationships between two companies rather than examining how synchrony emerges in broader industry networks or how individual or pairs of companies could capture the value of synchrony in different industry networks. (See “About the Research.”)
For example, it is relatively common for companies to coordinate their product development efforts in hopes of generating increased sales and customer satisfaction. Yet while some businesses work hard to synchronize their product development processes with other organizations, others are significantly less formal about how they tie in with outside entities that are involved with related products or synchronize unwittingly with companies in their network.
Synchronization can take a number of forms, and the implementation costs vary widely. Moreover, keeping part of one company’s operations synchronized with those of another organization can present substantial challenges involving control. Such challenges are magnified when capturing the benefits of synchrony depends on many other players in the industry network. Understanding what it takes to coordinate critical activities across industry networks can therefore be extremely helpful, particularly in technology-intensive industries, where innovation is distributed and companies are strategically interdependent.