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Technovation 24 (2004) 819–829 www.elsevier.com/locate/technovation Auditing best practice for effective product
Technovation 24 (2004) 819–829 www.elsevier.com/locate/technovation Auditing best practice for effective product

Technovation 24 (2004) 819–829

Technovation 24 (2004) 819–829 www.elsevier.com/locate/technovation Auditing best practice for effective product

www.elsevier.com/locate/technovation

Auditing best practice for effective product innovation management

Kathryn Cormican , David O’Sullivan 1

CIMRU, Department of Industrial Engineering, National University of Ireland, Galway, Nuns Island, Galway, Ireland

Abstract

Over the past number of years, researchers and industrialists have recognised the need for and the importance of developing approaches to enhance competitive advantage in new product development. However, the product innovation process is extremely complex and involves the effective management of many different activities. Despite the fact that many tools and techniques have been developed in an attempt to make this process more effective, product development projects are still prone to failure. The authors surveyed senior research and development managers in an attempt to identify the critical success factors for effective product innovation management (PIM). From this, a best practice model and scorecard were developed. The scorecard enables managers to measure their performance in terms of product innovation management against best practice. It provides an overview of a company’s strengths and areas for improvement with regard to product innovation management, highlighting those areas that require attention. The product innovation model and scorecard are presented, discussed and validated using case study analysis. 2003 Elsevier Ltd. All rights reserved.

Keywords: Product innovation management; Best practice model; Self-assessment scorecard; Case study analysis

1. Introduction

It is widely recognised that effective product inno- vation management is critical to the success of most manufacturing enterprises (March-Chorda` et al., 2002; Shepherd and Ahmed, 2000; Tuominen et al., 1999; Cooper, 1999; Patterson, 1998; Crawford, 1996; Wheel- wright and Clark, 1992). With such a close link between product innovation performance and the organisation’s overall success, managers and decision makers must ensure that this process is well managed and successful. However, product innovation is a risky and expensive endeavour, which results in low success rates and many projects being terminated midway in the development cycle. Research also indicates that a very high proportion of new product ideas fail commercially in the market place (Cooper, 1999; Clancy and Schulman, 1991). Lib- eratone and Stylianou (1995) believe that only about 14% of ideas that enter the new product development process are commercially successful. The emergence of networked organisations where team members incorpor-

Corresponding author. Tel.: +353-91-512292; fax: +353-91-

562894.

E-mail address: kathryn.cormican@nuigalway.ie (K. Cormican). 1 Tel.: +353-91-750414; fax: +353-91-562894.

0166-4972/$ - see front matter 2003 Elsevier Ltd. All rights reserved.

doi:10.1016/S0166-4972(03)00013-0

ate people from different organisations and geographi- cally dispersed locations can complicate this process even further. Harris and McKay (1996) also point out that while many companies have upgraded their product innovation processes, development output is far from being maximised. According to McQuarter et al. (1998), many of the factors identified relate to coordination and management issues. With so many issues to address and so many variables to consider, practitioners and researchers alike need a clear but complete framework for understanding and improving the product innovation management process. To this end, we studied eight technology-based organ- isations whose principal activity was product design and development. The aim of this activity was to interview members of the senior management team in order to understand the product innovation process in specific industrial contexts. The goal of these interviews was: (a) to identify the strengths and weaknesses of each organis- ation’s product innovation process, (b) to identify factors that facilitate innovation in industry and finally, (c) to discuss how companies must improve in order to main- tain long term competitive advantage. From this analy- sis, the authors developed a best practice model for pro- duct innovation management. In addition, a self- assessment scorecard was developed, implemented and

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K. Cormican, D. O’Sullivan / Technovation 24 (2004) 819–829

validated. This paper reports the ndings from this investigation.

2. Product innovation management

Product innovation is a continuous and cross-func- tional process involving and integrating a growing num- ber of different competencies inside and outside the organisational boundaries. Simply put, it is the process of transforming business opportunities into tangible pro- ducts and services. In the past, emphasis has focused on managing the single individual project in isolation of others and little attention was paid to the aggregation of these projects. More recently, research highlights the need to better manage the portfolio or collection of pro- jects (Cooper et al., 1998; Harris and McKay, 1996; Clark and Wheelwright, 1995). Companies are now realising that a key element of product innovation suc- cess involves employing a platform or family perspec- tive when planning and implementing product develop- ment projects. In general, most rms will work on a portfolio of innovations, some of which will represent incremental developments and improvements on existing and proven products, while others will focus on more radical innovations. While different rms put together different portfolios, most will have a combination of low risk, short term projects and high risk longer term ones. Ideally, a company should have a portfolio of products whose life cycles overlap (Cooper et al., 1998). This guarantees continuity of income and growth potential. Fig. 1 illustrates a basic model for product innovation

management. The goal of the model is to identify and integrate the most valuable and successful ways to plan and develop an effective product development process. It adopts a socio-technical systems approach. In other words, it considers tools and procedures as well as indi- viduals and teams. The model is developed using struc- tured analysis design technique. This method enhances communication by using diagrams based on simple box and arrow graphics. It consists of a set of steps or activi- ties to be accomplished, and each activity has various considerations, that are intended to make each step suc- cessful. It provides a structure, through which organis- ations can manage and co-ordinate their innovation pro- cess. There are ve key activities in this model. These are:

(a) analyse environment and identify opportunities, (b) generate innovations and investigate, (c) plan project and select sponsor, (d) prioritise project and assign teams, and nally, (e) implement product innovation plan. Each activity is described in terms of its inputs, outputs, con- trols and mechanisms. Controls are the enabling inputs to an activity. They are the reason for the activity to take place. Inputs are consumed by the activity and they together with controls are used to create outputs. Mech- anisms are used by the activity to transform inputs and controls into outputs. This helps the user to identify what activities are performed in an organisation, and what is needed to perform those activities.

in an organisation, and what is needed to perform those activities. Fig. 1. Basic model of

Fig. 1.

Basic model of product innovation management.

K. Cormican, D. OSullivan / Technovation 24 (2004) 819829

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3. Research methodology

Lewis (1998) notes that researchers should employ eld-based research methods in order to cope with the growing frequency and magnitude of changes in tech- nology and managerial methods. Case study analysis is an example of eld-based research. Based on in-depth examinations of real-world operations, process and sys- tems conditions, case study analysis can potentially improve the relevance and workability of resulting man- agement theory (Yin, 1993; McCutcheon and Meredith, 1993). Case research is lauded to be particularly useful in studying the product innovation process (Workman, 1993; Dougherty, 1992). With this in mind, extensive interviews were undertaken with senior managers from eight companies whose principal activity is product design and development (see Table 1). The sample chosen for this analysis was selective, based on organis- ations with a reputation for adopting best practices in product innovation. The industrial sectors of the organis- ations were healthcare, computing, pharmaceuticals, telecommunications and electronics. All eight organis- ations surveyed were multinational companies. All com- panies employed a high level of technology and focused on next generation product design and development. The research methodology used in this study is illustrated in Fig. 2. Five distinct phases were used in order to conduct this investigation. These are:

were used in order to conduct this investigation. These are: Fig. 2. Research methodology. implementing and

Fig. 2.

Research methodology.

implementing and validating the product innovation management model in an industrial setting.

Foundation: This phase incorporated identifying problems for product innovation management. Induction: This phase dealt with analysing the data within and across organisations or cases, developing initial hypothesis and comparing propositions to the literature and cases. Iteration: This phase involved extending hypotheses and conjectures, reaching closure and rening the work. Presentation: This phase involved introducing, presenting and explaining the research ndings. Implementation: The nal phase incorporated

4. Problems with product innovation management

As a result of our survey, the key reasons for failure have been identied and synthesised. They include:

4.1. Lack of customer focus

Manufacturing organisations often focus on internal procedures instead of focusing on the customer. They do not have processes in place to systematically identify current and emerging customer requirements and expec-

Table 1 Prole of organisations studied

Name

Contact

Product

Size

Technology

Structure

Company A

R&D manager R&D manager Product manager Product manager Product manager Product manager R&D manager Product portfolio manager

Temperature control units Electronics Medical devices Electronics Telecommunications IT solutions Pharmaceuticals IT solutions

Large

Medium

Function oriented

Company B

Large

High

Team based

Company C

Large

Medium

Function oriented

Company D

Medium

High

Team based

Company E

Large

High

Process oriented

Company F

Large

Medium

Team based

Company G

Large

High

Team based

Company H

Large

High

Process oriented

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tations and infuse them throughout the development pro- cess.

4.2. Lack of shared understanding

Product innovation teams comprise experts from a wide variety of functions and disciplines and this diver- sity can create serious barriers for shared understanding. Team members coming from different disciplines and different organisations or countries often lack under- standing of the critical development factors for other areas. They also require a mechanism to communicate the goals of the project so that everyone can work towards a similar end.

4.3. Poor portfolio management

Often an organisations portfolio of product inno- vation projects is badly balanced in terms of optimal investment mix between risk versus return, maintenance versus growth, and short term versus long term projects. Frequently, there are too many marginal value or sub- standard projects in the overall portfolio. Furthermore, many of these projects are unfocused. In other words, they are not aligned to the strategic direction of the organisation.

4.4. Poor communication and knowledge transfer

Product innovation involves synthesising and reusing existing knowledge and information. However, skills developed during the design and development process are often lost after the project is nished. Consequently, similar mistakes are repeated and companies spend scarce resources reinventing solutions that have been previously resolved. Furthermore, many organisations face difculties in transferring knowledge and infor- mation from one organisational unit to another.

(3) Planning and selection, (4) Structure and perform- ance, and nally, (5) Communication and collaboration. Each of these is discussed in more detail below.

5.1. Strategy and leadership

Strategy and leadership have been identied as the rst critical success factor to enable effective product innovation management. The importance of a products strategy is well documented in the literature (Lynn et al., 1996; Englund and Graham, 1999; Jones, 1997; Bookh- art, 1996; Clark and Wheelwright, 1995). A product strategy should dene the aims and objectives of the pro- duct innovation effort in relation to the organisations overall strategy. It should specify market niches as tar- gets to focus on and formalise the necessary structures for implementation. A product strategy should also focus and integrate team effort and permit delegation. This is particularly important for virtual teams. Whereas every member in the project team has an input into product innovation, leaders appear to have a signicant impact on product innovation initiatives. Many researchers and theorists provide evidence to sup- port this (Cooper, 1999; Cooper and Kleinschmidt, 1996; Liberatone and Stylianou, 1995; Wheelwright and Clark, 1992). This is because the power to make, and implement, decisions is concentrated in the hands of a few, leading individuals in an organisation. Leaders

drive innovative practice at all levels of the organisation.

A leaders role is to create a vision and effectively com-

municate this by setting clear objectives. To be effective

in product innovation, it is imperative that they develop

co-operation and implement consistent priorities across

all functions and all project teams in the organisation.

In order to do this, senior managers must adopt a systems

approach to projects (Englund and Graham, 1999).

5.2. Culture and climate

5. Best practice model

The results of our investigation revealed that there are many factors that affect the successful management of a portfolio of product innovation projects. However, an organisations characteristics can have a signicant impact on it. Companies must purposefully construct strategies and structures so as to enhance best practice for successful product innovation. Building an effective framework for product innovation management depends on adopting a socio-technical systems approach to all aspects of the organisation. This includes people, process as well as technology related issues. With this in mind, we identied and grouped ve key factors that were found to facilitate product innovation management. They are: (1) Strategy and leadership, (2) Culture and climate,

Positive cultural characteristics can provide an organ- isation with the necessary ingredients to innovate (Banks, 1999; Ahmed, 1998). According to West (2000) innovation and culture are intimately linked. Culture and climate are elusive concepts. While there is no wide- spread agreement on what exactly they are, there is some consensus that organisational culture can be described in terms of values, norms and beliefs while climate can be considered in terms of policies, practices and procedures. In this view, culture and climate can be considered in terms of the following functions:

Culture f(Values; Norms; Beliefs)

Climate f(Policies; Practices; Procedures)

Schneider et al. (1996) maintain that culture and cli- mate are interconnected. In their view, employees

K. Cormican, D. OSullivan / Technovation 24 (2004) 819829

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values and beliefs (which are part of culture) inuence

their interpretations of organisational policies, practices and procedures (climate). According to Ahmed (1998) culture has many characteristics, which can serve to enhance or inhibit the tendency to innovate. Johannessen et al. (1999) note that innovative organisations are (a) proactive, (b) take risks, (c) create commitment, and (d) initiate change. Organisational culture can be both an enabler and a barrier to sharing or reusing knowledge and thus inno- vation. While much valuable knowledge is encultured, so too are bad habits and incompetence. For example, cultural practices within companies often present sig- nicant obstructions to the sharing of knowledge. Banks (1999) notes that it is possible to create an organisation that has an appropriate culture to enable knowledge cre- ation, transfer and reuse. This is achieved by developing

a culture of openness and sharing, by motivating and

engaging people and embedding knowledge manage- ment activities in the day to day business processes, internal systems and structures.

5.3. Planning and selection

A rationally planned product innovation effort is imperative for success. This is particularly important when project teams are not co-located. Cooper and Kle- inschmidt (1996) emphasise the importance of pre- development activities to anticipate problems in advance

and bring conicts to the surface earlier in order to speed up the innovation process and facilitate the integration

of new technologies. Many other researchers concur with

this (Hart et al., 1999; Poolton and Barclay, 1998; Khur- ana and Rosenthal, 1997; Brown and Eisenhart, 1995; Bacon et al., 1994; Montoyna-Weiss and Calantone, 1994). It is necessary to effectively plan and select pro- jects, which are customer focused and link to the new product strategy and goals. Furthermore, contemporary organisations must be customer driven (de Brentani, 2001; Shepherd and Ahmed, 2000; Cooper, 1999; Grifn and Hauser, 1996; Pavia, 1991). Therefore, a clear understanding of user needs is critical to product inno- vation plans and all operations must be driven by these needs. Team members must work with customers in order to establish the voice of the customer and translate that value into the product concept and proposed sol- ution. According to Calantone et al. (1999), the screening of new product ideas is perhaps the most critical new product development activity, yet it often is performed poorly. The screening process helps to eliminate pro- jects that require extensive resources but are not justied by current business strategies. It also helps to prioritise projects so that efforts can focus on the critical few. Sev- eral studies on project selection provide a robust set of criteria for consideration (see Englund and Graham,

1999; Cooper et al., 1998). In this view, success depends on exploiting synergy among projects. Therefore, port- folio management techniques and methods should be incorporated into the selection process. Cooper (1999) asserts that rms must maximise the value of the port- folio and seek the right balance of projects. Product man- agers must also ensure that the projects and the spending breakdown mirror the businesss strategy. One of the key skills in effective innovation management is balancing the composition of this portfolio and matching it to the rms competencies and capabilities in technology and markets (Tidd, 1997).

5.4. Structure and performance

An organisations structure and performance have been identied as a key enabler to effective product innovation management. Two very distinct approaches to organisational structure are mechanistic and organic (Cumming, 1999). A centralised, mechanistic structure reinforces past behaviours while an organic, decentralised structure promotes learning and knowledge generation (Cumming, 1999; Baets, 1998; Davenport and Prusak, 1998). Centralisation creates a more frag- mented structure, which does not support people to chal- lenge underlying assumptions and think for themselves. Decentralisation, on the other hand, enables faster and more effective decision making in dynamic information rich environments. Knowledge sharing and transfer depends on personal networks and the willingness of individuals to share (Jones and Jordan, 1998; Ruggles, 1998; Ulrich, 1998). Nonaka and Takeuchi (1995) believe that organisations leverage individual talents into collective achievements through networks of people who collaborate. Consequently, organisations are beginning to reorganise reporting lines and organisational struc- tures not around traditional tasks or functional depart- ments, but around communities of practice. Work teams are emerging as the dominant organisational component of the new economy (Shepherd and Ahmed, 2000; Kay- worth and Leidner, 2000; Grifn, 1997). Motivation theory suggests that individuals respond positively to stimuli that reward achievement and per- formance. Motivation and reward systems are key elements in aligning the interests of employees to that of the organisation (Liebeskind, 1996; Bukowitz and Petrash, 1997). They can be adjusted to encourage the desired behaviour from all staff. Grifns (1997) ndings suggest that organisations are not adequately handling the issue of team-based rewards. Furthermore, there are few reports of practical incentive mechanisms linked to measuring and rewarding idea generation and knowledge sharing. Most companies still use traditional perform- ance measures, which in many instances are inappropri- ate indicators of success.

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5.5. Communication and collaboration

The nal key factor identied for successful product innovation management is communication and collabor- ation. Product innovation is a knowledge intensive pro- cess (Balasubramanian and Tiwana, 1999; Davenport and Prusak, 1998; Drucker, 1993; Nonaka and Takeuchi, 1995). It can be described as an information transform- ation process where information is gathered, processed and transferred in a creative way. Therefore, communi- cation is a vital and basic necessity for product inno- vation especially when team members are geographically distributed. Many researchers note that external com- munication is vital to successful product innovation (Mendelson and Pillai, 1999; Poolton and Barclay, 1998; Pitta and Franzak, 1997; Ancona and Cadwell, 1992). They found that the presence of a gatekeeper, or some- one who scans the organisations boundaries and brings information to the organisation and disperses it to those inside, is essential for product innovation. In particular, strong formal links with suppliers are very important to the product innovation process (Grifn and Hauser, 1996; Crawford, 1996). Huang and Mak (2000) found that signicant benets can be achieved if suppliers are involved in the early stages of the product innovation process. Customer involvement has also been proven to improve the effectiveness of the project (Shepherd and Ahmed, 2000; Leonard Barton and Sensiper, 1998; Grif- n and Hauser, 1996; Cooper and Kleinschmidt, 1996). The results indicate that manufacturers must appreciate thoroughly the needs and behaviour of potential users (de Brentani, 2001; Bacon et al., 1994). Internal communication is also vital for product inno- vation success. Grifn and Hauser (1996) examined the impact of communication, co-operation and inter-func- tional harmony and found that they strongly correlate with project success. Many researchers also emphasise the importance of early integration of functional expert- ise (Liberatone and Stylianou, 1995; Pavia, 1991). Enhancing communication between functions is crucial to successful product development and management (Maltz, 2000; Hise et al., 1990). Terziovski et al. (2002) found that the most signicant success factor was the establishment of cross-functional, multi-disciplinary teams.

5.6. Best practice model summary

This section has introduced and presented ve best practice features essential to product innovation manage- ment. These features are a synthesis of best practice in the area and useful to support the management of the product innovation process. Over time, the application of these features may inuence the cultural norms and contribute to the development of an environment for effective product innovation management. Taking these

theoretical concepts into consideration, a self-assessment audit called the product innovation management (PIM) scorecard was developed. The scorecard is made up of 50 criteria or traits drawn from the critical success fac- tors model. This is discussed in more detail in the next section.

6. PIM scorecard

Innovation audits can help managers and decision makers improve their product innovation process (Patterson, 1998; Chiesa et al., 1996). They assess whether the conditions necessary for innovation are in place and the degree to which best practice is used. The use of innovation scorecards provides an overall assess- ment of the practices adopted with respect to best prac- tices and enables decision makers to identify whether or not the required managerial processes and practices are in place (Chiesa et al., 1996). The product innovation management scorecard is a self-assessment audit that consists of 50 statements, or traits, based on the best practice model. The scorecard requires respondents to circle the extent to which they agree or disagree with the statements. The list of statements is presented in Table 2. Organisations that score high possess a good t between their current management practices and systems and traits that are lauded to represent best practice. Inversely, an organisation that scores low does not follow appropri- ate practices and will experience more difculty developing successful products. This allows managers and decision makers to acquire an overview of their strengths (to be exploited) and weaknesses (to be improved) with regard to product innovation manage- ment in each category.

6.1. Case study discussion

Senior product managers validated the scorecard by assessing its effectiveness (i.e. how useful, applicable and appropriate the statements are) as well as its practi- cality (i.e. how pragmatic, functional and deployable the statements are). Key ndings from the validation process are now discussed in more detail.

6.1.1. Strategy and leadership All product portfolio managers agree that an effective strategic plan is imperative to successful product inno- vation management. This is particularly notable when teams are not co-located. Product managers noted that product strategy is clearly defined and communicated to all employeesand product strategy is used to align priorities with other functionsare the most important and effective characteristics for product innovation in terms of strategy. However, the ndings of this analysis reveal that while this was identied as the strongest fea-

K. Cormican, D. OSullivan / Technovation 24 (2004) 819829

Table 2 The PIM scorecard

825

Please circle the extent to which you agree or disagree with these statements where 1 represents strongly agree and 5 represents strongly disagree

Statement

Score

Strategy and leadership

1 The product strategic plan is effective and used

1

2

3

4

5

2 Product strategy is clearly dened and communicated to all employees

1

2

3

4

5

3 The product innovation programme has a long term thrust and focus

1

2

3

4

5

4 Product strategy is used to align priorities with other functions

1

2

3

4

5

5 Strategies are exible enough to respond to changes in the environment

1

2

3

4

5

6 Senior management is accountable for new product results

1

2

3

4

5

7 Leaders visibly drive innovation

12345

8 Leaders adopt a consensus and shared approach to decision making

1

2

3

4

5

9 Leaders adopt a participative decision making style

1

2

3

4

5

10 Senior management actively encourages the submission of new product ideas

1

2

3

4

5

Culture and climate

1 The organisation permits the emergence of intrapreneurs or product champions

1

2

3

4

5

2 The organisation provides support in terms of autonomy, time and rewards

1

2

3

4

5

3 Money is made available for internal projects

1

2

3

4

5

4 Adequate resources are available and committed to achieve project goals

1

2

3

4

5

5 All employees participate in generating ideas

1

2

3

4

5

6 Senior management is committed to risk taking in product innovation

1

2

3

4

5

7 Failures and mistakes are tolerated and not punished

1

2

3

4

5

8 Knowledge sharing is encouraged and rewarded

1

2

3

4

5

9 All operations are driven by customer needs

1

2

3

4

5

10 There is a formal idea generation process in place

1

2

3

4

5

Planning and selection

1 An effective product innovation process is consistently implemented

1

2

3

4

5

2 A formal process is used to determine and update project priorities

1

2

3

4

5

3 Concepts are selected using pre-dened, multiple and explicit criteria

1

2

3

4

5

4 Pre-development market and feasibility studies are rigorously undertaken

1

2

3

4

5

5 Projects are terminated if and when necessary

1

2

3

4

5

6 Project proposals are tested for alignment with organisational goals

1

2

3

4

5

7 The project and the spending breakdown mirrors the organisations goals and measures

1

2

3

4

5

8 There is a good balance of projects which maximises the value of the portfolio

1

2

3

4

5

9 The product portfolio is matched to the rms competencies and capabilities

1

2

3

4

5

10 The voice of the customer is built into all product innovations

1

2

3

4

5

Structure and performance

1 Projects are developed using effective cross-functional teams

1

2

3

4

5

2 Project teams are organic, exible and agile

1

2

3

4

5

3 All team operations are driven by customer needs

1

2

3

4

5

4 Team leaders are involved in setting the product performance objectives

1

2

3

4

5

5 All team members are mutually accountable

1

2

3

4

5

6 Team members are empowered to make decisions

1

2

3

4

5

7 Virtual team members are equipped with effective ICT tools

1

2

3

4

5

8 Team membersrewards are equitable

1

2

3

4

5

9 Performance indicators are aligned with the organisations goals

1

2

3

4

5

10 Performance indicators encourage desired behaviour

1

2

3

4

5

Communication and collaboration

1 Gatekeepers are in place to continuously span the external environment

1

2

3

4

5

2 Customers and suppliers are involved in the product innovation process

1

2

3

4

5

3 Alliances are often formed with other organisations for mutual benet

12345

4 Communications among team members is efcient and effective

1

2

3

4

5

5 Communications between project teams is efcient and effective

1

2

3

4

5

6 Information on ideas generated, problems raised and project status is accessible

1

2

3

4

5

7 User needs analyses are undertaken and communicated to all

1

2

3

4

5

8 Product strategy and performance measures are clearly communicated to all

1

2

3

4

5

9 Individual skills are effectively leveraged within and between project teams

1

2

3

4

5

10 Virtual team members seamlessly communicate with each other

1

2

3

4

5

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ture in this category, organisations do not use the product strategy effectively to align priorities with other func- tions. Most strategic plans are developed at a high level

in the organisation (i.e. corporate level). It is also evident

that while some of these plans are comprehensive and systematic, others are more arbitrary and loose. In addition, there is evidence to suggest that there is a large gap between strategy development and project implementation. In other words, product strategies are not directly deployed into individual projects. Product innovation projects, in general, are merely loosely aligned with the organisations strategies, requirements and performance measures. Furthermore, the study found that many projects are not measured in terms of how they meet or satisfy these strategies, measures and requirements.

6.1.2. Culture and climate

An organisations culture (i.e. values, norms and beliefs) and climate (i.e. policies, practices and procedures) were found to have a signicant impact on successful product innovation management. In other words, members of innovative organisations are actively

encouraged to share ideas, take risks, and initiate change. Innovative organisations create commitment (i.e. they instil a level of pride in the organisation and promote employee development at a social and technical level). Moreover, mistakes are not punished when something does not go according to plan. This analysis also found that research and development functions experience problems with cohesion when their function reaches a certain size. When the function grows or expands past

a certain level it is important to have a systematic and

structured system in place to guide development efforts and to keep all players focused in the same direction. However, the adoption of a formalised system may con- ict with the need to maintain responsiveness and exi- bility. This is found to be particularly signicant when team members are geographically distributed.

6.1.3. Planning and selection

While project planning and selection was found to be the most signicant area in successful product inno- vation management, it was also found to be the area most in need of attention. An effective product plan is con- sistently implementedwas considered to be a strong trait in this category. However, most product managers concede that they suffer from poor project planning. Pro- ject planning in general is not formalised, systematic and widespread; many organisations cut corners and skip steps to speed up development time. Product managers also note that there is too much crisis management. In other words, they seem to adopt a short term view with regard to their initiatives and consequently spend most of their time “fire ghting. In addition, when contingency planning schedules fall off track there is a domino, or

knock on effect with regard to all other projects in the portfolio. This analysis also found that not all functions and levels (i.e. operations) are involved at the planning stage. Furthermore, while most projects are assigned some form of priority, projects are not selected accord- ing to how they meet the organisations goals and meas- ures. Product managers found that the project and spending breakdown mirrors the organisations goals and measuresis a very effective trait. Many organis- ations also suffer from poor resource management. It seems that the organisations studied have an abundance of new product ideas in their development pipeline but not enough resources available to implement them. Internal competition for people, tools and equipment is also prevalent.

6.1.4. Structure and performance

Most organisations analysed in this study employ team-based structures for product innovation initiatives. Many of these teams are cross-functional in nature and are organic, exible and agile. It also seems that the most successful organisations employ cross-functional teams from the initial stages of the product innovation effort (i.e. gap analysis and concept development). The nd- ings of this analysis reveal that cross-functional teams are more customer focused. They enjoy a large degree of autonomy and have the exibility to interact easily with other key players. Such team members are also more responsible and accountable for their actions and/or decisions. This analysis found evidence to suggest that the trait that refers to team membersreward systems namely team members rewards are equitableis very signi- cant in this category. In particular, cross-functional team members in a virtual environment often have specialised core competencies, come from different disciplines and different countries or cultures. Therefore, it can be dif- cult to reward such members fairly and equitably in view of the fact that no two people have similar backgrounds nor do they undertake similar work. Furthermore, many organisations had some form of performance rewards system linked to idea generation. While this has proven successful in the majority of organisations, some organ- isations also highlighted that it had proven to be a source of potential conict at an employee or department level and these organisations abandoned these schemes.

6.1.5. Communication and collaboration

Communication and collaboration are imperative to successful product innovation management. This is parti- cularly evident when team members are not co-located. Face to face interaction is lauded to be the most power- ful, effective and productive form of communication between team members. However, this is not always possible when teams are virtual; therefore, organisations are investing heavily in emerging web technologies in

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order to support the communication process. It seems that communication between product innovation team members is particularly important. Problems can and do occur between project team members and their func- tional specialisms. It is often difcult to leverage skills, knowledge and competencies from core competencies (i.e. design engineering) to project team members when they are not co-located. It also seems that organisations have an abundance of information regarding their product innovation projects. However, it is often difcult to locate the required pieces of information as they are often distributed across differ- ent document archives. Organisations are nding it dif- cult to access and gather minimum critical information regarding the status of each of their projects. Examples of minimum critical information include: start date, end date, project status, priority, and exception reports (i.e. projects that are red agged; in other words those that are falling behind key milestones). This is important to keep track of their progress.

6.2. Implementing the scorecard

The PIM scorecard was implemented in all companies that participated in the case study. However, for the pur- poses of illustration two companies were chosen to describe how the process works. The rst (Company X) is a design and manufacturing facility. The ndings of the scorecard reveal that the company scores below aver- age in all of the ve areas critical to product innovation management (see Fig. 3). More specically, this organis- ation scores particularly low in terms of its project plan- ning and selection. In this case, the organisation does not have a formal product innovation process in place. It operates in an ad hoc manner and does not use pre- determined explicit criteria to select and prioritise pro- jects. Consequently, project teams compete for resources. Furthermore, the customer is not part of the development team. There is no procedure in place to capture the voice of the customer. Consequently, cus- tomer requirements are not effectively gathered and introduced into the product concept. The process of implementing the scorecard stimulated key managers and decision makers to address some of these issues. Consequently, a major improvement initiative was launched to establish and document a comprehensive and visible product innovation process. The second organisation chosen to illustrate the PIM scorecard fares signicantly better than the rst. This organisation (Company Y) is also a design and manufac- turing facility. In this instance, many of the best practices highlighted are adopted and used in this company. As Fig. 3 illustrates, this organisation scores particularly well across all ve categories in the critical success fac- tors model. This company has very effective leaders who visibly drive innovation. They encourage the submission

who visibly drive innovation. They encourage the submission Fig. 3. Implementing the PIM scorecard. of new

Fig. 3.

Implementing the PIM scorecard.

of new ideas and adopt a consensus and shared approach to decision making. It seems that these leaders not only encourage the desired behaviour but also have the appro- priate infrastructures in place to facilitate this behaviour. For example, this organisation has an effective and used product innovation process in place. There is also a for- mal idea generation process in place and pre-develop- ment market and feasibility studies are rigorously under- taken. This study stimulated Company Y to embark on an inter-organisational benchmarking study to assess its current practices against industry leaders.

7. Conclusion

In todays dynamic environment, it is becoming increasingly apparent that the survivors in this new era will be those companies who are rigorous in their pursuit of innovation, in order to develop and deploy new pro- ducts more efciently, effectively and protability. It is also increasingly clear that the only way to achieve this goal is to actively manage the innovation process. In order to do this, managers must develop and provide the appropriate infrastructures and support systems. By understanding the process and the factors that facilitate product innovation, organisations can increase the likeli- hood of developing an appropriate environment for inno- vation. This in turn will help minimise their failure rate

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and maximise their chances of successful product inno- vation. This paper presents a best practice model that aims to facilitate product innovation management in a dynamic environment. The underlying objective is to develop more robust, generalisable guidelines for managers in technology-based companies who want to build success- ful new product portfolios. Analysis of the study revealed that successful organisations demonstrate a number of common traits. These organisations have a focused vision, strong leadership and customer orien- tation. Employee contribution to the innovation process was widespread and the organisations studied demon- strated a high prociency in both exploiting ideas and actively engaging in problem solving. Cross-functional teams with contributions from different levels of the organisations are also extensive. Effective project plan- ning and selection were identied to be imperative and the study found that this area is most in need of attention. Communication issues are also imperative for successful product innovation management. Specically, organis- ations noted that infrastructures are imperative to support communication within teams, between teams and with key customers and suppliers. Improving the product innovation process is not about quick xes but rather it is about recognising true symptoms, identifying their cause and then applying the appropriate treatment or remedies. Therefore, the implementation of product development best practices can best be viewed as a jour- ney (i.e. continuing process improvement) rather than as a destination.

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Kathryn Cormican (Ph.D.) is a lecturer in the Department of Industrial Engineering at the National University of Ireland, Galway. Her research interests lie in the areas of enterprise modelling, product innovation man- agement, and collaborative workgroups. Kathryn manages a number of European Union and industry funded research projects in this area. Prior to joining NUI Galway, Kathryn worked as a Management Consultant where she facilitated organisations with product and process improvement initiatives as well as strategic and operational change. She continues to work with many leading organisations helping them to design, develop and deploy new processes and systems.

David O’Sullivan (Ph.D.) is research director at the National University of Ireland, Galway, and author of over 50 publications including Manufac- turing Systems ReDesign (Prentice Hall), Reengineering the Enterprise (Chapman and Hall), and Handbook of IS Management (Auerbach). David leads a number of research projects in the area of innovation management and has also worked on various innovation management issues with lead- ing companies including Nortel Networks, Thermo King, IBM, Hewlett- Packard, Fujisawa and Boston Scientic.