New Product Development (NPD) practitioners are keen to benchmark NPD practices because identifying practices which are able to more efficiently and/or effectively deliver a new product or service could mean the difference between success and failure. To help in identifying such practices Dr. Kahn will present findings pertaining to what practitioners find to be poor and best NPD practices. Among the different practices presented particular focus will be put on metrics and performance measurement. Thoughts on how to frame metrics and performance measurement during innovation will be introduced. The presentation will conclude with guidelines for manifesting better performance through practices and metrics, incorporating actual project experiences from VCU’s da Vinci Center for Innovation.

1. Innovation Practices, Metrics,
and Performance
Kenneth B. Kahn, Ph.D.
Professor of Marketing and Director, da Vinci Center for Innovation
Virginia Commonwealth University
Richmond, Virginia
kbkahn@vcu.edu
© 2012 Kenneth B. Kahn, Ph.D.

2. JPIM 2006
JPIM 2012
BUSINESS HORIZONS
2012
© 2012 Kenneth B. Kahn, Ph.D.

3. Innovation/NPD Dimensions
Proposed Dimensions Dimensions Sorted by Weight
Commercialization Strategy
Company Culture Commercialization
Metrics Process
Process Project Climate
Project Climate Research
Research Company Culture
Strategy Metrics
© 2012 Kenneth B. Kahn, Ph.D.

4. STRATEGY
Best Practice Poor Practice
Clearly defined and organizationally visible Most NPD projects fit with mission, but some
NPD goals pet projects that do not fit mission exist
The organization views NPD as a long-term No NPD goals
strategy
The organization views NPD only as a short-
Mission and strategic plan help define strategic term tactical initiative
arenas for new opportunities
Unclear NPD goals
NPD goals are clearly aligned with organization
mission and strategic plan A variety of NPD projects are supported with
little or no regard for mix appropriateness
NPD projects and programs are reviewed on a
regular basis No concern over types of NPD projects being
developed
Opportunity identification is ongoing and can
redirect the strategic plan in real time to No prioritization of NPD projects
respond to market forces and new technologies No process for undertaking portfolio mgmt.
There is a ranking or prioritization of projects NPD projects may or may not be aligned with
There is keen consideration for balancing the organization’s mission or strategic plan
number of projects and available resources Pet projects are prevalent
All trade-offs among NPD projects are made
informally with no set criteria
© 2012 Kenneth B. Kahn, Ph.D.

5. COMMERCIALIZATION
Best Practice Poor Practice
The launch team is cross-functional in Marketing budget decisions can
nature dramatically change up to the point of
launch
A project postmortem meeting is held after
the new product is launched
Logistics and marketing work closely
together on new product launch
Customer service and support are part of
the launch team
A standard protocol for planning a launch
exists within the company
Cross-functional teams make decisions
concerning manufacturing, logistics,
marketing, and sales
© 2012 Kenneth B. Kahn, Ph.D.

6. PROCESS
Best Practice Poor Practice
A common NPD process cuts across Criteria for evaluating NPD projects are
organizational groups not defined
Go/no-go criteria are clear and Limited documentation on the NPD
predefined for each review gate process exists
The NPD process is flexible and Minimal testing (concept, product,
adaptable to meet the needs, size, and market) performed
risk of individual projects
No NPD process exists
The NPD process is visible and well There is no discipline in using the
documented organization’s NPD process
An IT infrastructure with appropriate There is no NPD process owner or NPD
hardware, software, and technical process champion
support is available to all NPD personnel
Not all NPD personnel have access to the
A clear NPD process exists same IT tools (software, hardware)
Projects are not reviewed at completion
The NPD process can be circumvented
without management approval
© 2012 Kenneth B. Kahn, Ph.D.

7. PROJECT CLIMATE
Best Practice Poor Practice
Cross-functional teams underlie the No identifiable NPD group
NPD process
No project leader
Each project has a clearly identifiable
project leader NPD personnel are involved in too
many projects
NPD activities between functional
areas are coordinated through formal
and informal communication
© 2012 Kenneth B. Kahn, Ph.D.

8. RESEARCH
Best Practice Poor Practice
Concept, product, and market testing is Customer or user is uninvolved in NPD
consistently undertaken and expected process
with all NPD projects
Little if any market research is
Customer or user is an integral part of undertaken
the NPD process
No real evaluation of testing (concept,
Results of testing (concept, product, product, market) results is undertaken
market) are formally evaluated
No market studies are undertaken to
understand marketplace
© 2012 Kenneth B. Kahn, Ph.D.

9. COMPANY CULTURE
Best Practice Poor Practice
Top management supports the NPD NPD is not a management priority
process
All NPD ideas come from within the
The company actively works with company
customers to develop new solutions
Management is primarily focused on
operational efficiency and cost savings
© 2012 Kenneth B. Kahn, Ph.D.

10. METRICS AND PERFORMANCE MEASUREMENT
Best Practice Poor Practice
No standard criteria for evaluating NPD
projects exist
No standard criteria for evaluating the
overall NPD effort exist
One person does all NPD project
evaluations
Projects are never killed
© 2012 Kenneth B. Kahn, Ph.D.

11. Study Conclusions
 There is evidence verifying the 2006 framework.
 We can distinguish between poor and best practices on
most dimensions.
 There is slightly more consensus on what constitutes
poor practice rather than best practice.
 Not all, but many characteristics appear common across
countries suggesting global NPD best/poor practices.
 Metrics is an area in need of further examination.
© 2012 Kenneth B. Kahn, Ph.D.

12. Metrics and Performance
Measurement
© 2012 Kenneth B. Kahn, Ph.D.

13. Five-Stage Idea-to-Launch Stage-Gate® System for Major Product
Development Projects
Idea Screen 2nd Screen Go to Go to Test Go to Launch Post Launch
Development Review
Gate 1
Gate 2 Gate 3 Gate 4 Gate 5 PLR
Discovery: Stage 2: Build
Stage 1: Stage 3: Stage 4: Stage 5:
Ideas Business
Scoping Development Testing & Launch
Generation Case -
Validation
The Customer or User
For Less Complex and Smaller Development Projects,
Use an Abbreviated Version: 2-3 Gates
Source: Robert Cooper, Chapter 1, PDMA Handbook 3rd Edition, forthcoming 2012

14. NPD Evaluation Stream
Development Activity Evaluation Task Evaluation Techniques
Strategic Planning Direction: Opportunity Identification,
(Pre-Process) Where should we look? Market descriptions
Ideas Generation Initial Review: Product Innovation Charter,
Is the idea worth consideration? Experience and Judgment,
Preliminary Market Analyses,
Concept Testing
Scoping Full Screen: Checklists, Scoring Models
Business Case Should we develop it?
Development Progress Reports: Protocol checks, Prototype
Testing & Validation Have we developed it successfully? Tests, Product Use Tests
If not, should we continue to try?
Launch Market Testing: Pseudo Sale, Controlled
How should we market it? Sales, Rollout
Post-Mortem Review
© 2012 Kenneth B. Kahn, Ph.D.

15. Example: Measuring Product Success
1st Generation 2nd Generation
Derivative

16. The Launch Control Protocol: An Example
Potential Problem Tracking Contingency Plan
Customers are not Use POS reports. Install point-of-
making trial Minimum 100 purchase displays.
purchases of the new purchases monthly
product as expected. per retail outlet are
expected.
Competitor may have Difficult to track, but Offer 2 for 1 program.
similar new product. conduct surveys with Consider bundling
retailers and final new product with
consumers. other products.
© 2012 Kenneth B. Kahn, Ph.D.

17. Marketing Control Considerations
Type of Control Purpose of Control Approaches
Annual Plan Control Is the business plan − Financial Analysis
being achieved? − Scorecard
Efficiency Control How efficient are our − Cost Analysis
business expenditures?
Profitability Control Is the company making − Profitability
money? Analysis
Strategic Control Are we doing the right − Marketing Audit
thing(s)? − NPD Audit
© 2012 Kenneth B. Kahn, Ph.D.

18. Considerations for NPD Metrics and
Performance Measurement
Issue Question
Definition What is the objective/goal?
Operationalization How can/should this be measured?
Intelligence Which data, information, and knowledge?
Level Where should the measurement occur?
“What gets measured, gets rewarded, and
Rewards and Recognition what gets rewarded gets done.”
© 2012 Kenneth B. Kahn, Ph.D.

19. Performance Measurement
• Efficiency (cost, time, resources)
• Effectiveness (objectives/goal attainment)
• Adaptiveness (ability to change/shift)
Potential managerial paradox: as the market becomes
increasingly vulnerable to performance competition, a sole
focus to reduce costs diminishes the organization’s ability to
respond to this kind of competition. Thus, cost efficiency
can be the enemy of product innovation, and vice versa.
© 2012 Kenneth B. Kahn, Ph.D.

20. © 2011 Kenneth B. Kahn, Ph.D.