Innovation

Companies' financial strength and market position depend on successful new product introductions, which, in turn, depend on successful product rollovers. Given the low success rate of product rollovers, companies need a formal process to plan and coordinate product rollovers and to reduce risk. This article presents a framework to help companies manage product rollovers, choose the best rollover strategy, and improve product rollovers. Companies need to plan their rollovers early, when they are planning the new product's introduction. First, they choose a primary rollover strategy, based in part on assessment of the uncertainties associated with the product's manufacturing, delivery, and market potential. Then they monitor product and market conditions. Finally, as product and market conditions change, they adopt a contingency strategy if necessary. Companies can consider two primary strategies for product rollovers. Solo-product roll, a high-risk, high-return strategy, aims to have all the old products sold out worldwide at the planned new product introduction date. The less risky dual-product roll plans to sell both old and new products simultaneously for a period of time and can be implemented in a variety of ways. If changed product and market conditions increase the product's risk, companies can choose from among four contingency strategies: making significant price markdowns, postponing the new product's introduction, introducing the new product earlier than planned, or combining two or more dual-product-roll strategies. Finally, while contingency strategies enable companies to modify their primary strategies if appropriate, companies can improve their product rollovers significantly by exploiting opportunities to reduce the product and market risks of each new product in the first place.

Companies can successfully challenge industry leaders even without radical technological innovation.

Why are new products frequently canceled in midstream or introduced later than planned? Why do product developers often have no time to devote to “top priority” projects? Companies may not be integrating strategic, conceptual, and planning functions at the front end with the detailed design and development that follows. Khurana and Rosenthal isolated seven activities critical to product and project success. The foundation elements, those that require cross-functional effort and senior management support, include developing a clear product strategy, formulating a product portfolio, establishing a structure that facilitates product development, and sharing responsibilities throughout the organization. Project-specific elements, which focus on the individual project, include clarifying the product concept, defining the product and market requirements, and planning and estimating the project’s resource requirements. The authors point out that the interrelationships between the elements are as important as the elements themselves. Khurana and Rosenthal examine in detail how the eleven companies in their study implemented the seven activities. While the authors rated two companies as outstanding and two as satisfactory, they considered seven to have serious deficiencies in their development of product strategies. Some had product development teams and managers but no one in charge of formulating product strategy. Others made decisions on new product development based on project criteria rather than strategic fit. And others had an isolated R&;D department that funded projects based on technology rather than on their potential to satisfy product requirements. How can a company improve its front-end process? Khurana and Rosenthal offer a checklist and map for diagnosing a company’s integration of front-end activities. And they discuss how a company can make the transition to a better managed product development process.

Are traditional reengineering approaches appropriate for improving knowledge work processes? In a study of thirty organizations, the authors found that improvement methods for knowledge work ranged from the classical top-down approach to a more laissez-faire philosophy that allowed professionals to design and execute their own work. Companies should probably choose an intermediate approach that reflects the type of knowledge work, the organizational culture, and the project's business requirements. They must recognize that the nature of knowledge work is different from administrative and operational work and that the people who perform it resist structured approaches.

Managers need to recognize the potentials of software in their development processes and change their approaches to utilize the full potentials of software-based innovation. By doing so, they can improve innovation quality, shorten cycle times, cut costs, lower risks, enhance the results of innovation, and increase its diffusion to customers. The authors explain the powerful possibilities of software-based innovation and provide many examples of how companies develop and manage software most successfully.

Analog Devices is a case study in how management innovation is a key to competitiveness.

The fact that Japanese manufacturers made tremendous inroads on the global automobile market during the 1970s will surprise nobody. What may surprise many is that Toyota's productivity rates exceeded U.S. manufacturers' as long ago as the 1960s. Business historian Michael A. Cusumano details the spectacular developments in Japanese productivity, quality, and process flexibility that have occurred over the past thirty years.

The strategic management of internal corporate venturing (ICV) presents a major challenge for many large established firms. The author's conceptualization of ICV suggests that vicious circles and managerial dilemmas typically emerge in the development of new ventures. These problems are exacerbated by the indeterminateness of the strategic context for ICV in the corporation, and by perverse selective pressures exerted by its structural context. This article presents four major recommendations for improving the effectiveness of a firm's ICV strategy.