Even though there is much lip service to the need for innovation in industry today, and most CEOs list innovation as a top priority, the truth is that our new products are less innovative than they were fourteen years ago. Consider the figure below, which shows changes in the product portfolios of a broad selection of companies from 1990 to 2004.
From Flexible Product Development by Preston G. Smith, Jossey-Bass, 2007. © 2007 by John Wiley & Sons. Used with permission. Data source: Robert G. Cooper, “Your NPD Portfolio May Be Harmful to Your Business’s Health,” Visions, 29(2):22–26 (April 2005).
There has been a steep decline in highly innovative new-to-the-world products, and this gap has been filled by an 80 percent increase in low-innovation improvements and modifications to existing products.
Why Has Product Innovation Declined?
There are many possible explanations for this disturbing fact, but a strong factor is pressure from the financial markets that has driven industry managers to be overly conservative — make no mistakes! Consequently, they have established development systems that reduce variation (such as Six Sigma), reduce “waste” (Lean), and plan uncertainty out of the project (phased development, including Stage-Gate®). Although such systems have been successful in other parts of the business—especially the factory—in improving profitability, they have had the unfortunate side effect of inducing rigor mortis in product development activities.
What Can We Do?
Fortunately, there is much we can do to restore flexibility—and thus innovation—to new product development. As explained on the rest of this website, many tools and approaches can lower the cost of change, thus allowing us to make changes during product development—even late in development—without too much disturbance.
(c) Copyright 2013 Preston G. Smith. All Rights Reserved.