NEW RESEARCH STUDY REPORT
New Product Development: Process
Benchmarks and Performance Metrics
Scott J. Edgett
When it comes to innovation performance, top performers have increased the gap
between themselves and worst performers, by executing best practices in a repeatable
manner to achieve innovation success. New
Product Development: Process Benchmarks and Performance Metrics, the latest joint
research study by APQC and the Product Development Institute with subject-matter expert
Dr. Scott Edgett, is a rich resource providing companies with the latest innovation
performance indicators that they can use to measure and compare performance, identify
areas for improvement, and implement best practices to improve innovation performance
and achieve success with new products.
The Latest Innovation Performance Metrics
By understanding how a company measures its innovation performance, a better understanding can be gained on how the company’s innovation program is performing. Without clear metrics, organizations are unable to determine if they are performing well, average, or poorly at product innovation or if their performance has changed over time. Knowing what to measure is one piece of the puzzle; knowing what to do with the measurements is the next step. In this report, containing the latest and most comprehensive innovation performance metrics, Dr. Edgett provides companies with a clear view in to what indicators organizations are using to measure their product innovation performance.
Measuring Innovation Performance: Benchmark Against the Best
Without external benchmarks for comparison, companies are left with subjective internal opinions on the performance of their processes. Measuring innovation performance allows companies to determine where they are performing well, where they are performing poorly, and identify areas their innovation program needs improvement. New
Product Development: Process Benchmarks and Performance Metrics provides companies with the opportunity to benchmark against their peers, as well as some of the world’s top innovators. Comparing their performance against others, companies can determine areas requiring improvement and build the necessary consensus to initiate change.
Best Practices Proven to Drive New Product Success
Ultimately, the objective of performance measurement and comparison is to identify
where a need to improve to become better innovators exists. This groundbreaking report
focuses on the mechanisms that enable companies to drive successful product innovation
forward. Dr. Edgett illustrates how having a systematic new product development process
in place impacts performance, further focusing in on front-end activities that have
been known to be critical to new product success. Furthermore, Dr. Edgett explores
gatekeeping and governance practices and activities that prove crucial to effective
decision-making. Dr. Edgett also investigates the role, and importance that people
play within organizations, providing insight into the nature of project teams and the
various approaches to project team management.
With 5 in-depth case studies, Dr. Edgett shares the approaches and methods used by some of the world’s top innovators. Diving deep into the innovation programs of best practice companies, Dr. Edgett provides context and flavor on how organizations operationally approach new product development.
Research Scope and Methodology
New Product Development: Process Benchmarks and Performance Metrics was a joint study
undertaken by the APQC and the Product Development Institute (PDI) with Dr. Scott J.
Edgett as the subject matter expert and author.
Quantitative research was conducted via a questionnaire that focused on 68 variables or measures used to capture the existence and proficiency of practices, approaches and methods. The analysis of this survey represents over 200 organizations with median sales of $1 billion, spanning a variety of industries including: Manufacturing, Telecommunications, Services, Health Care, Financial, Insurance, Non-Profit and more.
Qualitative research was conducted via site visits with five companies previously identified to having best practices in new product development in place. The report features in-depth case studies of these companies:
- Air Products and Chemicals, Inc.
- Ashland, Inc.
- Becton, Dickinson and Company
- Electro Scientific Industries, Inc.
Ideas/Interview Questions |
- The Latest and Most Comprehensive Innovation Performance Indicators
The metrics used to measure the business performance of new product development efforts are carefully examined. These metrics include measures of new product success, profitability, percentage of sales and profits coming from new product as well as the types of innovation undertaken. Project level metrics used to gauge how project teams are performing against budgets and timelines are also key metrics.
Dr. Edgett explains: “Determining how your organization is performing and how it compares to other organizations is always an interesting question. Without clear metrics and a way to compare them, it can be very hard to know whether you are doing well or poorly at product innovation, if your investment in R&D is producing the desired results, and what areas of your performance might need to be improved or strengthened.”
- Top Performers Have a Clearly Defined New Product Development Process in Place
How are businesses faring on the practices that have been identified over the years as positive drivers of performance? Do businesses really have a new product development process in place? Is it working?
The performance impact of a new product development process was investigated by Dr. Edgett, and the overwhelming conclusion was that best performers have a clearly defined new product development process in place. However, ensuring that there is a clear emphasis on up-front homework activities proved as an area of critical focus for best practice organizations.
- Key Gatekeeping and Governance Practices that Impact Success
Gatekeeping and governance have become increasingly important topics that companies are focusing in on to make Go/Kill and resource allocation decisions. What gatekeeping and governance practices make for effective decision-making?
Furthermore, having a gate structure in place is, in itself, not enough. It is also important to ensure that meetings are effective to ensure they have a positive impact on the success of the new product development program.
“An important part of a well-constructed NPD process is the gates or Go/Kill decision points.
At gates, management meets with the project team to review the project, evaluate its merits, and make
Go/Kill and resourcing decisions. What seems to separate the best performers is the ability to have,
on a repeated basis, these demanding Go/Kill decision points in the process where the hard choices
are made, and projects really do get killed. They have the protocols and best practices built into
their process and have the discipline to follow it. Some businesses claim to have gates in their NPD
processes, but a closer inspection reveals that these are largely 'project review points' or 'milestone
reviews' with no tough decisions - projects are rarely killed and a lot of time is spent
on discussing how to ‘fix’ the project.”
- Approaches, Methods and Practices at Top Performing Organizations:
In-depth case studies from five best-practice companies that span a variety of industries:
- Air Products, a global atmospheric, process and specialty gases, performance materials, equipment, and services provider, strives to balance innovativeness, operational excellence, and corporate responsibility. Discover Air Product’s approaches to project selection and portfolio management that balance risk and reward across three classes of new product projects.
- Ashland, Inc., a global specialty chemicals organization, blends new product development with Design for Six Sigma. Learn how Ashland implemented a solution development council to maintain the health and stability of its innovation processes and drive organic growth.
- Becton, Dickinson and Company (BD), a global medical technology company has a renewed focus on global product development systems that balances operational excellence with successful innovation. Learn how this initiative consistently fills BD’s innovation funnel with significant new products ideas and deliver winning new products to market on time.
- Electric Scientific Industries, Inc. (ESI), a leading supplier of innovative, laser-based manufacturing solutions for the micro technology industry successfully re-introduced its New Product Introduction Program. Learn how this tighter, formalized program has helped ESI create effective global cross-functional teams and successful move towards offshore manufacturing.
- EXFO provides optical testing solutions, wireless protocol analyzers and network simulators and portable test sets to the telecommunications industry. 44% of its workforce across 25 countries is involved in R&D. Learn how EXFO’s organizational commitment to bridge the cultural and time barriers associated with global product development helps it develop cohesive teams.
The Quest for Best Practices in Product Innovation
The Key Research Questions
Top Areas Studied
How the Benchmarking Research Was Undertaken
Organization of the Results
- New Product Performance Metrics
Percentage of Revenues and Profits from New Products
Success, Fail and Kill Rates
Time to Market
On Time and On Budget
New Product Development (NPD) Projects Meeting Objectives
Business Entity Performance
Performance Metrics Used to Measure Project and NPD Program
Defining and Identifying the Top Performers
How the Best Versus Worst Businesses Fare in Terms of Performance Metrics
Types of New Products Developed
- The Idea-to-Launch New Product Process and Practices
A Systematic New Product Process
Key Upfront Activities that are Built into the NPD Process
Gatekeeper Governance Practices
Quality of Your Gate Deliverables
Improving Your Gate Practices
- The Impact of People
The Way NPD Project Teams are Organized and Lead
How to Handle Project Team Management
Senior Leadership Support
The Role of the Process Manager
- Portfolio Management - A Special Insert
- Conclusion and Recommendations
- In-Depth Case Studies
- Air Products and Chemicals, Inc.
- Ashland, Inc.
- Becton, Dickinson and Company (BD)
- Electro Scientific Industries, Inc. (ESI)
- Selected Data Charts
Section 1: Organizational Characteristics
Section 2: Governance
Section 3: Culture and People
Section 4: The NPD Process
Section 5: New Product Performance
Section 6: Tools and Systems to Support NPD
- The Sample - Industry Breakdown
- Selected Characteristics of Businesses in the Sample
- Percentage of Revenues & Profits from New Products
- Success, Fail and Kill Rates - The Average Business
- Success, Fail and Kill Rates - Top 25% vs. Bottom 25%
- Time to Market (Idea to Launch Months)
- Percent of Projects on Time, On Budget - The Average Business
- Percent of Projects on Time, On Budget - Top 25% vs. Bottom 25%
- Percent of Projects Meeting Objectives
- Additional Performance Metrics - The Average Business
- How Businesses Fare in Terms of Performance Metrics
- Key Measures Used to Define New Product Success or Failure
- Key Indicators Used to Measure the Total New Product Program
- Performance Metrics Results - The Best vs. Worst Performers
- Performance Metrics - The Best vs. Worst Performers
- Breakdown of Projects by Project Type for the Average Business
- Breakdown of Projects by Project Type: Best 25% vs. Worst 25% of Performers
- Whether Businesses Have a Systematic NPD Process in Place
- Impact of Having a Systematic New Product Process in Place
- How Business Performs on Critical Pre-Development Activities
- Gatekeeping/Governance Approaches
- How Effective are the Gates
- Primary Approach to Establishing Project Teams
- NPD Project Team support - Best vs. Worst
- Who Leads the New Product Development Teams
- Senior Leadership Support - Best vs. Worst
- Types of NPD Training Offered
- How Businesses Fare on Portfolio Management
- Impact of Portfolio Management - Best vs. Worst
About the Author
Scott J. Edgett
- Pioneer of portfolio management for new products
- Co-author of best-selling book, Portfolio Management for New Products (Second Edition) as well as eight other highly acclaimed books
- Published 60+ academic research and business articles
- 20+ years experience working with organizations in product innovation and advising business executives
- Former Professor of Marketing at the Michael G. DeGroote School of Business, McMaster University, Canada
- Faculty Scholar at the Institute for the Study of Business Markets (ISBM) at Penn State University, USA
- CEO Product Development Institute and Stage-Gate International
- World’s Top 10 Innovation Scholar (Journal of Product Innovation Management, Vol.24 No.3: pp 214-229, May 2007)
Product Development Institute (PDI)
Product Development Institute is dedicated to helping companies improve their approach to new product development and portfolio management. The Institute has conducted some of the world's most comprehensive research and best practices in new product development—research that has led to some of the most important discoveries in product innovation such as: the widely used Stage-Gate® system; the concept of New Product Portfolio Management; and the Innovation Diamond™ Framework. For more information, please visit www.prod-dev.com.
American Productivity and Quality Center (APQC)
APQC is a member-based nonprofit and one of the leading proponents of benchmarking and best practice business research. Working with more than 500 organizations worldwide in all industries, APQC focuses on providing organizations with the information they need to work smarter, faster, and with confidence. For more information, please visit www.apqc.org.
Best Selling Books by the Author |
Michelle Jones, EVP
Product Development Institute
Phone: +1-905-637-5545 ext. 223