We should look at some research done by the American Productivity and Quality Centre (APQC) into new product development strategies in North America and Canada. Their sample was 105 businesses which responded to a detailed quantitative survey.
More than half were in the manufacturing sector and had an average turnover of $2.5 billion. The average R&D spend per business was $58.4 million, or 5.2% of sales. The study found that most of these companies have a long way to go in implementing what is considered to be effective new product development strategies.
They found that with new products developed, 32% were only carrying out incremental product changes, 22% were doing major product revisions and only 24% were actually developing products that were entirely new to the business. They found that only 46% of the businesses defined the role of new product development in achieving their business goals, hence the reason for the poor performance. While 65% of the businesses clearly defined the strategic area they wanted to focus on, whether it was markets, product areas, industry sector or technologies, only 38% had clearly defined new product development goals and only 38% had a long- term new product development strategy. Only 27% allocated strategic buckets for different project types.
This suggests that new product development might be a priority but it’s being executed poorly. What we see at the AMCRC is that businesses don’t have a clearly defined new product development strategy and they don’t clearly identify the markets for the products they want to develop. It’s a major area of weakness.
