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MA K I
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a look at the ev o l u t io n o f r e s e a r c h o n
, in n o v a t io n a n D g r o w t h
new proDucts
MANN
B Y D O N A LD R . LE H
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❱ COVER STORY ❰
T
HE FACT THAT most facebook, the ipod or the model
new product ventures t). the allure of spectacular suc-
end in failure can limit cess is particularly strong for small,
enthusiasm for emerg- young firms that have relatively
ing products, innova- little to lose in terms of brand eq-
tion and growth. how- uity or capital if they fail. in larger
ever, a low success companies, successful outcomes
rate may be accept- make heroes out of the developers/
able, or even appro- architects (steve Jobs, sergey brin,
priate, if the potential benefit (the henry ford) and generate huge fi-
profit) of a new product is suffi- nancial windfalls for the companies
ciently greater than the cost of fail- that market them.
ure. for a 20-percent success rate,
as long as the potential gain is four second, there is tremendous
times the size of the potential loss pressure for publicly traded com-
(ignoring benefits such as learn- panies to produce high growth
ing or product-line synergy and rates, thereby justifying and/or
costs like reputation tarnishing), increasing price/earnings ratios
then one should go ahead with the and stock price. this second force
launch on an expected value basis. explains why companies often
acquire other companies—and
in spite of the high failure rate, frequently overpay for them in the
the drive for new-product-driven process. a parallel force exists for
growth stems from two principal small family-owned firms as the ar-
motivations. first, there is hope rival of new generations produces
for a “right-tail” result (i.e., a spec- a need for more cash to sustain the
tacular success, such as google, growing extended family.
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MSI Research Priorities • the possibility that other (unnoted) practices that are
Given the key role of growth, in general, and new products, correlated (occur concurrently) with the “best practice” drive
in particular, it is interesting to see how both their importance the result; and
and the aspects of them considered most crucial have evolved • the question of whether the practice leads to success
over time. To assess this evolution from the perspective of busi- or vice versa.
ness, it is useful to focus on the research priorities developed by That is, successful firms can afford, and hence are more
the Marketing Science Institute. Beginning in 1974, MSI has likely, to engage in a number of activities, such as support-
surveyed its members (currently 72) to ascertain what issues ing social causes, providing employee benefits like day care
were most crucial and needed more attention (research). Figure and spending on research and development or advertising.
1 highlights the change in priorities over time. Untangling what causes what is non-trivial and requires data
First, somewhat surprisingly, developing new products was over multiple time periods, as well as careful (econometric)
not identified as a high priority topic between 1974 and 1992, analysis.
although developing business opportunities was the highest More interesting than the focus on method (best prac-
priority topic from 1984 to 1985. By contrast, from 1992 on, tices) are the topics identified as high priority. First, “break-
some variation on new products, innovation and growth has through” product platforms (aka really new products)
consistently been a top priority. remained a central concern. Second, attention was directed
More interesting is how the specific focus has evolved over toward the now common topic of customer insights.
time. Through the 1980s, the top priorities concentrated on The 2000-2002 priorities showed a lessening in concern
improving (innovating) the marketing mix, with no special about new products, as attention shifted to the Internet
focus on new products. The 1992-1994 priorities spotlight and new media. In terms of specifics, interest in consumer
improving the new product development process (i.e., efficien- (customer) insights, speed to market and evaluating/selecting
cy). For 1994-1996, the top priority was forecasting both new among products remained high.
product sales and future environments. The 2002-2004 priorities showed both a re-emphasis on
From 1996-1998, attention turned from minor (“lemon- the topic and an important shift in emphasis. For the first
scented”) innovations to “really new” (discontinuous) innova- time, growth was identified as the key aspect, with innovation
tions, which created or revolutionized product categories. In and new products now appropriately thought of as means to
addition, interest began to focus on not just single innovations, this end/goal. Second, the role of metrics in assessing product
but on developing organizations capable of producing multiple development, including the more qualitative aspect of idea
new products over time. generation, became more prominent—especially as they
From 1998-2000, attention was focused on the topic du related to predicting success and failure.
jour: best practices. While observing the practices of other The 2004-2006 priorities marked the ascension of growth
successful companies can indeed provide suggestions/ to the top priority, a position it has held for three of the last
hypotheses about what works, it is far from scientific or four sets of priorities. Discontinuous growth strategies ef-
reliable. Problems include: fectively combined the older emphasis on really new products
• the failure to see if unsuccessful companies follow with growth. The emphasis on organic growth signaled the
the same practices; increased emphasis on internal growth (vs. external via
40 | M a r k e t i n g M a n ag e m e n t | w i n t e r 2 011
mergers and acquisitions) now prominently espoused by lead- Sixty Years of Research
ing companies such as General Electric and Procter & Gamble. A complementary perspective to the priorities identified by
The 2006-2008 priorities conjoined innovation with managers can be observed by examining the academic litera-
growth. It also highlighted the growing emphasis on involving ture on the topic. Given the large body of work in this area,
customers in the innovation and product-development process, it is impossible to adequately cover all of it. Nonetheless, by
and formally identified design as a key (and emerging) focus. In examining award-winning and other relevant papers, one can
addition, it returned to the topic of the organization, specifi- get a pretty good sense of the developments over time. Specifi-
cally a culture of innovation. cally, award-winning papers through 2010 were examined from
The 2008-2010 priorities continued the evolution of Journal of Marketing (H. Paul Root), Journal of Marketing
emphasis by identifying other aspects worthy of exploration, Research (William F. O’Dell), Marketing Science (Frank Bass
including service, while retaining a focus on product develop- and John Little) and Journal of Consumer Research (Robert
ment co-creation and technology. Ferber).
The current (2010-2012) priorities again place profit- An impressive fraction of award-winning papers addressed
able growth at the top, highlighting the roles of information the general area of new products, innovation and growth.
and technology. It also, unsurprisingly given the state of the These were then supplemented by papers in these journals that
economy, identifies the role of economic conditions and social appeared on the top five pages of a Google search based on the
issues as particularly relevant aspects. words “new products,” “innovation,” “growth” and “market-
Examining these priorities across time reveals an interest- ing.” Papers in the most focused journal in the area, Journal of
ing progression. The focus has moved from innovation aimed Product Innovation Management, were not included because they
at improving the mix in general, to, initially, new products, and were so numerous (i.e., the entire May 2011 issue was devoted
then to really new products/discontinuous innovation. In- to product design). Clearly, it is an important resource for
novation itself then emerged as a major theme, including idea anyone interested in the topic.
generation, creativity and aspects of design. Most recently, the Next, a convenience sample of three professors was asked
focus has shifted to organic growth, with new products seen to go over the list and add key references. Finally, the author
more as a means to this end. added a few personal favorites. The result is a relatively unsci-
w i n t e r 2 011 | M a r k e t i n g p ow e r . co m | 41
F I GU RE 2 : A p p e n d i x Cl a s s i fi c a ti o n
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