New Product Development Speed: Too Much of a Good Thing?

Abstract

New product development (NPD) speed has become increasingly important for managing innovation in fast-changing business environments due to continuous reduction in the product life cycle time and increase in competition from technological advancements and globalization. While the existing literature has not produced consistent results regarding the relationship between speed and success for NPD projects, many scholars and practitioners assert that increasing NPD speed is virtually always important to NPD success. The purpose of this paper is to examine the implicit assumption that faster is better as it relates to new product success (NPS). From the perspectives of time-compression diseconomies and absorptive capacity, the authors question the assumption that speed has a linear relationship with success. The authors further argue that time-compression diseconomies depend on levels of uncertainty involved in NPD projects. Using survey data of 471 NPD projects, the hypotheses were tested by hierarchical regression analysis and subgroup polynomial regression. The results of this study indicate that NPD speed has a curvilinear relationship with NPS, and the nature of the speed–success relationship varies, depending on type and level of uncertainty. When turbulence or technological newness is high, the relationship is curvilinear, but when uncertainties are low, the relationship is linear. In contrast, the results of this study suggest a curvilinear relationship under conditions of low market newness but not when market newness is high. The present paper asserts that time-compression diseconomies and absorptive capacity are important theoretical constructs in understanding speed in NPD. The different impact of market newness and market turbulence on NPD speed supports the distinction of newness and turbulence as two different sources of uncertainty. Discussion focuses on the implications of NPD speed under the different conditions of uncertainty. NPD teams need to pursue NPD speed as a critical strategy, but it is necessary to analyze the source and degree of uncertainty about projects before a time-based strategy is selected. In order to address the challenges of high uncertainty, a firm needs to probe, learn, and iterate fast. In particular, NPD teams need to distinguish between the different requirements for new products in emerging and new markets, and those in fast-changing markets. Moreover, NPD teams need to balance how fast they need to go with how fast they can go by considering team absorptive capacity and customer absorptive capacity.