Innovative versus incremental new business services: different keys for achieving success

TLDR

In firms where new product development is strategic, managers must juggle a portfolio ranging from high‑tech innovations to simple improvements, and recent research shows that success depends on tailoring NPD practices to the innovativeness of each project. The study seeks to determine how the level of product innovativeness affects the success and failure factors of new business‑to‑business service projects. It gathers data through a large survey of managers experienced in new product development within their firms. The results identify global success factors—excellent customer fit, involvement of front‑line experts, and a formal launch program—that apply to all new services, while low‑innovative services benefit from leveraging firm competencies, a stage‑gate system, and cost‑controlled differentiation, and new‑to‑world services depend on an entrepreneurial culture, senior‑manager mentorship, and strong.

Abstract

In companies where new product development plays an important strategic role, managers necessarily contend with a portfolio of projects that range from high technology, new-to-the-world, innovations to relatively simple improvements, adaptations, line extensions, or imitations of competitive offerings. Recent studies indicate that achieving successful outcomes for projects that differ radically in terms of innovativeness requires that firms adjust their NPD practices in line with the type of new product project they are developing. Based on a large-scale survey of managers knowledgeable about new product development in their firm, this study focuses on new business-to-business service projects in an attempt to gain insights about the influence of product innovativeness on the factors that are linked to new service success and failure. The research results indicate that there are a small number of "global" success factors which appear to govern the outcome of new service ventures, regardless of their degree of newness. These include: ensuring an excellent customer/need fit, involving expert front line personnel in creating the new service and in helping customers appreciate its distinctiveness and benefits, and implementing a formal and planned launch program for the new service offering. Several other factors, however, were found to play a more distinctive role in the outcome of new service ventures, depending on how really new or innovative the new service was. For low innovativeness new business services, the results suggest that managers can enhance performance by: leveraging the firm's unique competencies, experiences and reputation through the introduction of new services that have a strong corporate fit; installing a formal "stage-gate" new service development system, particularly at the front-end and during the design stage of the development process; and ensuring that efforts to differentiate services from competitive or past offerings do not lead to high cost or unnecessarily complex service offerings. For new-to-the-world business services, the primary distinguishing feature impacting performance is the corporate culture of the firm: one that encourages entrepreneurship and creativity, and that actively involves senior managers in the role of visionary and mentor for new service development. In addition, good market potential and marketing tactics that offset the intangibility of "really new" service concepts appear to have a positive performance effect.