If there is one universal desire of every senior manager responsible for the financial performance of any company, it might just be: “We need to get products to market faster!” It is perfectly understandable. Most companies rely on new products to help drive revenue and earnings growth, and what better way to improve financial performance than to get more new products, and faster? But is that always the best strategy? Many companies emphasize time-to-market, or cycle-time, at the expense of every other NPD goal. Much of the popular NPD literature has done a good job selling this as the goal of NPD, but there is a growing body of evidence that questions the link between this strategy and firm performance.
The reasons for developing products faster are well known, but worth reviewing here. One of the better publications that provides a balanced treatment of time-to-market issues is Developing Products in Half the Time by Smith and Reinertsen (1). The authors consider the pros and cons, and emphasize that while there are benefits of decreasing time-to-market, it does come at a cost and is not appropriate in every case.
Smith and Reinertsen propose four primary reasons for developing products faster. First, as previously stated, financial performance is usually a key reason to decrease cycle-time. But how does that help? One reason is that getting a product to market faster theoretically can extend the product life-cycle and the peak sales, increasing overall aggregate sales. Getting a product to market faster might also lead to higher profit margins because of the potential that the first-to-market may have more pricing flexibility.
In many industries, being first to market can provide a key competitive advantage and is a second primary reason to emphasize a first-to-market strategy, as opposed to a fast-follower strategy. In some industries, electronics for example, being first to market provides the opportunity to lock in customers early and help erect high barriers of entry to competitive designs. Being first-to-market might help secure early market share vs. competitive offerings which may be crucial in some cases.
A third reason is to maintain more flexibility to changing market preferences. In some markets where the needs of customers are changing rapidly, it is much easier to respond to these changes over a shorter development time-frame compared to a longer development. If technology is changing rapidly, being able to quickly get a product to market may provide the advantage of allowing a company to wait until a technology has settled out, then rapidly developing a product based on that technology. Finally, many companies use fast time-to-market to maintain an overall market leadership position. They consider it a core competency and use it to position themselves as trendsetters in their customer’s minds. Perception can be a very powerful competitive advantage.
There may be other reason’s to decrease cycle-time, and get products to market faster, but in my experience the four reasons described above make sense and are supported by multiple other articles and books on the subject. There are many ways to decrease cycle-time, and improve time-to-market, but that is outside the scope of this article. The question I want to consider in this article is more a strategic question: Should time-to-market should be the primary focus of NPD?
Even Smith and Reinertsen point out that many have climbed onto the rapid development bandwagon just because they feel they have to do something. In my experience, many senior managers are generally frustrated by how long it takes to develop new products, and time-to-market and/or problems meeting schedules is only a manifestation of other systemic problems within the NPD process itself, organization issues, or cultural factors. For instance, if the project is not fully defined either because the organization does not have a robust definition process, or maybe because there is a lack of understanding about customer needs and the scope continues to change, these problems could well lead to longer cycle-times and missed schedules. Sometimes it is the organization’s ability to understand project risk. For projects with significant complexity, or those with unforeseeable uncertainty (also known as “unk unks”), unrealistic schedules are often forced onto project teams at the beginning of the project before the risks are fully understood. In other cases, there is a lack of project management skills that impact how close the project schedule aligns with reality. A significant problem in many organizations is too many active projects relative to the available resources. This leads to a high level of multi-tasking that can bog down every project, increasing cycle-time and the likelihood that the schedule slips.
If these types of problems exist, they need to be addressed which can help decrease cycle time and improve the organization’s ability to deliver products to market when promised. I am certainly not arguing that you should ignore them. What I am saying is that you cannot assume that decreasing cycle time will automatically lead to a higher level of firm performance. Decreasing cycle time may be more advantageous for some projects, some companies, and some industries. Even fast moving companies might have some projects that they should not be accelerating, and conversely many mature companies who are moving more slowly can benefit greatly by speeding up some projects. The argument I am making is that you have to look at each project in context and not blindly assume every project should be sped up.
Over the years, there have been many articles published questioning whether following a first-to-market strategy exclusively is always best. An article published in 1999 by Lambert and Slater (2) takes this position, but it was based mostly on qualatative evidence vs. empirical data. The article does, however, provide a useful framework to think about the concepts of first-to-market, fast cycle times, and on-time schedule performance. The authors proposed the following:
1) “First to Mindshare” (FTM) replaces the focus on first-to-market. FTM means that a specific company’s products are perceived by the market as offering solutions that competitors must match. This forces a company to replace the inward-focused time-to-market metric with a customer-focused view. What is it about a company’s products that will satisfy a user need better than the competition? To do that consistently over time is important, not that every new technology or product that a company introduces is first-to-market.
2) “Effective Market Introduction Timing” (EMIT) takes precedence over fast cycle times. This concept considers how the market might adopt the new product, the firm’s market position, competitor’s capabilities, and the “mindshare” considerations to help determine the optimal introduction cycle time for a company’s products. In other words, how fast a company needs to introduce new products is more a function of market considerations vs. an internal goal to “get to market faster”. It may not always be necessary.
3) “Managed Responsiveness” (MR) replaces on-time schedule performance. Similar to EMIT, “managed responsiveness” considers the firm’s market position, competitive threats, customer needs, mindshare strategy, long-term business strategy, and the type of market window a firm my face to help assess what projects are time sensitive and which ones are not.
An article published in 2012 by Chen et al. (3) surveyed existing studies linking speed and success of NPD projects and found no conclusive evidence to affirm that speed always equals NPD success. Another article in 2012 by Stanko et al. (4) found similar contradictory data. Chen looked at data from 471 NPD projects and further related NPD success and NPD speed to four factors including:
1) Technological newness: extent to which a technology or manufacturing process is new to the company and being applied for the first time.
2) Technological turbulence: the rate of change associated with a new product technology in an industry.
3) Market newness: extent to which a new product is targeted at a market that might be unfamiliar to the company compared to past products.
4) Market turbulence: rate of change in the composition of customer needs and preferences.
The results were interesting and helps to further the argument that speed and success do not always go hand-in-hand. The authors found that for high levels of technological newness, technological turbulence and market turbulence, there was a curvilinear relationship. In other words, at some point, faster leads to less success. On the other end of the spectrum, where there were low levels of those three factors, there was indeed a linear relationship: faster is better. The figure below illustrates the results.
The results were opposite, maybe somewhat surprisingly, for market newness as illustrated in the figure below. The results imply that when a product is being introduced to a market that is very familiar to the company, faster is not always better. The authors opine that maybe it is related to the ability of an existing market to adopt new technology, and the fact that in many cases, companies are very good at improving existing technology but they have a tendency to “overshoot” their customer’s needs.
Conversely, when a product is being introduced to a very unfamiliar market, faster appears to be better. I believe there are several examples that support this concept. For instance, a recent article about Starbuck’s (5) describes how they emphasize speed over “getting it exactly right” when they roll out new products. In the context of new coffee products, they are attempting to provide a new offering to a market segment they may not really understand. It is hard to argue with their success. Of course, they are not taking a huge risk if they introduce a product that does not resonate with a market segment. In some industries, for instance the medical device industry, getting it right is an absolute necessity as the risk is too high. The point is: speed is contextual.
An article (6) about a small company called Marlin Steel illustrates the concept as well. This company got started supplying of all things, bagel baskets to large national chains that use them for displaying their product. As their business was disrupted by Asian firms that could undercut them significantly on price, they were forced to re-focus the business. They did that very successfully by pursuing business from very demanding industrial customers in the aerospace, automotive, and other industries where there was a need for relatively sophisticated, high-quality metal mesh baskets that are used for various industrial processes such as parts cleaning. They are serving new markets who they are not familiar with and as part of their competitive advantage, they focus on speed of execution. Their customer’s place a high value on speed in combination with quality and it allows a small company like Marlin to compete successfully with Asian and European competitors.
So in summary, speed is no panacea. Faster does not always lead to higher levels of new product success and overall firm success. As with so many issues in new product development, context is important. Every project is different. Every industry is different. Emphasizing speed and rewarding teams only for being first to market, reducing cycle time, and always meeting the schedule is not a recipe for long-term company success (7). No one can really tell you exactly how fast is fast enough, but it falls to senior management to take a balanced, longer term approach. Having said that, I believe, that every organization must pursue those areas in the NPD process, organization structure, and culture that hinder the ability to move projects through the process as effectively as possible. You want to be able to run projects as quickly as possible when it is necessary. The challenge remains to know just what projects need to go fast and which ones do not.
What is your opinion on this debate? Do you believe that being first-to-market is always the best strategy for your industry and products? Why or why not? Are you in general happy with how long it takes to complete projects in your organization? Are you actively trying to reduce cycle-time, or is that not a major focus? What types of process, organization, or cultural issues impact your cycle time and ability to meet project schedules?
(1) Preston G. Smith and Donald G. Reinertsen, Developing Products in Half the Time. (New York: John Wiley & Sons, 1998)
(2) Lambert, Denis & Slater, Stanley F. 1999. Perspective: First, Fast, and On Time: The Path to Success. Or Is It? Journal of Product Innovation Management 16:427-438.
(3) Chen, J., Reilly, R.R., and Lynn, G.S. 2012. New Product Development Speed: Too Much of a Good Thing? Journal of Product Innovation Management 29(2):288-303.
(4) Stanko, M.A., Molina-Castillo, F., Munuera-Aleman, J. 2012. Speed to Market for Innovative Products: Blessing or Curse? Journal of Product Innovation Management 29(5):751-765.
(5) Carr, Austin. 2013. Starbuck’s Leap of Faith. Fast Company June:46-48.
(6) Fishman, Charles. 2013. The Road to Resilience: How Unscientific Innovation Saved Marlin Steel. Fast Company July/August:87-91, 108-109.
(7) For more information on measuring success in new product development, see Measuring New Product Development (NPD) Success.
New Product Visions is a consulting company that helps organizations improve the effectiveness of their new product development processes. We specialize in small to mid-sized companies that manufacture highly engineered products. Contact us today about how we might help you!
Specialties: NPD consultants, new product development consulting, developing new products, new product development seminars, small business consulting, new product development expert, product development process, new product development strategies, integrating NPD for mergers & acquisitions, organizing for innovation, management role in NPD, project risk analysis