antecedents and outcomes of new product development speed: an interdisciplinary conceptual framework

Antecedents and outcomes of new product development speed

An interdisciplinary conceptual framework

Ajay Menona, Jhinuk Chowdhuryb, Bryan A. Lukasc,*

aCollege of Business, Colorado State University, Fort Collins, CO 80523, USAbCollege of Business Administration, University of North Texas, Denton, TX 76203, USA

cFaculty of Economics and Commerce, University of Melbourne, Parkville, VIC 3052, Australia

Received 1 November 2000; received in revised form 25 February 2001; accepted 25 March 2001

Abstract

Modern marketplaces are characterized by speedy technological breakthroughs, rapid changes in sociopolitical conditions and consumer

tastes, and continuously shrinking product life cycles. Consequently, companies must consider strategies that reduce the time required to take

a product from concept to market. The authors draw from a diverse body of published research findings and corporate experiences to generate

an interdisciplinary inventory of organizational factors associated with short new product development (NPD) cycles. An integrative

framework is presented that describes the influence of infrastructural characteristics (structure, culture, and capital investment) and procedural

factors (groupwork, controls, and incentives) on NPD speed, and the subsequent effects on organizational outcomes (revenue, profitability,

corporate image, and brand image). D 2002 Elsevier Science Inc. All rights reserved.

Keywords: New product development speed; Structure; Culture; Capital investment; Groupwork controls; Incentives; Revenue; Profitability; Corporate image;

Brand image

1. Introduction

The competitive edge gained by an organization in

developing a new product quickly is well documented in

the marketing literature [1–14]. In addition to higher profit,

for example, a short new product development (NPD) cycle

can afford companies significant cost reduction, greater

market segment coverage, and a dominant leadership role

in the marketplace. With the increasing flow of information

between and within businesses and customers, and as

product life cycles continue to shrink, rapid response to

changing market conditions is no longer just smart business

practice — it is imperative.

A variety of strategic concepts (see Table 1) bear witness

to the growing realization of, and recent emphasis on, the

importance of NPD speed — defined as the pace of

activities between idea conception and product implementa-

tion. Despite the prominence of speed issues in popular

business-oriented publications, thorough academic exami-

nations of them have been scarce. For the most part,

business publications and academic literature have exam-

ined techniques and processes designed to improve produc-

tivity at individual stages or enhance only certain aspects of

the NPD process. The use of technological advancements

such as computer-aided systems of design and manufactur-

ing (CAD and CAM) [15] and the practice of assigning

product development to multifunctional teams [10,16–

18,26,27,30] are examples of widely discussed techniques

for speeding products through the developmental process.

We examine published research findings and business

experiences to generate an inventory of organizational

factors related to NPD speed and use it to develop an

integrated conceptual framework. Although organizational

factors have been studied extensively in the literature on

employee motivation, strategic decision processes, corporate

governance, and organizational characteristics [19–22], and

although recent evidence suggests that they influence organ-

izational performance [23–25], few studies have related

them to NPD speed. The objectives of this study are to (1)

draw on the literature related to organization theory in

diverse academic areas to develop an interdisciplinary con-

ceptual framework for the study of NPD speed, antecedent

0019-8501/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved.

PII: S0019 -8501 (01 )00163 -8

* Corresponding author. Tel.: +61-3-8344-5335; fax: +61-3-9347-

3770.

E-mail address: [email protected] (B.A. Lukas).

Industrial Marketing Management 31 (2002) 317–328

factors, and outcome factors, and (2) present an interdiscip-

linary inventory of theoretical propositions.

2. Conceptual framework

Clearly, some of the major factors that influence a

company’s decision to adopt fast NPD as a critical issue

in its strategic business plan are external to the company:

intensely competitive markets, rapidly changing consumer

tastes, accelerating technological advancements, lack of

patent protection, and maturity of product life cycles, among

others. Organizations that do not respond to such factors

adequately and in a timely way may incur a severe com-

petitive disadvantage [31,32]. However, in our attempt to

emphasize actionable variables, we address only those

antecedent factors that are internal to the organization. In

particular, each of the factors we explore is subject to

managerial influence and is an essential element of stra-

tegic business plans. In our interdisciplinary conceptual

framework, we identify two sets of antecedent variables:

infrastructural variables (structure, culture, and capital

Table 1

Constructs related to NPD speed

Construct Study Definition/connotation

Time-to-market Vesey [131] Time-to-market is defined as ‘‘the elapsed time between product definition and product

availability’’ (p. 151).

Wheelwright and Clark [163] Time-to-market is ‘‘such a critical dimension of performance in the outstanding project that all of

the processes, systems, and activities in development are geared to fast action’’ (pp. 15–16).

Skibinski [83] Term used: time-to-market. Not defined. Article appears to use the construct in its usual

connotation. Discusses the impact of computerization and automation in information systems on

time-to-market.

DeFosse and Barr [81] Term used: time-to-market. Not defined. Article appears to use the term in its usual connotation.

The construct is considered to be related to product development time and delivery time. Article

lists the benefits of electronic data interchange and electronic graphic interchange on

time-to-market.

Kharbanda [34] Term used: time-to-market. Not defined. Appears to use the term in its usual connotation.

Discusses Xerox’s experiences in NPD.

Cycle time Meyer [2] The basic premise of fast cycle time (FCT) is ‘‘shortening the overall business cycle, which begins

with the initial identification of a customer’s needs and concludes with the receipt of payment for

the product shipped or service delivered’’ (p. 8). The overall cycle encompasses many other

subcycles including the NPD cycle.

Bower and Hout [17] Fast cycle time is believed to be ‘‘an organizational capability, a level of performance that

management shapes and builds into the company’s operating systems and the attitudes of

employees’’ (p. 110). It is also considered to be ‘‘a management paradigm, a way of thinking about

how to gain real advantage over competitors’’ (p. 111).

Robertson [164] Market penetration cycle time is ‘‘the amount of time it takes to reach maximum sales potential

for a new product’’ (p. 88).

Thomas [5] Total cycle time is ‘‘the time it takes from expression of a customer’s need until that need is

satisfied’’ (p. 1).

Wheelwright and Clark [163] Actual term used: Fast cycle competition. Not defined. Refers to the ability to get to market faster

and more efficiently with products that are well matched to the needs and expectations of

target customers.

Schmenner [165] Cycle time, also called lead time, manufacturing interval, and throughput time refers to the

‘‘calendar time it takes to make a product, from the time materials arrive at the factory and are

available to be worked on until the finished product is awaiting shipment to a customer’’ (p. 11).

Time-based

competition

Stalk [3] Time-based competitive advantage includes ‘‘strategies based on the cycle of flexible

manufacturing, rapid response, expanding variety, and increasing innovation . . .’’ (p. 45).

Blackburn [1] Time-based competition (TBC) is ‘‘the extension of JIT [just-in-time] principles into every facet of

the value delivery cycle, from research and development through marketing and distribution’’ (p. 21).

Handfield [166] Time-based competition refers to ‘‘the ability to deliver a customized product within a shorter

elapsed time than can competitors in the same market, and is usually measured in terms of delivery

lead time’’ (p. 2).

Bockerstette and Shell [167] Time-based manufacturing is a ‘‘collection of concepts, tools and techniques, and management

practices that gives a company quick response capability in designing, producing, and delivering

products and services to customers’’ (p. 2).

Stalk and Hout [4] Time-based competition involves ‘‘altering [organizations’] measures of performance from

competitive costs and quality to competitive costs, quality, and responsiveness’’ and offering products

and services ‘‘at lower cost and in less time than are their more pedestrian competitors’’ (p. 1).

Stalk and Webber [11] Actual term used: Time-based competition. Not defined. Refers to the pursuance of the use of

time as a source of competitive advantage. It is believed to be related to cycle time, time to market,

NPD time, time elapsed between order and cash, and real-time customer responsiveness.

A. Menon et al. / Industrial Marketing Management 31 (2002) 317–328318

investment) and procedural variables (groupwork, controls,

and incentives).

2.1. Antecedents of NPD speed

2.1.1. Structure

Factors related to the structure of organizations play a

key role in short NPD cycles. In addition to academic

studies, corporate experiences corroborate this viewpoint.

For example, structural constraints were among some of the

most perplexing impediments to Xerox’s attempts to speed

up NPD [34]. In the mid-1980s, Xerox began to initiate

programs to create and maintain ‘agile’ organizational

structures in order to catch up with its competitors.

In the context of structural characteristics, bureaucracy

describes the rigidity and specificity of relationships

among individuals within an organization and the extent

to which decision making and responsibilities are dele-

gated throughout the organization (cf. Refs. [35,36]).

Research findings on formalization and centralization —

central aspects of bureaucracy — are divided on the issue

of how bureaucracy contributes to overall organizational

efficiency (cf. Ref. [28]). Kanungo [37] asserts that

formalization causes estrangement or noninvolvement

among professionals and is detrimental to overall organ-

izational goals. In contrast, Rizzo et al. [38] suggest that

lack of formalization causes role ambiguity. Organ and

Greene [39] indicate that formalization does not neces-

sarily have net negative effects on professionals. Kahn

et al. [40] found that although formalization may reduce

ambiguity, it increases the probability of role conflict.

Finally, drawing from the research of Fry and Slocum

[41] and Hall [42], Fredrickson [43] suggests that cent-

ralization promotes the initiation of decision processes by

only a dominant minority within the organization and

encourages opportunity-seeking behavior. He also propo-

ses that formalization results in decisive action only in

response to problems in the variables that are monitored

by the formal system.

We acknowledge the possibility of other advantages of

formalization and centralization, but we postulate that

those characteristics of bureaucracy essentially impede

the flow of information and are therefore inversely related

to short NPD cycles. The environment of an NPD process

is dynamic and fraught with uncertainty. As competitive

climates become unstable and less predictable, bureaucratic

structures must give way to networks of personal relation-

ships that work through informal, horizontal communica-

tion channels [44]. According to Bartlett and Ghoshal [44],

it is considerably more important to capture individual

capabilities and motivate the entire organization to respond

cooperatively to the demands of a dynamic environment

than it is to sustain elegant bureaucracies. Another stream

of research that examines organizational effectiveness from

the perspective of intraorganizational communication and

transaction efficiencies also suggests that bureaucracy is

related inversely to information dissemination and utiliza-

tion [29,33,45,46].

Proposition 1: Bureaucracy is related negatively to NPD

speed.

The literature on structural determinants of organiza-

tional efficacy is replete with recommendations of small,

flat organizations. Clearly, as Galbraith and Nathanson [47]

indicate, there is no ‘best’ organizational structure. An

optimal structure is contingent upon the requirements of

the task and the environment. However, for the rapid flow of

information, flat organizations appear to be superior. Meyer

[48, p. 95] indicates that in their quest to improve the way

companies serve customers, most modern organizations

tend to move away from; ‘‘functional hierarchies to a faster

and flatter . . . approach.’’ According to one estimate, the

number of channels of communication increases from 2 for

a 2-member team to 75 for a 5-member team to 11,253 for

an 11-member team [49]. The protocols imposed by the

many levels of a vertical hierarchy would severely impede

information flow.

In the context of rapid deployment of teams to an NPD

function, the structural impediments to information flow

warrant special attention. Because the traditional ‘tall’

organizational structure has an inherent tendency to make

corporations massive, unwieldy and sluggish, Charan [23]

highlights the need to rethink its merits. In his analysis of

the diseconomies of scale faced by contemporary busi-

nesses, Peters [50, p. 10] warns American businesses about

the perils of an enchantment with the ‘‘super-mega-network-

redoubled-Fortune-500-big.’’ Similar admonitions have

been issued by many other leading business scholars (e.g.,

Geroski [51] and Porter [52]). Indeed, a few of the blue chip

corporations in the US appear to recognize that growth, an

inevitable consequence of success, is frequently accompan-

ied by a loss in competitive vitality unless handled very

carefully. Johnson & Johnson, for instance, has split its

83,000-employee bureaucracy into several flat functional

units. Charan [23] advocates arrangements such as networks

that are informal and flexible. He provides illustrations of

the effectiveness of emerging networks at Conrail, Royal

Bank of Canada, and Dun & Bradstreet, among other

organizations. In a study of organizational influences on

the NPD process in financial services, it was found that

communication was one of the most critical factors [53].

We contend that a key aspect of a speed-based strategy is

the ability to respond to the demands of emerging conditions

in the marketplace, the customer base, the social milieu, the

regulatory environment, and the competitive situation. It is

critical to be able to uncover and rectify mistakes (or

unintended departures from original plans) or respond to

changing situations as early as possible. Organizations that

are flat in structure are able to combat the viscosity in

information flow that is so typical of hierarchical bureau-

cracies. Consequently, they have an advantage over ‘taller’

or multilayered organizations.

A. Menon et al. / Industrial Marketing Management 31 (2002) 317–328 319

Proposition 2: Organizational structure layers are related

negatively to NPD speed.

2.1.2. Culture

The impact of corporate culture on organizational effi-

ciency is widely recognized. At Matsushita, new white-

collar employees spend most of their first 6 months in

cultural and spiritual training [44]. In the US, all Disney

employees are required to receive training related to the

corporation’s culture [54]. Support for the notions that

‘strong’ corporate cultures contribute to corporate triumphs

[55,56], and that top managers have a critical role in

developing and implementing organizational culture

[20,57–60], is abundant in academic journals and popular

publications. Many researchers and practitioners consider

top management commitment to establishing and imple-

menting cultural norms a cornerstone for the development

of a competitive, consumer-focused culture [8,61–63].

Schein [59, p. 9] defines corporate culture as ‘‘[the] pattern

of basic assumptions that a given group has invented,

discovered, or developed in learning to cope with its

problems of external adaptation and internal integration

and that have worked well enough to be considered valid

and, therefore, to be taught to new members as the correct

way to perceive, think and feel in relation to these prob-

lems.’’ In marketing, Deshpande and Webster [57, p. 6]

define organizational culture as ‘‘the pattern of shared

values and beliefs that help individuals understand organ-

izational functioning, and, thus provide norms for behavior

in the organization.’’

Organizations attempting to develop a speed-based cul-

ture are usually rewarded for educating employees on

exactly how speed is achieved and about the advantages

of delivering products to market quickly. When employees

are socialized into the traditional practices of the organiza-

tion, they come to accept and conform to behavior that

supports the goals of the company [64,65]. The process of

cultivating and managing change is fundamentally depend-

ent on the commitment of top managers. Mere lip service to

concepts critical to developing a speed-based culture is

likely to undermine the process.

Corporate cultures can be categorized by two dimensions

[46,66]: organizational processes and organizational em-

phasis. Organizational processes range from flexible and

spontaneous to controlled, stable, and ordered. Organiza-

tional emphasis refers to the organizations focus on either

internal or external constituents. Inherent in the combined

effects of these two orthogonal dimensions are characteristics

that either shorten or lengthen NPD cycles. An adhocratic

culture, characterized by flexibility and spontaneity, as well

as an external orientation, affords the best organizational

climate for short cycle time. Willingness to take risks

combined with an emphasis on invention, innovation, and

adaptation encourages quick decision making and imple-

mentation of innovative processes necessary for short cycle

time. Quinn [49] highlights the notion of ‘controlled chaos’

to refer to an organizational culture characterized by flex-

ibility, informal controls, dynamism, and adaptivity. In sharp

contrast, cultures with a focus on internal smoothing exer-

cises and emphasis on control, order, and stability tend to

perpetuate a complacent, status quo environment in which

rules dominate the daily functioning of the organization.

Such a cultural climate is likely to discourage risk tolerance

and impede innovative behavior.

Takeuchi and Nonaka [67] assert that exposure to a

reasonable amount of risk is necessary in shortening NPD

cycles. Starr [68] notes that although US managers rarely

made major business blunders during the 1950s and 1960s,

few truly new product revolutions occurred during those

decades. The ultraconservative corporate culture of that

period actively discouraged assuming risk. In contrast, many

of the characteristics of an accelerated NPD process trade

time for risk [63]. It is imperative for managers to create and

support a corporate culture that tolerates some failures as an

integral part of the product development process. The

rewards of being the first to market with a successful product

can more than compensate for some failures.

Nutt [69] and MacCrimmon and Wehrung [70] conclude

that by displaying speculative decision making, organiza-

tional decision makers can encourage others in the organ-

ization to be tolerant towards risk. By clearly articulating the

acceptable standards of risk-taking behavior, managers can

encourage desirable behavior and discourage unwarranted

risk proneness [71–74]. (For a detailed discussion on risk

behavior, see Sitkin and Pablo [75].)

Proposition 3: Adhocratic culture is related positively to

NPD speed.

Proposition 4: Risk-tolerant culture is related positively

to NPD speed.

2.1.3. Capital investment

That technology plays a vital role in accelerating NPD is

self-evident and well accepted. Capital-intensive organiza-

tions have the advantage of being able to use technology to

speed processes and protocols by exceptionally large fac-

tors. In our framework, capital investment in technology is

proposed to contribute to short NPD cycles in two ways.

First, investment in process technology provides the cap-

ability to reduce processing time in many physical oper-

ations, including designing, manufacturing, testing, and

transporting. Additionally, capital investments in process

technology make employees more productive and may even

aid in innovative breakthroughs. Second, investment in

information technology (manifested in the utilization of

hardware, software, and human capital pertaining to

information processing) enhances the speed and quality of

information processing and, thus, contributes to short

NPD cycles.

Included among process technology investments are

automated CAD and CAM systems. More recent develop-


ments include computer-aided engineering (CAE) systems

that enable engineers to simulate the performance of proto-

types [76] and concurrent engineering, a process in which

several stages of NPD begin simultaneously instead of one

at a time in a sequential process [77]. Concurrent engineer-

ing usually affords savings in time-to-market ranging from

10% to 25% while yielding a better product (see Gehani

[78] for details on Eastman Kodak’s success with the

adoption of concurrent engineering in the development of

the Funsaver camera). Other technological advances directly

related to operational speed and, subsequently, NPD cycles

are simulation and rapid prototyping. Simulation provides

models of the manufacturing environment that managers can

use to test the effects of specific combinations of inputs on

the production process [79]. It often affords phenomenal

cost reductions through attenuated cycle times (see Yeich

[80] for details of cost savings achieved by the application

of this technique in an automobile plant). Rapid prototyping

takes CAD one-step further by creating tangible models of

even the most complex parts very quickly [15]. By con-

verting CAD data directly into physical three-dimensional

models, rapid prototyping enables engineers to test actual

models of proposed designs with relatively small invest-

ments of time and money.

Information technology can affect NPD speed in a

remarkable way. Backed by an abundance of evidence in

support of the beneficial effects of information technology,

we contend that the presence of systems and structures that

facilitate rapid exchange of relevant information between

functional areas is a key antecedent of fast NPD. An

organization’s commitment to information systems is evid-

ent not only in the deployment of hardware and software

tools that constitute the infrastructural makeup of the

organization, but also in the formal and informal procedures

that are put into place for the purpose of retrieving, analyz-

ing, storing, and transmitting information. Additionally, the

organization’s efficacious use of information is evident in

the capacity utilization of its information tools. Since a large

portion of an organization’s function involves sharing and

processing of information, efficiencies achieved through the

processing and distribution of information are reflected in

corporate performance quickly and significantly. See

DeFosse and Barr [81] for an example of the extraordinary

gains that are achievable through electronic data inter-

change. Other examples of the striking impact of automated

information sharing on time-to-market are related by Millen

[82] and Skibinski [83].

An additional way in which information technology can

affect NPD speed involves the use of technology for the

collection and analysis of customer survey data and other

marketing data that can be used to modify products ‘on the

fly’ during the development process. Many organizations

combine market data with the results of computer-simulated

market analysis to determine feasibility in what could be

considered an even higher level of technological involve-

ment in information processing [76]. Having feedback from

customers on proposed features and information about the

sales potential of different designs enables organizations to

avoid expensive and time-consuming design changes at later

stages of the product development process.

Proposition 5: Process technology investment is related

positively to NPD speed.

Proposition 6: Information technology investment is

related positively to NPD speed.

All antecedent variables discussed in the preceding

sections are related to the infrastructural makeup of an

organization. In contrast, the effect of the second set of

variables on NPD speed pertains to procedural or opera-

tional particulars. These are related to programmatic actions,

planning, and endeavor undertaken by the organization on a

regular basis and involve norms and regulations enforced by

administrative leaders. In the next sections, we discuss the

following procedural variables in our framework: group-

work, controls, and incentives.

2.1.4. Groupwork

Blackburn [84] argues that in a traditional sequential

approach towards project operations in general, and new

product design in particular, groupwork is unimportant.

However, for the purpose of reducing NPD time, groupwork

is indispensable, especially teamwork. Team-building is

required for the purpose of reducing ‘functional parochi-

alism’, communication overhead, and rework cycles and

catching design errors early in the cycle. Honeywell adopted

a team-building approach as a part of an experimental

program and succeeded in reducing average development

time from 38 months in 1983 to 14 months in 1988 [85].

Literature on workforce management concurs on the

beneficial effects of team-building [18,86–90]. Some of

the significant reasons for the increased efficacy of team-

work lie in the synergy achieved and the broad range of

perspectives that become available. It is critical that the

work teams involve groups of individuals from different

functional areas. Multifunctional teams promote sharing of

expertise and perspectives, encourage information flow, and

foster cooperative behavior between functional units

[16,91–96].

A related technique of workforce management involves

the delegation of authority to work teams. The efficacy of

empowering employees has overwhelming support in a long

line of research in organizational behavior and social

psychology. The outcomes of empowerment programs are

unequivocal and impressive. Conceptual analyses [97–

101], laboratory experiments [102–105], field studies

[106,107], case analyses [108–110], and research reviews

[111–114] involving a multitude of work settings have

repeatedly confirmed that when employees are accorded a

sense of control over their work environment, productivity

improves significantly. In a far-reaching effort to implement

the action-team concept in the Occupational Health and

Safety Division of 3M, top managers learned that the


success of teams requires genuine commitment of top

management and the dedication and professionalism of team

leaders and members [115].

Empowering a work team to quantify its own goals

motivates members to be more committed to those goals

than they would be if goals were simply decreed by a senior

executive. Meyer [48] recommends that managers be will-

ing to relinquish some power so that employees can use and

act on information traditionally reserved for managers.

However, industry surveys suggest that only 7% of com-

panies allow teams to make decisions on compensation

issues and less than 20% of teams have the power to do

performance appraisals. In terms of operating decisions,

only 6% of self-directed work teams have full responsibility

for preparing and managing their own budgets, and only

29% have the authority to set their own goals [18]. Despite

the fact that 26% of organizations surveyed were experi-

menting with the concept of empowered employee teams,

many organizations had not given these teams the informa-

tion and authority necessary to be effective. Yet, evidence

suggests that the effectiveness of empowered work teams is

beginning to be recognized by modern corporations. Gen-

eral Electric found that a combination of empowered teams,

flexible automation, and computerized systems resulted in a

250% increase in productivity [86]. Similarly, instead of

channeling decisions through sluggish bureaucracies, Four-

Gen Technologies empowers its software engineers through

a process called ‘down streaming’. Those employees are

placed directly ‘downstream’ of their own decisions — they

constantly interact with the company’s sales teams and

customers. Further, they have ultimate responsibility for

making appropriate product revisions. Empowering a team

to make broad decisions gives its members a sense of

ownership, which in turn results in improved performance

[116,117]. In a study of management in NPD units, it was

found that the ‘empowering manager’ is able to create an

innovative climate most successfully [118].

The effectiveness of empowerment is linked inextricably

to an ongoing commitment to training, which plays a key

role in the transfer of decision-making skills from managers

to employees. At Aid Association for Lutherans Insurance,

within the first year of a 2-year leadership program, overall

productivity increased by 20% and claim-processing time

decreased by 75% [88]. Motorola spent US$120 million

(3.6% of payroll) on training in 1992 and reportedly

received an estimated US$30 in productivity gains for every

dollar spent on training [119]. Productivity increases enable

organizations to speed operations because errors and rework

are minimized. Consequently, new products are developed

faster, reducing time-to-market.

In sum, work teams are considerably more effective than

individuals working in isolation because of the synergy they

achieve. Also, teams are most effective when they are

composed of individuals whose membership in the group

minimizes redundancy. Redundancy is minimized and the

content and diversity of group knowledge are maximized

when the groups are chosen from assorted functional areas

rather than from a single department.

Proposition 7: Team-building is related positively to

NPD speed.

Proposition 8: Empowerment is related positively to

NPD speed.

2.1.5. Controls

Managers must have a system for control of the workforce

engaged in the NPD process and must provide incentives to

maintain a ‘speed-conscious’ environment. A system of

control is a ‘‘process that allows senior management to

determine whether a business unit is performing satisfact-

orily, and which provides motivation for business unit man-

agement to see that it continues to do so’’ [120, p. 43]. The

process of establishing controls necessarily includes the

creation of incentives to guide employee actions.

Organizations attempting to expedite the NPD process

must ensure that managerial controls are balanced with

employees’ need for autonomy because independence from

tight management control is linked to successful innovation

[121]. The proper use of controls helps managers to achieve

this balance by aligning individual efforts with organiza-

tional goals. For example, design engineers must balance

the creative process of developing ‘blue sky’ products and

technologies with diverse organizational needs.

Financial controls, the most common and easily identifi-

able controls in an organization, usually are based on

budgetary measures, including return on investment, pro-

ductivity, cost per unit, and payback period. However,

traditional financial controls may be too short-term in scope

to be useful for achieving time-to-market objectives. Bud-

getary controls typically emphasize the coming 12 months

at the expense of long-term objectives and the company’s

competitive position [122]. Further, overreliance on fin-

ancial controls can create imbalances between control and

autonomy. Tight financial controls dampen employees’

enthusiasm about accepting calculated risks, thus stifling

invention and innovation in the NPD process [121]. For

example, when managers overmonitor total development

costs, product designers often become reluctant to include

cross-functional perspectives and delays in introduction of

product lines often ensue.

Proposition 9: Financial control is related negatively to

NPD speed.

Two types of organizational controls, formal and infor-

mal, are also relevant [123]. Because these control types

involve nonfinancial measurements of progress towards

long-term objectives, they are effective for achieving time-

to-market goals. Formal controls are ‘‘written, management-

initiated mechanisms that influence the probability that

employees or groups will behave in ways that support the

stated marketing objective’’ [123, p. 126]. Many organiza-

tions use periodic strategy reviews and annual operating


plans to formally control progress towards strategic objec-

tives [122]. In periodic strategy reviews, businesses outline

specific nonfinancial objectives that identify desired com-

petitive positions, and then evaluate progress towards those

objectives. By actively encouraging managers to evaluate

progress in getting products to market faster than compet-

itors, the periodic strategy review provides a good measure

of the organization’s ability to use time-to-market as a

competitive instrument. It also forces managers to stay

focused on the objective of speed and monitors relative

progress made towards that objective.

Informal controls are ‘‘unwritten, typically worker-ini-

tiated mechanisms that influence the behavior of individuals

or groups in marketing units’’ [124, p. 408]. These types of

controls can be partitioned further into professional controls

— mechanisms affecting employee behavior that arise

through the influence of peer relationships, and self-controls

— mechanisms that are internal to the individual. Profes-

sional influences may be overt (such as verbal pressure to

conform to acceptable behavior) or subtle (such as respect

towards peers who exhibit desirable behavior). The assump-

tion is that productive behavior encouraged through peer

relationships results in positive outcomes for the organiza-

tion. Because speeding up product development requires a

high degree of cooperation among employees and depart-

ments, organizations in which peers encourage communica-

tion, sharing of best practices, teamwork, and goal-setting

should be the most productive and best equipped to cut

time-to-market (however, we acknowledge that in some

dysfunctional organizations, employees use professional

controls to limit such positive behavior as hard work,

dedication, and teamwork by socially ostracizing peers

who exhibit those qualities).

Proposition 10: Organizational control is related pos-

itively to NPD speed.

2.1.6. Incentives

Incentives could be meaningfully categorized as financial

controls. However, they are separate in our framework,

primarily because of their theoretical significance for the

level of employee motivation and productivity necessary to

realize short NPD cycles. Incentives are contingent rewards

that are used to attain optimal levels of employee motivation

and productivity as well as to promote employee compli-

ance with behavioral norms that are desirable from the

perspective of the organization. Incentives to speed products

to market can take many different forms. We classify these

contingent rewards into two broad categories as personal

and group incentives.

Traditionally, managerial efforts to motivate employees

to achieve organizationally desired behavior have consisted

of providing incentives to individual employees. Personal

incentive systems include base pay and merit pay structures

as well as promotion procedures that reward individual skill

levels, performance, and contribution [125]. However, when

fast NPD is an objective, rewarding individual performance

may create conflicts between organizational goals and

employee motivation. The process of speeding products to

market necessitates cooperation and communication

between people and departments, resulting in organiza-

tion-wide coordination of efforts. In such scenarios, indi-

vidual incentives may encourage individuals to perform well

at the expense of the rest of the organization. For example, a

department manager might be rewarded when the depart-

ment makes a speedy contribution to a new product, even

though the final product is slow to reach the market. The

ensuing message could be, ‘‘Do your own thing and don’t

worry about the organization’’ [125, p. 155]. Group incen-

tives (rewards to individuals based on group performance)

are likely to be much more effective in such cases. However,

as Doyle advises [125], incentives must be tied to overall

strategic goals rather than localized departmental goals.

Even if a single department makes a significant contribution

to quick NPD, a portion of the reward should be withheld

unless the product actually reaches the market quickly. If

departments are rewarded for making an expeditious con-

tribution even when the product does not reach the market

quickly, employees may learn to think in terms of local

departmental needs. Because product development requires

cross-functional cooperation, managers ought to align the

strategic goals related to speed with incentives that encour-

age interdepartmental cooperation [126].

The success of work teams has led to an incentive system

known as ‘team-based pay’ whereby team members receive

40% to 50% more pay for learning all aspects of the work of

every other team member. The ability of team members to

perform each other’s job enables the team as a whole to be

more productive. Instead of one member acting and then

another member reacting, the team as a whole moves

together. Although it may not be practical for each member

of an NPD team to master the jobs of all other members,

they can be encouraged to acquire knowledge of all mem-

bers’ roles. For example, rewarding the entire development

team for streamlining design changes is likely to speed the

process of development at every functional stage. Another

incentive program that operates in a comparable way is

known as gain sharing. Tying individual bonuses to overall

organizational measures (such as profit) reinforces cooper-

ative behavior among employees. Because interdepart-

mental cooperation is necessary to speed products to

market, gain-sharing holds promise for fast NPD [112,125].

Proposition 11: Team-based incentive systems are


Proposition 12: Gain-sharing incentive systems are


2.2. Outcomes of NPD speed

Reflecting upon Northern Telecom’s business strategy,

Merrills [127, p. 108] notes, ‘‘. . . all the things that were


vital to our long-term competitiveness had one thing in

common: time.’’ Practitioners and business scholars have

chronicled the favorable effects of a short NPD cycle on

corporate performance in diverse industrial settings. The

most compelling argument in favor of adopting a speed

orientation is that it contributes significantly to overall

corporate performance. Specifically, we propose that a short

NPD cycle contributes to increased revenue and profitability

as well as enhanced corporate and brand image.

A 1983 McKinsey report on time-to-market and profit-

ability has left a strong impression on the minds of many

business scholars and practitioners [2,12,128–131]. In

particular, it showed that new products that are completed

within the originally estimated time but are as much as

50% over budget sacrifice only 3% to 4% in profits. In

contrast, products that meet budgetary targets but are 6

months late in shipping to market forfeit about 33% in

profits. The assumptions about market growth, price appre-

ciation rates, and effects of competitive activity embodied

in this model are representative of real-world product-

market configurations. In many contemporary product

markets (e.g., consumer electronics, high technology, fash-

ion wear, and financial products), the costs of falling behind

result in severe impairment for the company [132–134].

The damaging effects of lost sales on account of delayed

shipment to market are overcome only rarely through a

superior product.

Some of the benefits of a short NPD cycle are related to

the first-mover advantage [13,14]. Meyer [2] lists a number

of competitive advantages, including higher margins,

increased market share, establishing industry standards,

and locking up distribution channels. Nonetheless, many

of the key benefits of a short cycle time are located within

the organization. They are associated with higher levels of

profitability because the procedures and programs required

for achieving short NPD cycles also reduce overheads and

boost productivity. A short cycle time affords more ‘‘learn-

ing loops’’ [2, p. 31]. That is, organizations that adopt time-

to-market goals learn faster than their competitors since they

have more opportunities to complete the full business cycle

associated with the product. Additionally, in contrast with

programs such as total quality control, adoption of a speed

orientation involves measures that are easily communicated

and widely understood. Short NPD cycles are necessarily

associated with lower levels of inventory and working

capital. Finally, Meyer argues that quick turnaround times

provide all levels of organizational participants with fre-

quent positive feedback and aid in motivating the entire

company. Literature on the motivational effects of outcome

feedback corroborates this viewpoint [135–140]. Addition-

ally, a speed orientation necessarily involves the adoption of

performance goals and schedules. Research in organiza-

tional behavior provides strong evidence in favor of the

notion that adoption of performance goals improves

employee productivity [141,142]. Finally, empirical investi-

gations show that when goal-setting and feedback are used

simultaneously, they have a synergistic effect on perform-

ance and productivity [143,144].

Proposition 13: NPD speed is related positively to

revenue and profitability.

Companies that display ability for achieving consis-

tently short NPD cycles are also likely to be perceived in

a positive light by the consumer market in general. Being

able to launch a new product concept ahead of compet-

itors will often bring accolades and regard to the compa-

ny’s corporate image. Such attributions of efficiency and

excellence can and do extend to the company’s brands as

well. A part of the image of Honda may be attributed to

the pace at which they are able to introduce new

technology and designs. During the 1980s, the Japanese

automakers, on average, completed an NPD project in

little over half the time required by the top three

American automakers [145]. Stars of consumer electronics

such as Sony, Canon, Nikon, Toshiba, Hitachi, and

Matsushita have consistently delivered a bewildering array

of novel and contemporary product forms and designs. A

significant part of the admiration and esteem enjoyed by

these imposing brand names stems from the speed with

which they update their product lines.

Abell and Hammond [146] suggest that market pioneers

benefit from early entry and can often afford to provide a

superior product at a price that is lower than competitors’

prices. Such preeminence often translates into favorable

images [147]. Alpert and Kamins [148] suggest that a

number of psychological processes and decision-making

factors are affected by consumers’ interaction with the

products and brands offered by market pioneers. They

propose that pioneering brands, under many circumstances,

tend to be associated with the image and reputation of a

leader. Consumers tend to integrate such product and brand

images with their self-concept and that, in turn, enhances the

competitive advantage enjoyed by pioneers.

Proposition 14: NPD speed is related positively to

corporate image and brand image.

3. Conclusion

Effective management of NPD speed is a matter of

strategic significance that has repercussions for an organ-

ization’s financial performance and competitive position.

Building on evidence from academic research and business

experience, we make that point and develop an interdiscip-

linary theoretical framework to focus future research on the

topical area.

In closing, we note that working smarter as opposed to

working harder (cf. Ref. [159]) is a useful mindset for NPD

speed (cf. Refs. [149–158]). Accordingly, change, flexibil-

ity, dynamism, cooperation, invention, innovation, and

information utilization should be embraced — all of which


are potential aspects of a learning orientation. Indeed, many

of the prescriptions of the speed paradigm could be con-

sidered integral to an organizational orientation towards

learning [160–162]. The relationship between a speed

orientation and a disposition towards organizational learning

is a particularly interesting issue that warrants research

consideration in the future.

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Ajay Menon is an associate professor of marketing at Colorado

State University.

Jhinuk Chowdhury is an associate professor of marketing at the

University of North Texas.

Bryan A. Lukas is an associate professor of Marketing at the

University of Melbourne.


antecedents and outcomes of new product development speed: an interdisciplinary conceptual framework

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