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The Leading Question:
What Western multinational corporations (MNCs) need to know to successfully reverse their innovation flow i.e. launch new products developed in emerging markets in their domestic markets?
Main Findings:
- Realities in emerging markets are well suited for designing basic products that can be the starting point for product up-contenting.
- Products originally developed for emerging markets can be successfully adapted for sale in developed markets – a “reverse” innovation flow gains momentum.
- This strategy can both help to unlock new customer segments in wealthy markets and to compete against emerging MNCs, private labels, and generics conquering these markets bottom-up.
This dissertation integrates three papers on risk management in complex new product development projects (NPD) with an integrated perspective on the automotive industry. It seeks to provide a comprehensive access to the topic by highlighting the most relevant risk management aspects in NPD – processes and methods (chapter 2), organization and coordination (chapter 3) as well as culture and strategy (chapter 4).
The focus of chapter 2 lies on the identification and assessment of risks as the initial and most critical risk management steps. It illustrates the application of the analytic hierarchy process (AHP) method as an established multi-criteria decision analysis method to create transparency on the overall risk position of a selected highly complex NPD in the automotive industry. Chapter 2 confirms the AHP method as a suitable approach for stronger preventive risk management in complex NPD with stakeholders with conflicting functional perspectives. This sets the stage for chapter 3 and a subsequent consideration of organization and coordination.
Chapter 3 considers an issue of organization and coordination in complex NPD that is mainly based on the fact that the involved stakeholders have individual targets and rely on concurrent processes. The selected automotive industry example illustrates the resulting managerial challenge of balancing the overall NPD requirements such as product characteristics and development lead time (system perspective) and the targets of single stakeholders in NPD (individual perspective). The NK model as an important setting for search builds the methodical basis to solve this issue and results in optimized organizational and coordination setups.
The implications on risk management in complex NPD as a result of newly emerging NPD types in the automotive industry are subject to chapter 4. These implications are in line with profound industry changes that include changes in the requirements of customers and markets. Chapter 4 uses complexity theory and deploys the lens of complex adaptive systems (CAS) to NPD to outline the emerging NPD types and their implications on risk framing activities. An extended risk framework is derived as basis that addresses the cultural and strategic shift in the automotive industry with regard to managing risk in emerging NPD types.
The constant introduction of new products is of great importance for the long-term financial success of companies. Newly launched products in consumer goods and services markets show high failure rates, often reaching 50%. In order to reduce flop rates, companies can integrate innovative and knowledgeable customers, so called 'lead users', into the new product development process. However, the detection of such lead users is difficult, especially in consumer goods markets with very large customer bases. A new and potentially valuable approach for the identification of lead users are virtual stock markets, which have been proposed and applied for political and business forecasting, but not for expert identification yet. The goal of this paper is to analyze theoretically and empirically the feasibility of virtual stock markets for lead user identification. We find in our empirical study that virtual stock markets are an effective instrument to identify lead users in consumer goods markets. Using the proposed method, companies operating in these markets can identify lead users more easily and integrate them into new product development projects. Thus, they can improve the innovation processes and reduce new product flop rates.
Web-based interaction between customers and producers offer new promising ways of bringing customers into the company right to where the value creation begins - in new product development (NPD). Despite the high potential of virtual customer integration (VCI), practical application is limited. The decision of initial utilization of VCI depends on the manager’s predisposition - favorable or unfavorable -towards VCI; usually, it is the responsibility of managers and executives belonging to the development, marketing or innovation departments to sanction such a decision. To get a deeper understanding of antecedents leading to the application of VCI, further information is needed. In this paper, the authors shed light on the various factors affecting managerial intention to apply virtual customer integration. The theory of planned behavior (TPB) provides a basis for developing a research model explaining the relation between managers’ cognition, attitude, social norms, perceived behavioral control and their intention to adopt VCI. The initial results of our empirical study, wherein we interviewed 94 managers within the consumer goods and services field, show that the TPB accounts for 66 percent of the variance in the managers’ intention to apply VCI. Furthermore, the study reveals that social norms and perceived behavioral control are the main factors which influence managerial decision to apply VCI. This contrasts with the widely-held theory that an individual's attitude is the most significant factor of influence.