New product development
New product development (NPD) is the systematic process of bringing a new product from initial concept through design, testing, and manufacturing to market introduction, encompassing all activities required to transform ideas into commercially viable offerings (Cooper R.G. 2011, p.7)[1]. A pharmaceutical company spends 12 years and $2.6 billion developing a new drug. A consumer goods company launches 50 new products annually, most failing within two years. A startup iterates through 20 prototypes in six months before finding product-market fit. All are doing new product development—transforming possibilities into products people buy.
Companies depend on NPD for survival. Markets evolve, technologies advance, and competitors innovate. A product portfolio without new entries gradually becomes obsolete. Yet NPD is risky. Studies suggest 30-45% of new products fail commercially, and the figure rises for truly innovative offerings. The challenge is managing this uncertainty while moving efficiently from ideas to revenue-generating products.
Stages
NPD typically follows structured phases:
Idea generation
Sources. Ideas come from customers, employees, competitors, suppliers, research, and systematic creativity techniques. Companies may generate hundreds of ideas for each product that reaches market[2].
Front-end innovation. The fuzzy front end—before formal development begins—often determines success. Investing in understanding customer problems and market opportunities pays dividends.
Screening
Filtering. Early screening eliminates obviously poor ideas before resources are committed. Does it fit strategy? Is there a market? Can we make it?
Go/no-go decisions. Stage-gate processes require passing criteria before advancing to the next phase[3].
Concept development
Defining the product. The concept specifies what the product is, who it's for, what benefits it provides, and how it differs from alternatives.
Concept testing. Presenting concepts to potential customers reveals whether the idea resonates before development investment.
Business analysis
Economic viability. Detailed analysis estimates costs, revenues, required investment, and profitability. Many attractive concepts fail financial tests[4].
Risk assessment. What could go wrong? Technical risks, market risks, and competitive responses must be evaluated.
Product development
Technical creation. Engineers and designers translate concepts into actual products. Prototypes are built, tested, and refined.
Iteration. Development rarely proceeds linearly. Problems emerge requiring design changes that ripple through the system.
Testing
Technical validation. Does the product work as intended? Performance, reliability, and safety must be verified[5].
Market testing. Limited market trials reveal customer response before full-scale launch. Test markets and beta programs reduce launch risk.
Commercialization
Launch. The product enters the market with supporting marketing, distribution, and service capabilities.
Scaling. Production ramps up. Distribution expands. The organization transitions from development to ongoing operations.
Stage-gate process
Robert Cooper's framework dominates industrial practice:
Gates. Decision points where management reviews progress and decides whether to continue, recycle, or kill projects[6].
Stages. Work phases between gates where cross-functional teams complete defined activities.
Criteria. Each gate has explicit criteria—must-meet requirements and should-meet criteria—for passage.
Success factors
Research identifies what differentiates successful NPD:
Customer focus. Deep understanding of customer needs and involvement of customers throughout development predicts success.
Cross-functional teams. Integration across marketing, engineering, manufacturing, and other functions reduces handoff problems[7].
Senior management support. Leadership commitment of resources and removal of obstacles enables teams to succeed.
Clear product definition. Well-defined products with stable specifications avoid scope creep and rework.
Speed with discipline. Fast development matters, but cutting corners on front-end work creates expensive downstream problems.
Metrics
Organizations measure NPD performance:
Success rate. Percentage of launched products achieving commercial targets.
Time to market. Duration from concept to commercial availability.
Development costs. Resources consumed in the development process[8].
New product revenue. Percentage of revenue from products launched within recent years.
| New product development — recommended articles |
| Product management — Innovation management — Project management — Research and development |
References
- Cooper R.G. (2011), Winning at New Products: Creating Value Through Innovation, 4th Edition, Basic Books.
- Ulrich K.T., Eppinger S.D. (2016), Product Design and Development, 6th Edition, McGraw-Hill.
- Crawford C.M., Di Benedetto C.A. (2015), New Products Management, 11th Edition, McGraw-Hill.
- PDMA (2023), Product Development Best Practices.
Footnotes
- ↑ Cooper R.G. (2011), Winning at New Products, p.7
- ↑ Ulrich K.T., Eppinger S.D. (2016), Product Design and Development, pp.45-62
- ↑ Crawford C.M., Di Benedetto C.A. (2015), New Products Management, pp.89-104
- ↑ PDMA (2023), Best Practices
- ↑ Cooper R.G. (2011), Winning at New Products, pp.156-172
- ↑ Ulrich K.T., Eppinger S.D. (2016), Product Design and Development, pp.134-148
- ↑ Crawford C.M., Di Benedetto C.A. (2015), New Products Management, pp.178-192
- ↑ PDMA (2023), NPD Metrics
Author: Sławomir Wawak