The Marketing Book 5th Edition

A product development

process owner

A single function is

responsible for NPD

Each business unit’s general manager

directs their own NPD efforts

A new product team oversees all

development efforts

Distinct division or venture group

New product department with

permanent staff members

Firms (%)

70

60

50

40

30

20

10

0

Rest

Best

All

336 The Marketing Book

teams, while in the UK, the Best Practice firms
used new product teams and NPD permanent
staff (Tzokas, 2000). It should be noted, how-
ever, that much of the research in NPD into
what separates success from failure has con-
cluded that there is no one best way to organize
for NPD, as shown in Figure 12.6.
These studies and others tend to show that
multiple structures are used for organizing the
NPD effort within a firm, depending upon the
factors driving the innovation (i.e. its strategy)
and the level of innovation of the development.
For example, Page’s (1993) research shows that
the most common mechanism used for NPD is

that of a ‘multidisciplinary team’, but this was

used in combination with other mechanisms,

such as product manager, new product man-

ager and new product departments.

Structures used by companies may exist

either within or outside what might be termed

‘existing line functions’ (such as marketing,

R&D or engineering), although this is rarely

made explicit. Those which exist outside exist-

ing line structures are venture teams and NPD

departments.

Figure 12.6 NPD structure

Venture teams

These tend to be a permanent ‘maverick’ group,

with high status, separate budgets and report to

the MD. Their responsibilities can vary, but

include opportunity identification and feasi-

bility studies, through to management of the

new product development.

The advantages are that, freed from the

‘humdrum’ of current business, creativity can

be encouraged and the development has high

level support. On the other hand, they can turn

into acquisition hunters, may be prone to get

into unrelated areas and can be seen as a waste

of time if they acquire such information from

inside the company, which might occur if they

get involved with the development of existing

products.

New product departments or

divisions

These have the same status as functional

divisions and are essentially outside the

‘mainstream’ of business. They are usually

staffed by a combination of functions. They

may be used in different ways: as idea hun-

ters, where ideas are passed to the ‘main-

stream’ for development, or as developers,

who manage the new product from idea

through to the market launch. In the latter

instance, the ‘handover’ of the product will

take place at the launch, which may engender

feelings of ‘not invented here’. However, the

rationale for the complete segregation of new