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IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.EM-34,NO.3,AUGUST1987DefiningtheNewProductStrategyROBERTG.COOPERAbstract—Newproductsarecriticaltothegrowthandsurvivalofmostcorporations.Thenewproductstrategyisthemasterplanthatguidestheproductinnovationeffortsofthefirm,andlinksnewproductdevelopmenttothecorporateplan.Thisarticlelooksfirstatwhataproductinnovationstrategyis,itsroleinthecorporation,andwhyaninnovationstrategyisessentialtoaneffectivenewproductprogram.Next,thearticlefocusesonthedevelopmentofanewproductstrategy,beginningwithobjectivesandmovingtoarenaselection.Amatrixapproachtoarenadefinitionandselectionisused.Empiricaldatafromresearchbytheauthorisemployedinthemodeltoprioritizenewproductarenas.INTRODUCTIONNEWproductsarecentraltothegrowthandprosperityofthemoderncorporation.Increasingly,progressivemanagementsrecognizethatanewproductortechnologystrategyshouldbeanexplicitandcentralelementofthecorporatestrategy.Thisarticleisaboutnewproductstrategyatthecorporatelevel—abouttheneedforanewproductstrategy,andaboutdefininganddevelopingsuchastrategy.THEIMPORTANCEOFANEWPRODUCTSTRATEGYNewproductdevelopmentandtechnologybearanintegralrelationshiptoacompany'sstrategicthinkingbyhelpingtodefinetherangeofthatcompany'schoices.Formanycompanies,newproductsandtechnologieshavebecometheleadingedgeofcorporatestrategy,openingupnewmarketandnewbusinessopportunities.Therapidgrowthofcountlessfirmsinoffice-of-the-future,bioengineering,microelectronics,androboticsisevidenceofthegrowthpotentialofawellconceivednewproductstrategy.Similarly,manyoftoday'scorporategiants,suchasXerox,IBM,Polaroid,andTexasInstruments,werefledglingcompaniesonlydecadesago,butbecamegreatbecauseofnewproductchoicesmadebymanagementinearlieryears.Thecompaniesthataremostlikelytosucceedinthedevelopmentandlaunchofnewproductsarethosefirmswhichimplementacompanyspecificapproach,drivenbycorporateobjectivesandstrategies,withawell-definednewproductstrategyatitscore.ThesearesomeoftheconclusionsofastudyofbusinesspracticesbyBooz-AllenandHamilton.Therewereotherrecommendationsaswell,butaproductinnovationstrategyrankshighonthelistofthekeystosuccess.Somefirmsdodevelopsuchstrategies.Forexample,productinnovationchartersweredescribedbyCrawfordinhisstudyof125firms.Henotesthatfirmsarenowbeginningtopullallthemultifunctionalelementsofanewproductstrategytogetherinonedocument,whichspecifiesthetypesofmarkets,products,technologies,andorientationthefirmwillpursuewithitsnewproductprogram.PROBLEMInspiteoftheimportanceofnewproducts,managementcanfindlittlehelpfromthetraditionalliteratureintheformulationofanewproductstrategy.Fewguidelineshavebeendevelopedtoassistthemanagerinthechoiceofareasandthedirectionforthenewproductprogram.Thatis,thereexistfewconceptualframeworksorprovenmethodologiesforformulatinganewproductstrategy.Moreover,littleempiricalresearchhasbeenundertakentodeterminethecomponentsandresultsoffirms'newproductprograms:thatis,howcompaniesdirectlyorindirectlychoosenewmarketsandareasoftechnology,andorganizeandfocustheirR&Deffortsindifferentways.Althoughtherearemanystrategydevelopmentmodelsinusetoday,mostdealwithresourceallocationandstrategydevelopmentforthefirm'sexistingbusinessunitsandexistingproductlines.Forexample,variousportfoliomodelshavebeendeveloped,essentiallyvariationsoftheBostonConsultingGroupmodel—cashcows,stars,dogs,andwildcats.Whiletheseportfolioorresourceallocationmodelsmaysuggestnewareasforproductdevelopment,thesemodelsweredevelopedprincipallytodealwithproductsorbusinessesthatthecompanyalreadypossesses.Similarly,thePIMSmodel,anotherpopularstrategydevelopmentaid,looksatalternatestrategiesandtheirimpactonprofitability,butagainlargelyforexistingbusinessesinthecompany.Inshort,thesestrategymodelsdealwithwhatisratherthanwithwhatmightbe.Whatislackingintheseapproachesisasystematicprocedureforgeneratingandchoosingnewstrategicoptions,includingnewproductsandnewbusinesses.THEPRODUCTINNOVATIONCHARTERInabusinesscontext,strategyhasbeendefinedastheschemeswherebyafirm'sresourcesandadvantagesaremanaged(deployed)inordertosurpriseandsurpasscompetitorsortoexploitopportunities.Morespecifically,strategicchangeisdefinedasarealignmentofthefirm'sproduct/marketenvironnent.Strategyiscloselytiedtoproductandmarketspecification.Coreyidentifiesmarketselectionandproductdelineationasthetwokeydimensionsofcorporatestrategy.Productinnovationstrategy,whilecloselyrelatedtocorporatestrategy,tendstobemorespecific.Inrecentyears,thetermproductinnovationcharter—orPICforshort—hasbeenused.ThePICchartstheentirestrategyforafirm'snewproductprogram.Itistheessentiallinkbetweentheproductdevelopmentprogramandthefirm'scorporatestrategy.ThePIChastwokeyelements:ThePICspecifiestheobjectivesofthegame,therolethatproductinnovationwillplayinhelpingthefirmachieveitscorporateobjectives.Itanswersthequestion:wheredonewproductsandproductinnovationfitinthecompany'soverallplan?Thisrolethenistranslatedintospecificobjectivesforthenewproductprogram.StatementssuchasBy1990,30percentofourcorporatesaleswillcomefromnewproducts—productsthatwewilldevelopand