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C. M E R L E C R A W F O R DSTRATEGIES FORNEW PRODUCTDEVELOPMENTGuidelines for a criticalcompany problemC. Merle Crawford is a faculty m e m b e r at the University o fMichigan.In spite o f much evidence o f its success, manymanagers hesitate to establish a policy fornew product development. Their indecisionoften arises f r o m two reasons: they fear that adefined strategy may discourage innovationand they are uncertain how to formulate anew product strategy. The author o f thisarticle discredits the f o r m e r notion and, inreply to the latter, proposes the guidelines f o rdeveloping such a statement. As new productsare essential to the continued success o f mostfirms, the strategy must exist and must beoperant i f the firm is to avoid wasted time,effort, and money as well as employee confusion and discouragement.For longer than most of us care to remember,Dan Gerber has been proclaiming that babiesare his business, his only business. With somenostalgic regret I read recently that he hasaltered his strategy: he now permits limiteddiversification b e y o n d products for babies.DECEMBER, 1972A leading toiletries manufacturer has anequally tenacious,thoughunpublicized,commitment to only those new, nonfood,packaged goods that do not compete itemto-item with Procter and Gamble.Richard Rifenburgh, president of MohawkData Sciences, manufacturers of peripheralcomputer equipment, was cited recently inFortune as a man who, at the present time,would rather be an agile follower than acreative leader. 1 On the assumption that itwould be too expensive to develop frontiers,Rifenburgh prefers to wait to see on whichnewly opened trails the volume of activitywill fall.All of these companies have a powerfulmanagerial t o o l - w h a t I call a New ProductDevelopment Strategy Statement. They haveformed convictions concerning new productsthat seem most appropriate for their respective firms. Under vigorous leadership, theirpolicies are being implemented.Contrast the clarity of these approacheswith the following charge given to a productdevelopment group :. . . to take t h e lead in m e e t i n g the needs o f thecompany'scustomersfor i m p r o v e dand n e wp r o d u c t s , to develop new uses for existing p r o d u c t s ,a n d to develop h i g h - p r o f i t p r o d u c t s for i n t r o d u c t i o nto existing a n d p o t e n t i a l c u s t o m e r s .Research directors who labor underguidance like this are the ones who lament thelack of vision of marketing and top management personnel: the top brass can't recognizea good product idea when it is shown tothem. Research operations which " b e n e f i t "from the most liberal guidelines also endure1. Dan Cordtz, "Bringing the Laboratory Down toEarth," Fortune (January 1971 ), p. 106.49

C. MERLE CRAWFORD50the most idea rejection, development difficulties, and product failure.Specifically, does the statement of thatcompany limit the search to improving orextending the present product line? Whatdegree of relationship to the present scope ofactivity is necessary for the idea to beacceptable? May the search proceed intounrelated areas? Is search limited to the firm'spresent technological capabilities, distributionsystem, raw materials, and plant and humanresources? Is the door to acquisition open ordosed? Will functional capability be added tomatch each new idea, or should the ideasmatch present functional capabilities?The idea of putting definitive restrictionson the new product activity is not novel, butuse of it, especially sophisticated use, is stillnot widespread. Most large firms have something they call new product strategy but it ismore for directors and stockholders than forserious internal direction; other firms havesketches of such strategy but they are rarelyavailable for personnel down the line from thepresident's office. As the president of amedium-sized firm recently said to me, notentirely in jest: "Sure, we have a new productstrategy; just ask m e ! "Early in this century General Motorscommitted itself to a full line of automobiles,a strategy that proved superior to Ford's.Only recently did Coca-Cola abandon itsstrategy of no line additions. GeneralElectric's approach, a broad attack uponmarkets susceptible to electrical technology,is decades old.Indeed, new product strategies are so old,and in so m a n y cases credited with suchsuccessful outcomes, that one is prompted toask w h y all firms don't have them. There areessentially two reasons:WHATSHOULDINCLUDE?THESTATEMENTThe basic purpose of new product strategy isto provide unifying direction. It specificallynotes any tempting development areas thatare off limits; it clearly specifies those areaswhere effort is to proceed; and it adds anyother direction appropriate and relevant tothe firm, as in the Mohawk strategy. A review of representative strategy statements reveals how the following dimensionsare in actual use.Technology/Market MixAs long ago as 1957, the Harvard BusinessReview ran an article b y Samuel C. J o h n s o nof S. C. J o h n s o n & Son, Inc. and ConradJones of Booz, Allen & Hamilton whichbecame a classic because it spelled out whatwas rapidly gaining fame as the BA/H m e t h o dof organizing the new product function. 2 Thearticle contained a table which should be onpage one of every firm's planning document.It diagramed the alternatives available for newproduct activity as a 3x3 matrix (seeaccompanying table).This table structurally depicts the possiblenine combinations of market and technology.Some, all, or none of these m a y be encouraged, as the applicability of each of theoptions will vary from firm to firm. Unless itvalues new and improved products for theirown sake, any management will want to studythoroughly the various cost/return relationships and stipulate those which it wants tostress and those it wishes to avoid.Market Width1. M a n a g e m e n t is n o t c e r t a i n w h a t such statem e n t s s h o u l d cover.2. M a n a g e m e n t fears t h a t l i m i t a t i o n s m a ydiscourage s o m e useful or s u c c e s s f u l i n n o vation.These are the points to which we will nowturn our attention.The b o t t o m row of the matrix, New Market,provides the third dimension into the consid2. Samuel (2. Johnson, "How to Organize for N e wProducts," Harvard Business Review (May-June 1957), pp.49-62.BUSINESS HORIZONS

Strategies for New Product DevelopmentOptions in the Market-Technology MixNo No onSOURCE: Samuel C. Johnson and Conrad Jones, "How to Organize for NewProducts," Harvard Business Review (May-June, 1957), p. 52.erations the table does not include. There arethe categories of industrial, institutional, andconsumer, of domestic and foreign, and ofspecific product use categories, such as detergents, shoes, boats.If a c o m p a n y has any new productstrategy, it usually covers this dimensionfairly well. Most industrial firms feel at homein institutional markets b u t avoid consumerproducts (if not at first, then several expensive exercises later). Involvement in foreignmarkets is usually deliberate and, in mostsituations, so is choosing broad productcategories. When the United Shoe MachineryCorporation decided to move into other lines,all concerned personnel knew it.But this shouldn't imply for a second thatstrate es score well on this dimension. Infact, y o u can usually start an argument b yasking two executives of the same firm if theirfirm is attempting to move into closely alliedmarkets or product types which it is not nowin. Is the manufacturer of drugs for humanuse willing to enter the veterinary market?Should the soup c o m p a n y market snacks?Two years ago Lyle H. Polsfuss, then vicepresident of marketing for Green GiantCompany, stated that his top management(including the chairman) had delineated thespecific spheres of interest within which newproduct activity would proceed. 3 The fact3. In a speech, as reported(September 1, 1969), p. 51.DECEMBER, 1972in Advertising Age,that a team was developed for each sphereemphasizes the positiveness as well as therestrictiveness of the strategy.Degree of I nnovation/I rnitationThis is the third and last dimension on whichmost managements have made commitments,not because strategic direction is consciouslydesired so much as because innovativeresearch requires different scientific staffs.Thus the product development staff atMohawk Data Sciences is clearly directed totaking someone else's new technology andimproving, or at least individualizing, it insome way. In contrast, the Cabot Corporationis thoroughly committed to innovation andtakes in fifty times as much m o n e y fromlicensing processes as it pays out. 4Examples of both approaches can befound in Theodore Levitt's "InnovativeImitation," an article in which the world'sleading opponent of myopic marketingvigorously pleads for the option of imitation,though it too requires thoughtful development as well as faithful executions, sIf a management wants to assume thehigh-risk/pay-off character of innovative4. Cordtz, "Bringing the Laboratory," p. 108.5. Theodore Levitt, "Innovative Imitation," HarvardBusiness Review (September-October, 1966), pp. 63-70.51