An Integrated Model for Managing Innovation in the Early Stages

of New Product Development in SMEs

It is only through the creation of new products that most small firms can hope to sustain growth and profitability in the long term. However, new product development (NPD) is a difficult task and failure rates of new products are regarded by most as being unacceptably high. Why some products fail and others succeed has been the topic of a myriad of investigations (Calantone and Cooper, 1979; Madique and Zirger, 1984) dating as far back in time as the 1964 NCIB study (National Industrial Conference Board, 1964). While it would be erroneous to attribute product success to any single factor, there has been an emerging consensus that the factors which contribute to success are determined much earlier in the project’s life, explicitly in the early or pre-development stages (Booz-Allen and Hamilton, 1982; Stevens et al. 1999; Khurana and Rosenthal, 1998; Cooper and Kleinschmidt, 1996; Cooper, 1993; Lynch, 2007). Developing a new product that delivers superior benefits presupposes an understanding of technical and market needs, company resource compatibility and product marketability, a process that should ideally be undertaken prior to the commencement of any actual development (Stevens et al. 1999; Cooper, 1988). Without this up-front homework, significant problems in later stages of the development process can be expected including likely product failure. Indeed, the importance of predevelopment activities (idea generation, idea screening, idea evaluation, concept development and testing) has been empirically validated by extensive surveys for quite some time (Cooper and Kleinschmidt, 1995; Cooper, 1994). However, despite the criticality of predevelopment activities to success, it is these stages that receive the least amount of management attention and resources, and more often than naught are only superficially carried out or even omitted (Cooper and Kleinschmidt, 1996; Cooper, 1988). In a small firm context, relatively little empirical research indicates how small firms manage innovation in the early stages of NPD. In the small firm context, little research has been directed at the management of innovation during the critical predevelopment activities. Without a clearer understanding by academics of the managerial guidelines necessary to effectively transform ideas into product concepts, predevelopment activities will remain fuzzy and the creative benefits to SME’s in practice will never be fully realised. This project will provide a major practical contribution to the existing research through the dissemination of results and based upon an action research methodology will be utilised in order to understand the processes that enables an SME to successfully build and manage innovation in their pre-development process.  An overarching outcome of this research study will be to present implementable guidelines that can be used by SMEs to manage the delivery of creative and attractive new product concepts. The focus of this project will concern not only the development of theoretical and descriptive guidelines but also present guidelines that are prescriptive thereby ensuring their practicality to SMEs.