Multiproject Strategy and Sales Growth: The Benefits of Rapid Design Transfer in New Product Development

Abstract

This paper explores the impact on sales growth of different product development strategies, especially an approach that focuses on the coordination of multiple projects that overlap in time and share critical components. The data for our analysis comes from the automobile industry, although the principles we discuss should apply to any industry where firms compete with multiple product lines and where the sharing of components among more than one distinct product is both possible and desirable. Some firms compete by trying to develop ‘hit’ products in isolation, with little or no reuse of components or coordination with other products. Another way to compete is to leverage a firm’s investment in new technologies across as many new products as possible as quickly as possible, while the technologies are still relatively new. This paper proposes a typology that captures this effect by categorizing product development strategies into four types: new design, rapid (or concurrent) design transfer, sequential design transfer, and design modification. An analysis of 210 projects from the automobile industry between 1980 and 1991 indicates that firms utilizing the rapid design transfer strategy—quickly leveraging new platform components across multiple projects–increased sales more than when they or their competitors did not use this strategy. The study’s results suggest that not only the sharing of technology among multiple projects but also the speed of technology leveraging are important to sales growth. © 1997 by John Wiley & Sons, Ltd.

Assessing the Resource Base of Japanese and U.S. Auto Producers: A Stochastic Frontier Production Function Approach

“…11 While the criteria used by Car and Driver emphasize final product design quality rather than underlying capabilities, in a supplementary analysis we found that the Car and Driver award rates were correlated with firms' adoption of the "rapid design transfer strategy" identified by Nobeoka and Cusumano (1997). Honda, Mazda, Nissan, and Toyota have accounted for nearly half of all winning vehicles since 1983.…”

Holistic Customer Requirements and the Design-Select Decision

“…In the automobile industry, many managers have expressed the hope that automobiles become more like desktop personal computers, assembled from mostly standard components (Ealey and Mercer 1992). Yet, while progress has been made in adopting product platforms (Nobeoka and Cusumano 1997), most of the components of an automobile are designed for use in a specific model. We believe that differences in the extent to which components are designed for a specific product can be explained to a large extent by the nature of the customer requirements for the product and by the fundamental constraints of engineering design.…”

Performance Measurement in Product Development Research

“…In addition, individual product development project was chosen as an unit of analysis for an accurate comparative analysis. Although most contemporary companies simultaneously manage multiple projects (Nobeoka & Cusumano, 1997), the issue of such coordination between projects was omitted from the analysis.…”