Speed to Market for Innovative Products: Blessing or Curse?

Abstract

The relationships among speed to market, quality, and costs are important to managers as they attempt to best establish incentives and set goals for new product development teams, allocate resources for new product development, or create positional advantage in the market. The existing literature suggests that the economic consequences of being late to the market are significant, including higher development and manufacturing costs, lower profit margins, and lessening of the firm's market value. Therefore, traditional logic has held that new product development managers need to manage the trade‐offs among speed to market, quality, and costs. While both scholars and managers have often acquiesced to performance trade‐offs among “faster, better, and cheaper,” this research attempts to improve understanding of the interrelationships between these objectives, and ultimately profit. Based on a survey of 197 managers, faster speed to market is shown to be related to better quality and lower costs; it is not necessary to sacrifice one of these outcomes. Further, the moderating roles of two dimensions of innovativeness (innovativeness to the firm and to the market) are examined on the relationships between speed and quality, as well as speed and profit. Both dimensions of innovativeness positively moderate the relationship between speed to market and quality. For more innovative products (both to the firm and the market), there is a stronger positive relationship between speed and quality than for less innovative products. Further, innovativeness to the firm negatively moderates the relationship between speed and profit. Thus, speed has a less positive impact on profit for highly innovative‐to‐the‐firm products compared with less innovative‐to‐the‐firm products. By being conscious of the projects’ levels of innovativeness (along with prioritizing various performance measures), managers can more rationally decide when to emphasize speed to market based on this study's findings.

Frontline employees’ collaboration in industrial service innovation: routes of co-creation’s effects on new service performance

“…However, given that FLE co-creation allows a more accurate definition of customers' needs, thereby leading to improved NS quality (direct effect, H7), it can also be argued that FLE co-creation allows faster satisfaction of potential market needs relative to the competition, which reinforces the customers' perception of service quality and substantiates the mediating effect of NSD speed. Finally, Stanko et al (2012) do not find a direct relationship between speed to market and new product profitability, this relationship is mediated by new product quality. This evidence supports the mediating role of NS quality in the NS speed-NS market performance relationship.…”

“…Under this assumption, only in very extreme cases with very short development times would quality be affected negatively. Also, a reasonable development speed helps to enhance focus and discipline in the development effort, reinforcing the quality of the innovation being developed (Lukas and Menon 2004;Stanko et al 2012). From this third perspective, Stanko et al (2012) demonstrate that faster innovation processes allow the ready incorporation of both market information and customer feedback, thus improving the innovation quality.…”

“…Also, a reasonable development speed helps to enhance focus and discipline in the development effort, reinforcing the quality of the innovation being developed (Lukas and Menon 2004;Stanko et al 2012). From this third perspective, Stanko et al (2012) demonstrate that faster innovation processes allow the ready incorporation of both market information and customer feedback, thus improving the innovation quality. As a result of NSD speed, firms can provide in advance a service offering that is adapted to the market demands and preferences and which is perceived as clearly different from any alternative offered by the competition (Alam 2006;Lin and Germain 2004); in sum, of higher quality from the customers' viewpoint.…”

“…Recent studies in the innovation literature, mainly referring to product innovation, have focused on innovation process speed and new product quality as forerunners of innovation performance Rodriguez 2006, 2010;Carbonell et al 2009;McNally et al 2011), as well as on the innovation speedquality relationship (Chen et al 2005;Lukas and Menon 2004;Stanko et al 2012). In this respect, the literature presents conflicting results regarding the speed-quality interface, which has not been previously analyzed in the context of service innovation co-creation.…”

“…The path designated as operational route (Fig. 1) provides further empirical evidence on the impact of NSD speed on NS quality, which has been widely discussed in the literature (Stanko et al 2012), although it has not been previously analyzed in the NS co-creation context (Carbonell et al 2009). …”