New product quality: intended and unintended consequences of new product development speed

Abstract

This paper focuses on the quality of newly developed products. The study's purpose is to determine how the speed of developing a new product affects its quality début. Formalization, centralization, formal control, and informal control are included as control variables in the research model. An analysis of a random sample of manufacturing organizations demonstrates that new product development (NPD) speed has an inverted U-shaped effect on new product quality. This means that while superior new product quality is less likely to be achieved when NPD is conducted quickly, slowing down NPD is a double-edged sword as a reduction of NPD speed below moderate levels becomes detrimental to new product quality, as well. In addition, the results show that a new product's quality début is affected negatively by centralization and positively by informal control. The paper concludes with managerial implications and directions for future research.

Introduction

In this paper, we examine the relationship between new product development (NPD) speed and new product quality. Adopting an organizational behavior view of the subject matter, we are interested in products new to the organization. These products can be categorized twofold: as new to the organization and the market, typically labeled “new-to-the-world products”; and as new to the organization but not new to the market, typically labeled “me-too products” (see Booz Allen and Hamilton, 1982, Lukas and Ferrell, 2000, Olson et al., 1995). We are concerned with the intended and unintended quality effects of speed variation on both product categories. Studying the impact of NPD speed on new product quality is important for the following reasons.

The strategic significance of product quality is gradually being transformed from a point-of-difference to a point-of-parity by the globalization of markets and the associated diffusion of technological know-how. The principles of product quality are reasonably well understood by competitors and, thus, are much less of an exploitable advantage. Consultants are eager to share “the best practices of quality” with anyone who is willing to listen (and pay). Competitors frequently source from the same suppliers or outsource to the same contractors. There are few industries in which the achievement of uniform quality for products has not taken place. In the luxury car segment of the automotive industry, for example, products by Audi, BMW, Jaguar, Lexus, and Mercedes may differ in appeal, but only marginally in actual product quality. Similarly in the consumer electronics industry, video recorders or CD players by JVC, Panasonic, Philips, and Sony may differ in features, but, again, hardly in quality.

Are these quality standards, however, achieved from the outset? Do products display the same quality levels when they are first launched (i.e., when first-generation products reach the market for the first time) as they do after they have entered the growth and maturity phases of their life cycle? The answer is overwhelmingly “no.” Although a majority of successful new products quickly reach the industry standard for quality, it is frequently the case that product quality fluctuates in the introductory phase. New products have not had the chance to benefit from market feedback and production experience in the same way established products have. Indeed, established products have progressed along the experience curve while new products have not. In the automotive industry, it is no secret that the launch of an automobile that is new to the organization is prone to quality deficiencies. Accurately matching new market requirements with operational and organizational capabilities, with the aim of achieving zero product defects, often requires fine-tuning—a circumstance that is true not only for automobiles but for many other industries, as well.

Thus, in many ways, the last quality frontier is the initial phase of a new product's life cycle—the brief period before the new product reaches or determines the industry standard. Those organizations that can limit or eliminate quality problems with their new products might be able to reduce the risk of product failure. Several studies suggest that unmet quality expectations during the beginning of a product's lifecycle are among the principal reasons for the product to fail, even if the product is kept in the market and benefits from experience curve effects (e.g., Cohen et al., 1996, Hellofs and Jacobson, 1999, Wheelwright and Clark, 1992).

What can be done to ensure superior quality from a new product's first day on the market? Which factors deserve particular attention? Unfortunately, little is known about new product quality (Sethi, 2000). A fundamental reason is that product–quality research rarely distinguishes between new products and established products. The management and marketing disciplines, especially, have adopted an undifferentiated product perspective, in this respect. A compounding issue is that research in the business disciplines concerned with product quality relies heavily on anecdotal evidence (Sethi, 2000). Systematic testing of hypotheses in this area is only gradually being encouraged (see Wind and Mahajan, 1997).

In reviewing the product quality literature, one factor stands out as particularly relevant for the quality of a newly developed product: NPD speed. Clearly, it is not difficult to imagine that the quality of a new product depends heavily on the speed with which it was developed. Thus, provided that new product quality is important, it is reasonable to suggest that NPD should not be rushed. Some might even maintain that because “good things take time,” the more time invested in NPD, the more likely a high-quality new product.

But what if slow product development is also detrimental to product quality? There is mounting evidence suggesting that slack breeds complacency and a lack of discipline (Nohria and Gulati, 1996), which makes it possible that slow NPD leads to lower-quality new products. Indeed, a reduction in NPD speed might yield quite a different quality outcome than intended.

Our conceptual framework and hypotheses for examining the above issues are outlined in the following section. The subsequent section describes the sample and the measures. After presenting the analysis results, the managerial implications and future research directions are discussed.