Robert G. Cooper
In spite of all of the hype around product innovation and product development, new product productivity in America is down. My colleagues and I discovered that companies are still spending the same amount of money on R&D as a percentage of sales that they always did; but the percentage of sales from new products was down from about 32% to 28% over a 10-year period. That is about a 14% drop in NPD productivity, which is a significant cause for concern. We discovered that the important difference today, which is driving NPD productivity down, is the lack of blockbuster projects in companies’ development portfolios. When you look at the typical company’s current development pipeline, the cupboard is bare! The pipeline in the mid-1990s contained about double the percentage of truly innovative development projects and truly new product projects. Product development in the US is shifting towards the low-hanging-fruit type of projects. In order to take action to correct the situation – to fix the shortage of blockbuster, game-changing and high value development projects - it is important to understand the reasons.