THE LESSON LEARNT FROM Pavia. 1991. The early stage of new product development in entrepreneurial high-tech firms

The new product process is often divided into seven basic steps: new product strategy development, idea generation, screening, business analysis, development, testing, and commercialization. In this paper, the first three of these stages were argued. By making use of 118 high-tech manufacturing firms and software development firms, the author answered 4 questions: what are most valuable methods for identifying new products? what screening criteria did firms use? are idea generation and screening approaches associate with success? are the answers to these questions related to the educational background of decision makers?

When identifying potential new products, it was found that only about a third of the firms systematically gather potential new products ideas from customers (p. 23). Informal discussions and inter-departmental meetings are quite important activities for new product development. Similarly, although firms try to incorporate a discussion of new products in their annual strategic plans, only about a third of all the firms find this to be a very important activity; entrepreneurial high-tech firms still rely heavily on customer input for new product direction and utilize informal methods to identify new products. Firms that utilize informal identification methods may use either internal or external sources; but firms with formal methods would only use internal resources while rating annual strategic plan and market research as important parts (p. 25). With respect to screening, firms without formal procedures are more likely to use phrases like "ad hoc" and "gut feel" to describe their methods, and smaller number of them agreed that they use a consistent set of criteria for evaluation. The decision maker with business training has little effect on the aspects of idea generation but they may lead firms to rely more on short-term financial screening hurdles.

Finally, this study strongly suggests that the annual strategic plan has the potential for being an effective new product identification tool; and the information that would accrue through the use of environmental scanning and a database of potential new products. This is to say, the entrepreneurial high-tech firms with formal new product development process and plans are more favorable.