Measurement Case Study 6: Hypothesis-testing practice-oriented research

leaders a description of the development process of new products for one of the firm’s product groups was generated, in which it was specified how much time this firm usually spends in different stages of the devel- opment process and what are the determinants of the duration of each phase. This information about the current situation regarding this type of product was modelled in a computer simulation model Janszen, 2000. In a next step, the input from the interactive sessions with the focus group and the information collected from team leaders of different product development projects, from managers of functional areas, and from the firm’s documents, were used to estimate the effects of increased levels of reuse of standard designs on the duration of the development of new products in this product group. These estimates were discussed with team leaders and evaluated as realistic. In a similar way we developed, with the firm’s experts, a model of how the market share in this group of products is influenced by time of introduction, price, and attractiveness. Similarly, we developed scen- arios with different times of market launch, different levels of attrac- tiveness, and different price levels in order to estimate resulting market share in a manner deemed realistic by the firm’s experts.

11.2.4 Data analysis

We developed seven scenarios with different degrees of reuse of standard designs in new products, varying from 0 per cent to 30 per cent of the components of the new product. Figure 11.1 shows the annual sales volume in each of these seven scenarios. These results show that the annual sales volume could be increased by circa 50 per cent by reusing standard designs for up to 30 per cent of the components. 10 20 30 40 500 1,000 1,500 Percentage reuse sales volume a year x1,000 Figure 11.1 Effect of percentage reuse on sales volume a year

11.2.5 Results and implications

Our hypothesis was confirmed. The degree to which standard designs are reused in a new product in this firm has a direct positive relation to the annual sales volume and, we assume, to market share. An increase of 50 per cent of sales can be achieved by reusing standard designs for 30 per cent of the components of the new product. Because the firm considered all six scenarios as realistic including the one with 30 per cent reuse of standard designs, it is concluded from the positive test result that this firm had sufficient operational flexibility to realize a sufficient level of strategic flexibility.

11.3 Methodological reflection on Case Study 6

11.3.1 Practice

Case Study 6 is oriented to a leading European firm’s practice of new product development. This firm, which develops, produces, and mar- kets high-technology electronic products of a relatively short product life cycle, was interested in an assessment of whether its current resource-based capabilities were sufficient to develop new products and launch them on the market successfully.

11.3.2 Research objective

The result of exploration of practice for this study was the identifica- tion of a problem-finding knowledge need regarding the firm’s ability to launch successfully new products on the market. In the exploration of theory, some propositions were identified, on the basis of which the following hypothesis was formulated: Hypothesis:The degree to which standard designs are reused for components in a new product in this firm has a direct positive relation to the market share of that new product. This hypothesis represents a deterministic relation. The research objective of this hypothesis-testing study, thus, was to con- tribute to the new product development strategy of this firm by testing whether this hypothesis is true. A confirmation of the hypothesis would inform the