"Learning from failures increases success in product innovation"

October 6 2021
Research

You can increase the chance of success in developing new products by looking closely at previously rejected or failed projects. It is one of the conclusions from Jian Qin's research into the success factors in product development. He will receive his PhD today at Nyenrode Business University. Qin and his supervisor Prof. dr. Bo van der Rhee looked at the success of new product development (NPD) from an HR perspective, IT possibilities and developed a checklist for companies to identify new successful products from the waste basket of previously failed projects.

New product development is the key to sustainable competitive advantage for companies. But the process is complex and the chances of success uncertain. Nearly half (33-54%) of all new products fail. This is often due to lack of market understanding or improper product innovation strategy. Discovering the factors that increase the likelihood of success can save a company time and money. Qin has developed a holistic model in his research that can help managers with this. It shows that there is room in three areas to increase the chance of success: HRM, IT and looking at failed projects.

Checklist

“There is a mountain of pearls in the waste basket of product development. Because you can learn from your mistakes. When this becomes part of your company philosophy, it can help you optimize product innovation," says Qin. In his research, he compiled a checklist to discover the 'hidden gems': This checklist supports managers and encourages them to improve innovation performance by providing them with structured and standard criteria to identify potentially successful new product projects among those that have previously been rejected. For example: does the new product idea deliver unique customer benefits? Have performance metrics of product development been established? This is not only helpful for reducing the sunk cost associated with previously rejected projects, but can also exploit their potential for success, and become the company’s new growth engine.

Invest in training & recruitment

“You also have to prioritize investing in your human capital through training and recruitment,” says Qin. For example, think of providing employees with opportunities to learn and develop skills by long-term oriented training programs. But also establishing sound selection and hiring mechanisms like employment tests or extensive interviews. He distinguishes three dimensions within HR that play an important role in the success of new product development. It's about ability-enhancing HR practices, motivation-enhancing HR practices, and opportunity-enhancing HR practices. In short: The findings show the direct effects of the three HR practices and knowledge-based assets (human and social capital) on NPD success.

Customer feedback platform

Companies have been investing in IT infrastructure for years to facilitate product innovation. “But often they don't know how to improve their IT structure in such a way that they gain profit for product development,” Qin says. Consider, for example, an organization-wide platform for customer feedback. Managers should encourage NPD teams to interact with external customers and monitor market competitive dynamics. Meanwhile, a balanced innovation process design is needed to obtain a high level of NPD performance.

Read the summary of the research here

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