The PDMA Handbook of New Product Development

8.5. Summary

Three separate structures for developing new products are discussed. Unfortunately none appears to be a panacea. The SBU product development structure (bottom-left box in Figure 8.1) supports ongoing businesses, and while efficient, has difficulty creating entirely new businesses with high returns. In addition, the relentless quest to support ongoing customer requests for incremental extensions often drowns the effort needed to focus on new platform and breakthrough projects. Bower and Christensen (1995:53) indicate that mainstream business "...fail—not because they make the wrong decisions, but because they make the right decisions..." and relentlessly focus on today's customer needs rather than tomorrow's market trends.

NOTE

Christensen and Raynor (2003) advocate that a separate and autonomous business development group is required for the low-end-margin and nonconsumer disruptive businesses, since they will be consistently rejected by the SBU as either not providing enough profit or serving the wrong customer. Over time, these disruptive businesses have the potential for replacing the SBU business.

The external venture group (top-right box in Figure 8.1) was posited as a method to create new businesses for the corporation based on new technologies created by the firm—but which did not easily fit into existing SBUs. Unfortunately, this concept does not appear to be sustainable in public companies, since the stock market does not to reward companies for building ...