The PDMA Handbook of Innovation and New Product Development, 4th Edition

CHAPTER TWO AN INNOVATION MANAGEMENT FRAMEWORK: A MODEL FOR MANAGERS WHO WANT TO GROW THEIR BUSINESSES

Paul Mugge and Stephen K. Markham

2.1 Introduction

When asked in IBM’s yearly survey, the majority of CEOs cite “growth through new products and services” as their number one strategic objective. The globalization of markets has created a highly competitive arena where survival depends on a continuous stream of successful new products. Barriers to competition have fallen precipitously as regulations have eased and markets have become more global. After three decades of cost cutting and restructuring in response to a formidable set of global competitors, firms are turning their attention to growth. Their CEOs realize that the winners will be those companies that distinguish their products and services, that is, that create a competitive advantage.

According to the Product Development and Management Association (PDMA), successful high-technology companies have found that more than 50 percent of their current sales are coming from new products (Barczak et al. 2009). In the case of the most successful, this figure is over 60 percent. The next round of competitive positioning will be based on innovation, and a company’s innovation capabilities will determine its future growth potential. This is creating a special challenge for senior management. Only innovation increases the size ...