Navigating NPD in Unfamiliar Markets : Keys for a Successful Process Execution in Uncertainty

Sammanfattning: Innovation is a crucial activity to ensure companies’ viability and is increasingly important to sustain competitive advantage. Globalization and the accelerating technological development are creating new markets previously not explored. Companies’ capability to execute New Product development (NPD) under these circumstances is limited since this is a new setting for most companies. Literature reveals that developing highly innovative products entails higher potential of economic growth and this incentivizes companies to explore opportunities in unfamiliar markets. It is also previously empirical shown that the NPD process for products targeting unfamiliar respectively familiar markets should differ due to their varying nature. Despite this, companies tend to use the same NPD processes regardless of the market situation which furthermore can hinder companies from succeeding with innovations targeting unfamiliar markets. Considering this, the purpose of this thesis is to explore and identify which aspects within the execution of the NPD process that enable respectively inhibit companies to achieve commercial success in markets of different characteristics. To investigate this, a multiple case study was conducted at a Swedish manufacturer of industrial machines. Two cases representing unfamiliar respectively familiar markets were studied through employee interviews, observations, reading internal documents and informal meetings. The study was conducted with an abductive approach, investigating the empirical reality and existing literature simultaneously. The result of this study reveals aspects that are challenging for companies to contemplate when executing NPD in unfamiliar markets and how it contrasts to the conditions for familiar markets. Raising companies’ awareness of this enables them to be better equipped for executing NPD under unfamiliar market conditions. The main challenges concluded are allocation of human resources and competency utilization, deficient collection of market and customer information, and insufficient communication routines. Moreover, companies fail to evaluate the potential and risk of innovations and have a hard time developing and implementing an NPD process that supports both structure and flexibility in markets with different characteristics. The biggest difference with NPD for unfamiliar market is the level of uncertainty. The challenge of understanding the customer needs and the competitors becomes more tangible for unfamiliar markets, and further places agreat demand on a working communication system, flexibility, cross-functionality, good risk assessment and well-defined product requirements.