Development of Useful Ideas in the New Product Development Process of Small Manufacturers: An Investigation

Executive Summary This paper reports upon an investigation into the procedures and processes employed by small manufacturers to generate perceived useful new product ideas. The inquiry focused upon the sources of ideas, processes for producing these ideas, obstacles which inhibited company personnel in their efforts, and perceived importance of new product ideas. The practices of the respondents were evaluated and suggestions for possible improvement were set forth. Introduction The purpose of this paper is to outline a study of how small U.S. manufacturers engage in activities designed to create new product ideas-the first stage in the product development process. The study examined perceived useful sources of new ideas, suggestions for generating new ideas, constraints associated with generating new ideas, and managerial perceptions of the importance of useful new product ideas to the fulfillment of company goals. It is well established that small businesses are an important vehicle in the creation of employment, productivity, and income in the United States and other developed nations (Anonymous, 2005; Robbins, Pantuosco, Parker, & Fuller, 2000). Over 10.1 million individuals are actively engaged in starting new enterprises in the United States and these firms involve all categories of individuals by gender, age, and ethnicity (Reynolds, Carter, Gartner, & Greene, 2004). In turn, these firms are responsible for a large proportion of the new products which appear in the marketplace (Amini, 2004; Freel, 2000; Huang, Soutar, & Brown, 2002). Further, what applies to the small manufacturer applies often to all organizations. Hence, this is a potentially beneficial area of study for manufacturers at large. Shortcomings of Small Enterprises The evidence to date suggests that, in order to prosper, most enterprises, including small ones, must engage in the creation of new products with the passage of time (Farrell, 2003; Stevens, Burley, & Devine, 1999; Katila & Ahuja, 2002; Salavou, 2002). Despite the importance of product innovation, many small firms do not have effective mechanisms in place to carry out this activity (Anonymous, 2003). "For many small firms, new product development tends to be a haphazard process: it simply happens " (Vermeulen, 2005). An important outcome of this process is the low rate of success resulting from new product introduction (Goldenberg, Lehmann, & Mazursky, 2001). A causal factor which appears to be responsible for at least part of this deficiency is the pursuit of time compression among small business managers-where they strive to arrive at new product ideas in a short period of time, often without careful study (O Shea & McBain, 1999). Small and medium-sized enterprises often focus on the short run and neglect the long run-seeking immediate results (Lindman, 2002). Further, many of these organizations deprioritize the entire new product development activity (Woodcock, Mosey, & Wood, 2000). In addition, numerous small businesses labor under the disadvantages of lack of technically qualified labor, poor use of external information and expertise, difficulty in attracting and securing finance, unsuitability of original management beyond initial prescription, and high cost of regulatory compliance (Freel, 2000). An investigation of financial small and medium sized firms uncovered the following barriers to the creation of new product ideas (Vermeulen, 2005): 1. Most organizations use "lightweight" teams in the process. 2. Customers are hardly involved in development activities. 3. Companies struggle with developing incremental product innovations. 4. Firms suffer from a lack of resources for new product development. 5. Those who develop new offerings have limited experience in the process. 6. Top management typically does not provide incentives for new product ideas. …