The Influence of Complexity in Determining New Product Development Strategies

Abstract

How does complexity influence new product development (NPD) strategies? There are many ways of managing the challenge of new product development. This is especially true for new software products where a huge variety of approaches is possible. This study examines how successful New Zealand tech companies manage their NPD and how innovation complexity influences this. The new products are all software-intensive and have the additional pressure of being built for commercialisation. The study found that while there is considerable variation within NPD, the level of innovation complexity determined the approach companies were taking. Companies with complex innovation challenges had more iterative software development; flexible internal processes; nimbleness in decision-making and re-prioritisation. Lower levels of complexity in innovation were linked to more formal and sequential approaches to NPD; less reviewing of process or product experimentation. Overall there were also lower levels of strain. The Cyclic Innovation Model (A. J. Berkhout, Hartmann, & Trott, 2011) provides a useful description of how complexity in innovation is situated within a network of markets, customers, products and science and how innovation is not a linear, sequential process. The study additionally suggests that strong entrepreneurial skills are essential to managing high complexity.