Measuring Product Development Vitality
One of the things that satisfy engineers and product developers the most is to see their newly released products sell like hotcakes. It goes right to the core of why they pursued careers in science and engineering, to create things that better the lives and capabilities of others.
One of the things that satisfy finance and business professionals the most is to see the products they decided to invest in become successful.
One of the things that satisfies investment bankers and brokers the most is to see companies with a continual stream of winning products year after year.
Perhaps these are the reasons why a metric that did not exist before 1988 is now the number one corporate R&D performance metric in North America.
Most of us know the metric as “New Product Sales,” or “Revenue Due To New Products,” along with a myriad of other names. What they all strive to measure is the “newness” of annual revenues. The actual value of this key performance indicator [KPI] differs greatly by market, by the length of product lifecycle, and by the age of the company.
Published on Product Design & Development Magazine’s Product Design & Development website, Measuring Product Development Vitality examines the evolution and the industry adoption rates of this metric since its inception in 1988. The article explores differing definitions of the metric, differing definitions of how companies classify a product as being “new” or “old,” offers benchmarks for industry values when a new product is defined as being less than three years old, and discusses consequences when companies try to game the value of the metric.