Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry

Abstract

The research was very generously supported by the Alfred P. Sloan Foundation and was conducted while the first author was the Finmeccanica Faculty Scholar. We appreciate the many contributions made by members of the Stanford-McKinsey-Augsburg research team. We also benefitted immensely from the very helpful advice of Shona Brown, Lee Fleming, Charlie Galunic, Andy Hargadon, Jim Jucker, Bob Keeley, Neil Kane, Laura Kopczak, Garry Marchant, Anne Miner, Christine Oliver, Bob Sutton, Marcie Tyre, Mark Zbaracki, Harvard and Stanford seminar participants, and our three anonymous reviewers. This paper contrasts two theoretical models for firms' achieving fast adaptation through product innovation. The compression model assumes a well-known, rational process and relies on squeezing together or compressing the sequential steps of such a process. The experiential model assumes an uncertain process and relies on improvisation, real-time experience, and flexibility. The two models are tested using data from 72 product development projects drawn from European, Asian, and U.S. computer firms. The results indicate that using an experiential strategy of multiple design iterations, extensive testing, frequent project milestones, a powerful project leader, and a multifunctional team accelerates product development. In contrast, the compression strategy of supplier involvement, use of computer-aided design, and overlapping development steps describes fast pace only for mature industry segments. The results also show that planning and rewarding for schedule attainment are ineffective ways of accelerating pace. We conclude with linkages to punctuated equilibrium and selection models of adaptation, fast organizational processes, organic versus improvisational structures, and complexity theory.'