The new new product development game Stop running the relay race and take up rugby

In today's fast-paced, fiercely competitive world of commercial new product development, speed and flexibility are essential. Companies are increasingly realizing that the old, sequential approach to developing new products simply won't get the job done. Instead, companies in Japan and the United States are using a holistic method—as in rugby, the ball gets passed within the team as it moves as a unit up the field. This holistic approach has six characteristics: built-in instability, self-organizing project teams, overlapping development phases, "multilearning," subtle control, and organizational transfer of learning. The six pieces fit together like a jigsaw puzzle, forming a fast and flexible process for new product development, fust as important, the new approach can act as a change agent: it is a vehicle for introducing creative, market-driven ideas and processes into an old, rigid organization. Mr. Takeuchi is an associate professor and Mr. Nonaka, a professor at Hitotsubashi University in fapan. Mr. Takeuchi's research has focused on marketing and global competition. Mr Nonaka has published widely in Japan on organizations, strategy, and marketing. The rules of the game in new product development are changing. Many companies have discovered that it takes more than the accepted basics of high quality, lov^ cost, and differentiation to excel in today's competitive market. It also takes speed and flexibility. This change is reflected in the emphasis companies are placing on new products as a source of new sales and profits. At 3M, for example, products less than five years old account for 25%* of sales. A 1981 survey of 700 U.S. companies indicated that new products would account for one-third of all profits in the 1980s, an increase from one-fifth in the 1970s.' This new emphasis on speed and flexibility calls for a different approach for managing new product development. The traditional sequential or "relay race" approach to product developmentexemplified by the National Aeronautics and Space Administration's phased program planning (PPP) system-may conflict with the goals of maximum speed and flexibility. Instead, a holistic or "rugby" approach-where a team tries to go the distance as a unit, passing the ball back and forth-may better serve today's competitive requirements. Under the old approach, a product development process moved like a relay race, with one group of functional specialists passing the baton to the next group. The project went sequentially from phase to phase: concept development, feasibility testing, product design, development process, pilot produc-