Formalization of Front End Process

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Formalization of the Front-end Phase of the Innovation Process – Competitive Advantage or a Path to Downfall? Jarno Poskela, jarno.poskela@hut.fi Helsinki University of Technology, Finland

Abstract
The influence of front-end process formalization on front-end performance is currently intensively debated issue in the new product development literature. The main line of arguments state that process formalization in general kills creativity and leads to decreased innovativeness. However, studies that would have investigated the effect of formalization of the front-end phase, the creative and chaotic early part of the innovation process, are scare. Typically studies consider both front-end phase and development project phase simultaneously, thus averaging the totally different characteristics of these two phases. This article tested the association between front-end process formalization and perceived superiority of created product concepts. In addition, this article tested the classical contingency hypotheses whether the task uncertainty moderates this relationship. The study is based on exploratory factor analysis and multiple regression analysis that are used to investigate 133 frontend cases collected from Finnish industrial companies. The results indicated, opposite to the existing theory, that front-end process formalization is associated with superior product concepts. In addition, market uncertainty positively moderates this association, i.e. the more market uncertainty is present the more positive is the association. Implications of results from theoretical and practical point of views are discussed.

Introduction
The foundation for successful new product development is created in the front-end phase, which refers to the activities that take place before the formal development project phase (Koen et al., 2001). The overall structure and the main characteristics of the future product are all decided in the front-end phase, which then strongly affects subsequent new product development activities. Recent studies indicate that these early front-end activities represent the most troublesome phase of the innovation process, and at the same time one of the greatest opportunities to improve the overall innovation capability of a company (Reid and de Brentani, 2004; Herstatt et al., 2004; Nobelius and Trygg, 2002; Kim and Wilemon, 2002; Cagan and Vogel, 2002). The front-end phase nourishes the new product development project phase by producing new incremental and radical product concepts. The front-end phase results in a well-defined product concept, clear development requirements and a business plan aligned with the corporate strategy (Kim and Wilemon, 2002). In addition, the front-end phase should result a decision on how the product concept will be developed further. The decision could be to continue with an immediate development project or to put the concept ‘on hold’ to wait for more suitable timing, or even to kill the initiative. However, despite the recognized importance and great development potential of the front-end phase, e.g. compared to the development project phase, there has still been relatively little research on the best practices related to the front-end phase (Nobelius and Trygg, 2002; Kim and Wilemon, 2002; Koen et al., 2001). The theoretical discussion is still hindered by general level models, vague terminology and unclear definitions (Zhang and Doll, 2001; Koen et al., 2001). The front-end phase has a very strategic nature since important strategic decisions related to e.g. target markets, customer needs satisfaction, value propositions, expected product price and product costs, the main functionalities of products, and the predominately used technologies are all made at this stage (Bonner et al., 2002; Smith and Reinertsen, 1998; Wheelwright and Clark, 1992). These decisions embodied in a product concept define and guide the subsequent development activities later in the innovation process. An...
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