ABSTRACT

Innovation is defined as 'the use of new knowledge to offer a new product or service that customers want' (Afuah, 2003, p. 13). This implies that a certain amount of market research has already been conducted. Many companies have New Product Development projects without actually having a full scale R&D function, though some facility for product testing may be necessary to test out the prospect that customers do indeed want the new product in sufficient numbers and at a profitable price for the producer. NPD is well understood in manufacturing industries, such as food and consumer goods, but applies equally in a service context, for example new mortgage products in financial services. From the cases illustrated it is suggested that value chain analysis may be the key to identifying sources of risk for NPD projects, at least at the strategic level, such that risk management strategies can be developed appropriately before the project is implemented.