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Sep 15
2010

Innovation killer: Top executives

Posted by annearf in senior managementproduct developmentinnovationcareer

annearf

 What's the secret to product innovation that's both cost-effective and successful? It's making sure top managers aren't involved.

We're not talking about keeping their direct participation to a minimum. We mean not taking part in the proceedings at all.

A study of new product development at 30 large consumer packaged goods companies by The Nielsen Company found a direct correlation between new product success and low involvement by executives. Companies with less interference by top brass generate 80 percent more revenue from new products than firms with more involvement, according to the study. 

What's more, companies that also engage in such practices as having a regular post-mortem after all new product development efforts derive more than six times more revenue from new products compared to other companies.

In fact just being near corporate headquarters can have a stifling effect. At companies with an off-site innovation team, 5.7 percent of revenues come from new products compared to 4.8 percent at firms with no such teams. But companies with teams on site derive a mere 2.7 percent of revenues from new products. 

How come? According to Tom Agan, senior managing director of The Nielsen Company, senior managers are "often too quick to get involved in the creative process, especially when things are not going well, and their mere presence can stifle free-thinking ideas--which can doom the new product development process to failure."

 That doesn't mean senior executives shouldn't be involved in any capacity at all. According to the Nielsen research, top managers can have a role in managing the process from afar without taking part in the actual discussions. That means taking such steps as developing a formal process with decision points about whether or not to move forward. 

The bottom line: If you want the company to get the most bang for its buck, at least when it comes to new product development, make sure senior managers step back to the sidelines, where they belong.

 

 

 

 

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