IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v48y2002i3p313-327.html
   My bibliography  Save this article

Technology Selection and Commitment in New Product Development: The Role of Uncertainty and Design Flexibility

Author

Listed:
  • V. Krishnan

    (McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712)

  • Shantanu Bhattacharya

    (INSEAD, Boulevard de Constance, Fontainebleau, 77305, France)

Abstract

Selecting the right technologies to incorporate in new products is a particularly challenging aspect of new product definition and development. While newer advanced technologies may offer improved performance, they also make the product development process more risky and challenging. In this paper, we focus on the problem of technology selection and commitment under uncertainty, a major challenge to firms in turbulent environments. We argue that the "pizza-bin" approach of rejecting prospective technologies outright may not serve firms well when the pressure to differentiate products is enormous. After motivating the challenges and decisions facing firms using a real-life application from Dell Computer Corporation, we formulate a mathematical model of a firm that must define its products in the presence of technology uncertainty. Specifically, the firm faces two options: (i) a proven technology that is known to be viable and (ii) a prospective technology that offers superior price to performance results but whose viability is not a fully certain outcome. To minimize the impact of technology uncertainty, we consider two approaches to design flexibility, termed parallel path and sufficient design, which allow the firm to concurrently develop its products while the technology is being validated. Our analysis helps understand appropriateness of the different flexible design approaches. We illustrate our model with the Dell portable computer example and note the managerial implications of our analysis.

Suggested Citation

  • V. Krishnan & Shantanu Bhattacharya, 2002. "Technology Selection and Commitment in New Product Development: The Role of Uncertainty and Design Flexibility," Management Science, INFORMS, vol. 48(3), pages 313-327, March.
    • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:3:p:313-327
    DOI: 10.1287/mnsc.48.3.313.7728
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.48.3.313.7728
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.48.3.313.7728?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kevin F. McCardle, 1985. "Information Acquisition and the Adoption of New Technology," Management Science, INFORMS, vol. 31(11), pages 1372-1389, November.
    2. Shantanu Bhattacharya & V. Krishnan & Vijay Mahajan, 1998. "Managing New Product Definition in Highly Dynamic Environments," Management Science, INFORMS, vol. 44(11-Part-2), pages 50-64, November.
    3. Christoph H. Loch & Christian Terwiesch, 1998. "Communication and Uncertainty in Concurrent Engineering," Management Science, INFORMS, vol. 44(8), pages 1032-1048, August.
    4. V. Krishnan & Karl T. Ulrich, 2001. "Product Development Decisions: A Review of the Literature," Management Science, INFORMS, vol. 47(1), pages 1-21, January.
    5. Arditti, Fred D & Levy, Haim, 1980. "A Model of the Parallel Team Strategy in Product Development," American Economic Review, American Economic Association, vol. 70(5), pages 1089-1097, December.
    6. Thomke, Stefan H., 1997. "The role of flexibility in the development of new products: An empirical study," Research Policy, Elsevier, vol. 26(1), pages 105-119, March.
    7. Graves, Samuel B., 1989. "The time-cost tradeoff in research and development: A review," Engineering Costs and Production Economics, Elsevier, vol. 16(1), pages 1-9, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas A. Roemer & Reza Ahmadi, 2004. "Concurrent Crashing and Overlapping in Product Development," Operations Research, INFORMS, vol. 52(4), pages 606-622, August.
    2. Jürgen Mihm & Christoph Loch & Arnd Huchzermeier, 2003. "Problem--Solving Oscillations in Complex Engineering Projects," Management Science, INFORMS, vol. 49(6), pages 733-750, June.
    3. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    4. Zhang, Qingyu & Vonderembse, Mark A. & Cao, Mei, 2009. "Product concept and prototype flexibility in manufacturing: Implications for customer satisfaction," European Journal of Operational Research, Elsevier, vol. 194(1), pages 143-154, April.
    5. Annika Lorenz & Michael Raven & Knut Blind, 2019. "The role of standardization at the interface of product and process development in biotechnology," The Journal of Technology Transfer, Springer, vol. 44(4), pages 1097-1133, August.
    6. Sam Ransbotham & Sabyasachi Mitra, 2010. "Target Age and the Acquisition of Innovation in High-Technology Industries," Management Science, INFORMS, vol. 56(11), pages 2076-2093, November.
    7. Mohsen Jafari Songhori & Madjid Tavana & Takao Terano, 2020. "Product development team formation: effects of organizational- and product-related factors," Computational and Mathematical Organization Theory, Springer, vol. 26(1), pages 88-122, March.
    8. Nitindra R. Joglekar & Ali A. Yassine & Steven D. Eppinger & Daniel E. Whitney, 2001. "Performance of Coupled Product Development Activities with a Deadline," Management Science, INFORMS, vol. 47(12), pages 1605-1620, December.
    9. Haluk Yoeruer, 2020. "The Role of Platform Architecture Characteristics in Flexible Decision-Making," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 16(08), pages 1-28, January.
    10. Liao, Shuangqing & Seifert, Ralf W., 2015. "On the optimal frequency of multiple generation product introductions," European Journal of Operational Research, Elsevier, vol. 245(3), pages 805-814.
    11. Victoria L. Mitchell & Barrie R. Nault, 2007. "Cooperative Planning, Uncertainty, and Managerial Control in Concurrent Design," Management Science, INFORMS, vol. 53(3), pages 375-389, March.
    12. Nur Sunar & John R. Birge & Sinit Vitavasiri, 2019. "Optimal Dynamic Product Development and Launch for a Network of Customers," Operations Research, INFORMS, vol. 67(3), pages 770-790, May.
    13. Gopalakrishnan, Mohan & Libby, Theresa & Samuels, Janet A. & Swenson, Dan, 2015. "The effect of cost goal specificity and new product development process on cost reduction performance," Accounting, Organizations and Society, Elsevier, vol. 42(C), pages 1-11.
    14. Donald Gerwin & Nicholas J. Barrowman, 2002. "An Evaluation of Research on Integrated Product Development," Management Science, INFORMS, vol. 48(7), pages 938-953, July.
    15. Rajiv D. Banker & Indranil Bardhan & Ozer Asdemir, 2006. "Understanding the Impact of Collaboration Software on Product Design and Development," Information Systems Research, INFORMS, vol. 17(4), pages 352-373, December.
    16. Glen M. Schmidt & Evan L. Porteus, 2000. "Sustaining Technology Leadership Can Require Both Cost Competence and Innovative Competence," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 1-18, March.
    17. Lin, Jun & Chai, Kah Hin & Brombacher, Aarnout C. & Wong, Yoke San, 2009. "Optimal overlapping and functional interaction in product development," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1158-1169, August.
    18. Alan MacCormack & Roberto Verganti & Marco Iansiti, 2001. "Developing Products on "Internet Time": The Anatomy of a Flexible Development Process," Management Science, INFORMS, vol. 47(1), pages 133-150, January.
    19. Satish Nambisan, 2002. "Complementary Product Integration by High-Technology New Ventures: The Role of Initial Technology Strategy," Management Science, INFORMS, vol. 48(3), pages 382-398, March.
    20. Michael L. Harris & Rosann Webb Collins & Alan R. Hevner, 2009. "Control of Flexible Software Development Under Uncertainty," Information Systems Research, INFORMS, vol. 20(3), pages 400-419, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:48:y:2002:i:3:p:313-327. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.