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CHAPTER 12 COMPETING THROUGH INNOVATION
5 
The technical dog product does not work or users are dogged by technical problems 
(such as Jaguar Land Rover vehicles, which were frequently seen in this way until the 
take-over by Tata and a major investment in quality improvement).
6 
The price crunch comes when the innovating firm sets too high a price for a new product 
whose value is not perceived by target customers to be better or greater than existing 
products. Often, if competition offers a lower-cost product the innovating firm has to 
cut its price so fails to obtain the required return on investment from the innovation. 
Even Apple’s innovative iPhone was priced too high at launch and disappointing sales 
led to an early price reduction and refunds to early purchasers.
12.3 
Planning for new products 
The fact that innovation is so uncertain raises the question whether innovation can be man-
aged? Certainly it seems that using formalised new product development processes achieves 
greater new product success in some situations than does an ad hoc approach to product 
innovation. There is, however, a distinction between invention and innovation. The former is 
the discovery of a new device or a new process. It is fair to say that managers cannot specify 
deadlines for the discovery of new ideas or predict when a particular invention will occur or, 
indeed, when exactly a scientific discovery will be made. Invention cannot be planned. Often 
it is left to chance, or the perseverance and ingenuity of the scientist/inventor. Innovation is 
different. Once the new scientific or technical discovery is made, or a novel product idea has 
been conceived, its chances of being successfully commercialised rest predominantly on the 
astuteness of the firm’s management in new product planning and strategy determination, 
as well as the proficiency with which certain new product developments and launch activities 
are undertaken. From discovery/conception of the idea to marketplace, management and 
employees of the firm have direct control and influence over the fate of the discovery/idea. 
Businesses can reduce the risk of product innovation while improving the likelihood of 
success by adopting a planning orientation and sophisticated new product development pro-
cess. There was nothing accidental or ad hoc about the results achieved by Glaxo for Zantac 
in the anti-ulcer drugs market, or McDonald’s in fast foods – they succeeded through careful 
preparation of the strategies for product development and market entry. 
Nonetheless, one important caveat is that some of the most innovative companies in 
the world achieve their success through far less organised behaviours. The bureaucracy 
of conventional product planning plays little role in creating and managing innovation 
at Google. Indeed, innovation at Google appears to the outsider to be almost anarchic – 
disordered, in disarray and embroiled in uncomfortable uncertainty, living on the edge 
of chaos ( Lashinsky, 2006 ) – but it is effective for that company. There are many risks 
in how Google manages innovation, but it is how the company has built the capability 
to handle multiple, simultaneous, radical innovation initiatives. Similarly, in a famous 
statement to Fortune magazine, Steve Jobs of Apple stated: ‘We do no market research. 
We just want to make great products’ (quoted in Fortune , 2008), which is what Apple 
appears to have done. Formal product planning procedures may be useful, but they do 
not guarantee success. 
12.3.1 The new product planning process 
Nonetheless, many successful innovating companies develop a new product process, such 
as that shown in Figure 12.5 , which is linked to their company’s overall longer-term plan-
ning process.
First, the process suggests companies should define their business mission by asking: 
what business are we in? And what business do we want to be in? By considering the 

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PLANNING FOR NEW PRODUCTS
growth potential of the sales and market share and profitability of the company’s current 
range of products, and the extent to which growth objectives will be fulfilled, management 
can begin to identify gaps in achievable and desired growth. The role of new products and 
how the firm’s portfolio of businesses might be changed to achieve planned growth can be 
determined.
Firms also have to decide on the types of new product that are to be developed. It is 
usual to classify new products according to the degree of newness to the company and to 
the customers (see Figure 12.6).
Six categories of new products emerge, each one taking the company further and further 
away from its current activities and being, therefore, progressively more risky:
1