34 J PROD INNOV MANAG

1985;2:34-44

oc>oo

Selecting Winning New Product Projects:

Using the NewProd System

Robert G. Cooper

Separating probable winners from probable losers

is the goal of the new product screening task, and
Professor Robert G. Cooper has developed a model
that does this with remarkable success. In this arti-
cle, he reviews various approaches to new product
screening and then presents the basics of the New-
Prod model. NewProd now has a history of use in
industry that seems to be fulfilling its original re-
search promise. Professor Cooper shows how man-
agers can build their own screening models and out-
lines how such models can contribute in an
important way to better new product selection deci-
sions. Over the years, Professor Cooper has con-
ducted a series of major research projects that have
aimed at improvements in the new product process.
Their hallmark has been managerial relevance and
a sound theoretical foundation. This article, the
third that Professor Cooper has published in JPIM,
is in the same tradition.
Address correspondence to Professor Robert G. Cooper, Faculty of
Business, McMaster University, Hamilton, Ontario, Canada L8S 4M4.
This work was supported by a grant from the Office of Industrial Innova-
tion, DRIE, Canadian Federal Government.
0 1985 Elsewer Science Publishing Co., Inc.
52 Vanderbilt Ave., New York, NY 10017
New Products:
A High-Risk Endeavor
New products, although central to many firms’ suc-
cesses, are plagued by difficulties and uncertainties.
Hopkins reports that for every 100 industrial new prod-
ucts launched, about 40 fail in the marketplace [ 151.
Crawford estimates the failure rate to be about 35%
[12]. Similarly, our research shows that for every 100
products that are fully developed, only 60 become com-
mercial successes [ 111. The attrition rate of new prod-
uct projects is equally disturbing: Booz Allen and Ham-
ilton report that for every seven concepts that enter the
new product process, only one becomes a commercial
success; further, 46% of the resources that U.S. indus-
try devotes to new products are spent on products that
fail or are cancelled.
New product project selection becomes a pivotal
task in the desire to maximize returns from a firm’s new
product program. There are far more new product ideas
or projects conceived than resources to commercialize
them [lo]. Moreover the great majority of these pro-
jects are unfit for commercialization. In an ideal new
product process, management would be able to identify
the probable new product winners in advance, and be
able to allocate the firm’s development resources to
these projects. As a result, failure rates would be low,
misallocated resources would be kept to a minimum,
and the return would be maximized.
The idea screening stage is the first of these project
selection stages in the new product process [ 10,161. It
is the decision point at which more new projects are
0737-67X2/85/$3.30
SELECTING WINNING NEW PRODUCT
new product process. But the selection or design of an
appropriate screening tool must be made in the light of
BIOGRAPHICAL SKETCH
the following considerations.
Robert G. Cooper is Professor of Marketing at the Faculty of
Business, McMaster University, Hamilton, Ontario, Cana-
da, and also Director of Research of the federal government’s
Canadian Industrial Innovation Centre, Waterloo, Ontario.
He holds bachelor’s and master’s degrees in Chemical En-
gineering, and an M.B.A. and a Ph.D. in Business Admin-
istration. Dr. Cooper is a noted researcher, consultant, and
lecturer in the field of industrial product innovation, and has
published over two dozen articles and books on the topic.
Many readers will be familiar with his widely acclaimed
research study published in his book, Project Newprod:
What Makes a New Product a Winner?, Montreal: Quebec
Industrial Innovation Centre, 1980, from which part of this
article is adapted.
‘killed” than at any subsequent stage. Moreover, it is
a critical decision in the sense that, at this point, re-
sources are first allocated to a project: too weak a
screening procedure fails to weed out the obvious
“losers” or “misfits,” with the resulting misalloca-
tion of scarce resources and the start of a creeping
commitment to the wrong projects. In contrast, too
“rigid” a screen results in many viable and worthwhile
projects being rejected, and perhaps is even more costly
to the firm in terms of lost opportunities.
New Product Screening:
Current Approaches
A myriad of approaches and schemes have been pro-
posed to aid in the initial or idea screening stage of the
AUTHOR’S NOTE:
The NewProd model presented in this article traces its roots back to
earlier research undertaken by the author [6,8,9]. The idea for the
model came about almost as an afterthought from research we under-
took into why new products succeed or fail. The model, in conceptual
form, was first presented in a theory article [lo]. Even though the
model was not operational at that time, it attracted considerable atten-
tion, so much so that it was decided to operationalize the model, and
computer software was written. Since that time, several institutes,
including the Wisconsin Center for Product Exploration (University of
Wisconsin, Engineering School) and the Industrial Innovation Cen-
tre-Montreal, have made NewProd available to local commercial
users. To date, a number of major corporations have had experience
with the NewProd model (or ProCon, as it is called at Wisconsin), and
because of their interest and positive experiences, we felt the time
appropriate to share some of these experiences with others, and hence
this article. For more information on NewProd, contact the author.
J PROD INNOV MANAG 35
1985;2:34-44
A tentative commitment in a sequential process.
The screening decision is only the first GO/KILL
decision in a sequence of such decisions for the
new product project under consideration [ 11. A
GO decision is not an irreversible decision, nor is
it a decision to commit all the resources needed
for the entire project.
Rejection and acceptance errors. The screening
decision cannot be a perfect one, but must strive
for a balance between errors of acceptance and
rejection. It should not be overly conservative
and rigorous, accepting only the “sure bets”; nor
should it lead to the dissipation of resources over
a large number of unwarranted projects.
Uncertainty of information and absence offinan-
cial data. The screening decision amounts to an
investment decision, but one made in the absence
of concrete financial data [lo]. The richest and
most accurate data are typically found at the end
of product development, or better yet, during
commercialization [ 11. At the initial screening
stage, however, financial data are often missing
altogether, and where available, are probably
very uncertain [22]. Even qualitative data are
often subjective and fairly unreliable.
Multiple objectives and evaluation criteria. The
criteria used in the screening decision should re-
flect the corporation’s overall objectives, and in
particular, its goals for its new product program.
Not all of these criteria are quantifiable, nor are
they necessarily internally consistent. Also, both
the data available and the criteria are time variant,
i.e., change or become better defined as the pro-
ject progresses [2,7,14,19].
Realism and ease of use. The screening decision
method must be amenable to implementation.
The decision tool must be realistic, i.e., not re-
quire so many simplifying assumptions so as to
invalidate its results. And the tool must be easy to
use-data requirements, computational effort,
and interpretation of results must be consistent
with managers’ capabilities.
36 J PROD INNOV MANAG
1985;2:34-44
No one screening method available today meets all
the requirements for an ideal screening tool as outlined
above. Instead, a variety of methods have been devel-
oped, and each incorporates some of the desired fea-
tures. The four main approaches to initial screening
include [2,5,17]:
1. Benefit measurement models.
2. Economic models.
3. Portfolio selection models.
4. Market research approaches.
Benefit measurement models require a well-in-
formed respondent or group to provide subjective in-
puts regarding characteristics of the project under con-
sideration [3]. Such models are systemmatic
procedures for soliciting and integrating benefit data.
They typically avoid conventional economic inputs,
but rely more on subjective assessment of proxies for
new product success and payoffs, and fit with corporate
objectives. Included in this category are checklists, and
their extension, scoring models. In the latter, ratings of
a project’s attributes are sought and combined in a
weighted fashion to yield a numerical project score.
Economic models treat the idea screening decision
much like a conventional investment decision. Com-
putational approaches, such as payback period, break-
even analysis, return-on-investment, and discounted
cash flow methods, are used. To accommodate the un-
certainty of data, techniques of probability, including
Monte Carlo simulation, risk analysis, and decision
tree analysis, have been proposed. But at the idea
screening stage, economic models suffer because they
require considerable financial data as inputs when
often relatively little is known about the project. Thus,
such models are usually considered more relevant for
“known” projects (line extensions, product modifica-
tions, etc.), or at later stages of the new product
process.
Portfolio selection models view the screening deci-
sion as part of the total resource allocation problem.
Such techniques largely involve operations research
constrained optimization methods, such as linear, in-
teger, and dynamic programming [ 131. The objective is
to develop a portfolio of new and existing projects in
order to maximize an objective function, yet subject it
to a set of resource constraints. Because these mathe-
matical models require substantial data inputs, includ-
ing financial data on all projects, timing information,
resource needs, and availabilities, they are rarely used
PI.
Market research approaches are usually limited to
R. G. COOPER
relatively simple consumer products, such as packaged
goods. Such techniques assume that the critical criteria
for the GO/KILL decision solely involve the mar-
ketplace; technological and production issues are either
obvious or simple to solve. Given a market-based
screening decision, it makes sense to use a variety of
market research techniques, ranging from consumer
panels and focus groups to perceptual and preference
mapping, to screen product ideas.
Of all the dozens of screening models proposed,
benefit measurement approaches are generally recom-
mended for new product idea screening. Because only a
tentative commitment is required, and since available
information on the project is limited, benefit models
become the logical screening tool [23]. For example,
the Conference Board reports that about half the firms
they studied have set forth writen guidelines or rules for
project selection [ 161. Usually these are in the form of
checklists or scoring models. Souder investigated 26
project selection models and found that managers rated
scoring models best in terms of ease of use and cost to
implement [23]. Souder concludes that scoring models
are “highly suitable for preliminary screening deci-
sions where only gross distinctions are required among
projects. ”
Scoring Models: Their Shortcomings
In spite of their popularity, scoring models are plagued
by difficulties [20]. Such models rely on the subjective
ratings of managers, and hence data input may not be
very reliable. However, at the screening stage, man-
agement opinion is often the only data available. More-
over, ratings from several evaluators together with con-
fidence scores can be combined to yield a composite
and more reliable value for each input variable. The
premise here is that the “average” decision maker is
near optimal; unfortunately, none of us is ‘ ‘average. ’ ’
Other criticisms tend to be of a technical nature.
Often, scoring models are seen as oversimplifications,
since they attempt to reduce a complicated decision
situation to a product score [20]. A major deficiency is
the arbitrariness of items or checklist questions used,
and that importance weightings assigned to each criteri-
on are also arbitrarily determined. The selection of
these questions and weights are no doubt based on the
judgment and past experience of the model developer.
SELECTING WINNING NEW PRODUCT
However, his or her experience may be limited to a
handful of projects, while his/her ability to judge how
important each item is and to translate these into numer-
ical weights, may be limited. Freimar and Simon pro-
pose the use of linear discriminant analysis of a large
number of past successes and failures in order to identi-
fy the weights to attach to each screening variable [20].
Another weakness is the fact that many of the vari-
ables or items are not independent of each other. For
example, if one of the screening items is “com-
patibility with distribution channels,” then it certainly
is not independent from the “compatibility with cur-
rent products” measure. (Both items are taken from
O’Meara’s model [ 181). The result is that certain items
are double counted. Schocker, Gensch, and Simon note
that factor analysis of the many screening variables to a
subset of independent factors or dimensions could be
used to eliminate the interdependence of ratings [21].
The Advantages
In spite of these criticisms, the scoring model is perhaps
the best idea screening tool available. Proponents argue
that such a model has utility for a number of reasons: it
helps make a highly judgmental decision somewhat
more objective; it systematizes the review of projects; it
forces managers to subject each project to a consistent
and large set of review criteria; it focuses attention on
the most relevant issues; it requires management to
state goals and objectives clearly; it is easy to under-
stand and use; and it is generally applicable.
The NewProd Model
The NewProd screening model is essentially a scoring
model, but with several important differences. Like a
scoring model, it is based on the premise that a project’s
desirability, attractiveness, or eventual success can be
predicted by examining the profile of the project. That
is, there exists a “winning” or desirable profile that is
fairly predictive of product outcomes. As in most scor-
ing models, NewProd evaluators rate the project under
consideration on a large number of criteria; zero-to-ten
rating scales are used. These evaluators’ inputs are then
combined mathematically to yield a product score, and
in the case of NewProd, a likelihood of product suc-
cess.
J PROD INNOV MANAG 37
1985;2:34-44
The difference is that NewProd was derived from a
large number of past new product successes and fail-
ures. In short, the questions or items used and the
weights attached to these items are based on a statistical
analysis of almost 200 projects from 100 companies.
And the model has been validated, yielding a predictive
ability-ability to predict accurately a product success
or failure-of approximately 84%.
The Development of NewProd
Here’s how the NewProd model was derived. A total of
195 industrial new product cases from 102 firms was
identified. Half of these were commercial successes,
i.e., met or exceeded the acceptable financial return for
this type of investment. The other half had been
launched, but were subsequently rated as commercial
failures.
For each project, managers were asked to rate the
project on each of 80 characteristics. Zero-to-ten rating
scales were used. Of the 80 characteristics, a total of 48
were judged to be potentially useful screening criteria,
since they would be known at the outset of the project.
The 48 characteristics described such features of the
project as:
its marketplace; for example, market size,
growth, level of competition, etc.
the product advantage; for example, product
uniqueness, quality, superiority, etc.
the project-company fit in a number of key areas
ranging from distribution fit to technology re-
source compatibility.
the newness of the project to the firm; for exam-
ple, market newness, technological newness, etc.
and the project itself; for example, its magnitude,
complexity, determinateness, etc.
Next, these 48 characteristics were reduced to 13
underlying factors or dimensions, which were indepen-
dent of each other, yet captured the original 48 vari-
ables. Factor analysis was used, as suggested by
Schocker, Gensch, and Simon [21]. These 13 factors
are essentially composite variables comprised of the
original 48 variables, each variable with its own weight
or loading on each factor.
38 1PROD INNOV MANAG R. G. COOPER
1985;2:34-44

Next, an equation was developed between degree of Product Advantage

commercial success (or failure) and these 13 underly-
The product’s marketability is also important to suc-
ing dimensions. l Of the 13 dimensions, eight were
cess. For marketability, it is critical to achieve a differ-
linked to product outcomes in a significant way. Both
ential advantage either via the product’s design,
multiple regression and linear discriminant analysis
features, and quality, or by virtue of the product’s eco-
were used, and yielded essentially the same results.
nomics to the end user. Product Superiority is the most
The regression results were marginally better and were
important factor in the success equation, having a new
selected for use in the model. The eight key dimen-
product which:
sions, their weights or coefficients in the success equa-
tion, and typical questions or items that load on each of
the dimensions are shown in Table 1. is superior to competitors’ products in terms of
The resulting model was validated using a cross- meeting customer needs;
split half method. The original sample was randomly
split into two halves. One half was used to generate a has unique features for the user, not available on
model; the other half of the sample was used to test the competitive products;
model, i.e., see whether the model correctly predicted
a new product success or failure. The procedure was is higher quality than competitors’ products, e.g.,
repeated, but this time the halves of the sample were more reliable, lasts longer, tighter specs, etc.;
switched. Virtually identical models were obtained
from both halves; therefore, one is justified in combin- permits the customer to do a task he/she could not
ing the sample halves and deriving a combined model do with what was previously on the market;
(Table 1). Predictive abilities were excellent; the
model accurately predicted successes 82.6% of the reduces the customers’ costs; and
time and failures 86.0% of the time, for an overall
predictive ability of 84%. is a highly innovative product- the first of its
kind on the market.

Screening Criteria Product Economic Advantage for the user-the second

Market Criteria
A total of eight factors or underlying dimensions were
found to impact on new product outcomes (Table 1).
Two factors describe the market opportunity or market
attractiveness. The first of these captures the magni-
tude of the market opportunity: being in a high growth,
large, and high need market. The second is entering a
market where competitive intensity is low: few com-
petitors, little price competition, few new products,
and relatively static user needs. This latter factor
gauges the ease of (or lack of resistance to) exploiting
the market opportunity. Note that a third market de-
scriptor uncovered in the factor analysis-the exis-
tence of a dominant competitor with a loyal customer
base-is not decisive in determining product success or
failure.
’ “Degree of commercial success” was defined from a financial stand-
point: the degree to which the product’s profitability exceeded (or fell short
of) the acceptable profitability level for this type. of investment. A “minus
five” to “plus five” scale was used, where +5 = far exceeded the accept-
able profitability and -5 = fell far short of the acceptable level.
marketability factor-involves a lower price-for-value
product and customer cost reductions.
One other factor-namely product innovative-
ness-is not a dimension closely linked to success.
Note that product innovativeness was a dimension
identified in the factor analysis, but was not found to be
tied, either positively or negatively, to project out-
comes. Projects strong on this dimension involve high-
ly innovative, new-to-market products, the first into the
market with only a potential demand, and unique task
products. But in spite of their innovativeness, such
products fared no worse or better than less innovative
products.
Synergy Criteria
Project-company fit dimensions were also important to
product outcomes, Overall Project-Company Resource
Compatibility was the more important, and included
synergies in the areas of managerial skills, market re-
search talents, sales force and distribution resources,
SELECTING WINNING NEW PRODUCT J PROD INNOV MANAG 39
1985;2:34-44

Table 1. NewProd Screening Model: Key Factors and Weights”

Regression
coefficient
(weight of
Key factors or dimensions (factor name) factor) F value Variables or items loading on factor

product superiority, quality, and uniqueness 1.744 68.7 product is superior to competing products
product has unique features for user
product is higher quality than competitors
product does unique task for user
product reduces customers’ costs
product is innovative-first of its kind

overall project/co. resource compatibility 1.138 30.0 a good “fit” between needs of project and company
resource base in terms of:
managerial skills
marketing research skills
salesforceidistribution resources
advertising/promo resources
financial resources
engineering skills
R&D resources
production resources

market need, growth, and size 0.801 12.5 high need level by customers for product class
large market ($ volume)
fast growing market

economic advantage of product to end user 0.722 10.2 product reduces customers’ costs
product is priced lower than competing products

newness to the firm (negative) -0.354 2.9 project takes the firm into new areas for firm such as:
new product class to company
new salesforceidistribution
new types of users’ needs served
new customers to company
new competitors to company
new product technology to firm
new production process to firm

technological resource compatibility 0.342 2.5 a good “fit” between needs of project and company
resource base in terms of:
R&D resources & skills
engineering skills & resources

market competitiveness (negative) -0.301 2.0 intense price competition in market

highly competitive market
many competitors
many new product intros into market
changing user needs

product scope 0.225 0.9 a market-derived new product idea

not a custom product, i.e., more mass appeal
a mass market for product (as opposed to one or a few
customers)

constant 0.328

“R2 = 0.420. Adjusted R* = 0.395. F(8,186) = 16.83. Std error = 2.73

40 J PROD INNOV MANAG
1985:2:34-44
advertising and promotion resources, financial re-
sources, R&D and engineering talents, and production
capabilities.
Newness to the Firm is a negative factor for project
outcomes. Projects involving a new product class to the
company, new distribution and salesforce approaches,
new types of customer needs, new advertising and pro-
motion methods, a new clientele, new competitors,
new product technology, or a new production process
for the firm fare more poorly.
The final important project-company fit dimension
is Technological Resource Compatibility, a positive
factor. Technologically compatible projects are those
that fit well into the firm’s existing base in terms of
R&D resources and skills, and engineering resources
and skills. But note that production and technological
newness (also uncovered in the factor analysis)-pro-
jects involving new production processes and technolo-
gies to the firm-has no impact on product outcomes.
Other Criteria
A group of factors were identified that we later called
‘ ‘project descriptors. ’ ’ Most of these, including Prod-
uct Technical Complexity and Product Determinate-
ness (how clear the product specification and tech-
nical solution are at the outset of the project), have no
link to product outcomes. Only one entered the success
equation, but in a fairly weak manner, namely Product
Scope: custom products aimed at one or a few custom-
ers fare more poorly than do mass-market, broad-ap-
peal, more standardized new products.
Using the NewProd Approach
The NewProd model has been employed in a number
of companies. Initial use has typically been to validate
or to check out the use of the model and to determine
its predictive ability. For example, in one firm, eight
new product projects were scored by up to ten eval-
uators. All eight products were eventually launched,
and their market results compared to the NewProd pre-
dictions. In all eight cases, the model accurately pre-
dicted the product’s outcome: strong success; margin-
al success; marginal failure; or strong failure. (Note
that NewProd predicted a strong failure in one of the
R. G. COOPER
cases, but commitment to the project was so strong
that it was launched in spite of the negative prognosis;
and the outcome was as predicted, i.e., a strong
failure .)
Developing Your Own Model
The methodology that we employed to derive the New-
Prod model can also be used by organizations in order
to develop their own screening models. The basic steps
are:
1. Develop a reasonable set of screening items or ques-
tions. The items we used in NewProd are probably a
good place to begin.
2. Identify a sample of past new product successes and
failures within the corporation.
3 Request one or more evaluators to rate each of these
past projects on each of the criteria developed in
item 1.
4. Using appropriate statistical techniques, e.g., factor
analysis, multiple regression, and/or linear discrim-
inant analysis, derive a subset of key underlying
dimensions and a success equation.
5. Validate the model. Use either a cross split half
method (described above) or better yet, some new
test cases (as we have subsequently done).
6. Develop the computer software to handle the eval-
uator’s inputs. (Both batch and user friendly in-
teractive programs for an IBM-PC have been writ-
ten for NewProd.)
7. Establish a procedure within the firm to facilitate the
use of the model, beginning with a teaching session
in a seminar format.
A number of companies are presently developing
their own versions of the NewProd model, using the
above procedure. While NewProd was derived for in-
dustrial products, such approaches also have ap-
plicability for other types of products. A major pack-
aged goods firm, an organization involved in the
production of television shows, and a pharmaceutical
company, are at the early stages of similar model devel-
opments using the NewProd methodology.
The NewProd model, as presented here, has also
been operationalized for public use (see author’s note in
box inset). The procedure is as follows:
1. Up to ten evaluators are selected to review a pro-
posed new product project. Some of these eval-
uators are closely involved in the project; others are
SELECTING WINNING NEW PRODUCT J PROD INNOV MANAG 41
1985;2:34-44

Table 2. Factor Scores: A Profile of the Project

Mean
weighted Std.
Factor name Evaluator 1 Evaluator 2 Evaluator 3 evaluator Deviation

1. Product superiority/quality 1.17 1.11 1.33 1.19 0.10

2. Economic advtg to user -0.25 -0.44 -0.98 -0.49 0.31
3. Overall company-project fit -0.05 0.16 -0.61 -0.16 0.32
4. Technological compatability -0.20 0.04 -0.55 -0.19 0.24
5. Newness to the firm -0.36 -0.15 -0.22 -0.24 0.09
6. Market need, growth, & size 0.88 1.36 0.01 0.88 0.56
7. Market competitiveness -2.05 -2.11 -1.03 -1.82 0.50
8. Product scope 1 .oo 1.05 0.60 0.90 0.20

chosen because they are well informed on the topic,

but not directly connected to the project. Most users
of the model attempt to put together a multi-
disciplinary evaluation team for each project. For
example, one chemical company, which has had
considerable experience with NewProd, brings to-
gether evaluators from Sales, Marketing, Product
Management, Engineering, R&D, Production, and
Finance.
2. A preliminary briefing session is held, where the
proposed product and project is described to the
evaluators. This meeting is descriptive and not eval-
uative in nature, i.e., evaluators are permitted to ask
questions about the project, but are discouraged
from offering opinions about its pros and cons.
3.
Each evaluator then independently rates the project
on each of the 48 items or questions. Items are
presented in statement form, and the evaluator indi-
cates whether the statement describes the project or
not (disagree/agree: 0 to 10 scales). In addition, for
each item, the evaluator indicates how confident he
or she was in providing the rating (again a 0 to 10
confidence score).
4. The model administrator collects the evaluation
forms and forwards them for NewProd data pro-
cessing .
5. Upon receipt of the computer output, a debriefing
meeting is held. Here, the team of evaluators review
each others’ inputs, flagging points of disagree-
ment. The scores on each of the important eight
underlying factors are discussed, noting the positive
or negative impact of each on the projects’ merits.
Finally the product score and likelihood of success
for each evaluator and the “average evaluator” are
reviewed.
The following product screening case best illustrates
this final debriefing or results interpretation session.
Example
The example used is the evaluation of a new A.C.
motor control. 2 In this case, three evaluators answered
the 48 screening questions and indicated their confi-
dences on each of the 48. The evaluators’ input data
was then displayed, together with the scores of a
‘ ‘mean weighted evaluator, ’ ’ based on the inputs of the
three people (table not shown).
Next, the evaluators’ 48 ratings were reduced to the
eight dimensions or factors to yield a profile of the
project (Table 2). Here, factor scores are shown on a
scale, such that zero is neutral, and high values are plus
or minus one. So from Table 2, and reading down the
“mean evaluator column” we see that the new product:
is truly a superior product, with real benefits to
the user (factor 1: mean score = 1.19)
is entering a very uncompetitive market (factor 7:
mean score = - 1.82)
is entering an attractive market-growth, poten-
tial, size, etc. (factor 6: mean score = 0.88)
and so on.
The “pros” and “cons” of the project are identified
in Table 3. Here the impact of each element in the
product’s profile is shown. For example, the strongest
positive feature of this project is the product superiority
(factor l), while its weakest facet is the lack of an
economic advantage to the end-user (factor 2).
2Disguised project and names.
42 1PROD INNOV MANAG R. G. COOPER
1985;2:34-44

Table 3. Factor Scores and Impacts: Factor Table 4. Overall Project Ratings: Project Scores
Impact Table and Probabilities

Mean Evaluator Name Score Probability (%)

Factor name evaluator Impact
1 R. Booth 3.71 91.3
1. Product superiority/quality 1.19 strong positive 2 C. Clayton 4.12 93.5
2. Economic advtg to user -0.49 negative 3 G. Franks 1.55 71.5
3. Overall company-project fit -0.16 marginal (negative)
MN Mean wt’d eval 3.32 88.8
4. Technological compatability -0.19 marginal (negative)
5. Newness to the firm -0.24 marginal (positive)
Marginal factors
6. Market need, growth, & size 0.88 strong positive
Pros of the project Cons of the project (from positive to
7. Market competitiveness - 1.82 positive
(in descending order) (in descending order) negative)
8. Product scope 0.90 marginal (positive)

1. Product superi- 2. Economic advtg 8. Product scope

ority/quality of user 5. Newness to the
Probability of Success 6. Market need, firm
growth, & size 4. Technology
Finally, in Table 4, the product scores are computed 7. Market com- compatability
(based on the regression equation of Table 1). These petitiveness 3. Overall company-
scores are usually in the -5 to +5 range, where + 5 project fit

means “a great financial success.” From these scores,

the percent likelihood of success is computed, again by
calibrating against our past cases-the almost 200
known successes and failures. From Table 4 we see
that all evaluators rated the project positively; that the
evaluators 1 and 2 were extremely optimistic on the
project (success likelihoods of 91% and 93%); that
evaluator 3 was more pessimistic, with a resulting suc-
cess probability of 7 1%; and that overall, the likelihood
of success was 89%-a very positive result. Also in
Table 4, the pros and cons are again displayed, this time
in order of impact on the project.
Diagnosis
In a debriefing meeting, involving all evaluators, dis-
cussion focused on diagnostic questions, such as:
. Why did evaluators 1 and 2 differ so much from
evaluator 3? (All three evaluators were present in
the meeting. )
. What are the main “pros” of the project? What is
the relative impact of each? And, are we reasona-
bly confident about our assessments of these
positive features?
. What are the “cons” of the project? How damag-
ing are they? And most important, can we do
anything to rectify, or at least, diminish them?
The various tables provided by the computer
(not all shown) help in this diagnostic stage.
The Model in Use
Besides yielding a product score and likelihood of suc-
cess, a scoring model, such as NewProd, provides
important diagnostic outputs. Indeed, some users claim
that the diagnostics are more valuable than the product
score and success liklihood.
Experience in using NewProd shows that only a
handful of projects are clearly black and white situa-
tions. Few projects are rated very negatively, wherein
the great majority of factors are negative and the
liklihood of success is 30% or less. Very positive pro-
jects are also in a minority: projects where all important
factors are positive, where the success likelihood is
70% or better, and where the variance among eval-
uators is small.
More often than not, projects receive a mixed eval-
uation, i.e. , some positive features, some negative fea-
tures, a resulting success likelihood between 30% and
70%) and some variance between evaluators. And here
is where the diagnostic capabilities of such a model
become important. Some examples:
. In the debriefing meeting, evaluators look for
areas of disagreement in the input variables. For
example, in the most current version of the soft-
model ware, a list of input variables featuring high vari-
ances or disagreements among evaluators is dis-
SELECTING WINNING NEW PRODUCT
played. These high variance items become the
topics of the meeting agenda. The meeting fo-
cuses on questions such as: why was there so
much disagreement amongst us on item number
X or why did evaluator A rate item Y so high, and
evaluator B rate that item so low?
Usually the reasons for the disagreement are
readily identified. For example, in one evaluation
of an industrial chemical, two of the evaluators
assumed a positioning strategy and niche target
market that avoided a head-on confrontation with
major competitors; the other three evaluators
rated the project assuming a nose-to-nose posi-
tioning strategy with competitors. The input rat-
ings and resulting prognoses were quite different
between these two groups of evaluators. But the
reasons for these differences became quickly ap-
parent, and a discussion on positioning strategy
ensued. The product was eventually launched,
targeted at the niche segment, and as predicted,
became a success. In other cases, discussion of
the inputs that feature high variances among eval-
uators reveals that one or more evaluators has had
first-hand knowledge that he or she then shares
with the group. So the debriefing session be-
comes a knowledge-sharing forum, with the
group moving towards a common knowledge
base. This sharing of experience is particularly
fruitful when the group is multidisciplinary.
l The profile of the project on each of the eight key
factors helps to identify and prioritize the pros
and cons of the project. The relative impacts-
positive or negative-of these factors provide
key insights into needed action. Three typical
questions on a negative evaluation, for example,
include the following:
Why did the project come out relatively negatively?
What were the “killer factors”? And most important,
can we do anything to improve these negative factors?
A Planning Tool
The outcome of this impact analysis is very often a
study or task to correct a highly negative feature of the
project, or to confirm a critical positive feature.
For example, in an evaluation of new building mate-
rial, the product fared moderately positive on most of
the eight screening factors. Only on Product Superi-
J PROD INNOV MANAG 43
1985;2:34-44
ority was the product rated poorly. And this one factor
proved to be a damaging one to the overall assessment
of the project. Discussions ensued and the R&D project
manager confessed that it had been his goal to develop a
product that would simply equal a competitor’s prod-
uct. The outcome of the debriefing meeting was a rec-
ognition that product superiority was essential to the
product’s success. And two studies were immediately
commissioned to achieve this: an end-user interview
study to identify weaknesses in the competitive product
as perceived by potential customers; and in-house
creativity sessions that focused on ways that the pro-
posed new product could be significantly improved.
Thus the output of a well-conceived screening model is
not only a GO/KILL evaluation, but most importantly,
an indication of what needs to be done next in the event
of a GO or tentative project.
A final benefit of a systematic screening procedure is
the payoffs from involving evaluators from different
functional areas within the firm. In one company, typ-
ical new product projects had been screened and re-
viewed by an R&D committee. Not surprisingly, there
had been many complaints from the operating divisions
about the types of new products that eventually found
their way out the lab and into the divisions. The intro-
duction of the NewProd system forced the involvement
of people from the operating divisions in the screening
decision, but in a relatively painless and efficient man-
ner. Not only did better screening decisions result from
these multidisciplinary inputs, but a thorny political
problem was solved.
Learning from Experience
New product success can never be guaranteed. Indeed
new product development is perhaps the riskiest en-
deavor of the modem corporation. But new product
development must continue if the corporation is to
prosper.
Project selection is pivotal to effective risk reduction
in new development. A scoring model, such as New-
Prod, can be a valuable tool in screening new product
proposals. Moreover the diagnostics of such an evalua-
tion help guide the project by identifying key questions,
issues, and tasks to be undertaken.
We can always learn from our past triumphs and
disasters. An empirically derived screening model,
44 JPRODINNOVMANAG
1985;2:34-44
based on these past experiences, is simply a convenient
way of translating these experiences into a management
decision tool, which promises to yield better results
than traditional approaches.
References
1. Albala, America. Stage approach for the evaluation and selection of
R&D projects. IEEE Transactions on Engineering Management
EM-22:153-162 (Nov 1975).
2. Baker, N. R. R&D project selection models: an assessment. IEEE
Transactions on Engineering Management EM-2 1: 165% 17 1 (Nov
1974).
3. Baker, N. R. and Freeland, James. Recent advances in R&D benefit
measurement and project selection methods. Management Science
21:11&1-1175 (1975).
4. Baker, N. R. and Pound, W. R&D project selection: where we stand.
IEEE Transactions on Engineering Management EM- 11: 124- 134
(1964).
5. Booz, Allen and Hamilton. New Product Managementfor the 1980’s.
New York: Booz, Allen and Hamilton, 1982.
6. Calantone, Roger and Cooper, Robert G. New product scenarios: pros-
pects for success. Journal of Marketing 45 (Spring 1981).
7. Charles, A. and Stedry, A. C. Chance constrained model for real-time
control in research and development management. Management Sci-
ence 12:B353-62 (April 1966).
8. Cooper, Robert G. Identify industrial new product success: project
NewProd. Industrial Marketing Management 8: 124- 135 (1979).
9. Cooper, Robert G. The dimensions of industrial new product success
and failure. Journal of Marketing 43 (Summer 1979).
10. Cooper, Robert G. An empirically derived new product project
selection model. IEEE Transactions on Engineering Management
EM-28:54-61 (Aug 1981).
R.G. COOPER
11. Cooper, Robert G. The impact of new product strategies. Zndustrial
Marketing Management 121243-256 (1984).
12. Crawford, C. Merle. New product failure rates-facts and fallacies.
Research Management 9-13 (Sept 1979).
13. Gear, A. E., Lockett, A. C., and Pearson, A. W. Analysis of some
portfolio selection models for R&D. IEEE Transactions on Engineer-
ing Management EM-1866-76 (May 1971).
14. Glotskey, G. R. Research on a research department: an analysis of
economic decisions on projects. IEEE Transactions on Engineering
Management EM-7:166-172 (Dee 1960).
15. Hopkins, David S. New Product Winners and Losers. Conference
Board Report #773, 1980.
16. McGuire, E. Patrick. Evaluating New-Product Proposals. New York:
Conference Board Report No. 604, 1973.
17. Moore, John R. Jr. and Baker, Norman R. Computational analysis of
scoring models for R&D project selection. Management Science
16:B212-232 (Dee 1969).
18. O’Meara, J. T. Jr. Selecting profitable products. Harvard Business
Review 83-89 (Jan-Feb 1961).
19. Rubenstein, A. H. Research project selection (an industrial researcher’s
view). Research Management 71225-233 (May 1964).
20. Simon, L. S. and Freimar, M. Analytical Marketing. New York: Har-
court, Brace & World, Inc., 1970.
21. Schocker, A. D., Gensch, D., and Simon, L. S. Toward the improve-
ment of new product search and screening. In: 1969 Fall Conference
Proceedings, Amer. Marketing Assoc., P. R. McDonald (ed.). 1969,
pp. 168-175.
22. Souder, W. E. A system for using R&D project evaluation methods.
Research Management 21129-37 (Sept 78).
23. Souder, W. E. A scoring methodology for assessing the suitability of
management science models. Chemical Engineering 123- 126 (Ott 28,
1963).