Publication Type

Journal Article

Publication Date

3-2002

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.

Keywords

New product development, Design flexibility, Technology selection

Discipline

Advertising and Promotion Management | Marketing | Technology and Innovation

Research Areas

Operations Management

Publication

Management Science

Volume

48

Issue

3

First Page

313

Last Page

327

ISSN

0025-1909

Identifier

10.1287/mnsc.48.3.313.7728

Publisher

INFORMS (Institute for Operations Research and Management Sciences)

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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