Want to Have a Successful NPD Alliance?Follow a Four Stage Process

This content relates to : NEW PRODUCT & SERVICE DEVELOPMENT

HIGHLIGHTS

Strategic alliances can help alleviate the costs and risks associated with NPD. 

Successful alliances involve four stages: awareness, exploration, commitment, and dissolution.

Understanding and adopting this four-stage process can lead to successful NPD results for all partners.

Murray R. Millson

Monterey Bay 

New Product Development (NPD) can be an expensive and risky endeavor. But several forms of cooperative NPD strategies and organizations are available to support new product development processes in innovative/entrepreneurial organizations. In particular, strategic alliances, i.e., formal or informal “cooperative” organizational arrangements, can facilitate the joint development, launch, and commercialization of new products. 

NPD alliance formation is not a discrete event but a maturation process that involves four process stages which are executed over time. The first stage of the NPD alliance maturation process involves the new product developers’ awareness of the need for additional information and knowledge that cannot be found in the new product developing organization. The awareness stage can foster the need to form an alliance with other organizations which can generate a search for potential alliance partners. 

The second stage of the NPD alliance maturation process is entitled exploration. During the exploration stage the organization’s NPD needs must be clearly understood, potential partners must be identified, potential alliance partner’s organizational structures must be scrutinized, knowledge of potential partners’ organizational sizes need to be determined, and the investigation of the day-to-day management processes of potential alliance partners need to be investigated. 

The third stage of the NPD alliance maturation process involves the developing and consummating of an alliance contract which occurs in the commitment stage. The final stage of the NPD alliance maturation process is known as dissolution. During this final stage, the two or more NPD developing organizations will execute an eventual and amicable conclusion to the need for their partnership. Understanding the alliance formation and maturation process can lead to successful NPD results for all partners and provide a viable alternative to the traditional in-house, do-it-all-alone NPD process. 

Author: 

Murray R. Millson, ’93 Ph.D. 

Professor of Marketing, College of Business, California State University, Monterey Bay 

To learn more, read: 

Millson, Murray R., S.P. Raj, David Wilemon (1996), “Strategic Partnering for Developing New Products,” Research Technology Management, 39 (3), 41-49.