Framework development for optimizing responses to NPD risks

Abstract

A firm should maintain or expand its competitive advantage through new product development (NPD) efforts for better functionality and performance of its products with a faster speed of development due to shorter cycles in technological innovation. However, there are challenging barriers for a successful NPD such as high development costs and schedule tightness. The barriers can be strong when various risk factors appear randomly during an NPD project. Therefore, the types of risk factors and their frequencies should be predicted in advance, and also their impact must be estimated to be able to respond effectively and efficiently. This study suggests new methodologies by which optimized responses to risk factors are determined through the computation of the impact values of the risk factors, the probability of risk factor occurrences, and the integrated risk degree for the entire NPD project. Systematic approaches for handling either expected or unexpected risk factors are required for successful NPD projects. This study provides the fundamentals for establishing a systematic management framework for handling risk factors in NPD.

Keywords:

• NPD project risks
• impact value
• integrated risk degree
• optimal responses