Determinants of Profit as the Criterion for the Evaluation of the Product Development Process

Abstract

There are three main elements of the product development process that are suitable for evaluation: the means employed, the activities and the outcomes. Most available methods provide an evaluation of the outcomes, but this can only provide retrospective information. There is a need to be able to evaluate an existing or proposed process to determine whether it will successfully meet the objectives of a particular project. This can be done by evaluating the planned activities of the process for their effectiveness in addressing the important issues in the project. These issues are called the “determinants of profit”, and a survey and trials in industry show that they provide an effective criterion against which companies can evaluate the activities of their product development process. The determinants of profit can be divided into enabling determinants, which must be addressed above a threshold value of effectiveness in order to produce a viable product, and differentiating determinants, which provide scope for competitive advantage.