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Innovation and New Product Development (NPD) are often closely tied together as the former is frequently a key element in the latter. The term “innovation” refers to the generation of new ideas and the work of people to find ways to implement those ideas in practical ways. New product development occurs over time and covers the various stages necessary for a business to conceive and create a new product, either a tangible good or an intangible service. Innovation and new product development are often synergistic forces, as innovative ideas spur NPD, which in turn can inspire further advancements within an industry.
To fully understand the connection between innovation and new product development, it is important to know what each concept means. Innovation can be a major technological leap, such as the introduction of a completely new product that has no discernible competition. Simpler forms of innovation can include new developments within an existing market, which alter the way in which people use and view such products.
New Product Development is the process by which a new saleable good or service is conceived and created by a company. NPD can be a long process, or one that is fairly short, and includes initial brainstorming, prototyping and development, and the eventual market launch of a product. The first stage of NPD is often where innovation and new product development coincide, as brainstorming and the design of a new product can include major advancements within an industry. These types of developments may continue throughout the entire NPD cycle, and are often integral to the creation and release of a successful product.
Innovation and new product development are not mutually inclusive, however. A company can create a new product without inherently innovating upon established ideas and products. This can be a new version of an existing product that is updated but the included features are not necessarily ground breaking. A company may choose to release a product that matches options that are available from its competitors, but with few or no features beyond them.
The importance of innovation and new product development is often what sets certain companies apart within an industry. Market leaders are frequently those businesses that are the first to create new technology or to adapt to changing needs of customers. Such innovation can be expensive and time-consuming, however, so it may be a financial risk. The rewards for successful advancements in a market can be numerous, so the risk is often worthwhile.