Management control of new product development projects

While prescriptions abound of techniques that should be used to control new product projects, usage of these techniques has been found to be quite low. The purpose of the research reported in this paper is to identify the management control systems that are used to control new product projects and the characteristics of effective management control systems. The results of our recently completed study of the management control systems used in twelve new product development projects indicates that the systems used in successful new product projects were different than those used in less successful projects. We found that in more successful new product projects: 1) more dialogue regarding the goals for the project took place between different levels of management and different departments, both initially and throughout the course of the project; 2) managers from the project leader on up were in constant touch with how a project was progressing; and finally, 3) projects were led by individuals who were concerned not only with technical issues but also with the entire project, e.g, with communicating with and involving other departments, and with the impact of technical decisions on the manufacturability and salability of the product. We also found that on all projects individual rewards were not directly tied to project performance or to a product's commercial success. Implications of our findings for managers of development departments are also discussed.