Survey Says Superior Products May Be Bad

For Additional Information:
Dr. William Souder, (205) 890-6407
[email protected]
Phillip Gentry, (205) 890-6414
[email protected]

Survey says superior products may be bad

Relatively small U.S. companies probably should not invest the money that is needed to develop industrial products which are technically superior and have superior performance. That apparently counterintuitive finding is from an eight-year study of more than 150 new electronics products developed by 50 companies in the U.S. and Japan. Of those companies, 20 were small U.S. firms producing electronic components.

The study by Dr. William Souder, eminent scholar in management at The University of Alabama in Huntsville, and Dr. X. Michael Song of Michigan State University found some common traits among successful products developed by the small firms, the Fortune 500 firms and the large Japanese companies. Don't introduce radically innovative products in well-known, established markets, for instance.When they looked at other parameters, however, they found some surprising differences. Two examples are technical and performance superiority. In well-known, established markets, superior technology and performance seems to neither help nor hinder the success of products introduced by the larger companies.When the small companies developed superior products for those same types of markets, however, their success rate was substantially lower than the companies' expectations.

"These were surprising results," Souder said. "You would think that having a superior product would positively effect your chances of success. But exactly the opposite is the case.

"We found that in these low uncertainty markets there are typically several competent competitors, all using the same industry standards. Purchasing agents at the companies which buy these electronic components prefer technically familiar products which meet, rather than exceed, the specifications. In that environment, these small companies have to be careful not to over design their products."

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