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NEW PRODUCT DEVELOPMENT

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New Product Development
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New Product Development:

Process Benchmarks and Performance Metrics

Copyright © 2011 by Product Development Institute and APQC

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission.

Stage-Gate is a registered trademark of the Product Development Institute

ISBN 978-0-9732827-3-3

ISBN 978-1-60197-171-5

Publishers: Product Development Institute and APQC

Author: Dr. Scott J. Edgett

Contributors: Rachel Brill, Marisa Brown, Rebecca Colley, and Erin Williams

For more information please contact:

Product Development Institute APQC

Product Development Institute APQC

1425 Osprey Drive, Suite 201 123 North Post Oak Ln, Third Floor
Ancaster • Ontario • L9G 4V5 Houston, TX 77024-7797
Canada +1-713-681-4020 • 800-776-9676
+1-905-304-8798 [email protected]
www.prod-dev.com www.apqc.org

For information regarding other publications by the author, seminars, and Stage-Gate solutions
please visit www.stage-gate.com.

For information regarding other publications and research conducted by the APQC please visit
www.apqc.org.

NEW PRODUCT DEVELOPMENT

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New Product Development
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Table of Contents
1. Introduction 7
1.1 The Quest for Best Practices in Product Innovation 7
1.2 The Key Research Questions 8
1.3 Topic Areas Studied 8
1.4 How the Benchmarking Research Was Undertaken 9
1.5 Organization of the Results 12

2. New Product Performance Metrics 13

2.1 Percentage of Revenues and Profits from New Products 13
2.2 Success, Fail and Kill Rates 14
2.3 Time to Market 16
2.4 On Time and On Budget 17
2.5 New Product Development (NPD) Projects Meeting Objectives 18
2.6 Business Entity Performance 20
2.7 Performance Metrics Used to Measure Project and NPD Program 21
2.8 Defining and Identifying the Top Performers 24
2.9 How the Best Versus Worst Businesses Fare in Terms of Performance Metrics 25
2.10 Types of New Products Developed 27

3. The Idea-to-Launch New Product Process and Practices 30

3.1 A Systematic New Product Process 30
3.2 Key Upfront Activities that are Built into the NPD Process 36
3.3 Gatekeeper Governance Practices 37
3.4 Quality of Your Gate Deliverables 40
3.5 Improving Your Gate Practices 42

4. The Impact of People 44

4.1 The Way NPD Project Teams are Organized and Lead 44
4.2 How to Handle Project Team Management 46
4.3 Senior Leadership Support 49
4.4 The Role of the Process Manager 50

5. Portfolio Management—A Special Insert 52

5.1 Portfolio Management 52

6. Conclusions and Recommendations 57

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Appendices
A. In-Depth Case Studies
1. Air Products and Chemicals, Inc. 61
2. Ashland, Inc. 77
3. Becton, Dickinson and Company (BD) 90
4. Electro Scientific Industries, Inc. (ESI) 103
5. EXFO 114

B. Selected Data Charts

Section 1: Organizational Characteristics 138
Section 2: Governance 147
Section 3: Culture and People 150
Section 4: The NPD Process 153
Section 5: New Product Performance 168
Section 6: Tools and Systems to Support NPD 175

References and Endnotes 177

About the Author 179

About the Product Development Institute and APQC 180

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Exhibits
1.1 The Sample—Industry Breakdown 11
1.2 Selected Characteristics of Businesses in the Sample 12
2.1 Percentage of Revenues & Profits from New Products 14
2.2 Success, Fail and Kill Rates—The Average Business 15
2.3 Success, Fail and Kill Rates—Top 25% vs. Bottom 25% 15
2.4 Time to Market (Idea to Launch Months) 16
2.5 Percent of Projects On Time, On Budget—Average Business 17
2.6 Projects On Time, On Budget—Top 25% vs. Bottom 25% 18
2.7 Percent of Projects Meeting Objectives 19
2.8 Additional Performance Metrics—The Average Business 20
2.9 How Businesses Fare in Terms of Performance Metrics 21
2.10 Key Measures Used to Define New Product Success or Failure 23
2.11 Key Indicators Used to Measure the Total New Product Program 24
2.12 Performance Metrics Results—The Best vs. Worst Performers 26
2.13 Performance Metrics—The Best vs. Worst Performers 27
2.14 Breakdown of Projects by Project Type for the Average Business 28
2.15 Breakdown of Projects by Project Type: Best 25% vs. Worst 25% of Performers 29
3.1 Whether Businesses Have a Systematic NPD Process in Place 32
3.2 Impact of Having a Systematic New Product Process in Place 34
3.3 How Business Performs on Critical Pre-Development Activities 37
3.4 Gatekeeping/Governance Approaches 38
3.5 How Effective are the Gates 40
3.6 Gate Deliverables 41
4.1 Primary Approach to Establishing Project Teams 45
4.2 NPD Project Team support—Best vs. Worst 46
4.3 Who Leads the New Product Development Teams 47
4.4 Senior Leadership Support—Best vs. Worst 49
4.5 Types of NPD Training Offered 50
5.1 How Businesses Fare on Portfolio Management 54
5.2 Impact of Portfolio Management—Best vs. Worst 54

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1. Introduction
1.1 THE QUE ST F OR BE ST PR ACTI CE S I N PR OD U CT INNOV AT I ON

As organizations try to move forward through what will likely be a long and bumpy economic
recovery, two key imperatives are emerging for those of us with an eye on creating future value for
our organizations.
1. We cannot manage the past.
2. In every industry, innovation is moving forward whether or not your organization is moving
with it.

As we know, the nature of the recovery, or the “new normal”, differs depending upon your industry
and the different parts of the world in which your customers are based. Still, the above principles
apply.

So, given the need to keep innovating despite resource restraints, what are other companies doing to
keep moving ahead? And what does it mean for new product development (NPD) efforts?

In this study, we benchmarked what organizations are currently doing, what best practices are, and
provide a baseline that you can use to compare against your organization’s capabilities. A number of
key themes are benchmarked including performance measures and metrics, NPD process standards
and activities, governance (gatekeeping), and culture.

For example, a complete evaluation of the performance measures that companies are using and the
typical results achieved provide a solid baseline to compare to your organization’s performance. We
gathered numerous NPD-related performance metrics including sales, profit, speed to market, and
performance versus budget. Hence, this report provides metrics that compare company or business
unit level product innovation performance and also evaluates performance at the project level.
Similarly, a detailed examination was undertaken of NPD activities at both an organizational level
(process standards) and at the project execution level (the type of activities occurring, the quality, and
their impact). Finally, we measured some aspects of culture to learn how organizations leverage
teams and support them to improve organizational capability as well as the role of the NPD process
manager.

The key challenge, of course, is how to do all of this effectively and repeatedly. In this report, we
share how best-practice organizations support product innovation processes that deliver results. The
findings present an interesting picture of what these organizations do and how they developed and
continue to manage their processes. We hope these best practices will help your organization
improve its performance in this important endeavor of managing your new product development
efforts.
NEW PRODUCT DEVELOPMENT
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1.2 T HE KEY RE SEARCH QUE STI ONS

This investigation addresses four main questions in new product development:
1. Metrics: How are businesses performing in terms of their new product development efforts?
For example: How successful are they? Are they profitable? What percentage of sales and
profits comes from new products? What types of innovation are undertaken? And, at the
project level: what metrics are used to gauge how project teams are performing against
budgets and timelines?

2. NPD process: How are businesses faring on a number of practices that have been identified
over the years as positive drivers of performance? For example: Do businesses really have a
new product development process in place? Is it working? Do the early pre-development
activities impact the ultimate success of the project?

3. Gatekeeping and governance: What practices are used? How effective are gatekeeping practices?
What is the impact on success?

4. Best vs. worst companies: What are the best- or top-performing businesses doing differently
from the rest? What are some of the details and examples of best practices? How have
companies sought to leverage the people side of innovation? And additional questions.

1.3 T OPI C ARE AS ST UD IE D

Previous research has identified a number of factors that are proposed to drive new product
performance1. These factors provide the conceptual framework and basis for the current study. The
ten main topic areas studied include:

Performance Metrics:
1. Product innovation metrics at the business unit level

2. The type of projects undertaken—the portfolio breakdown

3. Metrics used to gauge NPD performance at the project level

4. Differences in performance between top performing companies (top 25 percent), and the
poor performing companies (bottom 25 percent)

The Idea-to-Launch New Product Process and Practices:

5. The business’s NPD process—the idea-to-launch or stage-gate process—and its elements

6. Best practices embedded within the NPD process

7. Quality of execution of key activities in typical new product development projects/programs

8. The quality of up-front activities (before development begins)

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9. The effectiveness of Gatekeeping and Governance practices including the quality of gate
deliverables and their quality

10. The impact of teams, leadership, and process management.

Each of these 10 key topic areas has a number of sub-items, so that a total of 68 practices, methods,
and approaches were researched.

NPD performance metrics are always a question of interest as organizations strive to benchmark
themselves against others to determine if their performance standards are acceptable or not. In this
study the performance of businesses’ new product development efforts—their total NPD
programs—was also measured. Note that NPD performance is a multi-dimensional concept, so
multiple measures of performance are used in this study. These performance measures include:

 Percentage of new products meeting sales, profit, and market share objectives (3 measures)
 Success, failure, and kill rates of NPD projects (3 measures)
 Proportion of NPD projects on budget and on schedule (2 measures)
 Average slip rates for projects behind schedule
 Percentage of the business’s sales and profits generated from new products (2 measures)
 Overall profitability of the business’s total new product efforts relative to spending
 Time to market
 Whether the business’s total NPD program has met or exceeded its sales and profit
objectives (over the last three years)
 The success and profitability of the business’s total NPD program (over the last three years)
 Whether the business has been able to reduce product development cycle time—
development-to-launch time—significantly over the last three years
 Other key indicators used to measure performance.
From these multiple performance metrics, top performing performance dimensions were created
which enable us to identify the Best Performers in NPD.

1.4 H OW THE BENCHMARKI NG RE SE AR CH W AS U NDER TAKE N

The research was undertaken jointly by the American Productivity & Quality Center (APQC) and the
Product Development Institute (PDI) with the author as subject matter expert. The study used
APQC’s standard and proven benchmarking methodology, including both qualitative and
quantitative methods.

Qualitative: Site visits were organized with five companies previously identified as having best
practices in new product development in place. The APQC research team consisted of the subject
matter expert, a number of representatives from the sponsor companies, and APQC personnel who
conducted the meetings. These on-sites visits were based on a detailed interview guide or
questionnaire, which covers essentially the same 10 topics as listed in Section 1.3.

NEW PRODUCT DEVELOPMENT

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New Product Development
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The following five companies were visited.

 Air Products and Chemicals, Inc. (Performance Materials Division) is engaged in high-
end, performance-specific applications, primarily in a business-to-business model and is
comprised of six business lines: specialty additives, functional additives, personal care,
reactive intermediates, polyurethane additives, and epoxy additives. The PMD group
generated about $700 million in sales in 2009.

 Ashland, Inc. (Performance Materials Business Unit) has a business-to-business focus

within two main markets: transportation and building/construction. This business unit sells
the resins that are eventually used by its customers for composites and high-performance
adhesives composites. This business unit contributes approximately $1 billion in sales
annually.

 Becton, Dickinson and Company (BD) is a global medical technology company,

comprised of three divisions: Biosciences, Diagnostics and Medical, that develops,
manufactures, and sells medical supplies, devices, laboratory instruments, antibodies,
reagents, and diagnostic product. Annual sales were about $7.3 billion in 2010 of which
Diagnostics comprised approximately 30 percent.

 Electro Scientific Industries, Inc. (ESI) is a leading supplier of innovative, laser-based

manufacturing solutions for the microtechnology industry. Its systems enable precise
structuring and testing of micron to submicron features in semiconductors, LEDs and other
high-value components.

 EXFO is a leading provider of optical testing solutions and wireless protocol analyzers and
network simulators, and portable test sets for the telecommunications industry.

Quantitative: A detailed quantitative questionnaire was also constructed, focusing on the 10 topics
in Section 1.3. A total of 68 variables or measures were used to capture the existence and proficiency
of practices, approaches, and methods in the questionnaire. Additionally, some general descriptive
questions to characterize the businesses were included.

Many questions were measured on Likert-type anchored 0-10 scales—for example, questions that
sought the degree to which certain practices or methods were employed and how well, or how
successful NPD Gatekeeping practices are. Other questions were direct, seeking a quantitative
answer, such as percentage of projects that were commercial successes or failures or percentage of
projects meeting sales targets. Finally, a number of open-ended questions that sought text responses
were included.

The quantitative sample: A total of 257 business entities responded to the detailed quantitative
questionnaire. Refinement of the data sample plus the removal of small organizations led to a useable
sample of 211 respondents. Selected sample statistics are:

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 Businesses are in a number of different industries, with about half in the manufacturing
sector (Exhibit 1.1)
 The businesses have median sales of $1 billion and the median number of employees is
2,500 (Exhibit 1.2)
 Median R&D spending data is $10 million per business or 4.0 percent of sales. The mean
values are also shown in Exhibit 1.2, but are skewed by a number of very large businesses.

Exhibit 1.1: The Sample – Industry Breakdown

Industry Percentage of Participants

Industrial Products 20.4%

Consumer Goods 18.5%

Service 15.6%

Chemical 7.1%

Other Business-Business 7.1%

Health Care 6.6%

Telecommunication 5.7%

Electronics/computers 4.3%

Software 4.3%

Other 10.4%

NEW PRODUCT DEVELOPMENT

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Exhibit 1.2: Selected Characteristics of Businesses in the Sample

Average Value Across Median Value (50th

Characteristic
Businesses percentile) Across Businesses

Number of employees 15,423 2,500

Annual sales revenue $8.4 billion $1 billion

Spending on R&D
8.2% 4.0%
(as a percent of sales)

Annual spending on R&D $1.1 billion $10 million

1.5 ORG ANI ZATI ON OF THE RE SUL T S

Next comes the reporting of the results. With so many practices, methods, and performance metrics
gauged, a roadmap of the report may be useful:

 The next section, Chapter 2, provides NPD performance results of the businesses on the
many performance metrics measured. Here, these performance metrics are also combined to
identify the Best and Worst Performers.
 Chapters 3 and 4 outline how the businesses rate or fare on the different practices and
methods in each of the first 10 topic areas outlined. Additionally, each practice is measured
against performance metrics to assess how the top and bottom performers score on each.
 Chapter 5 looks at portfolio management and its impact on success.
 Chapter 6 outlines the Conclusions and Recommendations.
 Appendix A provides detailed case descriptions from the site visits undertaken with the five
best practice companies which are presented as individual case studies.
 Appendix B provides the survey data results in chart form to provide the reader with
additional points for reference and information.

NEW PRODUCT DEVELOPMENT

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2. New Product Performance Metrics

Determining how your organization is performing and how it compares to other organizations is
always an interesting question. Without clear metrics and a way to compare them, it can be very hard
to know whether you are doing well or poorly at product innovation, if your investment in R&D is
producing the desired results, and what areas of your performance might need to be improved or
strengthened. In this chapter, how the businesses fare on a number of the top performance metrics is
highlighted, along with the distribution of results—the top and bottom 25 percent of businesses.
Also, based on these performance results, a subset of best performing businesses are identified,
which then help to identify best practices in subsequent chapters.

2.1 PER CE NT AGE OF REVE NUE S AND PR OFI TS F R OM NEW PR ODUC T S

The most popular performance metrics used at the business unit level are the percentage of sales
(revenue) and the percentage of profits derived from new products. But how do businesses perform
on these popular metrics? Exhibit 2.1 reveals the results:

Average Business Top 25% Bottom 25%

% revenue from new products 27.3% 36.3% 10.0%

% of profits from new products 25.2% 30.5% 10.0%

These percentages of sales revenues and profits are defined as follows: the percentage of the business
entity’s annual sales revenues (or the business’s profits) that is derived from new products launched
within the last three years.

Overall, the average percentages are impressive for new products launched within the past three
years. But most impressive are the results of performers in the top 25 percent on these two metrics:
36 percent of sales and 30.5 percent of profits coming from new products.

But words of caution: Although these are popular metrics, be aware that they are not necessarily the
right metrics to gauge performance or the only metrics to use. Here are the comments of an astute
and experienced CTO:

“Percentage of sales is a ‘good news, bad news’ metric. One of our business units has a very
high percentage of sales from new products. But this is due to a combination of negative
factors: high and costly product obsolesce in their market; new products that did not
perform—either technically or financially—and needed to be fixed and replaced; and over-
reaction to every single customer request. The result is a lot of ‘churn’ in the product line,
which is very costly to the business. So a high percentage of sales is not always a good
thing.”

NEW PRODUCT DEVELOPMENT

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PROCE SS BE NC HMARK S AND PERFOR MANCE ME TRICS

Exhibit 2.1: Percentage of Revenues & Profits from New Products

Bottom 25% of
10.0% Businesses

% of revenue coming Average

27.3% Business
from NPs
36.3%

Top 25% of
Businesses

10.0%
% of profits coming
25.2%
from NPs
30.5%

0% 10% 20% 30% 40%

Percentage of the Business’s Sales Revenues & Profi ts

Comi ng from New Products La unched in Last 3 Years

2 . 2 S UC CE SS , F AI L A ND K IL L R ATE S
Another key metric is the NPD success rate: what proportion of projects entering development
become commercial successes? Or become commercial failures? Or are killed along the way?

The average values are shown in Exhibit 2.2, while the top 25 percent and bottom 25 percent of
businesses on this metric are shown in Exhibit 2.3:

Average Business Top 25% Bottom 25%

Success Rate 53.2% 70.0% 35.0%

Failure Rate 26.5% 10.0% 35.0%

Kill Rate 20.3% 5.0% 30.0%

NEW PRODUCT DEVELOPMENT

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Exhibit 2.2: Success, Fail and Kill Rates – The Average Business

Killed Prior to Launch

Commercial
Successes

Commercial Failures

Exhibit 2.3: Success, Fail and Kill Rates – Top 25% vs. Bottom 25%

Bottom 25% of
% of projects 35.0% Businesses
commercially Top 25% of
successful 70.0%
Businesses

% of projects 35.0%
commercial failures 10.0%

% of projects killed 30.0%

prior to launch 5.0%

0% 20% 40% 60% 80% 100%

Percentage of Business’s New Product

Projects that are Successes, Failures, or Killed

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The result is a respectable success rate on average of 53 percent. But note the huge difference
between the top 25 percent of businesses and the bottom 25 percent on this Success Rate metric: the
top 25 percent have double the success rate of the bottom 25 percent. And the bottom 25 percent
have more than three times the failure rate of the top 25 percent. These are not small differences—
these performance differences are of great magnitude, and raise the questions: what separates the
best from the worst; and why do the top businesses do so exceptionally well?

2.3 T I ME TO MARKET
Time to market is a very typical performance metric, given the heavy emphasis placed on speed-to-
market and cycle time reduction in product innovation. The median product development time from
Idea Generation through to Product Launch is slightly less than 18 months. However, the
breakdown, by businesses, shows that a wide range in cycle times exists (see Exhibit 2.4). Note that:

 55.1 percent of businesses take less than 18 months, on average; and

 30.7 percent take at least two years or more to get new products from idea to market.

Exhibit 2.4: Time to Market (Idea to Launch Months)

More than five years 3.1%

Three to five years 8.2%

Two to three years 19.4%

Nineteen to 24 months 14.3%

Thirteen to 18 months 24.0%

Seven to 12 months 22.4%

Three to six months 8.2%

Two months or less 0.5%

0% 10% 20% 30%

Percentage of Businesses – Average Time to Market

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2.4 ON TI ME AND ON B U DGET

Another performance perspective is the proportion of projects that meet their targeted launch dates
on time and on budget. Exhibit 2.5 provides the results for the average business, and Exhibit 2.6
shows the results for the top 25 percent and bottom 25 percent on this metric:

Average Business Top 25% Bottom 25%

Percent of projects on time 44.4% 70.0% 20.0%

Percent of projects on budget 56.5% 81.0% 40.0%

The fact that, on average, more projects are behind schedule (missing their scheduled launch date)
and that a considerable percentage (43.5 percent) are over budget raises serious concerns about
scheduling, resource management, project management, and commitments to timelines. Admittedly,
there is a small group of businesses doing much better than these average businesses: 70.0 percent on
schedule and 81.0 percent on budget. But the other extreme is the bottom 25 percent, whose
performance is 3.5 times lower than the top 25 percent. The significant difference between the top
25 percent and bottom 25 percent indicates that many firms have yet to achieve acceptable on-time
and on-budget results, although a handful of firms prove that this goal can be achieved.

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Exhibit 2.6: Projects On Time, On Budget – Top 25% vs. Bottom 25%

Bottom 25% of
% of projects launched
20.0% Businesses
on schedule
70.0% Top 25% of
Businesses

Time late (as % of

40.0%
schedule)
19.0%

% of projects on budget 40.0%

81.0%

0% 20% 40% 60% 80% 100%

Percentage of Business’s New Product Projects

On Time, On Budget

But how late is late? The “slip rate” measures how late a project is as a percentage of its total
scheduled time to market. On average, when a project is late to market, it is behind schedule (the
“slip rate”) by 31.4 percent, as noted in Exhibit 2.5. That is, if a project is scheduled for 18 months
time-to-market, the typical “late project” gets there in 23.6 months, i.e. 5.6 months late.

That is the data for the average business. The worst performers (bottom 25 percent on this metric)
see their “late projects” miss the scheduled launch by 40 percent, while the best drive their slip rates
down to 19 percent.

2.5 NPD PROJE CT S MEET ING OBJE CTI VE S

What portion of NPD projects meet their objectives? Management measures the performance of
NPD projects on a number of objectives, for example profits, sales, and market share. But just how
do businesses rate on these metrics? Exhibit 2.7 shows the proportion of projects meeting profit,
sales, and market share objectives. It also shows the results for the top 25 percent and bottom 25
percent of businesses on these three metrics:

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Average Bottom
Top 25%
Business 25%

% meeting profit objectives 51.1% 70.0% 29.9%

% meeting sales objectives 52.2% 70.0% 33.5%

% meeting market-share objectives 48.8% 70.1% 30.0%

The performance metric results are a cause for concern. First, the fact that the mean values are
averaging about 50 percent for all three metrics means that a sizable proportion of projects (almost
half) are failing to meet objectives. This result should be unacceptable for most senior management
teams. Next, consider the distribution of results: the top 25 percent of businesses on these metrics
are achieving almost 2.5 times the performance of the bottom 25 percent, suggesting that many
businesses have a lot of room for improvement.

Exhibit 2.7: Percent of Projects Meeting Objectives

29.9% Bottom 25% of Businesses

% of projects meeting profit
51.1% Average Business
objectives
70.0% Top 25% of
Businesses

33.5%
% of projects meeting sales
52.2%
objectives
70.0%

30.0%
% of projects meeting market
48.8%
share objectives
70.1%

0% 20% 40% 60% 80% 100%

Percentage of Business’s New Product Projects

Meeting Objectives

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2.6 BUSINESS E NTITY PERFOR MANCE

There are many ways to measure a business’s performance at product innovation. These include a
number of qualitative metrics and comparative measures that are best captured on 0 to 10 scales.
Exhibit 2.8 shows the average results on six such scaled metrics, while Exhibit 2.9 shows results for
those with very positive results (scoring 8, 9, or 10 out of 10) and those with poor results (scoring 0,
1, 2, or 3 out of 10) on each performance metric. The results:

1. Most businesses actually do keep score and measure their overall NPD performance (mean
rating: 5.4 out of 10). A surprising 11.7 percent do not, however.
2. Businesses see their NPD efforts or programs as moderately profitable relative to how much
they spend on them (mean rating: 5.8 out of 10). Only 19.2 percent see their programs as
very profitable.
3. The ability to meet profit objectives is more weakly rated on average (mean rating: 5.2 out of
10). Only 12.9 percent of businesses were very satisfied with their ability to exceed profit
objectives.
4. Meeting sales objectives was rated weakly as well (mean rating: 5.3 out of 10) and only 13.0
percent of businesses were very satisfied with their ability to exceed sales objectives.
5. Cycle time reduction is the goal in many businesses’ product innovation efforts. And so, the
ability to reduce cycle time over the last three years is a key metric. Businesses rate poorly on
this metric (mean rating: 5.2 out of 10), with only 11.6 percent of business claiming very
good results.

Exhibit 2.8: Additional Performance Metrics – The Average Business

Product performance is measured 5.4

Product performance tracked centrally 5.4

Profitability vs. spending 5.8

Met/exceeded profit objectives 5.2

Met/exceeded sales objectives 5.3

Reduction of cycle time 5.2

0 1 2 3 4 5 6 7 8 9 10
0=Not 10=Excellent,
at all The Degree that Each to a great
Performance Metric is extent
Measured

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A quick glance at Exhibit 2.8 shows that mean scores fall almost entirely down the middle of the
chart, with the average business achieving a moderate-to-weak 5 to 6 out of 10 on just about every
performance metric. These depressed scores are a definite concern. The worst performance is on the
cycle reduction metric. The strongest performance metric was the business’ profitability relative to
spending over the past three years.

2.7 PER F ORMANCE MET RI C S U SED T O MEASU RE PR OJEC T AND NP D PR OG RAM

What gets measured usually gets done! Metrics that are regularly measured and reported also tend to
shape what people try to improve upon. So, what types of performance metrics are commonly
employed in NPD? We investigated the specific metrics employed in NPD management, not so
much as a best practice (there are no ratings or scores reported here), but as a way to gain insights
into which metrics are the most popular.

Two types of metrics are investigated:

1. Metrics used to gauge how successful an individual new product project was. For example,
was project X a success or a failure?
2. Metrics used to gauge how well the business’s total new product effort performs (its NPD
program). For example, the percentage of new products launched that were commercial
successes.

Thus, one set of metrics is at the project level (Exhibit 2.10); the other is at the business or business unit
level (Exhibit 2.11). The results are self-evident.

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Individual NP project performance metrics:

Most companies use multiple project performance metrics (on average, the companies used 4.2
different metrics per business). The most popular metrics are, in order of popularity:

Metric Percentage of Businesses Using

Revenue versus forecasted revenue (meets revenue goals) 68.9%
Customer satisfaction measures 60.5
Profitability of the new product (NPV, operating profit, EVA, etc.) 56.3
Time to market 48.4
Profitability versus forecasted profits 47.4
Performance to schedule (on-time launch) 41.4
Market share 37.4
Performance to budget 35.3
Time to profit/breakeven time 29.5
Cost of NPD as a percent of revenue produced 25.8
Percent of repeat customers 16.8

Program (overall NPD efforts) performance metrics:

Most businesses use multiple metrics here (on average, the companies used 2.6 different program
metrics). The most popular metrics used to gauge the entire NPD efforts of the business are:

Metric Percentage of Businesses Using

Percentage of revenue from new products 68.8%
Percentage of growth in sales coming from new products 44.1
Percent of profit generated by new products 39.8
Success rate of launched products 37.1
Number of major launches per year 37.1
Return on investment of R&D dollars 29.0
Overall profits (annual) generated by new products 29.0

In all cases, a time frame had been defined: new products launched over the last two, three, or five
years. Often the definition of “what is a new product” proved difficult or problematic, but in better
practice firms this term had been precisely defined to enable the use of these metrics.

But words of caution: Although these are popular metrics, be aware that they are not necessarily the
right or universal metrics to gauge NPD performance. Nor will a single metric necessarily capture all
facets of new product performance. Recall the comments of the experienced CTO (Section 2.1) who
noted that “percentage of revenue” can reward or induce the wrong kind of behavior. He was not
alone. We heard a number of knowledgeable people suggesting caution in that NPD metrics, as with
all metrics, can cause or incent the wrong kind of management actions. For example, NPD
performance measured strictly by “percentage of sales from new products” will logically lead to a
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number of short-term, fast projects (and few longer term ones); projects that generate sales but not
necessarily profits; new products that could cannibalize existing products and create a lot of
unnecessary churn in the product line; and so on.

Exhibit 2.10: Key Measures Used to Define New Product Success or Failure

Revenue vs. forecasted revenue 68.9%

Customer satisfaction 60.5%
Profitability 56.3%
Time to market 48.4%
Profitability vs. forecasted profits 47.4%
Performance to schedule 41.1%
Market share 37.4%
Performance to budget 35.3%
Time to profit/breakeven time 29.5%
Cost of NPD as a % of revenue produced 25.8%
% of repeat customers 16.8%
Other 2.2%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percent that Use the Measure

Note: Most companies use multiple measures

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Exhibit 2.11: Key Indicators Used to Measure the Total New Product Program

% of revenue from new products 68.8%

% growth in sales from new products 44.1%

Success rate of launched products 37.1%

Number of major launches per year 37.1%

% of profit generated by new products 39.8%

Return on investment of R&D dollars spent 29.0%

Overall profits generated by new products 29.0%

Other 5.9%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percent that Use the

Indicator
Note: Most companies use multiple measures

2.8 DE FI NING AND ID E NTI FY ING THE T OP P ER F OR MER S

Which businesses are the best or top performers? And which are the worst? These are important
questions, and they lie at the basis of a valid benchmarking study. By comparing the practices used in
Best versus Worst Performers, one can zero in on the best practices. For example, while many of the
practices and methods we observe and report in this study may seem intuitively obvious as “best
practices”—such as building in the voice-of-customer, or adopting a solid new product development
system. Unless these practices have a significant impact on performance, they cannot be considered
as best practices. Moreover, just because someone in the company claims that some method or
approach is a best practice, does not necessarily make it so. Unless it can be shown to positively
impact on performance, it probably is not a best practice. Thus, identifying the top performing
businesses in product development, and then comparing what they do versus the poor performers, is
an important step to identifying and validating best practices. Note also that poor performers must
be identified, because it’s only by comparing and contrasting practices in the Best versus the Worst
Performers that best practices can be proven.

Numerous performance metrics were identified and investigated in this study. Previous sections in
this chapter have reported how businesses perform on these metrics. Trying to identify which
businesses are the best versus the worst on each and every metric becomes a cumbersome task;
moreover, some of these metrics are themselves inter-correlated.

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As a result, a composite variable was created using responses to three key performance metrics
focusing on profits and sales. The “top” performers for this composite had consistently strong
performance across all questions, and the “bottom” performers for this composite had consistently
weak performance in the three areas. The “middle” group had any other combination of scores. The
three key measures are:

 Profitability of the NPD program over the past three years relative to spending on it,
 Ability to meet or exceed profit objectives over the last three years, and
 Ability to meet or exceeded its sales objectives over the last three years.
Hence, a new composite variable was created that reflects the three groups’ strength on these three
metrics. Group one was very strong on achieving profit and sales results; the second group was very
poor or fell far short of profit and/or sales objectives; and a third, middle group that comprises the
rest of the respondents.

2.9 H OW THE BE ST VER SU S W ORST BU SI NE SSE S FARE IN TER MS OF PE R F OR MANCE

METR IC S
How well or poorly did the Best and Worst Performers do in terms of the many performance metrics
that were measured? And are they really the Best and Worst businesses according to these metrics?
Let’s look now at how well and poorly they really did in NPD—a validation (see Exhibits 2.12 and
2.13).

The results are overwhelming: clearly a powerful set of Best Performers that can readily compare to a
weak set of Poor Performers have been identified. There are 16 performance metrics in total
(Exhibits 2.12 and 2.13). Here we see that on all 16 metrics, the Best Performers score significantly
higher and stronger than the Worst.

For example, the Best versus the Worst Performing businesses in Exhibit 2.12:

 Have much higher new product success rates (62.0 percent vs. 44.9 percent) and lower
failure rates
 Have higher proportions of projects on time (60.4 percent vs. 25.5 percent) and on budget
(66.7 percent versus 40.0 percent)
 Have more projects that meet their sales objectives (74.7 percent vs. 36.7 percent) and profit
objectives (about 71.8 percent vs. 36.7 percent)
 See a much higher proportion of their business’s sales revenues and profits coming from
new products (about 45 percent vs. 14 percent).

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Exhibit 2.12: Performance Metrics Results – The Best vs. Worst Performers

44.9% 52.2%
% of developments successful (success rate)
62.0%
34.2%
% of developments that fail (failure rate %) 27.7%
13.8%
20.9%
% of projects killed (prior to launch) 20.1%
24.3%
40.0%
% of projects on budget 61.4%
66.7%
25.5%
% of projects on schedule 46.9%
60.4%
36.7%
% of projects that met profit objectives 50.1%
71.8%
36.7%
% of projects that met sales objectives 50.1%
74.7%
43.2%
% of projects that met mkt share targets 46.7%
66.1%
16.9% 28.2%
% of revenue coming from NPs Worst Performers
46.6%
Middle Business
10.5%
% of profits coming from NPs 26.2% Best Performers
43.8%

0% 20% 40% 60% 80% 100%

Mean Rating Percentage

Note: Statistically significant at a confidence level of 0.05 or better

And in Exhibit 2.13

 Measure and track performance (mean rating on a 1-10 scale: 6.6 vs. 3.1)
 Have more profitable NPD programs versus spending (mean rating on a 1-10 scale: 8.4 vs.
3.2)
 Have NPD programs that meet the business’s profit objectives (mean rating a 1-10 scale: 8.1
vs. 1.9).

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Exhibit 2.13: Performance Metrics – The Best vs. Worst Performers

3.2
Product performance is measured 5.7
6.7
3.0
Product performance tracked centrally 5.7
6.5
3.2
Profitability vs. spending 6.0
8.4
1.9
Met/exceed profit objectives 5.6
8.1
2.3
Met/exceed sales objectives 5.5
8.2
2.2 Worst Performers
Reduction of cycle time 4.6 Middle Business
5.6 Best Performers

1 2 3 4 5 6 7 8 9 10

% of Businesses that are “Very Good” vs. “Very Poor”

On Performance Metrics

Note: Statistically significant at a confidence level of 0.05 or better

2.10 TYPE S OF NE W PRODUCT DEVE LOPE D

What is the right portfolio mix in terms of projects? This is always a question that we are asked and
one that executive teams are always debating. Other common questions are: What is the right mix of
project types to have in the portfolio? How do we optimize the portfolio mix? Or, what is the right
split between high and low risk projects? The answers to these questions should be reflected in the
breakdown of product development or project types undertaken—where the funds are invested. By
default the projects that are currently active and funded is your current and active portfolio and a
reflection of current managements’ view of their innovation strategy and a reflection of their risk
profile. Additionally, breakdowns of new products and projects by innovation type should give a
predictor of the business’s NPD performance and act as an indicator of what types of results we
should be able to expect in the future. For example, too much emphasis on short term, low risk small
projects might point to an under-achieving business or a business where the actual spending reflects
a very risk adverse culture. Exhibit 2.14 shows the breakdown for the average business. Note that the
dominant categories are:

 Incremental product improvements/changes (34.8 percent); followed by

 Major product revisions (22.5 percent); and then
 New products to the firm (20.0 percent).

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This is a fairly reasonable balance among projects in these three main categories. By contrast, new-to-
the-world products—true innovations—and minor development—such as promotional and package
changes—represent a minority of new products (6.7 percent and 13.4 percent, respectively).

Do the Best Performers adopt a different mix of project types—is there an optimal portfolio of
project types? Consider how the Middle businesses compare to the Best and Worst Performing
businesses—see Exhibit 2.15.

What is noteworthy is the shift towards much more innovative and/or riskier and bolder projects as
one migrates from Worst to Best businesses. For example:

 More than half (57.1 percent) of Worst businesses’ projects are the small, incremental
ones—promotional/package changes or incremental product improvements and changes.
 By contrast, only 40 percent of Best Performers’ projects are these small, incremental ones.
 Best Performers take on a higher proportion of larger, more innovative projects: 38.2
percent of Best Performers’ projects are either new-to-the-business or true innovations—
new-to-the-world.

Exhibit 2.14: Breakdown of Projects by Project Type for the Average Business

Promotional
New product to Other development/package
world
change
2.6%
6.7% 13.4%

New product to
business 20.0%

Incremental product
34.8%
improvement/change

22.5%
Major product
revision

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Exhibit 2.15: Breakdown of Projects by Project Type: Best 25% vs.

Worst 25% of Performers

Bottom 25% Middle Top 25% of

of Businesses Businesses Businesses

Promotional Developments, Price

17.1% 13.0% 10.8%
Changes & Packaging Changes
Incremental Product Improvements &
40.0% 34.5% 29.5%
Changes

Major Product Revisions 21.4% 23.1% 20.5%

New to the Business Products 14.0% 20.3% 26.7%

New to the World Products 4.1% 6.4 11.5%

~40% ~50% ~59%

Note: Does not add to 100% down a column due to a
small percentage of “other” projects.
Point Steps

 By contrast, only 18.1 percent of Worst Performers’ projects are these bolder projects.
 Consider the last category on its own in Exhibit 2.15: Best Performers do almost three times
the number of true innovations (new-to-the-world products) projects than do Worst
Performers: 11.5 percent versus 4.1 percent.
 As you progress from the worst to middle to best performers, there is a full 10 percent step
change in the project mix towards the more innovate types of projects reflecting an increase
in risk as you move from each of the three categories.

Conclusions: We cannot prove cause-and-effect here—that doing more venturesome projects will
lead to better performance results. But if you wish to benchmark the Best Performers in terms of
project types, Exhibit 2.15 is a good guide. And note the tendencies when comparing Worst versus
Best Performers—the heavy shift from small and incremental projects to bolder and more innovative
projects.

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3. The Idea-to-Launch New Product Process and

Practices

This section deals with the process that businesses use to drive new product projects from the Idea
Stage through to Launch. Specific topics in this section include:

1. The nature of the business’s new product process,

2. Practices embedded within this process, and
3. The role of governance (gatekeeping).

3.1 A SY STE MATI C NEW PR ODUC T PR OCE SS

A new product process—a game plan or playbook to guide NPD projects from idea to launch—is a
key to NPD success. The term “new product process” means more than just a flow-chart; the term
includes all process elements—the stages, stage activities, gates, deliverables and gate criteria that
constitute a well-defined new product process. For more than twenty years, organizations have been
urged to design and implement such a new product process, and they appear to have heeded the
experts. Indeed, having a well-defined new product process is the strongest practice observed in the
sample of businesses. Consider now some of the details and practices associated with this best
practice (Exhibits 3.1 and 3.2):

1. A clearly defined idea-to-launch new product process: As noted, businesses rate very
high here, with 88.2 percent of businesses having such a NPD process, and only 11.9
percent scoring weakly (Exhibit 3.1). The Best Performers score 9.2 out of 10 here
compared to only 5.7 for the worst performers.

2. A visible, documented process: Some firms claim to have a NPD process; but on closer
inspection, it’s more of a high level and conceptual process—a few flow diagrams with
boxes and diamonds and little more. To be operational, an effective new product process
should be well mapped-out, visible and well-documented. Again, the sample of businesses
does fairly well, with best performers having a mean rating of 8.4 out of 10. 84.6 percent of
businesses indicate that they have a reasonably well-documented and visible NPD process;
only 15.2 percent scored poorly.

3. An adaptable and scalable process: Is the NPD process a flexible one, adapted to the
needs, size and risk of the project? Or is it a rigid, one-size-fits-all process, failing to
recognize the difference between high risk and low risk projects? Two thirds of the
businesses in this study (80.6 percent) view their process as somewhat flexible, adaptable and
scalable. (The Best Performers score of 8.0 out of 10 compared to only 4.7 for worst
performers).

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4. Whether the NPD is really used: The true test of a process is whether or not it is really
used; or is it merely window-dressing in the business (i.e. a paper process only). There is
clear evidence that some businesses have a process that is consistently used and understood
by the organization with 78.7 percent indicating a moderate or strong use of their NPD
process. Somewhat disturbing is that although the great majority does claim to have some
type of NPD process in place (only 11.9 percent claimed not to have a process at all), 21.4
percent claim that their process is not really used.

5. An enabling process for the project team: Another test of one’s NPD process is whether
or not it is a facilitating process that helps project teams get their products to market (rather
than a bureaucratic process that stands in the way). This is one of the weakest elements of
the NPD process, with a moderate mean rating score of 5.9 out of 10, and with 56.8 percent
reporting that the process is only moderately enabling (22.0 percent of businesses reporting
that it is strongly enabling). (However, best performers outscore the worst performers 7.2 vs.
4.1 out of 10.)

6. Defined Go/No Go criteria at gates: Go/Kill criteria are considered important to better
evaluate the merits of NPD projects, and to assist management in making the critical
Go/No Go decision. In spite of the logic of having such consistent gate criteria, the lack of
such criteria is fairly widespread (22.5 percent of businesses lack these criteria; only 43.1
percent claim to have very well-defined gate criteria). Indeed this is a somewhat weaker facet
of business’s NPD processes (a mediocre mean rating score of 6.6 out of 10). Without clear
decision criteria it is hard to separate the winning projects from the less attractive ones.
Interestingly, the best performers score twice as strong as the worst performers (8.6 vs. 4.3).

7. Deliverables defined for each gate: A menu of what the project team is expected to
deliver to each gate in the NPD process—their “deliverables”—is a positive feature of best-
in-class new product processes that is also common amongst the sample of businesses.
Overall, having well-defined deliverables is rated fairly strongly, with 84.6 percent of
businesses having such an explicit menu of deliverables to guide project teams.

8. Checks to monitor if the process is followed: Monitoring to see how well the process is
followed is a good way to determine if project teams are actually using the process. If too
many teams are not following the process, the checks can act as an early warning signal.
Unfortunately, the overall mean score reported here was 5.6 out of 10 with only 23.5 percent
of companies reporting that they are very good at monitoring the process.

Merely having a NPD process in place, however, is a good start but it is not enough to maintain the
position of a top performing company. Instead having a good process in place is really just the
starting point. The Best Performers go on to further enhance their process to ensure it is working
effectively and delivering the desired results. Unfortunately, the poorer performers still have not
adapted this best practice as the results in Figure 3.2 clearly demonstrate.

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Some examples: As would be expected of best practice firms, companies that took part in the site visits
(the case studies) had in place a well designed stage-gate new product development process (e.g., Air
Products, Ashland, BD, ESI, and EXFO). A detailed profile of each company’s process is provided
in Appendix A. Each company indicated that a solid, well-defined process with clearly defined
activities in each stage and a well-defined decision framework for the gates (decision points) was a
critical best practice for them.

 Air Products and Chemicals, Inc.: “The organization uses a consistent, organization-wide
process called offering development and introduction (ODI) that is modeled on the Stage-
Gate® process. This process, a company-wide stage-gate framework, has become
institutionalized and is ingrained in the language and culture of the company.”

 Ashland, Inc.: “We have been able to successfully combine our product development
process [Stage-Gate] with our Six Sigma program. This combined approach allows us to
produce high-quality products in a disciplined manner.”

 Becton, Dickinson and Company (BD): “BD’s global new product development system
serves as an effective baseline for planning and managing NPD projects and provides a basis
for functional transparency and accountability.”
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 Electro Scientific Industries, Inc. (ESI): “The improved consistency of the process is
helping to improve the quality of content, accelerate learning for new participants, and
enable objective status reporting.”

 EXFO: “We have a well-defined stage-gate process that over the years has evolved as we
have adapted to changing market needs. Our process is a considered an asset.”

The results from these and other firms have been impressive. For example, Michael Popule, Group
Manager, Reaction Engineering, Air Products when asked about the impact of their process, said “It
allows us to fail fast and move on rather than not try risky projects that could have a large reward.”

A closer look at the ingredients of such a process confirms the conclusion above: that having a new
product process is the starting point to separate the Best from the Worst Performers. Having all of
the elements of this process is very evident in top performing businesses. Note how high Best
Performing businesses rate on almost all the elements of a systematic NPD process in Exhibit 3.2
compared to the Worst Performers.

 Best Performers’ NPD processes are enablers—they make it easier for project teams to drive
their NPD projects to market (rather than being a burden on them)
 Best Performers’ NPD processes are adaptable and scalable—they are flexible processes,
adapted to the needs, size and risk of the project (rather than being a rigid one-size-fits-all
process, failing to recognize the differences between major and minor projects).

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Exhibit 3.2: Impact of Having a Systematic New Product Process in Place

5.7
Use formal NPD process 8.1
9.2
5.7
Visible, documented process 7.6
8.4
4.7
Adaptable, scalable process 6.9
8.0
3.8
NPD process is really used 6.1 Worst Performers
6.8 Middle Business
4.1 Best Performers
Process enables project teams 5.9
7.2
4.3
Go/No Go criteria defined 6.6
8.6
5.1
Deliverables defined per gate 7.5
8.8
3.3
Checks to monitor process is followed 5.6
6.0

2 3 4 5 6 7 8 9 10
0=Not 10=Very
at all Impact of Each NPD Process Element much so

Note: Statistically significant at a confidence level of 0.05 or better

Conclusions: Overall, the majority of businesses fare very well in terms of their new product
processes. For the majority of businesses, the NPD process is in moderately good shape.

Best Performers overwhelmingly have a NPD process in place, along with most of its elements. Thus
having a NPD process, along with the items or ingredients listed in Exhibit 3.1, is highlighted as a
best practice in this study. So, if your business lacks a solid NPD process, or it’s only a high-level
process, it’s time to install a best-in-class process, complete with these eight items observed in our
Best businesses:

1. A clearly defined idea-to-launch new product process. This includes clearly designated
stages—a series of defined stages, for example: ideation, scoping, build the business case,
development, testing and launch; with activities defined for each stage (i.e. outlines of what
happens in each stage and includes guidelines on the “how tos”).

2. A visible documented process—well mapped-out, visible and well-documented, much like a

playbook—that provides genuine guidance to project leaders and teams).

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3. An adaptable and scalable process—a flexible process, adapted to the needs, size and risk of
the project.

4. A process that is really used. An effective implementation and ability to sustain the process is
essential: getting senior management buy-in and commitment (i.e. they really are walking the
talk); user-friendly documentation; training of all players—teams, team leaders, and
gatekeepers; ensuring all projects are in the process; a Process Manager in place; a process
database, IT support and performance metrics all contribute to ensuring the process is
enabling people and that they actually use it.

5. An enabling process for project teams—a facilitating process, helping project teams get their
products to market.

6. Defined Go/No Go criteria at gates—the criteria that projects will be judged on to make
Go/Kill and prioritization decisions.

7. Deliverables defined for each gate—a menu of what the project team is expected to deliver
to each gate meeting. This is often in the form of templates.

8. Monitoring the process to ensure it is really working. By ensuring that teams are actually
using the process and identifying where and or why they are not provides the continual
feedback needed to continue improving the process and making it “the way we do business”.

Note that merely having a formal and documented NPD process is only the first step. It is how the
process, its activities and recommended practices are implemented that makes the difference. We will
see some of these impacts later in this chapter.

Bureaucracy: It is also important to ensure that your process is constantly improving over time to
leverage internal learnings and to ensure if it is meeting both internal and external needs. Hence,
there is a need to be consistently on the alert for non-valued work or outdated documentation. You
need to get rid of any bureaucracy that may have entered into your process over time. Your NPD
process should be designed to facilitate project teams in getting their new products to market,
securing resources and senior management commitment, and removing roadblocks. Instead, too
many NPD processes, implemented with the best of intentions, appear to create bureaucracy and
much non-value-added work. One way to prevent this from occurring is to periodically review your
process to make any needed improvements. Most companies in the survey have revamped or
restructured their process:

 73.2 percent within the past three years

 10.6 percent within the past three-five years.
If you have not revamped or modernized your process within the past few years it is probably time
to do so.

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Flexibility: Next, make sure that the process is flexible and scalable, perhaps having different versions
of the process—a full five-stage, five-gate process for major NPD projects, and perhaps a shorter
three-stage process or “Stage-Gate Express” for lower risk projects, such as enhancements,
modifications and extensions. One size does not fit all!

3.2 KEY U PF R ONT ACT IVI TIE S TH AT ARE BU IL T I NT O THE NP D PR OCE SS

A handful of best practices are often cited that should be built into companies’ NPD processes
before the Development Stage begins. This emphasis on pre-development work has also been
historically identified as the most problematic phase. It’s here where the new product idea is fleshed
out into a clear product definition; where the magnitude of the opportunity is assessed and the
business case constructed; and the action plan for the rest of the project is mapped out. All these
activities are supposed to occur before serious development work begins—at least, that’s the theory!
But is there really this emphasis on up-front work in typical businesses?

Most companies acknowledged that they do attempt to do these activities but there are significant
differences in how well each activity is actually conducted. These include:
1. Initial screening—the first decision to move ahead on a new product project. Often this idea
screen is handled by a mid-management group, and relies on criteria for making the Go/No
Go decision to allocate funds or people to the proposed new product idea.

2. Preliminary technical assessment—the first technical assessment of the project, identifying

potential technical risks, probable solutions, and technical challenges.

3. Preliminary operations (or manufacturing) assessment—an initial assessment of the manufacturing or

operations process before development begins, including process design, source of supply,
operating costs and equipment requirements.

4. Customer value assessment—determining the value of the product (or value-in-use) of the
proposed new product in the customer’s eyes.

5. Business/financial analysis—a financial or business analysis leading to a Go/No Go decision

prior to the Development Stage. This often includes a strategic assessment, along with a
spreadsheet analysis (e.g. NPV, EBIT, sensitivity analysis).

Although no one group excelled at these key activities the best performing companies were
consistently able to do better quality work for each activity (see Exhibit 3.3). In other words these
organizations were able to conduct better quality of execution to derive better quality information on
the merits of undertaking a project before the actual development work began. There is a clear
emphasis on up-front homework: Up-front homework takes place—both customer and technical
assessments—before projects move into the Development Stage. This is probably one of the key
reasons why these better performing companies achieved the performance results highlighted in the
previous chapter.

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Exhibit 3.3: How Business Performs on Critical Pre-Development Activities

4.6
Initial screening 5.8
6.8

5.0
Technical assessment 6.5
7.3

4.3
Manufacturing assessment 6.0
6.9

4.1
Customer value assessment 5.8
6.4 Worst Performers
Middle Business
5.0 Best Performers
Business analysis 6.6
7.4

3 4 5 6 7 8 9 10
0=Very What is the Quality of Each 10=Excellent
poor NPD Process Element

Note: Statistically significant at a confidence level of 0.05 or better

3.3 G ATEKEE PI NG G OVE RNANCE P R AC TI CES

The Gates in a well-defined idea-to-launch process are the Go/Kill decision points where the latest
information on a project is reviewed to ensure that only the right projects move forward in the
process. Effective gates are central to the success of a fast-paced, product innovation process—“as
the gates go so goes the process”. So how well are gatekeeping best practices applied and what is the
impact on project success?

First let’s look at the use of gatekeepers in general. Sometimes it is unclear just who should undertake
project reviews and whose signatures are needed for a project to proceed. The locus of decision-
making—the people who make the Go/No Go decisions at gates—is also an important feature of
many firms’ NPD processes. In Exhibit 3.4 most companies clearly have identified gatekeepers or
decision makers. In some organizations these decision makers remain the same throughout the
process while others use more senior or higher level decision makers for later Gates that require
more resources and use the lower level gatekeepers for the earlier Gates. Best performing companies
tend to use the later approach more often, indicating that they reserve senior management time by
using mid-level decision makers for the early Gates (usually Gate 1 and 2) where fewer resources are
allocated. However some companies argue that it was better to keep a consistent set of gatekeepers
throughout the process.

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Exhibit 3.4: Gatekeeping/Governance Approaches

6.0
Have designated Gatekeepers 7.6
8.1

2.8
Gatekeepers change as risk changes 4.2 Worst Performers
5.5 Middle Business
Best Performers

4.3
Go/No Go criteria 6.6
8.6

5.1
Defined Gate deliverables 7.5
8.8

2 3 4 5 6 7 8 9 10
10=Very
0=Not Presence of Each NPD much so
at all Process Element

Note: Statistically significant at a confidence level of 0.05 or better

Next, defined Go/Kill criteria are considered important to better evaluate the merits of projects, and
to assist management in making the Go/No Go decision. In spite of the logic of having such gate
criteria that are spelled out for each gate (written down and visible to everyone), the lack of such
criteria is fairly widespread amongst the poorer performing organizations (4.3 out of 10 compared to
8.6 for best performers). Thus, best performers were twice as likely to have clear Go/Kill criteria as
worst performers.

Finally, for gatekeepers to be able to make good decisions and apply decision criteria, it is helpful to
have the right information available to aid in making these decisions. Top performers tended to have
deliverables clearly defined for each gate. A standard list of items that the project team is expected to
deliver to each gate in the process—their “deliverables”.

In summary, best-in-class new product processes have clearly designated gatekeepers with clear
Go/No Go decision criteria and predefined deliverables identified. Interestingly, when probed about
global gatekeepers that have oversight for projects spanning multiple geographic locations the results
were mixed with 46.9 percent of companies indicating that they were moving in this direction but
53.1 percent did not use this approach.

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Having the gate structure in place is, in itself, not enough however. It is also important to ensure that
these meetings are effective: that the meetings are held; that the right people attend; that the
discussion and decisions are of high quality and even that the decisions are actually made. If the
meetings are well run and are producing good quality decisions, then the people will see these
meetings as a productive and efficient way to handle this type of decision-making. So how does our
sample of companies measure up? Interestingly most organizations indicate that this was an area that
could be improved upon. However both the moderate and best performers were well ahead of the
poor performers in how they practice the Gate principles (the results are illustrated in Exhibit 3.5):
1. Gatekeepers attend the meetings: All of the key decision makers invited to participate as
gatekeepers attend the gate meeting. There are no cancellations, if at all possible, and when a
cancellation does occur by one individual the meeting still goes ahead.

2. Effective Gate meetings: The meetings themselves are managed effectively. Agendas are
distributed in advance, meetings start and end on time, the agenda is followed and a record
of all decisions is kept. In other words good meeting protocols are developed and followed.

3. High quality contribution: Each gatekeeper makes good quality contributions. In order
for this to occur, each gatekeeper comes prepared for the meeting and has pre-read the
project materials. The questions are insightful and helpful to understanding the risk
associated with the project. (Note this was the weakest area for the poor performers).

4. Quality/Objective decisions: A high quality approach to decision-making is used.

Decisions are fact-based and objective in nature.

5. Decisions are actually made: Decisions are made at each gate meeting. Either a
Go/Kill/Hold/Recycle decision, including approval of the action plan for the next stage of
work and approval of the resources and date for the next meeting.

6. Gatekeepers support the decision: Each gatekeeper visibly supports the decision made at
the gate meeting (including resources) in the weeks or months after the meeting. This was
the highest score of this category by the best performers (7.1 out of 10).

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Exhibit 3.5: How Effective are the Gates

4.7
Gatekeepers attend meetings 6.1
6.2

4.9
Effective gate meetings 6.4
6.9

3.0
High quality contribution 5.6
5.9

3.6
Quality/objective decisions 5.8
6.7

3.9
Decisions are actually made 6.5
6.9 Worst Performers
Middle Business
3.7 Best Performers
Gatekeepers support decision 6.0
7.1

3 4 5 6 7 8 9 10
0=Not How Effective is Each Gate Principal 10=Very
at all much so

Note: Statistically significant at a confidence level of 0.05 or better

3.4 QUALI TY OF Y OUR G ATE DELIVE RABLE S

To support effective gatekeeping practices, the quality of deliverables needs to be of high enough
quality that the decision makers can, in fact, make the decisions that are being asked of them. So, best
practices companies also have standards and expectations around the gate deliverables. Similar to our
discussion above on gate principles the moderate and best performers tended to both score
adequately here although it was acknowledged that this was an area that they are constantly trying to
improve. Not surprising, the poor performers however are struggling with Gate deliverables. In
Exhibit 3.6 four key practices are profiled.
1. Gate deliverables are complete: The agreed-upon deliverables are completed by the team.
The plan that was approved at the previous gate and the corresponding activities and
deliverables in that plan has been completed. This was the best score in this category for the
best performers (7.0 out of 10).

2. Deliverables are distributed on time: All agreed-upon deliverables are distributed to the
gatekeepers on time. Hence the deliverables are received on time, reviewed for completeness

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and distributed to the gatekeepers per the guidelines in the NPD process. Note that this was
the weakest score for the poor performers (4.1 out of 10).

3. Business case is of high quality: The business case and/or executive summary that are
submitted to the gatekeepers are of high quality. That is, they are complete, include accurate
information, add value, and focus on the critical issues.

4. Gate presentation is of high quality: The presentation made at the gate meeting is of high
quality. It is concise, within the allotted time period, includes a clear recommendation with
options/alternatives, action plan for the next stage of work, and has a clear request for
resources.

Exhibit 3.6: Gate Deliverables

Deliverables are 5.4

6.7
complete 7.0

Deliverables are 4.1

6.2
distributed on time 6.9

Business case is 4.4

6.2
high quality 6.9

Gate presentation 4.9 Worst Performers

6.4
is high quality 6.9
Middle Business
Best Performers

3 4 5 6 7 8 9 10
0=Not 10=Very
at all Quality of Gate Deliverables much so

Note: Statistically significant at a confidence level of 0.05 or better

In summary, an important part of a well-constructed NPD process is the gates or Go/No Go

decision points. At gates, management meets with the project team to review the project, evaluate its
merits, and make Go/No Go and resourcing decisions. What seems to separate the best performers
is the ability to have, on a repeated bases, these demanding Go/No Go decision points in the
process where the hard choices are made, and projects really do get killed. They have the protocols
and best practices built into their process and have the discipline to follow it. Some businesses claim
to have gates in their NPD processes, but a closer inspection reveals that these are largely “project
review points” or “milestone reviews” with no tough decisions—projects rarely are killed and a lot of
time is spent on discussing how to “fix” the project.
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3.5 I MPR OVI NG Y OUR G ATE PR AC TI CE S

If your company needs to improve its gate practices with respect to product innovation, a number of
easily identifiable symptoms will be evident. Generally, lack of alignment, poor cooperation across
functions, meetings that do not seem to be productive and unhealthy competition across groups
and/or business units are early warning signals. The most tell-tale sign is a lack of clarity and
transparency about the direction of your business’s R&D program or total new product efforts.2

Other common warning signs that you may have poor governance practices are:

1. Inefficiencies occur due to duplication of effort. Without good co-ordination and approval, your
projects and project teams from around the world are very often working on similar projects,
or even worse, the same project, without realizing it. Oversight of the innovation pipeline
helps to ensure that different parts of your company—often with good intentions—are not
duplicating each other’s efforts.
2. Decision making is not clear and is lacking in accountability. Who is responsible for a project and
how an approval is gained should not be guesswork or the result of hallway lobbying efforts.
As good projects surface in your business, a clear path should exist to secure timely
approvals. For this to happen, clear accountability and a clear specification of who should be
making these types of decisions are needed.
3. The right decisions are not being made. The information to make effective investment or Go/Kill
decisions is often missing or not available. A common symptom here is the uneasy feeling
that your development pipeline contains too many projects that should be killed, and that it
lacks the type of projects needed to meet your business goals.
4. Resource deployment is not clearly aligned with your business’s strategy. Although your people are
working hard and have a full plate of projects to work on, there is no assurance that these
efforts support the strategic direction of your business. This is likely the result of weak
guidelines that lack clear decision criteria.
5. Frustration over the value of the innovation pipeline. Here a common symptom is the feeling that, if
all projects in your pipeline were completed, they would not meet desired targets. It is
probably full of time-consuming, yet low value projects. Or, worse yet, there are no realistic
valuations on projects. Hence there is no real control and prioritization.
6. Business units are not following a governance process to manage innovation. The problem here is that
each business unit spends R&D resources or consumes corporate R&D budgets, but does
not utilize a proper and standard approach to selecting and funding projects; or they have no
clearly defined innovation strategy. Without this type of oversight, it is very hard to have
confidence in the business unit’s ability to deliver results against their strategic plans.
7. Decisions are not timely. Your competitors always seem to be ahead of you and, as a result, your
project teams always seem to be racing to catch up. With a poorly managed innovation
strategy, organizations do not fund their strategic buckets properly. Instead, they are busy
supporting short-term market requests from the sales teams. Hence, no balance exists

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between incremental product development projects and longer term, more strategic, major
projects.
8. Internal politics play too large of a role. We have all been there. More time is spent lobbying than
actually doing real work. With no clear definition of roles and responsibilities, your people
learn how to work the system to get things done. So a large amount of their time is spent
lobbying to get or keep their budgets and people.
9. A lack of visibility regarding decision making. No one can really explain how to get approvals or
how past projects were approved. Good projects lie fallow, while others seem to have a life
of their own.
10. Frustration around the level of bureaucracy. Your people’s frustration with the level and degree of
bureaucracy is often a warning sign that existing polices and supporting documentation
requirements are actually counterproductive. Stifling innovation with too much bureaucracy
is very easy, particularly in a large organization. While some policies and procedures are
needed, companies today are too lean to support unnecessary work.

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4. The Importance of People

This section, the last of those that review the study results shifts away from process and addresses
the “people” issues. After all, product innovation—its success or failure—seems to be very much
within the hands of the people who work on or lead projects teams, and on their management. The
four key areas investigated here include:

1. The nature of project teams and how they are organized

2. Different approaches to project team management

3. The role of senior management

4. The role of the Stage-Gate process manager.

4.1 T HE WAY NPD PROJE CT TE AMS ARE ORG ANIZE D AND LE AD

The way project teams are structured, organized and leverage functional representation is
fundamental to new product success. This success factor has been highlighted in a number of studies
and books over the years, and it seems that many businesses have heeded the message: project teams
appear to be in fairly good shape, on average.3 In general, team structure, organization and function
is fairly positive as most organizations recognize the importance of this in successful product
innovation. Typically, each significant NPD project has a clearly assigned team—people who are part
of the project and work on it. The primary approach to establishing these teams is assignment by
management based on resource availability (see Exhibit 4.1 and Exhibit 4.2).

 The team composition is cross-functional from different functional areas such as R&D,
Marketing, Operations, Supply Chain, etc. as needed.
 These teams work to resolve specific problems and to perform tasks related to the project.
Top performers are much better at this than poorer performing companies (8.5 vs. 5.9 out
of 10).
 There is a clearly identified team leader—a person who is in charge and responsible for
driving the project.

The in-depth case studies that were conducted highlight a number of best practices that these
companies use to leverage their teams for more successful outcomes. Here is a summary of the key
findings from these case studies that are presented in more detail in Appendix A:

 All major projects have a clearly identified project team leader

 Project team leaders tend to remain the same throughout the life of the project versus
changing leaders as the project progresses

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 Each project is assigned team members that represent the cross-functional needs of the
project
 Key team members tend to remain with the project from start to finish
 Cross-functional cooperation and communication is good
 The assigned project team is accountable for the performance of the project
 Teams are able to handle outside-the-team inputs and decisions effectively and have an
executive sponsor to help when necessary
 The team leader can be from any functional area however it is more common to see these
team leaders as professional project leaders with the proper training
 Technology is leveraged so the team members can communicate effectively. This is more
important when teams are not co-located such as in regional or global project teams.

Exhibit 4.1: Primary Approach to Establishing Project Teams

Formal teams based on availability of

37.1%
resources
Management determines project team
membership and reallocates resources as 36.2%
needed
Informal teams based on availability of
13.3%
resources

Team leaders determine project team

11.4%
membership

Other 1.9%

0% 10% 20% 30% 40% 50%

Percent that Use as Primary Approach to

Establish Team

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Another Random Scribd Document
with Unrelated Content
 Me miserable! which way shall I fly
Infinite wrath and infinite despair?
Which way I fly is Hell; myself am Hell;
And, in the lowest deep, a lower deep
Still threatening to devour me opens wide,
To which the Hell I suffer seems a Heaven.

Paradise Lost, Book IV, lines 73–78.

I. THE NATURE AND FORMS OF SYPHILIS OF

THE NERVOUS SYSTEM (NEUROSYPHILIS)
 PARADIGM to show possible abundance and variety of
symptoms and lesions in DIFFUSE NEUROSYPHILIS
(“cerebrospinal syphilis”). Autopsy.

Case 1. Mrs. Alice Morton[1] was in the hands of at least five well-
known specialists in different branches of medicine and surgery
during the nineteen years of her disease. It appears that she
acquired syphilis upon marriage at the age of 23 to a man who later
became tabetic and acknowledged syphilitic infection previous to
marriage. Mrs. Morton remained without children and there were no
miscarriages.
At the age of 27, she developed iritis, paresis of the left eye
muscles, and ulceration of the throat, with destruction of the uvula.
The syphilitic nature of her disease was at once recognized and the
classical treatment was given, although, through numerous shifts in
consultants, this treatment was never pushed to the limit. At 28 Mrs.
M. began to suffer from severe headaches resembling migraine and
accompanied by attacks of paræsthesia; at 35, came severe pains in
the back and difficulty in walking.
At 36, the migraine attacks began to be accompanied by blurring
of vision and dizziness. The difficulty in walking became extreme,
affecting particularly the right foot. The legs became spastic, there
were pains and hyperæsthesia of the chest, and severe cramps of
the legs. Antisyphilitic treatment at this time yielded marked
improvement.
During her thirty-sixth year, Mrs. M. sustained curious transient
losses of vision and of hearing. She was also irritable, and at this
time developed her first pronounced mental symptoms, namely,
delusions concerning her relatives. There were also a few seizures of
an epileptiform nature.
 At 38 there was a spell of total deafness, followed by
improvement. The eye muscles were also subject to a variable
involvement with intervening spells of improvement. The knee-jerks
were lost, but after a time returned in less pronounced form. Shortly,
an absolute paralysis and extensive decubitus developed, and death
occurred at 39.
The autopsy is briefly summarized below, but it is important in the
understanding of Mrs. M.’s case (particularly some of the sensory
symptoms and the transiency of certain symptoms) to consider the
pre-infective history. Although there seems to be no doubt that the
patient acquired syphilis at about 23 years of age from a syphilitic
husband, who himself later became tabetic, yet it is of note that the
patient was the only child of parents, both of whom also suffered
from mental disease. Mrs. M.’s father died of what was called
softening of the brain (one should avoid terming all old cases of so-
called “softening of the brain” syphilitic, since the older
diagnosticians did not always distinguish between non-syphilitic
arteriosclerotic effects and syphilitic disease). Mrs. M.’s mother also
died insane (confusion and emotional depression). It is clear, then,
that we do not need to suppose that every symptom shown by Mrs.
M. is directly due to destructive or irritative lesions immediately due
to the spirocheta pallida. The case is, in fact, an excellent lesson as
to the association of structural and functional effects in
neuropathological cases.
Mrs. M. as a child had shown talent, but was somewhat nervous
and eccentric. At one time, she had an attack of hysterical
dysphasia; at another time, an attack of hysterical dyspnea; during
another period, an apparent obsession (kicking the mopboard at
regular intervals). Moreover, she had for years suffered from
migraines of a severe and unusual type. Both the hysterical tendency
and the migrainous tendency became mingled with the results of the
neurosyphilis in later stages of the disease in such wise that it was
hard to tell exactly where the structural phenomena left off and the
functional phenomena began.
 For example, at the age of 32, nine years after infection and four
years after the earliest nerve symptoms traceable to syphilis, and at
about the time of the onset of spinal cord symptoms, an attack was
described as follows:
The patient had a very severe attack of migraine (?) yesterday,
preceded and accompanied by paraphasia, so severe that for
three hours she was unable to make herself understood, and
indeed felt “as if her ideas were getting away from her.” This
attack was ushered in by a numbness of the forefinger and
thumb of the right hand, which lasted for about three hours,
though the earlier attacks had lasted for only about ten minutes.
During this period the hand felt as if it had been frozen and the
loss of muscular power was so great that she was unable to hold
objects in the hand. In some of the attacks this paræsthesia has
affected the entire left half of the body, and occasionally the
right half. Sometimes the seizures come on with great
suddenness, so that once, when she was attacked while in the
middle of the street, she had considerable difficulty in reaching
the sidewalk. After the worst part of the attack is over a certain
amount of paraphasia may persist for some days, together with
awkwardness in the use of the right hand and numbness. She
has had a great deal of nausea and vomiting, without reference
to the taking of food.[2]
Bearing in mind the mingling of structural with functional
symptoms in this case, let us consider the autopsy findings.
 ANATOMICAL
FORMS OF NEUROSYPHILIS
AUTONOMIC (SYMPATHETIC) NEUROSYPHILIS?

PERIPHERAL NEUROSYPHILIS

CENTRAL NEUROSYPHILIS
MENINGEAL
VASCULAR
PARENCHYMATOUS
MENINGOVASCULAR
VASCULOPARENCHYMATOUS
DIFFUSE ( = MENINGOVASCULOPARENCHYMATOUS)

GUMMA

Chart 1
 CLINICAL FORMS OF
NEUROSYPHILIS
HEAD AND FEARNSIDES, 1914
SYPHILIS MENINGOVASCULARIS
CEREBRAL FORMS
HEMIPLEGIA
AFFECTION OF THE CRANIAL NERVES
MUSCULAR ATROPHY
LATERAL AND COMBINED DEGENERATIONS
EPILEPSY

SYPHILIS CENTRALIS
DEMENTIA PARALYTICA
TABES DORSALIS
MUSCULAR ATROPHY
OPTIC ATROPHY
GASTRIC CRISES
EPILEPTIC MANIFESTATIONS

Chart 2
Peripheral neurosyphilis: The lesions of the cranial nerves were
characteristically asymmetrical. Whereas the left third nerve looked
entirely normal, the right third nerve had its diameter reduced
two-thirds. On the other hand, the fourth nerves were equal and
apparently normal. The sensory portion of the left fifth nerve was
normal; the right fifth nerve was normal. The right sixth nerve
agreed with the right third nerve in being atrophic, and was in fact
reduced to a mere thread without contained nerve fibres at a point 2
mm. from its superficial origin. Although the right third nerve was
atrophic, it was the left seventh and eighth nerves which had
become atrophic; the process had spared the right seventh and
eighth nerves. The remainder of the cranial nerves were grossly
normal, except that the optic nerves had an outer zone of a
translucent nature. So far, no spirochetes have been demonstrated in
any portion of the nervous system of this case, but such
asymmetrical and focal cranial nerve lesions are perhaps due to local
spirochetal infection, punctuating (as it were) the diffuse process.
How much of the transient blindness, deafness, and ocular
paralysis can be explained on the anatomical findings in these
nerves? Possibly a portion of the phenomena can be so explained.
Thus, the mechanical conditions of pressure inside and outside these
nerves, both in their peripheral course and in their passage through
the membranes, can be readily understood to differ during the acute
and subacute inflammation, during the process of repair in the pial
tissues, and during the process of overgrowth of neuroglia tissue
about the superficial origins of the nerves. Of course, the majority of
lesions of these nerves were entirely extinct at the time of the
autopsy, and their history could be surmised only from the
appearances in the left eighth nerve. Here occurred a sharply
marked focal area of gliosis with apparently total destruction of
nerve fibres and related with a lymphocytosis of the investing
membrane (one of the few areas of lymphocytosis found anywhere
in this case).
 If it were not for the pre-infective history, the hysterical dysphasia
and dypsnea, the youthful obsessions, the migrainous tendency, and
the psychopathic inheritance, we might be tempted to try to explain
the transient blindness, the deafness, and ocular palsies on the basis
of mechanical and toxic variations in the conditions of the peripheral
cranial nerves. The existence of a trace of lymphocytosis in the left
eighth nerve leads to the hypothesis that treatment might still be
effective in this particular region (see below in discussion of spinal
symptoms).
Spinal neurosyphilis: Not only the spinal cord but also the
posterior and anterior nerve roots exhibited severe lesions. These
lesions were both meningeal and parenchymatous. The meningeal
process differed in its intensity in different parts of the spinal cord,
being severest in the thoracic region. At one point in this region, the
dura mater was so firmly attached to the pia mater that the line of
demarcation between the two membranes was hard to make out. In
fact, it seems clear that there could have been no free
intercommunication between the spinal fluid above these adhesions
of dura to pia mater and the spinal fluid below the adhesions.
Accordingly, it seems that lumbar puncture, had it been practised in
this case, would have failed to show features representative of the
whole cerebrospinal fluid system. Moreover, since at no point in this
region of adhesions or in the pia mater of the spinal cord below this
point, were found any lymphocytes, it seems clear that the ordinary
lumbar puncture would have failed to reveal a pleocytosis. Whether
this fluid would have yielded a positive globulin and excess albumin
test, it is now impossible to say; but it appears that the process in
the lower part of the spinal cord was to all intents and purposes
extinct.
However, there was one region of more severe inflammatory
involvement. The spinal cord in the cervical region showed a
lymphocyte infiltration of its vessels amounting to a mild myelitis
(meaning, thereby, an inflammatory process of the spinal cord
remote from the pia mater). Moreover, in this region, there was,
besides the perivascular infiltration of the substance, also an
infiltration of the overlying membranes themselves, especially in and
near the posterior root zones.
The lessons of this finding are several: The inflammatory process
in this case does not appear to have been entirely extinct! Can we
not suppose that treatment might still have benefited this local
inflammation (perivascular infiltration of the cervical spinal cord
substance and overlying lymphocytic meningitis)? Can we not also
picture the gradual ascent of the inflammatory lesions from lower
segments to higher segments and possibly conceive of the gradual
elevation of the zone of hyperæsthesia manifested in this case as
following the gradual displacement upward of the lymphocytic
process? Are there spirochetes in this tissue? So far none have been
discovered, possibly through inaccuracies of available technique. To
the neuropathologist, however, the lesion looks like a local reaction
to organisms.
In addition to the spinal meningitis, chronic and acute, as above
described, there were extensive parenchymatous spinal lesions.
In the first place, the meningitis had affected practically all the
posterior roots so that the explanation of the posterior column
sclerosis of this case is clear. The meningitis had apparently been so
marked, also, that all the fibres anywhere near the periphery of the
spinal cord had been likewise destroyed. The posterior columns and
the posterior root zones were markedly sclerotic; or as we say
(having reference to the overgrowth of neuroglia tissue) gliotic. But
there was as much sclerosis (gliosis) of the lateral columns
(particularly in the posterior two-thirds) as there was in the posterior
columns and root zones. In fact, the entire posterior half or two-
thirds of the spinal cord markedly outstripped the anterior portions
of the cord in the severity of the gliosis (sclerosis) shown.
But although we can explain the posterior column sclerosis, the
sclerosis of the posterior root zones and the marginal sclerosis
(Randsklerose) round the entire periphery of the cord, on the basis
of long-standing effects of old meningitis, we cannot thus explain
another finding, namely, the destruction of the fibres in the lateral
columns. This, in fact, is explained through lesions (mentioned
below) that affected the encephalon. The net result of all these
lesions of the spinal cord was to leave only the gray matter and a
small amount of surrounding fibres (belonging to short tracts uniting
nearby segments) intact. Briefly stated, every long tract in the
spinal cord appeared upon examination to be extensively
degenerated. The genesis of this parenchymatous loss was,
however, double, being in part due to a local meningeal process
(sometimes known as “perimeningitis”) and in part due to a cutting
off of the pyramidal tract fibres on both sides by lesions higher up in
the nervous system.
Case I.
Spinal Cord
(Three
Levels)
Showing:

A. Marginal
sclerosis—
effect of old
meningitis
now extinct.
B. Posterior
column
sclerosis—
effect of
meningitis
about
posterior
roots also
now extinct.
C. Bilateral
pyramidal
tract
sclerosis—
effect of
cerebral
thrombotic
lesions.
Note
distortion of
tissues in B
and C,
partly
artificial
(tissues in
places
diffluent).
 ANATOMICAL FORMULAE
MENINGOVASCULOPARENCHYMATOUS INVOLVEMENT

M, V, P, or Combinations Applied to the Classification of Head and

Fearnsides

I. SYPHILIS MENINGOVASCULARIS
CEREBRAL FORMS M or V or
MV[3]
HEMIPLEGIA V
AFFECTION OF THE CRANIAL NERVES M
MUSCULAR ATROPHY M
LATERAL AND COMBINED DEGENERATIONS M
EPILEPSY M or V

II. SYPHILIS CENTRALIS

DEMENTIA PARALYTICA MVP or VP
TABES DORSALIS MP
MUSCULAR ATROPHY P
OPTIC ATROPHY P
GASTRIC CRISES (M? or) P?

EPILEPTIC MANIFESTATIONS P?

Chart 3
Can we offer any explanation of the partial return of knee-jerks
after their temporary total loss at a certain period of the disease? We
may assume that the knee-jerks were functionally lost about a year
before the death of the patient through the partial or even almost
complete destruction of the entering posterior root fibres at that
level of the spinal cord which is directly related with the knee-jerk.
The later partial return of the knee-jerks apparently requires us to
suppose the maintenance of some fibres and collaterals by which a
functional connection can be effected between the fibres of the
posterior roots and the anterior horn cells which innervate the
quadriceps femoris. Let us now suppose that pari passu with the
actual return of the knee-jerks, the destructive processes that are
affecting both pyramidal tracts high up in the nervous system are
now advancing. It is clear that, whatever inhibitory influence these
pyramidal tracts have been exerting up to this time upon the knee-
jerk reflex arc, that influence is now to be decidedly reduced in
amount and possibly absolutely lost. Upon the loss of such inhibitory
influences exerted from above, the few persisting connections of the
posterior roots and anterior horn cells are now permitted to resume
their functions.
Encephalic neurosyphilis: The lesions mentioned above as
causing destruction of the pyramidal tracts of the spinal cord were
symmetrically destructive and atrophic lesions of the gray matter of
both corpora striata with atrophy of the anterior segments of the
internal capsules. There was a degenerative process of the corpus
callosum especially affecting the forceps minor of the tapetum. The
ventricles were largely dilated, indicating a considerable destruction
and atrophy of the white matter in general.
After the above discussion of the possible effects of pyramidal
tract lesion in this case, it is unnecessary further to discuss the
paraplegia produced by the cystic lesions of the corpora striata. The
theorist might inquire how these cystic lesions are produced:
whether by vascular blocking or by toxic effects of the accumulations
of spirochetes. Evidence is lacking which would completely sustain
either hypothesis. Still, we do know that lesions almost identical in
appearance may be produced by the necrosis consequent to the
plugging of nutritive vessels in an organ like the brain supplied with
end arteries. Therefore, it is probable that most pathologists would
believe these lesions of the corpora striata to be produced by
vascular plugging of the nature of thrombosis.
It is worth while to note that there was a suggestion of foci of
encephalitis made out upon the gross examination. The cortex in
general showed strikingly few lesions. However, the convolutions did
show in places numerous ill-defined areas of hyperemia and slight
swelling. These areas were of irregular distribution and only a few
mm. or cm. in diameter. No gross vascular lesions were
demonstrable in connection with these focal areas. Microscopically,
however, venous plugs of polymorphonuclear leucocytes were found,
and the local hyperemias were found to be largely due to venous
congestion. However, very few polymorphonuclear leucocytes were
found outside the blood vessels.
The white matter of numerous convolutions showed
microscopically certain pale spots suggestive of an early atrophic
process. Very possibly these represent a general tendency in the
cerebrum to the same process of parenchymatous loss which had
proceeded to such a marked degree in the spinal cord.
There was a single large so-called cyst of softening in the
cerebellum (1.5 mm. across by 0.5–7.5 cm. in depth).
How far can we explain the symptoms of this case on the basis of
these encephalic lesions? We can offer no correlation with the
cerebellar lesion; and possibly this lack of correlation is to be
expected on account of its failure to affect the vermis. As to the
cystic lesions of the corpora striata, their effect in producing
paraplegia at the close of life is obvious, and their possible relation
to the partial return of knee-jerks has been discussed. Literally
amazing was the comparative integrity of the cortical gray matter of
this case when the spinal cord and the interior structures of the
encephalon had been subjected to such severe and numerous
lesions. The only mental symptoms noted in the case were sundry
delusions directed against the patient’s relatives and a certain
optimism which led the patient to cling as if with an obsession to the
belief that in the end she would get well.
 VARIOUS FORMS OF
NEUROSYPHILIS COLLECTED
FROM SEVERAL SOURCES
MENINGEAL NEUROSYPHILIS (M)

GUMMA OF DURA MATER M

GUMMATOUS MENINGITIS (Pial) M
SYPHILITIC MENINGITIS (Pial) M
SYPHILITIC CRANIAL NERVE PALSIES (Primarily M
Pial)
SYPHILITIC BULBAR PALSY M
SYPHILITIC ROOT NEURITIS M
SYPHILITIC TRANSVERSE MYELITIS M
SYPHILITIC NEURITIS (Some Cases by Extension) M
SYPHILITIC EPILEPSY (Some Cases) M
SYPHILITIC MUSCULAR ATROPHY (Some Cases) M

VASCULAR NEUROSYPHILIS (V)

SYPHILITIC ARTERIOSCLEROSIS V
SYPHILITIC CEREBRAL THROMBOSIS V
SYPHILITIC APOPLEXY V
ANEURYSM V
SYPHILITIC EPILEPSY V

PARENCHYMATOUS NEUROSYPHILIS (P)

GUMMA P
CEREBROSPINAL SCLEROSIS P
SYPHILITIC PARANOIA P?
SYPHILITIC CHOREA P
SYPHILITIC EPILEPSY P
TABETIC PSYCHOSIS P?
SYPHILITIC MUSCULAR ATROPHY P
SYPHILITIC NEURITIS P

Chart 4a
 MENINGOVASCULAR NEUROSYPHILIS (MV)

CEREBRAL SYPHILIS MV
CEREBROSPINAL SYPHILIS MV
SYPHILITIC EPILEPSY MV

MENINGOPARENCHYMATOUS NEUROSYPHILIS
(MP)

CEREBRAL SYPHILIS MP
CEREBROSPINAL SYPHILIS MP
TABES DORSALIS MP
ERB’S SYPHILITIC SPASTIC SPINAL PALSY MP

VASCULOPARENCHYMATOUS NEUROSYPHILIS
(VP)

CEREBRAL SYPHILIS VP
CEREBROSPINAL SYPHILIS VP
PARETIC NEUROSYPHILIS (GENERAL VP
PARESIS)
LISSAUER’S GENERAL PARESIS VP

MENINGOVASCULOPARENCHYMATOUS
NEUROSYPHILIS (MVP)

CEREBRAL SYPHILIS MVP

CEREBROSPINAL SYPHILIS MVP
PARETIC NEUROSYPHILIS MVP
TABOPARESIS MVP
 DOUBTFUL (TOXIC?, IRRITATIVE?)
NEUROSYPHILIS (?)

“PARESIS SINE PARESI”

SYPHILITIC NEURASTHENIA
TABETIC PSYCHOSIS
SYPHILITIC PARANOIA
SYPHILITIC POLYURIA, POLYDIPSIA
SYPHILITIC NEURALGIA

Chart 4b
Summary: We have here dealt at length with a long-standing
Diffuse Neurosyphilis affecting to some extent the entire meninges
and producing a destruction of posterior column fibres and
numerous other fibres of the spinal cord (tabetiform portion of the
neurosyphilis picture). We have also found central lesions of the
corpora striata affecting the destruction of both pyramidal tracts
(paraplegic portion of the neurosyphilis picture). We have found
evidences of acute inflammation (lymphocytosis) in the cervical
region of the spinal cord and in the left eighth nerve (progressive
inflammatory neurosyphilis picture). In short, we have presented
a case of diffuse (meningovasculoparenchymatous) neurosyphilis
characterized by an ascending character in a course of at least 16
years; we have indicated a number of possible clinical correlations,
not only with the major portion of the clinical course (symptoms of
myelitis and pyramidal tract destruction), but we have also
mentioned, merely for their suggestive value, a number of finer
correlations between histological findings and certain clinical features
(notably transient losses of vision and hearing, and a partial return
of the lost knee-jerks). Bearing in mind the clinical and anatomical
findings of this case, we shall be able to discuss the cases that
follow in a briefer and more condensed fashion.
 TABETIC NEUROSYPHILIS (“tabes dorsalis,”
“locomotor ataxia”) complicated by vascular
neurosyphilis (hemiplegia). Autopsy.

Case 2. Francis Garfield had been a successful lumberman and

had enjoyed good health until his forty-fifth year. Suddenly one day,
while walking on the street, Garfield lost the use of his legs and for a
time was quite unable to walk. However, he recovered locomotion
and after a time there was nothing wrong with his leg movements
except a slight ataxia.
At the age of 52 Garfield had to give up work. It appears that he
had been becoming cranky, sometimes, for example, shouting,
whistling and slamming doors, apparently to annoy the family. His
intellectual capacity seemed to be maintained, although his memory
was slightly impaired.
At 67 years there was an ill-defined seizure, followed a few days
later by another seizure with aphasia (wrong words used and lack of
understanding of things said).
For years Garfield had been totally deaf in the right ear (following
explosion of a gun?). Now, however, the left ear also showed a
sensory impairment. Slight slurring of speech had been noticed first
in the sixty-sixth year.
Physically there was a slightly enlarged heart with accentuated
second aortic sound and irregular rhythm. Neurologically, inability
to stand or walk; marked ataxia in his leg movements; upper
extremities quite well controlled; the pupils were small and unequal,
the left being larger than the right; although the reactions were
difficult to test, the pupils seemed to react slightly to direct light
stimuli; the knee-jerks were absent; tests for sensibility so far as
could be determined did not show any abnormalities; there was
much complaint of sharp pains in the legs.
There is no doubt that we are here dealing with a case of Tabes
Dorsalis plus certain complications due to Vascular Lesions. The case
went on to death from rupture of aortic aneurysm (also doubtless
a syphilitic complication). The death occurred at 71, four years after
admission to Danvers Hospital.
 MAIN FORMS OF NEUROSYPHILIS
(CLASSIFICATION OF THIS BOOK)
DIFFUSE NEUROSYPHILIS
(non-vascular forms of “cerebral,” “spinal” and
“cerebrospinal syphilis”)

VASCULAR NEUROSYPHILIS
(“cerebral arteriosclerosis,” “cerebral thrombosis”)

PARETIC NEUROSYPHILIS
(“general paresis”)

TABETIC NEUROSYPHILIS
(“tabes dorsalis”)

GUMMATOUS NEUROSYPHILIS
(“gumma of membranes, of brain”)

JUVENILE NEUROSYPHILIS
(paretic, tabetic, diffuse)

Chart 5
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