Is 'Cutting-Edge' Good? Assessing Product Newness Factors in Technologically Turbulent Environments?

Overview: Firms are constantly faced with the dilemma of developing products that are both cutting edge and also easily understood by customers. Customers may reject products that diverge too much from prior generations of products, but products that are too similar to prior products may not stand out. We analyzed 423 firms to better understand how both product newness to the firm and product newness to the customer impact NPD performance in varying environments. Our findings highlight that firms are generally effective at innovating on their own, but customers need some turbulence to adopt new innovations that are dissimilar to their prior usage experiences. Firms should continue to innovate and be ready when a turbulent environment provides innovative opportunities.