Many companies today are making new product development a central element of their competitive strategy.

Many companies today are making new product development a central element of their competitive strategy. Because the potential benefits of successful product innovation are great—prolonged growth, superior financial returns, and strong investor interest-many companies offer employees incentives such as promotions and bonuses for developing new products, incentives not offered for innovations in other areas of the business, firms' priorities can also be shaped by their measurement systems, since these systems can directly measure returns from new products more immediately than they can measure returns from investments in such areas as organizational restructuring or innovations in marketing.

But the organizational culture of such companies can hurt them in the marketplace because a narrow focus on product development can ultimately detract from a firm's performance. For instance, a company's ability to profit from new products can be severely hampered if it has neglected other functions and business processes. If a company develops a superior new product but is unable to distribute and promote t rapidly, competitors with better distribution systems may copy the product and introduce It into the market before the innovator can profit from its innovation. In contrast, effective distribution, marketing, and accounting systems-that is, strong overall business systems -can act as entry barriers, deterring would-be competitors from entering a particular

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