Alcatel-Lucent falls, Huawei ascends: new product development makes the difference

Purpose: This study aims to use the new product development (NPD) perspective to understand why traditional leading telecom equipment companies, such as Alcatel-Lucent (ALu), have stagnated but the newcomer Huawei has achieved steady growth. Design/methodology/approach: This paper takes the form of a comparative case study. Findings: Three significant differences in NPD process between the companies were discovered: first, although both companies claim that they are market-oriented, Huawei’s NPD projects are customer-driven, and ALu projects are joint considerations of customer demand and technology leadership; second, Huawei uses a design-to-value strategy, and ALu applies a design-for-quality-premium strategy; third, resources are allocated and shared at the corporate level in Huawei and at the business division level in ALu. Practical implications: This study offers several implications for NPD managers. First, holding a market leader position is more important than being a technology leader. Companies must fundamentally change their mind-sets, restructure NPD models and prioritize and empower marketing and sales departments in the decision-making and management of NPD projects. Second, to maximize customer value, managers must balance cost and quality and avoid overengineering. A quality premium no longer necessarily leads to product competitiveness. Third, to improve the efficiency of NPD performance, companies must build up a mechanism to enable across-boundary resources. Originality/value: This study highlights a number of key NPD strategy issues. It was conducted in the telecom equipment industry, but NPD managers of other industries will also gain useful insights from the discussion.