Ideation-Execution Transition in Product Development : Experimental Analysis

Bringing a new product to market involves both a creative ideation stage, and an execution stage. When time-to-market constraints are binding it is an important question how to divide limited time between the two stages and who should make this decision. We introduce a laboratory experiment that closely resembles this setting: it features a product development task with an open design space, a downstream cost increase and two development stages. We show that performance is significantly worse when designers choose for themselves when to transition from ideation to execution and that decision control explains a large share of performance variation even after controlling for individual differences. How the time is allocated between ideation and execution does not affect mean performance, but later transition increases risk. One driver of poor design outcomes in the designer-initiated transition regime are delays in physical construction and testing of designs. We show that such delays can be prevented by "nudging" designers towards early prototyping. However, the most important performance driver is the lack of task structure in endogenous regimes, which can be remedied by demanding a concrete, performance-oriented deliverable prior to a transition