Technovation 20 (2000) 115–127

www.elsevier.com/locate/technovation

Technological entrepreneurship
Integrating technological and product innovation
a,*
Anne Tomes , Rosie Erol a, Peter Armstrong b

a
Design and Innovation Research Unit, School of Cultural Studies, Sheffield Hallam University, Psalter Lane Campus, Sheffield S11 8UZ, UK
b
Department of Management, Darwin Building, Keele University, Staffordshire ST5 5BG, UK

Received 30 January 1999; received in revised form 15 June 1999; accepted 22 June 1999

Abstract

Using case study material from an advanced chemical technology, this paper identifies two forms of connection between the
developer/producer of a new technology and the manufacturers of consumer products. In the first, the connection is direct, whilst
in the second it is effected through an intermediary company which has developed an expertise in tailoring the new technology to
particular applications. Whilst the direct connection has resulted in a number of NPD failures, the mediated connection has been
consistently successful. Through an examination of two NPD programmes within each chain of connection, the paper examines the
reasons for these differential success rates, and discusses the implications for the organization of NPD within advanced technology
fields.  2000 Elsevier Science Ltd. All rights reserved.

Keywords: Technological entrepreneurship; Technological innovation; Product innovation; Networks; NPD chains; Intermediary companies

1. Introduction ket failures. Those carried out in the applications com-

This paper is concerned with the distinction between
technological and product innovation, and with the
effectiveness of different forms of inter-company net-
work in achieving the latter. The idea that the two forms
of innovation may best be achieved through different
forms of co-operation is not entirely new. An explora-
tory study by Moenaert and Caeldries (1996) suggests
that technological learning may be improved by the
facilitation of internal communication flows within an
R&D team whereas market learning may be advanced by
contacts with other R&D teams. The present — equally
exploratory — study compares two product development
programmes carried out within a company specializing
in the development and production of an advanced tech-
nology with two carried out by a company specializing
in applications of the same technology. Though the pro-
grammes in the producer company achieved a measure
of technological success, they were, in spite of this, mar-
* Corresponding author. Tel.: +44-114-225-2661; fax: +44-114-
225-2603.
E-mail address: annetomes@aol.com (A. Tomes)
pany, on the other hand, were market successes.
The failures in the producer company illustrate the
importance for the success of NPD programmes of
assigning due weight to product, as opposed to techno-
logical innovation. Where technologies are relatively
stable, of course, this distinction is obvious, since much
design effort in these areas goes precisely into the cre-
ation of products which are innovative in the sense of
enabling new lifestyles whilst employing conventional
technologies. According to Hoshino (1987) and Evans
(1990), this is the situation in some areas of consumer
electronics. In fields of rapid technological change how-
ever, the distinction between technological and product
innovation may be obscured by the concurrence of the
two. On the one hand NPD programmes may be set in
motion by the opening-up of new technological possi-
bilities, and on the other, programmes of technological
development may be driven by new product concepts.
Where there is a dialogue of this kind between techno-
logical and product development, it is easy to mistake
the one for the other, particularly where the product of
one company in a supply chain is a technology for its
customer. As has been pointed out by Afuah and Bahram
(1995), innovation may appear differently to the innovat-

0166-4972/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 1 6 6 - 4 9 7 2 ( 9 9 ) 0 0 1 1 6 - 9
116 A. Tomes et al. / Technovation 20 (2000) 115–127
ing entity than it does to its suppliers or its customers.
For example, a technology which is innovative from the
point of view of its supplier may, for certain customers,
be nothing more than another means of realizing a con-
ventional product.
The dangers of confusing product and technological
innovation are illustrated through four case studies of
new product development (NPD) in a field of rapidly
advancing technology, ‘specialist chemicals’. For
reasons of confidentiality we have had to suppress details
of the actual technology. The case study approach was
deemed appropriate for an exploration of the factors
which might account for differential success rates in high
technology NPD, since it enables complex causative
connections to be traced through a number of forms of
evidence (documents, artefacts, interviews and
observation). On the downside, case study evidence can
only be generalized in the form of hypotheses or theories
rather than statistically validated findings (Yin, 1994).
Two of the case study NPD programmes were unsuc-
cessful in the sense that the company succeeded in solv-
ing a sequence of difficult technological problems, only
to find that their product’s advantages over a simpler
rival technology were insufficient from their customers’
point of view to justify its greater cost and handling dif-
ficulties. The assumption behind these NPD programmes
appears to have been that the solution of a series of tech-
nological problems would automatically result in an
innovative product. Bearing in mind Cooper and Kle-
inschmidt’s (1993) finding that the single most important
determinant of NPD success is a product which is clearly
different from, and superior to others in the same market,
these failures show the importance of maintaining an
end-user’s, as opposed to a technologist’s perspective
on innovation.
A second, related, objective of the paper is to explore
the effectiveness of different forms of inter-company
network in the NPD process, particularly in its crucial
early stages (Cooper, 1988). The advantages and prob-
lems of networks as a means of pooling resources of
technology, intellectual property and finance have been
extensively discussed in a variety of high-technology
industries — for example, pharmaceuticals [(Bower,
1993), computing (Noren et al., 1995), chemical pro-
cessing (Hutcheson et al., 1995) and home automation
(Tidd, 1995)]. This body of work, however, has yet to
produce an accepted vocabulary for different patterns of
inter-company interdependence. Consequently the ques-
tion of which pattern might most effectively promote
NPD has scarcely been posed. The present paper offers
a beginning in this respect, since the data suggest that
the relationship between a company specializing in tech-
nological development and the manufacturers of con-
sumer products may be more effective when mediated
by a company specializing in applications of the tech-
nology.
The two themes of the paper are connected in that the
respect in which the mediated relationship was superior
to the direct one was in the integration of product and
technological development. In the mediated relationship,
product concepts originated with consumer goods manu-
facturers rather than with either the developer of the
technology or the application specialist, thus ensuring
that due weight was assigned to the product innovation
aspect. In this connection, survey data by Karakaya and
Kobu (1994) show the advantages of using customers as
the source of new product ideas, whilst the importance
of involving customers in product design at a more gen-
eral level has been confirmed by Gemunden et al. (1992),
Shaw (1993) and Hutcheson et al. (1996).
Besides assigning due weight to the product inno-
vation aspects of NPD, the mediated relationship pos-
sessed the additional advantage that the expertise of the
application specialist was focused precisely upon the
integration of product and technological innovation. This
is consistent with Iansiti’s (1995) finding that differences
in NPD performance in fields characterized by discon-
tinuous technological change are correlated with skills
and routines aimed at technology integration which are
successful in merging deep technical knowledge with a
detailed understanding of the specific environment in
which new technologies are applied. The difference
between the cases reported here and those described by
Iansiti is that these integrative skills were supplied by
an intermediary company, rather than developed within
the organization which developed the base technology.
The implication is that this form of network may be an
effective way of managing the integration of product and
technological development.
2. Case studies
2.1. Multichem
Multichem is a medium sized multinational company
which produces a range of products within the chemical
industry. The UK company has an annual turnover of
around £100 million, and employs about 1000 people.
The company’s involvement in specialist chemicals
began about 40 years ago, in collboration with edu-
cational and defence establishments. The original chemi-
cals that were developed were unstable and difficult to
use, and further research work was carried out to pro-
duce a more stable form. They succeeded in developing
a synthetic material which was much more stable and
predictable in its performance than the original materials
based on natural products. These new materials were
seen as being novel, highly versatile materials with new
optical properties which appeared to the company to
have the potential for a wide range of applications.
Although the synthetic version is still not easy to handle,
 A. Tomes et al. / Technovation 20 (2000) 115–127
this achievement opened up opportunities for the devel-
opment of new products.
Currently, the development and production of special-
ist chemicals is carried out by the Specialist Chemical
Group. This group, consisting of about a dozen research
staff plus the marketing and production teams, is respon-
sible for the development of consumer applications as
well as the technology itself. We talked with staff for a
total of nine hours, with the data coming from taped
interviews with the Marketing and Business Develop-
ment staff of the Specialist Chemical Group.
Using case study material from an advanced chemical
technology, this paper identifies two forms of connection
between the developer/producer of a new technology and
the manufacturers of consumer products. In the first, the
connection is direct, whilst in the second it is effected
through an intermediary company which has developed
an expertise in tailoring the new technology to particular
applications. Whilst the direct connection has resulted in
a number of NPD failures, the mediated connection has
been consistently successful. Through an examination of
two NPD programmes within each chain of connection,
the paper examines the reasons for these differential. It
will be evident that Multichem’s early presence in the
market for specialist chemical applications was built on
successful R&D programmes. Perhaps for this reason,
and perhaps because the supply of scientific apparatus
to universities and colleges is still a major part of the
company’s business, there remains a strong element of
R&D-push in Multichem’s search for consumer markets:
... a lot of new products come out of R&D. It’s
people playing with the vivid effects, and thinking we
must be able to do something with this. And then it’s
given to the marketing department to do something
with it.
Multichem began to combine different chemical
components into mixtures to produce new effects. Unlike
research laboratories, however, commercial customers
could not be expected to master the delicacies of hand-
ling the specialist chemicals, since they are very sensi-
tive to contamination. However, if these new effects
were to be exploited in commercial applications, it was
necessary to find some means of insulating the specialist
chemical component from other components of the final
mixture. The answer, developed over a number of years
of R&D work was to process the specialist chemicals
further. This solution therefore, represented a major R&
D investment for Multichem before the search for con-
sumer applications could even begin:
We were making specialist chemicals, and then
because everyone said they found them so difficult to
use, we took it on to the next stage ourselves, and
started encasing them. Many other people who have
117
wanted to use these wonderful effects couldn’t do the
modification. Now that’s not surprising, it’s very
tricky. So we started talking to ink makers, and paint
makers, surface coatings people. “Here’s some
encased chemicals. See if you can make some inks
and some surface coatings.” This was pretty hard
work, because most of them still couldn’t use the
encased chemicals. Basically what they were doing
was taking them, sticking them into an existing sys-
tem, and hoping that would make the product. Now
that would never work, and it never did work. So we
employed ink specialists, and we learned how to make
inks, so we could basically do it ourselves.
Having developed its range of inks, Multichem began
looking for consumer applications. The Business Devel-
opment Manager describes the sense of anticipation at
that time.
It was really a very exciting time because we had
these [inks] which people were able to use, just about,
with a lot of technical assistance, but they could do it.
The general understanding was that only volume mar-
kets were worthwhile. Because of the problems of hand-
ling specialist chemicals, even in capsule form, niche
markets would have demanded disproportionate cus-
tomer support.
Each market you sold the specialist chemicals to
required a large amount of technical back-up, due to
the difficulties of working with them. Working with a
lot of smaller markets would have required too much
technical assistance on the part of the company. The
markets which were considered were all large enough
markets to justify the company undertaking the pro-
ducts.
2.1.1. Clothing
The idea behind the clothing project was to print gar-
ments with the special inks. Clothing manufacturers
were contacted by the marketing department to obtain
an initial reaction to this product concept. This was
favourable, and so the decision was made to go ahead.
This immediately set the agenda for an R&D pro-
gramme: the further development of the specialist
chemical inks so that they would be suitable for screen-
printing onto textiles. Washability was a problem:
...the water resistance was generally atrocious, after
five washes you’d basically got rid of it... so we had
to do a lot of research into how we could make these
screen printing inks stable enough to put onto fabric.
We spent a lot of time with cross linking systems to
try and get it washable.
118 A. Tomes et al. / Technovation 20 (2000) 115–127
—and the loose weave of cheap mass market clothing
fabrics:
The thing about [these materials] is that they are
generally very low quality, very stretchy... with lots
of holes in. And we had an ink which didn’t stretch
and didn’t wash very well... also the [brightness of
the] effect depends very much on getting a single
layer of the chemical on a black background. If
you’ve got holes everywhere, you don’t get this single
layer..., and you don’t get the pure effect.
—and the contamination of the specialist chemicals by
the other ingredients of screen-printing inks:
... the ink system we have had its limitations, you
can’t just stick your normal additives into the ink sys-
tem, you can’t use the normal binder systems... so
you’re very limited by the ingredients you can put in.
—and, for a cheap, mass-produced clothing, the cost of
the specialist chemical-based inks was a chronic anxiety.
In spite of all these problems, the project pressed
ahead:
So the market situation was wrong, there were
[competitive products] at the time, the cost was too
much, and there were technical problems as well. But
we weren’t to be stopped on that one... basically the
size of the market was very attractive. [So] we spent
more on R&D...
To some extent the problems of washability and of
printing onto stretchy fabrics were solved.
...It was really very close to what we needed. You
still only got ten washes out of it, and they all had to
be hand washed. You couldnt stick it in a machine.
So it was getting a bit dodgy for the volume market,
but people liked it.
In the light of the continued high cost, however, the
limited washability which had been achieved was begin-
ning to look insufficient:
If it’s a very cheap sort of material, then OK, ten
washes is fine, but with it being a specialist chemical
product it wasn’t cheap... we were really having to
charge quite a lot of money.
Meanwhile, the progress towards an achievable pro-
duct on the technical front appeared to have the effect
of clarifying the customers’ requirements:
When you talk to people about [this product] they
get really excited, saying it’s the most wonderful
thing ever, but when we actually came to do it, they
all went a bit lukewarm. You can describe [the effect]
on the phone, and they get very excited about it, but
when they actually see the end product... it’s not like
they’d been expecting. So there was always that dis-
appointment factor.
What finally killed the project was competition from
a rival technology. Not anticipated at the launch of the
specialist chemical development programme, these dyes
turned out to be cheaper, easier to apply and gave a bet-
ter visual effect.
It’s basically a different type of material... And they
are easier to use generally... I wouldn’t say they are
any more stable, they’re just [give a better effect],
easier to use...so they came at just exactly the same
time as we were trying to make people interested in
[our product]. And they came in at a low price.
2.1.2. Food labels
A special effect food label was another product con-
cept which emerged from Multichem’s search for mass
markets for their inks. The idea was proposed at a joint
meeting of the R&D and marketing departments:
...Sure enough we started talking to the food
people, they said, ‘Yes, that’s what we want. We must
have it.’
On the basis of this positive initial response to the
concept, Multichem began work on developing inks and
a printing system suitable for this application:
Screen printing is slow, so we had a real challenge.
We had got to get our ink systems into a new printing
technology. And the only way we were going to be
able to develop a new printing technology was by
going back to encasing the chemicals. All the faster
cheaper printing techniques were really putting down
much lower film weights of inks. So you need much
smaller chemical units. So we had an intensive R&D
campaign to reduce their size.
Besides reducing the size of the capsules, Multichem
needed to formulate a chemical mixture which would
attract the attention of the consumers, as well as produce
the desired effect.
This specialist chemical mixture is a very particular
mixture. They spent ages working on this.
The problem of printing the labels at speed was
tackled by forming alliances:
... we teamed up with an ink manufacturer, and a
label manufacturer. It was quite easy to persuade
 A. Tomes et al. / Technovation 20 (2000) 115–127
them, when we told them what we were planning
‘We’ve got a huge market here.’ So I teamed up with
these guys, and between us we developed a new ink.
And basically it worked brilliantly. We were concen-
trating on being experts on the specialist chemicals,
they were concentrating on being experts on the ink.
And that way we worked really very well together.
On this basis, Multichem succeeded in developing
what appeared to be a saleable system:
And when we had a system that we were both
happy with, we went and practically knocked on the
door of the biggest food manufacturer in the world,
well the UK arm of it, and said ‘Hi guys, this is who
we are, this is what we’ve done, we think maybe
you’ll be interested’. And they were. They turned
round and said, ‘Yes, we’re very interested, we basi-
cally want to use this as a marketing tool.’
At this point, the food manufacturer became suf-
ficiently committed to involve itself in the development
of the printing process:
... they supported the work. They bought the ink.
They really pushed it. We ran trials at the biggest
printers in the UK. We started to move into the huge
league, printing millions and millions of these labels,
so everything became a lot more serious and a lot
more expensive.
At this point, there was considerable excitement at
Multichem. There was talk of building a new plant if
the product took off. Against this, there were still funda-
mental, and apparently intractable problems:
We were still not too happy with the visual effect,
and the technical problems were really that it was a
water based ink. They were used to solvent based
inks. Water based inks take a lot longer to dry [and]
what they found was... they had to slow the machine
down, which they didn’t like. Also they couldn’t get
enough [ink] down with one hit. You had to put it on
twice. So you had to print it, dry it, print it and dry
it, and also try and print all the other solvent based
colours on the same sheet.
Still keen on the concept, the food manufacturer began
evaluating the same competitive technology which had
defeated Multichem in the previous project. At the time,
Multichem believed that their own specialist chemical-
based labels had sufficient technical advantage:
We thought we were going to be OK with the
[competition this time], because... [they couldn’t pro-
119
duce such a controlled effect]... So we thought, ‘OK,
we’ve really got the edge here.’
Unfortunately for Multichem, this turned out to be a
misreading of the manufacturers’ real needs. In the light
of the advantages of compatibility with solvent-based
inks and speed of printing enjoyed by the other tech-
nology, their shortcomings turned out to be acceptable
after all:
But at the end of the day... [the competitive tech-
nology was] cheaper and easier... And in the end we
ended up running trials side by side, with the [com-
petitor] company. And the story continues that [the
food manufacturer] then decided to go with the other
method. And the product went into the shops.
The business development manager reflects on the
experience:
The market opportunities were real. You can tell
by the [competitive technology] going in and taking
the market from us. It’s a low quality product, but at
the end of the day, it did what was necessary. You
can say ours is a much better product, much more
sophisticated,... and much cleverer, but they’re not
interested in all that stuff. I think one of our failings
has been concentrating too much on how clever we
are and what we can do with our wonderful specialist
chemical, we really are focused on these. If we were
more a marketing company than a chemical company,
we would have found a way of securing an agreement
with the manufacturers [of the competitors tech-
nology]...but it wasn’t the core technology for us...
and we wanted to just concentrate on the specialist
chemicals.
2.2. Chemtech
Though a small company, with only 60 or so
employees worldwide, Chemtech headquartered in the
US is the product of a complex series of take-overs, mer-
gers and demergers. This is well illustrated in the story
of how the company originally became involved with its
principal specialist chemical technology. About 25 years
ago, a precursor company — then a specialist stationary
manufacturer — incorporated a novelty specialist chemi-
cal product into one of its standard products. The popu-
larity of this item encouraged the company to develop
similar products for other applications. By the 1980s
stationary had been quietly forgotten as Chemtech’s
interest in specialist chemical technology diversified into
the more technically demanding applications. Currently
the company supplies specialist chemical products into
120 A. Tomes et al. / Technovation 20 (2000) 115–127
a wide range of application areas though the tradition of
novelties lives on in the form of promotional products.
Chemtech is one of the industry’s successes. Current
worldwide annual turnover is about $10 million, increas-
ing at about 20% per annum. The UK operation was set
up about 5 years ago and currently employs 15 people,
many of whom have worked for Multichem at some
point in their careers. Though the company has interests
in other technologies, about half of the UK employees
are directly involved in specialist chemicals. The form
of this involvement is rather different to that typical in
Multichem. Chemtech neither develops nor manufac-
tures specialist chemicals on its own account. Most of
its raw materials, in fact, are purchased from three or
four chemical manufacturers including Multichem.
Rather, it is a company which has built up a particular
expertise in formulating specialist chemical mixtures
which will deliver the properties required in consumer
applications. Surprisingly perhaps, in a science-based
industry, this expertise has been acquired through
experience, rather than formal scientific study. Our data
are from interviews, totalling 10 hours, with the com-
pany’s research, marketing and production staff. The
quotations are from taped interviews with the UK Direc-
tor:
The industry [is] founded really on empiricism.
People go out and find a bunch of chemicals, and then
mix them or process them in some way or another,
and the ones that work you keep, and the ones that
don’t you throw away. So if you go and search the
patent literature or the open literature the isn’t very
much written about anything that anyone does in the
industry. There are patents there if you read them
[which] tell you some rudiments, but there’s nothing
of any significance if you were to look seriously at
getting into the industry. So there’s quite a significant
barrier to entry based on the high level of empiricism.
This means that Chemtech’s ability to adapt specialist
chemical mixes is relatively unique within the industry:
... people that are in the industry who compete with
us basically rely on their raw material suppliers to
provide them with technical support. None of them
really have the capability to develop anything that is
outside of the ordinary.
The two basic processes through which Chemtech has
built up its portfolio of capabilities are acquisition and
recruitment. In an industry characterized by great deal of
churning, this demands opportunism informed by active
networking within the industry. This ability of innovat-
ing entrepreneurs to use personal networks and prior
relationships to glue together sources of knowledge and
expertise has been noted by Lipparini and Sobrero
(1994). The following examples are typical of the history
of Chemtech.
We added a downstream processing capability in
1982 when we hired a guy from [one company] which
was a competitor... We also hired another guy who
was doing [work for] medical [applications]. So he
had some experience of novel specialist chemical for-
mulations when he came to Chemtech.
Though the company is well aware of the importance
of marketing the capabilities built up in this fashion, the
industry as a whole has a reputation for uncertain qual-
ity. For this reason the company’s ability to develop
specialist chemical applications is best publicized by
results and by the education of potential customers rather
than advertising as such:
We don’t do a lot of advertising... you’ve got to
go through an education process to build an new
image for the products and the markets... a lot of our
competitors actually make products where the quality
actually isn’t what it should be, so you get a raw deal
in terms of the image in the marketplace. Particularly
in the UK market, the consumer level [of expectation]
is a result of our efforts to ensure the quality of the
products that we supply.
A very important consequence of the reputation built
up by Chemtech is that product concepts normally orig-
inate with its customers rather than the company itself:
Interviewer: So what’s the process then? Does
someone come to you with an idea, or do you have
an idea for a new product?
No usually people come to us with ideas. We’ve
got a good track record of making big things happen.
2.2.1. Toy blocks
This happened in the case of a multinational producer
of toy building bricks. The idea was to include a part
which used the special effects produced by these chemi-
cals in one of their toy sets. Chemtech became involved
as a result of the toy manufacturer’s search for a partner
who could develop such products:
Large companies undertake global searches for
people within this business... And they scan through
the various trade publications, publications about
company services and capabilities, and they’ll end up
with a shortlist of about a dozen people that might be
worth contacting around the world, who appear to
know something about the technology.
 A. Tomes et al. / Technovation 20 (2000) 115–127
In its initial approach, the toy company had in mind
a fairly definite specification for the brick. It is an
important part of Chemtech’s approach, however, that
this was treated as a basis for negotiation rather than
as an unalterable NPD target. The aim was to reach an
acceptable compromise between the customer’s require-
ments and what could realistically be achieved through
the formulation of specialist chemical mixtures:
I think what they wanted was basically somebody
who understood what they wanted to try and do.
When we first set out to describe what was possible,
we had to persuade them that they don’t actually need
the device to satisfy every one of their design pre-
requisites all at the same time. You end up working
backwards from the ideal product to a product that is
going to be acceptable to them that can be produced
to meet their tolerances, is technically possible and
fits also their budget...you have to communicate with
[the customers] and let them understand the tech-
nology of your business. If they understand, you’re
not just fobbing them off with something that’s
second best, you’re actually taking what’s available
and customizing it to what they particularly want.
To Chemtech’s director, this initial negotiation is a
key phase of the NPD process:
Customers usually ask us to do something which
is close to being impossible, on the boundary between
what you can and cannot do technically. You’ve got
to bring it back inside that boundary as far as you
can so that you can give yourself a realistic shot of
producing the thing reproducibly, and hitting it, not
spot on every time, but certainly within the levels of
tolerance that are acceptable to the customer. Every-
thing that Chemtech has ever done with big multi-
nationals has always involved some kind of dialogue
with the customers. You listen to what they tell you
to find the best shot you can give them.
Because the negotiation, on Chemtech’s side, is based
on an assessment of technological feasibility, it also
serves as a vetting mechanism. The company does not
involve itself in speculative R&D programmes:
... while you take the company forward, you have
to turn your back on a lot of things as well. One of
the reasons Chemtech has been successful is that we
turned our back on more projects than we decided
to pursue.
Interviewer: So what factors influence your
decision about whether or not to follow an idea?
Well I think a lot of it’s gut feeling... the company
depends a lot on me to make the judgement calls on
what’s worth chasing and what isn’t worth chasing.
121
At the time of our research, the toy project looks like
a success for Chemtech. This is not only important in
itself: it will also feed back into the company’s repu-
tation-based approach to marketing:
This [toy company] thing is a prestigious piece of
work. It’s just [these chemicals] on a unit, a little
widget which produces a certain effect. It’s not that
sophisticated a product really when you look at it, but
it’s made to a very demanding quality. Our ISO9000
qualification was an important factor in taking the
project forward. The new product’s going to be
launched in July, well we’ve made a few shipments,
but when that appears on the market it will open
people’s eyes to the fact that high spec devices can
be made to satisfy the most demanding clients using
[this] technology. That’s one of the things which our
competitors around the world would find very diffi-
cult to do.
2.2.2. Smart indicators
Chemtech’s involvement in smart indicators began in
much the same way as the toy brick project. A develop-
ment company producing products for the catering
industry thought up the concept of incorporating ‘smart’
chemicals into food packaging, which can react to the
condition of the contents. This company too carried out
a scan for technological expertise:
The most important thing in the history of that pro-
ject was first of all they asked [us] to do something,
‘Can you make an indicator’ [that reacts to the state
of the food] and I said, ‘Well, once you sort the...
technology....’
Interviewer: So they came to you in the first place?
Yes, they basically found us, and they were talking
to other people at the time saying ‘This is what we
want you to try and do for us, is it possible to do it?’
I think they undertook a global search... they basically
found us, and they were talking to other people at the
same time, saying this is what we want you to try and
do for us, this is what I want to do, is it possible to
do it?
Chemtech’s approach was to assess the requirements
of the development company in the light what was achi-
evable through specialist chemical technology. Having
done so, the company proceeded to the ‘working mod-
el’ stage:
I said, ‘Well what is the... precision? What sort of
tolerances have we got?’... And again the key thing
there was it’s not possible to buy a chemical mixture
122 A. Tomes et al. / Technovation 20 (2000) 115–127
off the shelf with the right properties [so] the most
important thing was to actually make a prototype to...
see whether it works. And we did that.
The next problem was mass production. The solution
drew on Chemtech’s unique ability to formulate special-
ist chemical mixtures:
So now the issue becomes we want to make some-
thing like three million or five million of these things
every month. How are you going to apply them auto-
matically to the packaging? [The solution] was to pro-
duce something that was on a roll that could be
applied automatically. It’s not the easiest thing to do
because we had to adapt the mixtures for one process
to a different technology. And we did that eventually,
and unfortunately it wasn’t quite as good as the orig-
inal one, but it worked. I think again we had about
10 different chemicals, 10 or 11 in the first one, and
six or seven different chemicals in the second one.
And none of the chemicals were the same in either
mixture. Again that exemplifies the type of thing that
Chemtech can do that our competitors can’t, and also
it exemplifies the technical approach that we have to
making new products possible. And to the best of my
knowledge our competitors couldn’t even get close to
doing that.
As with Multichem’s projects, competing techno-
logies were a potential alternative route to the food pack-
aging indicator. Partly because of the company’s interest
in this competitive technology, however, Chemtech’s
director was aware of this alternative throughout the pro-
ject, and remained confident that the advantages of their
own specialist chemical technology would prove decis-
ive in this application.
I think there are some applications where the [alter-
native] technology is better... So there are various
areas where it would be difficult for our own tech-
nology to compete with alternative technologies. But
for the most part, our principal business is geared
around the advantages of our materials, which is to
pursue applications which generally speaking would
not be possible with any other technologies.
3. Discussion
It is tempting, at this stage, to make a straightforward
comparison between the relatively successful NPD pro-
cess at Chemtech and the problems encountered by
Multichem. Clearly the processes in the two companies
differ in the source of the product concepts, the prelimi-
nary evaluations of their prospects and the monitoring
of competing technologies. On the basis of such a com-
parison, it would not be difficult to put forward expla-
nations of the companies’ different success rates, point-
ing towards the conclusion that companies competing in
fields characterized by rapidly evolving technologies
ought to do it like Chemtech and not like Multichem.
The difficulty with this apparently logical approach is
that Multichem and Chemtech are not altogether inde-
pendent. Although the companies compete as the sup-
pliers of specialist chemicals adapted to specific new
products, these chemicals are developed from generic
materials supplied by Multichem, amongst other manu-
facturers. Whilst Chemtech is not locked into its relation-
ship with Multichem, nor even into the particular tech-
nology, the fact remains that its present reputation as a
developer of specialist chemicals for consumer appli-
cations depends upon the existence of suppliers of the
‘generic’ chemicals. In a sense, therefore, the problems
of Multichem — at least insofar as they stem from its
situation as a supplier company rather than from stra-
tegic ‘errors’ — are part of the cost of Chemtech’s rela-
tive success.
For this reason, we believe is better to view the NPD
processes within these two firms as part of larger chains
of relationships connecting the development of specialist
chemicals with the consumer end-point. From this point
of view, the case studies are windows into two different
product development networks. The first (pattern 1) is a
direct connection, in which the producer/developer of the
base technology sets out to adapt it to the requirements
of product manufacturers. In the second (pattern 2), this
connection takes place through an intermediary company
which has developed a specialist expertise in the adap-
tation of the base technology. It is the effectiveness of
these two forms of connection between technology and
application which is in question, rather than the perform-
ance of the two companies concerned.
3.1. Pattern 1: the direct connection
Pattern 1 began with the physical properties of the
specialist chemicals. Conceiving of the problem as one
of creating mass markets for their products, Multichem
set out to develop a generic method of applying them to
consumer items. Thus the initial development of inks
based on specialist chemicals preceded the search for
specific applications of these inks. Once viable inks had
been produced, the company’s R&D and marketing staff
looked for existing mass-produced items (clothing and
food labels in the cases described above) which might
be enhanced in some way by the chemicals’ properties.
The resulting product concepts were then tested against
the reactions of relevant manufacturers. Where these
were positive, Multichem then launched into a secondary
adaptation of the specialist chemical inks and printing
technology to the chosen consumer products. Though
 A. Tomes et al. / Technovation 20 (2000) 115–127
this was done in partnership with ink and label manufac-
turers in the case of the food labels, most of the R&
D thrust still fell within the field of specialist chemical
technology. Consequently it took place within Multi-
chem itself. Provided the interest of the consumer pro-
duct manufacturers was confirmed, this stage of develop-
ment was followed by a tertiary phase aimed at
developing a fully commercial product and production
process. In both of the case study applications, it was
during this third phase, and only in the light of the
emerging potentialities of the competitive technology
that there occurred a clarification of the users’ require-
ments. In both of the cases described above, this clarifi-
cation proved fatal to the specialist chemical technology
(preference for bright colours, approximate tempera-
ture response).
3.2. Pattern 2: connection through an application
specialist
Pattern 2 began with an approach to Chemtech from
a consumer product manufacturer. This meant that two
very important preliminary stages occurred within these
consumer product companies rather than in Chemtech.
Firstly a relatively stable product concept had been
developed, which called for properties achievable by
specialist chemicals. Secondly the environment had been
scanned for suppliers of suitable technologies, as a result
of which Chemtech had emerged as a front runner. On
these bases, Chemtech could assume a degree of com-
mitment on the part of the manufacturer. Because these
processes, as well as the establishment of Chemtech’s
reputation, occur offstage in the cases reported above,
it is all the more important to be aware of them when
considering the requirements for successful NPD within
the Pattern 2 connection.
Chemtech’s reaction to approaches from interested
product manufacturers might fairly be described as argu-
mentative. Unwilling to embark on R&D programmes
which involve major extensions of current specialist
chemical capabilities, Chemtech aimed to negotiate achi-
evable performance targets before committing itself to
development work. This kind of compromise, of course,
is not always possible, and it was important to Chem-
tech’s NPD success-rate that many projects were aban-
doned at this stage.
Those which proceeded were developed on the basis
of Chemtech’s expertise in manipulating properties by
mixing the basic specialist chemicals. In an area in
which the received scientific understanding is not always
a reliable guide to the properties of chemical mixtures,
expertise of this kind is partly experience-based. As
such, it is expensive to acquire and relatively unique to
the company — or rather to the individuals presently
employed in it. This characteristic of the technology
adds to the confidence with which Chemtech can pro-
123
ceed with their development programmes. Customers are
unlikely to find alternative sources of the company’s
expertise.
The actual R&D process in Chemtech is brief, specific
to particular manufacturing process, and, like the product
specification, subject to negotiation. In the case of the
food packaging, it is noticeable that there was a compro-
mise between the manufacturer’s preferred application
process and Chemtech’s estimate of the capabilities of
the specialist chemical indicator. Whereas the cus-
tomer’s specifications appeared to become clearer and
more rigid for Multichem at this late stage of develop-
ment, for Chemtech it seemed to become more flexible.
3.3. The two NPD chains compared
3.3.1. Customer involvement in product concept
3.3.1.1. Pattern 1 Although Multichem’s marketing
department collaborated with R&D in originating the
product concepts, it was a marketing department domi-
nated by research-minded chemists. This meant that the
company’s product concepts tended to combine a highly
professional knowledge of specialist chemical properties
with a decidedly amateur understanding of the relevant
markets. Though the company was aware of the impor-
tance of marketing, this awareness took the form of test-
ing the product concepts produced within the company
against the reactions of relevant consumer product
manufacturers. Whilst these reactions were probably
authentic, the market sector from which they were
obtained had already been defined by an initial ‘R&D’
view of the market. The pattern 1 marketing process,
in other words, tended to over-define the question and
customers from whom an answer would be obtained.
Certainly it failed to draw on the marketing expertise of
the consumer product manufacturers.
3.3.1.2. Pattern 2 Chemtech’s product concepts orig-
inated with consumer product manufacturers. Since these
were large companies, the anticipated competitive
advantages of an specialist chemical-based product were
likely to be informed by a relatively sophisticated under-
standing of the market. Thus Chemtech could be fairly
sure that a technically successful NPD process would
also be commercially successful. Besides this advantage
in market intelligence, there is evidence that customer
involvement makes for a more efficient product develop-
ment process. Surveys in the manufacturing, medical
instrument and food processing industries consistently
indicate that the use of the customer as a source of tech-
nical ideas is associated with NPD success (Karakaya
and Kobu, 1994; Gemunden et al., 1992).
124 A. Tomes et al. / Technovation 20 (2000) 115–127
3.3.2. Mass markets vs niche markets
3.3.2.1. Pattern 1 Multichem’s product concepts orig-
inated in-house. Since the company was fairly large, this
meant that they were driven by the need to find outlets
for a large-scale production of specialist chemicals. This
requirement tended to translate into a scan of (existing)
mass products for those which might be enhanced by the
chemicals’ properties. Unless the properties in question
were unique to the specialist chemicals, therefore, this
strategy virtually guaranteed that the company would
encounter competition from other technologies. If some
feature of a mass product is obviously attractive, it is
more than likely that that others will be looking for ways
of providing it.
It should be pointed out that Multichem has learned
from its experiences of competition from apparently
inferior technologies. In the case of the clothing appli-
cation, the company believes that it could have estab-
lished a partnership with the competitor, so as to exploit
the potential of the alternative technology to the advan-
tage of both.
3.3.2.2. Pattern 2 The product concepts suggested to
Chemtech by its potential customers (a food indicator
and toy brick) might well be have appeared to Multi-
chem as the kind of ‘novelties’ to be ignored in the
search for mass markets. The fact that the market for
Chemtech’s food indicator later expanded to 3–5 million
units annually, could scarcely have been predicted at the
outset. The search for mass markets built into the con-
cept stage of Multichem’s NPD process was virtually
guaranteed to overlook ‘hidden’ markets of this kind.
To some extent, this was a function of the scale of the
companies: since Chemtech could prosper in markets too
small to support Multichem, it could not only develop
products intended for these markets, but also reap the
rewards if and when those markets expanded.
3.3.3. Customer commitment
3.3.3.1. Pattern 1 Although Multichem recognized
the need for customer commitment after their problems
with the clothing application, this was still only achieved
at a late stage in the development of the food label. The
prototype application was developed unilaterally by
Multichem on the basis of nothing more than an
expression of interest on the part of potential customer.
Even when an achievable process had been demon-
strated, the customer’s involvement in developing it to
the production stage was largely limited to setting design
specifications and running manufacturing trials. This
lack of customer commitment to the specialist chemical
application meant that it tended to remain on trial
throughout the NPD process. Its acceptability depended
on meeting comparatively rigid performance specifi-
cations.
This was probably another consequence of Multi-
chem’s strategy of looking for applications in existing
mass markets. Almost by definition, the production tech-
nologies in such markets will be highly-developed and
stable, so that any modification would incur considerable
costs. As a result, there appeared to be no possibility of a
compromise between the consumer product specification
and the properties of specialist chemicals. Noticeably, in
fact, the requirements of Multichem’s customers became
clearer, and more demanding, as development work pro-
ceeded.
Again, this problem has now been recognized within
the company. The current policy is that NPD work only
progresses in collaboration with lead users who are pre-
pared to undertake an equal risk in the development pro-
cess.
3.3.3.2. Pattern 2 Chemtech’s director was keenly
aware that an approach from, rather than to, a customer
signaled commitment to the success of a project: ...
you know, people’s careers are made on bringing
the products we are able to produce for people to mar-
ket successfully. I mean look at [an electronics-based
manufacturer], the first time round they failed to bring
the thing to market they ended up firing a few of their
research engineers. And I think this is happening with
[one company] at the minute in the cosmetics indus-
try. These high volume, high exposure deals are very
important to the people that we’re dealing with in the
company as our customers, and they can’t afford to
drop the ball, because their careers are on the line.
Shaw (1993) has noted the importance of product
champions in customer companies in facilitating learn-
ing by innovating entrepreneurs and in diffusing the
costs of NPD programmes. In the case of Chemtech, this
customer commitment also meant that their customers
were more likely than Multichem’s to be flexible on per-
formance specifications. For this reason, Chemtech was
able to negotiate the initial targets for the NPD process,
and to continue the dialogue ‘from first contact to first
order’, as the Director put it.
3.3.4. Vetting
3.3.4.1. Pattern 1 Vetting consisted of two phases.
The first was a preliminary canvass of the product con-
cept amongst potential customers. Where this was posi-
tive, the company proceeded to the ‘working model’
stage of product development, thus guaranteeing that the
costs of this would be incurred every time a customer
was attracted to the concept. The second phase of vetting
was tacit in the customer’s trials of the performance and
 A. Tomes et al. / Technovation 20 (2000) 115–127
manufacturing compatibilities of the prototype product.
In the cases outlined above, NPD on pattern 1 was aban-
doned only at the point where the product failed these
trials, having incurred all of the costs of development
work up to that point. Thus vetting in pattern 1 was,
effectively speaking, in the hands of the customer. The
anticipated difficulties of developing appropriate chemi-
cal mixtures appear to have been of little account. They
appeared, indeed, to have been regarded as a scientific
challenge, of which more in a moment.
3.3.4.2. Pattern 2 Many possibilities were rejected at
the concept stage. Chemtech would only embark on
NPD on the basis of a ‘gut feeling’ (i.e. experience-based
knowledge of what can be achieved by mixing the basic
chemicals) that the development track would be short
and successful. In this sense the company was conscious
of operating at the ‘low tech end of a high-tech field.’
Given that the initial approach in pattern 2 was from
customers, and that this signified that that a potential
market existed, this meant that vetting was on the basis
of technological viability, that it was carried out by the
producer company, and that it mostly took place before
development costs were incurred.
3.3.5. Doing science vs doing new products
3.3.5.1. Pattern 1 NPD was driven by the R&D men-
tality. This was probably a function of the history of
Multichem, as well as the background of its staff. Much
of the initial growth of the company came from supply-
ing scientific apparatus to universities and colleges, and
this was still an important side of the business. Appropri-
ately — from the point of view of this side of the busi-
ness — many of the staff, including the marketing staff,
had higher degrees in chemistry. Even in their dis-
cussions with customer companies communication
tended to be between R&D departments rather than
through marketing. What ran like a thread through the
Multichem interviews was a relish for challenging R&
D problems. Instead of prompting re-evaluations of the
NPD programme in which they occur, it seems that the
difficulties only added to the company’s determination.
Entirely appropriate to an R&D team tasked with the
development of a new technology, such an approach is
more questionable when carried over into an NPD strat-
egy. It is an attitude which guarantees that expenditure
on each NPD programme will end only with its complete
success or complete failure.
3.3.5.2. Pattern 2 NPD was driven by the intersection
between the customer’s product concept and Chemtech’s
expertise in mixing specialist chemicals. The director of
Chemtech was conscious that the firm’s approach lacks
the glamour of ‘real’ science. NPD tracks appeared to
be short, highly specific to the customer’s product (rather
125
than aimed at a generic mass market), and probably inex-
pensive.
In the long run, of course, the commercial successes
of Chemtech within pattern 2 could be argued to be
dependent upon the scientific knowledge of specialist
chemical properties produced within pattern 1. Amongst
other things, this was signified by the fact that many of
Chemtech’s staff had previously worked for Multichem.
From this point of view, the problem might be seen as
one of the distribution of the fruits of success within
pattern 2, rather than the failures of pattern 1.
3.3.6. Reputation
3.3.6.1. Pattern 1 Multichem’s reputation is as a
pioneer and a leading producer of specialist chemicals.
Within this field, the company is regarded as a major
repository of expertise. Its track record, however, is in
developing technological capabilities, rather than the
incorporation of these into successful products. Having
entered the field of product application as a means of
creating markets for its chemicals, the company finds
itself faced with the task of establishing a reputation
whilst it is still developing the appropriate expertise.
Though this is no easy task, its willingness to reflect
on its experiences and change its mode of operation are
grounds for optimism.
3.3.6.2. Pattern 2 Many of Chemtech’s competitive
advantages flow from its track-record in the adaptation
of specialist chemical mixtures to customers’ require-
ments. It was on the basis of this reputation that the com-
pany was approached by consumer product manufac-
turers with concepts to which they were committed in
advance. From this it followed that the company was
in a position to choose the post promising development
projects — and so on.
Whilst our case studies clearly illustrate the advan-
tages which flowed from Chemtech’s reputation, they
cannot, in their nature show how it was created and
maintained. This happened over a long time-scale and
in advance of the events described in this paper. It is
important, nevertheless to bear in mind the key role
played by reputation in Chemtech’s continued success.
Without it the advantages of specializing in adapting the
base technology to particular products would have coun-
ted for little. To put the matter another way: the func-
tional advantages needed to be converted into reputation
before they could become actualized as competitive
advantage. As Bidault and Fischer (1994) have pointed
out, the uncertainties for customers in buying-in
unknown technologies means that the reputation of the
supplier (established in Bidault and Fischer’s came
through prior business contacts) becomes very important
to the purchase decision.
126 A. Tomes et al. / Technovation 20 (2000) 115–127
4. Conclusions
Evidence from case studies is, in its nature, indicative
rather than conclusive. The two successful and two
unsuccessful NPD programmes compared this paper,
however, point towards two main conclusions.
The first is that companies with a successful record
in the development of a technology may not be equally
successful in the development of products based on that
technology. In order to be successful NPD programmes
need to aim at new, or markedly advantageous, products
as experienced by the user (Cooper and Kleinschmidt,
1993). Product innovation in this sense is not guaranteed
by the solution of difficult technological problems. The
mindset and company culture adapted to technological
innovation may need to adjust its focus in order to give
due weight to the issues involved in product innovation.
The second conclusion is that intermediary companies
may have an important part to play in overcoming this
problem. The intermediary company described in this
paper had built up an experience-based expertise in the
adaptation of a base technology to the needs of consumer
product manufacturers. Because of the company’s repu-
tation in this respect, its product concepts originated with
the manufacturers of consumer items, thus ensuring that
the product innovation aspect had been given due
weight. Thus a network in which the technology pro-
ducer connects to consumer product manufacturers
through an intermediary company specializing in appli-
cations of the technology may be more effective than a
direct connection. That this differential success was not
confined to the particular NPD programmes reported in
this paper was indicated by the fact that the intermediary
company was in a much stronger financial position than
the technology producer.
In a tacit endorsement of this analysis, the company
which produced the base technology had considered the
option of abandoning their attempts to develop consumer
products directly in favour of supplying specialist chemi-
cals to intermediary application specialists. In the parti-
cular field of specialist chemicals, however, there were
too few companies with the appropriate capabilities.
At the time of writing, the producer company is hav-
ing some success with an alternative strategy in which
the intermediary company is replaced by the research
laboratories of large customer companies. Because of its
reputation in the science of specialist chemicals, the
company is a leading supplier of specialist chemicals to
these laboratories, and there are cases in which they have
developed successful new products based on these
chemicals.
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Anne Tomes is a Visiting Research Fellow at Sheffield Hallam Univer-
sity. She received her BSc from Birmingham University in 1968, her MSc
in Marketing from UMIST in 1971 and her PhD from Sheffield University
in 1982. Before her move to academia, she gained industrial experience
in new product development with Ferrodo Ltd and Granada TV rental,
and worked for 12 years as a marketing consultant with many top organi-
zations, including Whitbread, Batchelors, Texas Instruments, British Rail,
Johnson & Johnson, and British Glass. Dr Tomes has researched and pub-
lished widely within the marketing area and has written two student man-
agement textbooks. Her theoretical and practical interests currently focus
on design and the development of new science-based products, in which
fields she has recently completed two large-scale research projects spon-
sored by the Design Council.
Rosie Erol is a Research Associate in the Design and Innovation Research
Unit at Sheffield Hallam University. She received her BSc in Physics at
Sheffield University in 1991, her MSc in Instrumentation and Analytical
Science at UMIST in 1992 and her PhD in Medical Physics at Sheffield
in 1996. She has recently completed work in a research project sponsored
by the Design Council on the role of the design imagination in connecting
basic research to product applications.
Peter Armstrong is a Professor of Management at Keele University. He
 A. Tomes et al. / Technovation 20 (2000) 115–127 127

received his BSc in Engineering from Bristol University in 1960, his MSc
in Sociology from Bath University in 1973 and his PhD in Sociology from
Bristol in 1988. After seven years as an R&D engineer, he returned to
university to study sociology and is now best known for his research on
the social aspects of accounting. He has also published widely on indus-
trial relations and other aspects of management. Professor Armstrong’s
current research is concerned with the role of management accounting in
controlling labour and with the cultural interface between management
and design.