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A more rational approach to new-product development.

Eric Bonabeau¹, Neil Bodick, Robert W Armstrong

¹Icosystem, Cambridge, Massachusetts, USA. eric@icosystem.com

Harvard Business Review

|April 17, 2008

Summary

Segmenting new-product development (NPD) into early and late stages improves efficiency. Eli Lilly

Area of Science:

Pharmaceuticals
Business Strategy
Product Development

Background:

New-product development (NPD) is often treated as a single process.
This monolithic approach can lead to decision-making errors, such as pursuing failing projects or prematurely terminating promising ones.
Companies often focus disproportionately on late-stage development, neglecting crucial early-stage evaluation.

Purpose of the Study:

To demonstrate how segmenting NPD into distinct early and late stages can enhance efficiency and cost-effectiveness.
To introduce and evaluate the impact of an autonomous early-stage development unit (Chorus) at Eli Lilly.
To highlight the benefits of an experimental, truth-seeking approach in early-stage development.

Main Methods:

The study describes the implementation of Chorus, an autonomous unit at Eli Lilly dedicated to early-stage NPD.

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Chorus focuses on evaluating prospects and eliminating unviable candidates, maintaining loyalty to experimentation.

The performance of Chorus is compared to traditional, non-segmented NPD processes.

Main Results:

Chorus significantly improved NPD efficiency and productivity at Eli Lilly.
The unit, despite low investment, delivers a greater fraction of molecules for late Phase II trials.
Development speed was nearly doubled, and costs were reduced to less than a third of the standard process, saving up to two years.

Conclusions:

Segmenting NPD into early (evaluation) and late (maximization) stages is a more rational and effective approach.
Autonomous early-stage units like Chorus can mitigate decision-making errors and accelerate drug development.
This segmented strategy leads to faster, more cost-effective new-product development with improved outcomes.