When senior managers think of product development, they all dream of the same thing: a steady stream of breakthrough products—the kind that will enable their companies to grow rapidly and maintain high margins. And managers set ambitious goals to that end, demanding, for example, that a high percentage of sales come from products that did not exist a few years ago. Unfortunately, the development groups at many companies don’t deliver the goods. Instead of breakthroughs, they produce mainly line extensions and incremental improvements to existing products and services. And as the pace of change accelerates in today’s markets, that’s a recipe for decline, not growth.