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This article reviews three types of innovation which contribute to organic business development: product innovation, process innovation and market innovation. It argues that market innovation ‐ defined as improving the mix of target markets and how these are served ‐ provides a powerful focus for identifying new business opportunities. Examples from the field of financial services illustrate how skilful market innovation can serve to grow a business as well as to safeguard it from attacks by competitors.

This paper reports the results of a study into leadership of new service development projects in consumer banking. A sample of UK businesses embracing both new entrants and mature incumbent players was studied. The results highlight considerable similarity in the project “micro‐climate” for successful projects. It is argued that a micro‐climate is created by appropriate leadership practices and styles. The paper highlights lessons in the organisation of innovation and the contributions of different types of leaders.

Provides a review and ready reference to recent writings on new service development (NSD), especially for the financial services sector. Discusses the types of new service development, the purposes served by them and the processes. Refers to the key activities of NSD and measures its success. An annotated bibliography supplies a very useful guide to the new service development literature.

Deregulation, advances in enabling technology, and aggressive competition from new suppliers, including banks, are causing more and more traditional insurance companies to revise the way in which product development is undertaken. A study of ten companies offering life insurance and ten companies offering general insurance in Britain shows that a few of them are now putting into place amended managerial systems. The marketing function is undergoing changes in responsibilities in all these companies. While most companies have key managers who have visions of how markets can be reshaped to give distinct competitive advantages, effecting such changes within existing operating constraints poses major challenges.

A study of 16 constituent businesses of large UK banks, building societies and insurers shows that product development success is associated with particular styles of head office involvement. Apart from providing financial resources, effective head offices provide leadership in the agreement of objectives based on a wider vision of opportunities. This allows constituent businesses to capitalize more fully on entrepreneurial opportunities. Such head office support is particularly valuable when a business is complex and related to others in the corporate portfolio. Lesser performance was found to be associated with distinctly different styles of head office involvement. At the extreme it involved unnecessary meddling.

The distinguishing feature of new style product development is that it allows companies to achieve new sales growth even in markets which many suppliers regard as mature. Success is achieved by using marketing skills to focus technical skills. Discusses the operational requirements for making the approach work in large organizations, drawing on examples of new style product development in American, Japanese and British companies.

Those banks which are active and experienced product innovators use organisational systems significantly different and better suited to the task of developing new products than those of less active product innovator banks. The findings, based on interviews conducted in nine large commercial banks competing in the market for corporate banking services, show a key difference between the organisation arrangements of the two banking groups; active product innovators ensure that specialised personnel make regular, effective contact with the market while less active product innovators see development tasks as a special activity. Active product innovator banks have also progressed considerably in opening up traditionally tight operating structures in order to initiate product innovation.

The managerial implications of a study of 40 leading US and UK manufacturing firms (20 UK, 20 US) are examined in which senior and middle‐level managers were interviewed face to face. In both countries, common problems confront management which wants to grow its business organically in preference to growing it by acquisition or by selling other manufacturers′ new products. Successful firms distinguish themselves by (1) balanced efforts between updating existing product lines and developing completely new products, and (2) efficient and speedy development work. It is argued that top management involvement and middle management teamwork are the key to achieving these dual objectives.

New service development (NSD) is an imperative to suppliers in today's highly competitive banking markets. Communication during the NSD process is important if the needs of customers are to be met functionally as well as economically. The results presented in this paper identify communication skills associated with successful NSD. Case research into nine UK‐based commercial banks shows that the most successful developers use special skills for communicating with customers – especially with “lead customers” – throughout the development process. Less successful developers concentrate their communication exchange on the end of the process.