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a one-year head start over rivals that responded only after
demand for the new product increased significantly. Shin-Etsu’s
early lead proved to be decisive. By closely tailoring production
to the needs of the semiconductor industry, Shin-Etsu quickly
gained share in the market for the new wafers. By 2004, it com-
manded a nearly 50 percent share of the fast-growing market
and became the market leader. 2
Nitto Denko, a manufacturer of chemical and electrical com-
ponents, followed a comparably aggressive new-product develop-
ment strategy during the 1990s. The company launched a series
of new products between 1994 and 2003, increasing the share of
revenues from new products from 28 percent to 46 percent.
The strategy had three pillars. First, Nitto Denko exploited its
existing manufacturing capabilities to develop new products—
such as leveraging the capabilities that had been deployed in the
manufacture of insulating tape for cables for the purpose of
making packing tape. Second, it adapted existing products to
new applications and new customers. For example, it applied its
experience in making protective film (used primarily to protect
automobiles during shipping) to develop protective materials for
other glass and metal products. Third, Nitto Denko sold its
existing products into new markets. Having expanded its range
of protective materials for manufactured products, it began sell-
ing the same products to silicon wafer manufacturers.
Nitto Denko found that this strategy had an added benefit.
It was able to obtain detailed information about customers in
these markets, which enabled it to expand into other niche
products and discover lucrative adjacent markets.
Nitto Denko’s success was built on its strategy of entering or
creating niche markets of approximately $10 million and aim-
ing to become the top player in each market. In order to develop

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