Definition
New product sales in the last three years total product sales in the year; this window is full of bases in the three years and most companies want it to continue to increase.
In detail
Vitality index is a metric that measures the contribution of new products to sales, calculated as the ratio of sales from new products over the past three years to total sales. It reflects the renewal speed of the product portfolio and innovation capability, and is a key performance indicator in the product development system. Unlike the mere number of new products, the vitality index emphasizes market acceptance. It is typically used as a monitoring metric in strategy deployment and product lifecycle management, with target values varying by industry, but most companies aim for continuous improvement.
Example in practice
In the annual strategic review, management observed that the vitality index had declined for two consecutive years, indicating insufficient contribution from new products. They adjusted product development resource allocation to accelerate high-potential projects. By tracking the vitality index, the company evaluates the return on innovation investment and decides whether to increase R&D or adjust the product portfolio.