Effective new product development (NPD) is one of the most important processes firms should undertake in order to achieve a competitive advantage This paper will analyze the NPD process and explore organizational capabilities by presenting two case studies of the material industry. These analyses demonstrate that it is significant for material suppliers to evaluate not only material specifications but also the production process of their users and the performances of the users' products (system products). We call this “evaluating capabilities" and propose that knowledge beyond the business domain is necessary to achieve a competitive advantage.