Market and technology changes have brought about new characteristics of product development. One of the most significant changes from the traditional to the new paradigm is the change from sequential and collocated product development process to overlapped and distributed process. This paper explores the appropriate overlapping policy in distributed product development based on a system dynamics model. The major contribution of this study is to suggest that it is very dangerous for a company to develop innovative products with distributed teams. Not only coordination time but also wrong overlapping policy makes delay unavoidable for the distributed and innovative projects. The simulation results are empirically proven by our experience in the consumer electronics companies and previous literature.