In certain sectors (e.g., consumer electronics), products are developed as part of successive product transitions where the new generation of the product replaces its predecessor. To the best of our knowledge, this paper is the first that takes a marketing perspective to examine the drivers and performance outcomes of a firm’s decision to determine generational product innovativeness (GPI). Empirical results from 201 generational product transitions in the UK show that a) market and technology sensing capabilities positively influence GPI, and b) GPI has an inverted U-shaped impact on generational product performance. The results contribute to the product innovation literature, which sparsely studied generational product transitions. The paper also provides managerial implications on how firms can enjoy superior generational product performance by leveraging outside-in capabilities and optimally managing GPI.