Team design thinking in new product development (NPD) refers to a set of design-oriented principles that can be embedded in the everyday routines of NPD teams. We theorize that team design thinking enables NPD teams to develop more innovative products––products that are useful and novel––by reducing the routine and cognition-based inertia that constrains the team’s innovativeness. Through a study of 247 NPD projects, we investigate the relationships between team design thinking, product utility, and product novelty. Further, we also explore whether the team’s unfamiliarity with product contexts influences these relationships. Findings show that team design thinking is positively associated with useful products in both familiar and unfamiliar contexts, but that team design thinking is associated with product novelty only in familiar contexts. Findings also suggest that team design thinking can be framed as a dynamic capability that addresses routine and cognition-based inertia by expanding the organization’s knowledge resource base, particularly in familiar contexts. A key implication of this research is that team design thinking will influence product utility in a variety of situations, but its influence on product novelty will be evident primarily in familiar contexts.