Technology Management Class 2: Product Development Models

1
Technology ManagementClass 2 Product
Development Models part 1

• John A. Hengeveld
• April 7, 2003

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Subjects to Hit today

• Product Policy Decisions
• WC Discussion (inc New Logic)
• Stage Gate
• Examples
• Problems with Stage Gate
• More flexible models
• In class exercise

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Product Policy Decisions- Hallmarks of effective
processes

• Involvement of marketing, manufacturing and
  engineering in a coordinated way.
• Marketings role is insure the voice of the
  customer is represented and heard throughout
  development
• Old Market research New Sensing.. Empathic
  Design
• Coordinated cross functional process involves
  substantial work prior to product design.
• The process has real go/no decision points.
• Objective Process which delivers superior value
  to the target customers

4
Product Policy Decisions- Success rate of
products

• Me Too products 18.4
• Hengevelds first law
• Never innovate (a very great deal) for a me too
  product.
• Products with Moderate Advantage 58
• Differentiated Products 98
• Key to differentiation is to draw on
  companycompetencies and not only assess
  market/product fit, but also product-company fit.
• its the right product.. But not for our company

5
Product Policy Decisions-Managing Existing
Product Lines

• Product-line strategy.. a time-phase CONDITIONAL
  plan for the sequence of developing products

McGrath, Product Strategies for High Technology
Companies, McGraw-Hill, 1995 emphasis added
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WC Discussion

• Highlights of Chapter 1,2

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Excerpts from WC, Exhibit 1-5
PROBLEMATIC Outstanding
Characteristics Consequences Selected Themes
Multiple, ambiguous objectives,different functional agendas Long planning stage, project becomes vehicle for achieving consensus Clear objectives and shared understanding of projects intent throughout organization early conflict resolution at low levels
Focus on current customers and confusion about future target market Moving targets, surprises and disappointments in market tests, late redesigns Actively anticipating future customers needs, providing continuity in offerings
Narrow Engineering Focus on elegance little concern with time Slipping schedules Maintaining strong focus on time to market while still being creative, system view of project concept
Reliance on engineering change and mfg ramp to fix problems Poor, unrepresentative prototypes, late changes, scramble in mfg Testing and validating product and process designs before hard tooling, design it right the first time
Narrow specialists in functional chimneys Engineering ping-pong, miscommunication, error Broad expertise in critical functions, team responsibility, integrated problem solving
Unclear direction, no one in charge Lack of coherent shared vision, false starts Strong leadership and widespread accountability
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Development Strategy Framework
Technology Strategy
DevelopmentGoals and Objectives
Aggregate Project Plan
ProjectManagementand Execution
Market Strategy
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Critical Issues in Technology Strategy

• Separating Invention from Application ex 2-4
• Product and Mfg Process Integration New Logic
  of High Tech RD article

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HP Pizza Bin Approach (WC Exh 2-4)
Business Strategy
Division Strategy FunctionalStrategies Pizza
Bins of Proven Technology
A
B
C
D
Concept
DevelopmentProjectPhases Ongoing Improvement
Eng
Pilot Prod
Production
LearningAcross Projects
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Critical Issues in Product/Market Strategy

• Number, timing and rate of change of platforms
• Number, timing, frequency and relationship to the
  product/market strategy of derivative products

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Exhibit 2-10 4 types of projects
Research AdvDevelopment
Process Changes
New CoreProcess
1 DeptUpgrade
Next GenProcess
Tuning
Product changes New CoreProduct Next
GenProduct Additionto Prod Family Add-ons
Enhance
Breakthrough
Platform or Next Gen
Derivative(Enh, Hybrids and CostReduction)
Question Why does this model make financial
sense ????
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Exhibit 2-10 4 types of projects
Increasing Costin Development
Increasing RISK!!
Increasing Delivery of NEW Valuein the Market
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WC Discussion

• Highlights of Chapter 3-5

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Essential Point in Management
Strategy
Product, Process and ResourceRoadmap
Projects
People
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WC Chapter 3

• Functional Maps
• Useful analysis tools in the management of
  technology oriented business
• Gap from strategy to operating plan over long
  term
• Examples (Essential for Technology Mgmt)
• Product Roadmap (see book)
• Feature Spidergram
• Price/Performance Map (see book)
• Engineering Skills (see book)
• Technology Gap Analysis

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Map Example Feature Spidergram
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Map ExampleTechnology Gap Analysis
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Strategy to Action Pure Fiction
COMPENTENCIES
Action Domain
GOALS
STRATEGY
VISION
Deliver Superior Customer Value to Gas Analysis
Customers around the world.
Platform Rationalizationand Inst Connectivity
Modernize Legacy to Common Platforms
Leverage our strong 1 position in chemical
sensors
Software and Platforms
Interfaces.
Strong position inChemical Sensors
Differentiated Component Technology
Component SCA initiative
Spect Measurement Competency
SpectoscopicMeasurement
DSP
Enter Biomedical Gas Applications
Develop Full Portfolio of Biomedical Products
Digital Signal Processing technology
Processors
Develop Key products
Analyze internet based gas measurement
Remote gas measurement prototype
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Technology Actions, Gaps Projects
Standards management
Capability
Action Domain
Low
Platform Rationalizationand Inst Connectivity
Platform Strategy
High
Interfaces
Low
Processors
Leapfrog Project
Low
DSP
Low
Component SCA
Gas Competency Initiative
Low
Gas Competency
GRPL Product Development
High
Develop Key products
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WC Chapter 4

• The aggregate project plan as a tool for
  management of commitment and resources
• Underlying assumption..

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Ch 5 Development Funnel

• Stage Gate model is broadly used.
• It sometimes even works.

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Model III Structured Funnel
Phase 2 Detailing proposed products bounds and
required knowledge
Phase 1 Product/Process Idea Generationand
concept development
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Questions to ask about funnels

• Creating Development Projects
• Where do ideas come from?
• How are they selected for further work?
• What criteria is used to select?
• Converging the design/product
• Are decisions made, if so how, who what process?
• When are they made?
• pattern of convergence ie how many
  options,how long are they considered
• Commitment to market
• Criteria for introduction?
• Who makes decision?

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The structured funnel

• WC seem to like it a lot.. In fact they push it
  heavily.. But we can be more ummm neutral.
• Foreshadowing
• When would it work???
• Where would it fail???

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The problem of product development cycle time
MarketIntro
Concept Development Planning
Implementation
Project Start
Concept Time
Response Time
Time to Market
Concept Time is the window for applying new
technology Response Time is when the ability to
respond to changes in technology or market
is severely limited.
Developing Products on Internet Time, Iansiti et
al, 1997
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Microsoft Product Development
start
User Feedback
release
Vision/outline
Specification
Design Coding
Integration
Test
Stabilize
From Iansiti and MacCormack, Living on Internet
Time, 1997
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My Yahoo!! Development Process
start
First prototype
release
Internalbeta
externalbeta
Objectives
Feature Design and Coding
Integration
System Redesign/Iterations
Stabilize
Designreview
From Iansiti and MacCormack, Living on Internet
Time, 1997
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Structure of Flexible Product Development
start
Sensing the market
release
Specification
Design
Integration
Test
Stabilize/Ramp up
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Tradeoffs in Flexible models
Netscape
Microsoft
Need for external testing
YAHOO!
Risk of external testing
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Development model tradeoffs
Flexible
Garage Shop
Novelty
Its been done!
Stage-Gate
Complexity
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Stop Sign Shift underway

• Product development focus
• Innovation Stream Management
• Technology Streams
• External Technology Rapid change..
• Ext Technology is rarely source of competitive
  advantage
• Internal Technology Investment to create
  sustained market advantage.
• Market Streams
• Slower change
• Frequently source of longer term competitive
  advantage

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Capability Pizza Bin Approach
Business Strategy
Product Execution
Capability Development Strategies
Marketing Strategy
Engineering Strategy
Manufacturing Strategy
Service Strategy
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In class exercise

• Design a product development process forour
  sample firm in the handout.

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Exercise Part II

• Now lets change some technology assumptions
• Mattel and Barbie Dolls
• Drug Company
• Flat panel company

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Mattel

• Must be shown to buyers in August for Christmas
• Must contain new variant of Barbie and all her
  friends and all relevant accessories
• 9 months from the completion of a design until
  production ready to go for September 15.
• Can only add one new Barbie set a year because of
  costs of marketing, and the availability of
  production lines

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Drug Company

• Identification of compounds
• Clinical Trials in many phases
• High cost of testing
• Generally high profits for home run drugs.

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Flat Panel Company

• Strategy?
• Issues?
• Constraints??
• Process Elements

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For Next Week

• Read chapters 6-8, WC
• Doesnt matter what product development process
  you use, these chapters are very important.
• Prepare the Apple Case (Team)
• Apple did everything wrong, yet they succeeded,
  why?