MSETM 5110

1
MSETM 5110 New Product Development

• Purpose
• Connectivity
• Relevancy
• Application
• Science what is
• Engineering creating what has never been

2
MSETM 5110 New Product DevelopmentRecap of
Session II

• NPI Alignment to Business Strategy and Values
• The Concept of Functional Maps (Power in the
  Process)
• Portfolio Management
• GEs Two-Decade Transformation Jack Welchs
  Leadership
• The Continuum (Checklist) Exercise
• Linkage to Business Strategy
• Metrics and Tools
• Cross-functional Teaming
• Discipline and Commitment
• Finding Solutions in the Face of
  Constraints/Challenges
• Capital/Budgets
• People Resources
• Market Dynamics
• Return On Investment
• Economic Fluctuation

3
MSETM 5110 New Product DevelopmentGEs
Two-Decade Transformation Jack Welchs
Leadership

• Jack Welchs View On
• Inheriting GE From Predecessor
• Product Exit Strategy
• Workout (Town Meetings, Departmental Meetings)
• Globalization
• People Development
• Compensation practices
• Managers as Teachers, Coaches, Mentors
• Promotion Practices (Values vs. Results)
• Capturing Employee Ideas
• Customer Focus (Increasing the Customers
  Intellect and Helping the Customer Win)
• E-Business (Spans Employees, Suppliers,
  Customers)
• People with Energy and People Who Can Energize
  Others

4
MSETM 5110 New Product DevelopmentWhy Do It?

• Competitive Advantage/Staying Competitive
• Short-term and Long-term Viability/Sustainability
• Fund More Research
• To Improve the Quality of Life
• To Solve Technology-based Problems
• New Platforms and Derivative Products
• Improve Productivity and Efficiency
• Protect Installed Base
• Protect Customers Investment
• Create Brand Loyalty
• Vehicle for Strategic Partnership
• Meet Stakeholders Expectations
• Customers
• Employees
• Investors
• Renewal and Transformation of the Organization

5
MSETM 5110 New Product DevelopmentSuccessful
Innovation Companies

• Vision/Mission/Values
• Alignment Around Value
• People Systems Around Values
• Organize for Success
• Effective Integration and Communication
• Clarity of Responsibility and Accountability
• Focus on Results Thru Flawless Execution
• Technology Platform Leader
• Provide the Technological Foundation on Which
  Other Products Are Built
• Interoperability
• Encourage Other Companies to Develop and Build
  Complementary Innovations

6
MSETM 5110 New Product DevelopmentSuccessful
Innovation Companies (contd.)

• Entrepreneurship/Intrapreneurship/Venture
  Capitalist
• Focus on Continuous Improvement
• Marketing/customer Requirements and Expectations
• Research, Design, and Development
• Manufacturing and Provisioning
• Strategic Suppliers
• Celebrate/Reward Success

7
MSETM 5110 New Product DevelopmentDeveloping
a Radical New Innovation Agenda

• Continuous Reinvention (Transformation)
• Avoiding One-Vision Wonders
• Harnessing the Imagination of Every Employee
• Developing New Financial Measures That Focus on
  Creating New Wealth
• Creating Vibrant Internal Markets for Ideas,
  Capital, and Talent
• Reference Gary Hamel, Leading the Revolution.

8
MSETM 5110 New Product Development

• Applying Development Strategy and Resources to
  Stay Ahead of the Power Curve
• Preemptive
• Proactive
• Maximum Value

9
MSETM 5110 New Product DevelopmentThe
Continuum Exercise
Poor 0 Average 5 Flawless Execution 10

• Checklist
• Are strategy and goals clearly defined,
  understood, communicated, aligned, executed?
• Is there a documented NPI process?
• Are there the right metrics around the process?
• Time to market/development cycle (e.g., from
  concept to customer or from design freeze to
  ready-to-order)
• Status vs. project schedule
• Recovery plan in place
• Quality and reliability
• Change activity
• Target cost
• Percent revenue from new products

10
MSETM 5110 New Product DevelopmentThe
Continuum Exercise (contd.)
Poor 0 Average 5 Flawless Execution 10

• Is there a mechanism to benchmark your
  organization vs. recognized best-in-class
  performance standards?
• Is there a mechanism to capture learnings from
  each introduction that can be used to improve
  project after project?
• Are the right tools available for project
  tracking?
• Is there effective integration and communication
  across the functional teams (design, mfg.,
  marketing)?
• Are there the right skills on the team?
• Is there the right commitment and passion for
  flawless execution?

11
MSETM 5110 New Product DevelopmentCompetitive
Benchmarking

• The Search of Those Best Methods, Practices, and
  Processes That Will Lead to Superior Performance
• Pioneered by Xerox and Other Corporations in the
  Early 80s
• Essentially Means Studying Major Competitors to
  Discover Their Strengths and Weaknesses
• Typically Looks at Design, Marketing,
  Manufacturing, Customer Support, Distribution,
  etc.
• Information Gathering Not Clandestine But
  Available in Public Financial Statements,
  Industry Analysis and Trade Journals
• There Is A Defined Benchmarking Process

12
MSETM 5110 New Product DevelopmentReasons for
Benchmarking
WITHOUT BENCHMARKING WITH BENCHMARKING
Becoming Competitive
Internally Focused Concrete Understanding of Competition
Evolutionary Change New Ideas of Proven Practices/Technology
Low Commitment High Commitment
Industry Best Practices
Not Invented Here (NIH) Proactive Search for Change
Few Solutions Many Options
Average of Industry Progress Business Practice Breakthrough
Frantic Catch Up Activity Superior Performance
13
MSETM 5110 New Product DevelopmentReasons for
Benchmarking (contd.)
WITHOUT BENCHMARKING WITH BENCHMARKING
Defining Customer Requirements
Based on History or Gut Feel Market Reality
Perception Objective Evaluation
Low Fit Higher Conformance
Source Robert C. Camp, Benchmarking.
14
MSETM 5110 New Product DevelopmentKey Metrics
for World Class Manufacturer

• Manufacturing Cycle Time
• DP Ratios (Determines Build to Order or Build to
  Stock)
• Setup Times
• Material Availability
• Material Velocity (Distance of Material Movement
  During Production)
• Machine Up-time
• Customer Service Time

15
MSETM 5110 New Product DevelopmentMetrics

• Simple
• Actionable and Attainable
• Drive the Right Behavior
• Assumptions
• There Is A Defined Process/System
• There Is A Recognition That the Process/System Is
  Never the End
• There Is Commitment to Continuous Improvement of
  the Process/System
• Excellence Is Embraced As A Vision and Journey

16
MSETM 5110 New Product Development

• Maintaining Schedule Control
• Resource Commitment Head Count, Fixed Costs,
  Expenses
• Pricing For Major Customers and Major Accounts
• Potential Slips in Major Milestone Dates (the
  executive sponsor wants early warning and
  recovery plans)
• Plans for the Transition from Development Project
  to Operating Status
• Thorough Reviews at Major Milestones or Every
  Three Months, Whichever Occurs Sooner
• Review of Incentive Rewards That Have
  Company-wide Implications for Consistency and
  Equity
• Cross-project Issues Such as Resource
  Optimization, Prioritization, and Balance
• Source Wheelwright and Clark, pg. 212

17
MSETM 5110 New Product Development

• Heavyweight Team Contract Book Major Sections
• Executive Summary
• Business Plan and Purposes
• Development Plan
• Schedule
• Materials
• Resources
• Product Design Plan
• Quality Plan
• Manufacturing Plan
• Project Deliverables
• Performance Measurement and Incentives
• Source Wheelwright and Clark, Exhibit 8-3

18
MSETM 5110 New Product Development

• Responsibilities of Heavyweight Core Team Members
• Functional Hat Accountabilities
• Ensuring Functional Expertise on the Project
• Representing the Functional Perspective on the
  Project
• Ensuring That Subobjectives Are Met That Depend
  on Their Function
• Ensuring That Functional Issues Impacting the
  Team Are Raised Proactively Within the Team

19
MSETM 5110 New Product Development

• Responsibilities of Heavyweight Core Team Members
  (contd.)
• Team Hat Accountabilities
• Sharing Responsibility for Team Results
• Reconstituting Tasks and Content
• Establishing Reporting and Other Organizational
  Relationships
• Participating in Monitoring and Improving Team
  Performance
• Sharing Responsibility for Ensuring Effective
  Team Processes
• Examining Issues From an Executive Point of View
  (answering the question, Is this the appropriate
  business response for the company?)
• Understanding, Recognizing, and Responsibly
  Challenging the Boundaries of the Project and
  Team Process
• Source Wheelwright and Clark, Exhibit 8-5

20
MSETM 5110 New Product DevelopmentAssignment 1

• Case Study 1 (HBR 9697052) Living on Internet
  Time Product Development at Netscape, Yahoo!,
  NetDynamics, and Microsoft
• In approximately 400 words, (a) compare and
  contrast the development philosophy, process and
  culture at Netscape, Yahoo!, NetDynamics, and
  Microsoft and (b) rank the companies (1 through
  4) in terms of year-over-year growth (e.g. market
  share, revenue, profitability, dividends, etc.)
  since the early and mid-90sthe time frame in
  the case study.
• DUE DATE Friday, July 12, 2002