Too many manufacturers are failing to bring new products to market on time and on budget. As a result, they are taking a hard look at their product development processes and exploring new methods, like agile, to gain a competitive edge.
"Necessity is the mother of invention."
A quote attributed to the Greek philosopher Plato, the words continue to ring true nearly 2,400 years after his death in a vast array of situations and provide impetus for the development of myriad new products. Interestingly enough, it is providing impetus for new concepts in the new product development process itself.
How so? Successfully introducing new products into the marketplace remains a challenging proposition for many, if not most, manufacturers. A 2008 survey showed that companies were meeting their product launch dates just 45% of the time, on average. More recently, a survey of senior executives by Boston Consulting reported that only 52% of them were satisfied with their companies' return on investment in innovation.
"I will have a meeting this very afternoon with literally half a dozen folks around the world who are working on a project for Xerox where this [concern] is our exact topic: How are we going to speed this up and make sure we get a better result?" George Gibson told IndustryWeek. Gibson is a chapter president for the Product Development and Management Association (PDMA). He also is a manager of Next PIJ Platforms in the Xerox Innovation Group. "At every company I know, that very conversation is going on as well. Getting better in a way that confers competitive advantage is the primary question facing new product development professionals."
For some manufacturers, getting better may be as simple as actually instituting a product development process (although there also exists a school of thought that says process is overrated.) It is not a school attended by Dantar P. Oosterwal, author of "The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development." Oosterwal, who worked for nine years at Harley-Davidson and followed that with a stint at Sara Lee, says having a formal or standardized product development process is enormously important. Without one, it becomes very difficult to improve upon the process. Moreover, he says,
"Getting better in a way that confers competitive advantage is the primary question facing new product development professionals."
Easily the most prevalent of product development processes among manufacturing companies is some sort of staged process. Staged processes are characterized by the concepts of stages or phases, intersected by toll gates. The number of stages can vary and incorporates processes such as concept exploration, system exploration, business analysis and ultimately a ramp-up to production. Between each stage are the toll gates, which effectively serve to give management the opportunity to review the output of the prior stage or phase. The decision to proceed with the project, cancel the project or repeat a previous stage is made at each gate. Various estimates put 60% to 80% of companies in manufacturing using some sort of staged process in their product development.
For good reason. It organizes the product development process in a better-than-average way, and it has the advantage of operating along the line of how business investments are made, Gibson says. Most companies won't commit to large investments at the start of a process, and staged development offers a means of continually addressing risk. Third, the review process gives senior management control, notes Steven Eppinger, professor of management science and engineering systems at the Massachusetts Institute of Technology's Sloan School of Management. "Senior managers want for control. It's one of the big reasons senior managers like it," Eppinger says.
The popularity of a phased approach does have its downside, Gibson notes. "One of the problems with the high adoption of phase gate is that it doesn't supply competitive advantage. If it's a tool that everybody uses, it's the tide that floats all boats," he says. "Now, the problem with that argument is floating all boats would mean everybody's product development success rate would be increasing, and that turns out not to be the case."
In Search of Improvement
The "Next Big Thing" in product development is not simply the next new product introduced by each company. It's also the next idea, invention or improvement that will make the product development process faster, less expensive and more successful in its outcomes. Gibson notes that advances in technologies allow product developers to perform functions virtually that would have required hardware in the past. That speaks to speed and cost. Open innovation give companies the opportunity to partner with the best minds and best companies across the globe. Theoretically, it too should help improve new product introduction outcomes.
"You're now likely to see many more new ideas tried," Gibson predicts. "We're in a time when the next new thing will be invented or will be discovered. So if you are not experimenting with the business of how you do experiments, you are wasting your time."
"The whole objective is to create reusable knowledge better, faster, more efficiently as the way to being able to get products developed faster."
The MIT professor says he believes certain elements of the spiral process can be applied to the manufacturing product development process to improve it, and he reports having received positive feedback on the topic in seminars he has given on the topic. Eppinger says spiral development can offer greater flexibility in the review process and to address market changes "because you aren't doing the whole product definition up front." It also provides earlier attention to risks associated with product development, he asserts.
In manufacturing companies producing complex products that include a lot of software code, it's likely the software development is being done through spiral development, Eppinger says. In those instances, spiral development is coexisting with other product development processes.
Agile development also emerges from the software industry. It is characterized by small teams, rapid delivery of iterations, possibly less written process and intimate customer collaboration. "While it started out being just for software, agile is not just for software anymore," Gibson says. In the right environment, "these can be applied successfully to a wide variety of offerings."
Xerox itself has been employing agile methods outside of software for two or three years. "The success rates people had seen in software prompted us to say, Can't these same principles be applied in our work in services and our work in devices?'" Gibson explains.
The agile conversation also has arisen among the companies that participate in a high-tech roundtable of which Xerox is a part. Once a quarter, leaders in product development gather together to discuss common problems ("things we can talk about without having to sign a non-disclosure agreement," the Xerox manager points out). Xerox has presented some of its work around agile at that quarterly meeting and has heard similar stories from other firms. "They may or may not have linked it formally to agile as we have, but the very same techniques are showing up in a number of places," Gibson says.
Then there is knowledge-based product development, a version of which Oosterwal discusses in his book about Harley-Davidson's product development efforts. While he uses the words "lean" product development in his book's title, Oosterwal, who is now a partner at the Milwaukee Consulting Group, never advocates simply moving lean manufacturing principles upstream. "It's lean in that it's about the elimination of waste. It's about doing things better, faster, more efficiently," he says. Oosterwal acknowledges the late Allen Ward as a contributor to bringing lean principles to Harley's product development function. An author and professor, Ward is recognized for his expertise about the Toyota product development process.
"What we were trying to do is recognize that the objective in product development is to close the knowledge gap between when you start a new product project and when you want to execute that or launch it, because in the end that is all you are doing," Oosterwal says. "The whole objective is to create reusable knowledge better, faster, more efficiently as the way to being able to get products developed faster."
Product Development Processes
The following is a short list of product development processes gaining greater attention in the manufacturing product development community. It is not a comprehensive list.
Agile Development -- A group of development methodologies primarily associated with software. Agile promotes frequent inspection and adaptation. The methodologies rely on the ability of small teams and teamwork to make changes quickly, and promote intimate customer collaboration. Agile methods do things in small increments. Iterations are short; one to four weeks, for example.
Knowledge-based Development -- A development methodology characterized by the creation of reusable knowledge through learning cycles. It incorporates set-based design, which calls for the development of early multiple designs that are ultimately winnowed down to a final design selection.
Spiral Development -- A development process, again largely associated with software, characterized by multiple iterations of the entire process (unlike staged processes, in which decisions to proceed to the next step of the process, cancel or repeat a process occur at "toll gates.")
Familiarity with knowledge-based product development is growing, as is its use -- or elements thereof -- in manufacturing product development. "It's starting to become more known," Oosterwal says. "I think people are hungry for it."
That said, the former Harley executive suggests that the fire-fighting model is the most prevalent process in product development today. "There's not a formal mechanism for that but that's what organizations do," he says.
For manufacturing companies well-advanced in their product-development processes but still seeking the next competitive edge, PDMA's Gibson outlines a key challenge: "Somewhere in the world somebody is developing the next technique that I need to get faster. It isn't necessarily very visible [yet]. How am I going to find out and how am I going to be the first one to find out? Because I know for sure that competitive advantage is only going to happen if I know something that my competitors don't or I know it faster or I can use it better."