Improving Performance in Integrated Product Development

After years of rightsizing and reengineering in addition to placing a focus on efficiency in factory operations, manufacturing companies are looking for new core competencies that can provide differentiation and competitive advantage. Many are turning to their product development capabilities and trying to understand the answers to the following questions:

1. Are we improving our product development?
2. How does our product development capability compare to our leading competitor's?
3. In what areas can we achieve a competitive advantage in product development?
4. How can we accelerate our improvements in this area?

This article summarizes a framework for exploring these questions and assessing product development maturity. It is based on integrated product development capability benchmarking studies, which were conducted on 14 successful manufacturing companies in 1997 and 1998.

Improving Product Development Via Natural Maturation Stages

What makes a product development system truly exemplary? Figure 1 shows the various patterns that emerged as a result of asking that question to the benchmarking participants. Understanding these patterns can be useful to any organization wanting to accelerate its progress in integrated product development.

Basic concurrent engineering capability involves:

• Basic CAD and simulation tools - often in their second or third generation.
• Cross-functional teams.
• A system for effectively managing projects.
• A robust activity for integrating engineering and manufacturing through early design reviews and the use of various designs for "X" methodologies.

This state of maturity is roughly equivalent to Phase II in Figure 1 and attaining this state can take a well-managed organization many years. Some never get to that point; however, many organizations which do achieve this level of maturation find it hard to move to the next level.

It's the equivalent to honing your skills as a Division I college basketball player, but being unable to muster the continued tenacity to mature to be an NBA caliber player. Part of the difficulty is in understanding what it takes to play at the next level - understanding what skills and capabilities distinguish organizations whose product development prowess is truly exemplary compared to other organizations.

No large organization can accomplish a total redefinition of its product development system in one large step; instead, organizations move through the following stages:

Stage 1
Stage 1 is the acquisition and deployment of basic automation tools such as CAD systems. This is usually seen as a panacea for performance improvement; however, only small improvements are realized because the tools aren't effectively linked to improvements in development processes.

Stage 2
Stage 2 involves improving the ability to execute individual projects with greater consistency and reliability through the implementation of cross-functional teams and a reduction in producibility-related design changes through the application of DFM principles. Improved schedule compliance may result, but products often miss the mark with customers.

Stage 3
The focus of product development organizations is now on improving the ability of products to delight customers. Development teams focus on incorporating the voice of the customer into upfront planning. In addition, efforts to seamlessly blend fuzzy, front-end development and product launch help to improve product success rates and reduce break-even times. Costs are reduced and schedules are further compressed through judicious integration of suppliers into the process. While projects now hit the mark with customers, on-time delivery is still sporadic because too many projects crowd the development pipeline.

Stage 4
The focus turns to an enterprise view of product development rather than a project view. Resource balancing and project selection methodologies help to reduce cancellations and assure the rapid start of critical projects while project selection criteria are linked with an improved definition of product strategy, and platform/ architecture planning becomes more sophisticated and improves the reuse of development efforts.

Stage 5
To optimize the use of precious human resources, improvements in skills growth are judiciously planned and supported with a broad range of training and cross pollination of experience. Knowledge from individual projects is archived for reuse on subsequent programs. Advanced collaboration technology begins to replace collocation as a method for communication and cross-functional knowledge sharing.

Seven Competencies of Excellent Product Development Organizations

Following are seven important characteristics of excellence, which distinguish the participants in these product development practices benchmarking efforts. They provide a basic roadmap of improvement activities, which can help a company desiring to move off of its current product development plateau.

1. Customer Focus and Product Definition
The leading cause of new product failure is missing or poorly defined customer requirements. Successful products require customer involvement and input to understand how to deliver value in unique ways. Exemplary IPD (Integrated Product Development) activities understand the primacy of the customer in judging the result and, as a result, build the customer into the project.

When evaluating your practices for linking your products to customers, examine the following:

• Methodology
  Do you have a clear method for developing product definitions? One business equipment company uses a product definition scorecard to rate how well it has understood user needs, assessed risks, and considered regulatory and channel issues.
• Broad Toolbox
  Do you apply a variety of methods consistently and effectively for capturing the voice of the customer? One bus company sent all of its engineers on the road to ride buses all across the continent to talk to bus drivers and riders - and to observe how people "used" the bus.
• Value Focus
  Do you explore the complete product and develop a clear value proposition, which delivers a competitive advantage - before designing the product? One medical equipment company developed a deployment simulation to evaluate how much time could be saved in a customer's lab environment. Not only did it guide the design requirements, but the simulation also proved useful in selling the product.

2. Benchmarking
One of the best ways to spot a company with a mature IPD system is to ask what it believes are the company's key strengths and weaknesses. We asked this question of one manufacturer of point-of-sale devices and the answer was quick and concise, "We have a rock solid process that effectively involves our suppliers in critical decisions - but we have a long way to go on product definition, positioning and project selection." This was the answer given by most of the organization.

In contrast, a manufacturer of consumer products in the South told us about its world-class DFX capability and waffled when it came to selecting a weakness. Its implementation of DFX was neither exemplary nor complete and its process weaknesses were obvious after a quick review of the project management procedures.

What was the difference? More often than not it comes from benchmarking. Companies that understand where they need to head have usually judiciously compared their practices to other companies. Sometimes formal benchmarking teams have been dispatched to conduct the comparison.

Additional approaches to building a clear understanding of relative strengths include:

• Internal Audits
  One multidivisional electronics manufacturer conducts internal audits of the product development capabilities of its divisions semi-annually.
• Industry Peer Sharing
  A medical equipment company attributed its ability to establish clear improvement priorities to participation in a roundtable group with similar non-competitive companies.
• Consulting Assessments
  Without question it was discovered that organizations which have involved an outside resource specializing in product development demonstrate more rapid maturation of their integrated product development system. "They helped us to see ourselves in a new light," claims one company.

3. Targets and Measurement
Two of the clearest signs of maturity in IPD are the availability of clear, concrete targets for improvement and the ability to track progress against these goals. Benchmarking is the key to establishing good targets and robust metrics practices are critical to assessing results.

The IPD efforts of an aerospace component supplier have advanced rapidly and consistently for three years. The company attributes this to its metrics program, saying, "It's important to let our product development community know how we're doing. We monitor a critical set of metrics including time-to-market, milestones achieved, customer satisfaction - about eight altogether. More importantly, we use the metrics to take corrective action. If we don't use the metrics, we drop it."

If you're building a product development metrics program, consider the following:

• What Gets Measured Gets Done
  If improved drafting productivity is your target, by all means gather that data. However, if your focus has turned to improving how the customer perceives quality or improving the overall effectiveness of your R&D investment, you need to construct measures that deal with those issues.
• It Takes Time
  Most management teams vastly underestimate the time required to design and implement a strong metrics program. Once it's in operation, you'll need time to collect data for a solid baseline. Experts recommend that you plan on years - not months - to get this functioning effectively.
• Distant Early Warning Systems
  One of the least utilized types of metrics is predictive metrics, which are those measures of activities or results that are causal to the major goals that you want to achieve. If your goal is to improve your ability to complete projects on time, data on schedule compliance collected after release is like reading yesterday's newspaper. However, tracking requirements changes, design changes after prototype and time to achieve full staffing can help identify problems early.

4. Engaging Management
One of the top complaints of product development professionals is a feeling of isolation from top management. Companies with active efforts in IPD often lament, "We can't get the GM to come to a scheduled meeting, much less explore ideas informally." Another complaint is that product development teams don't know what top management really expects from their product development capability.

Other companies experience the opposite problem. At a medium-sized business equipment company it was determined that many top executives had engineering backgrounds and regularly insisted on personally participating in design reviews - redirecting technical approaches and fighting fires. While the product development community in this company never felt neglected, it also never felt truly supported.

To productively engage top management in supporting excellence in product development, help them focus on:

• Removing Barriers
  One east coast manufacturer made it a practice to assign "management angels" to key development programs to remove obstacles.
• Actively Reviewing IPD Progress
  Management needs to remember that to have consistently better products you need a better product development process. At companies with mature IPD efforts, management has learned to balance short-term sales and production issues with a focus on growing tomorrow's products.
• Getting Started
  Studies have shown that management typically pays most of its attention to product development at the end of the program - when it's often too late. Mature organizations are adept at engaging management early - to set charters and strategy, establish direction and expectations, and commit resources.

5. Managing the Product Pipeline
"Sometimes we're very good at building the wrong product," admits a senior manager from an automotive supplier.

One of the most important roles of top management is to set the product development agenda. No actions speak louder in establishing that agenda than selecting new products and projects. This ability to "do the right things" in addition to "doing things right" is a key differentiator of those companies with exemplary performance in product development. When done correctly, fewer resources are wasted on cancellations and projects experience fewer delays waiting for resources.

To test your organization's maturity in managing an effective aggregate project plan, consider the following:

• Cross-Functional Approval
  Many companies are effective with cross-functional teams. Far fewer are effective at blending cross-functional perspectives in selecting projects. A medical equipment supplier incorporates the perspectives of engineering, manufacturing and marketing on a Project Approval Committee chaired by the GM. A set of screening criteria (Does the customer care? Can we win? Do we care? Can we do it?) help them to manage the flow of projects from concept to launch.
• Project Categorization
  A program manager at a major business equipment company summarizes it well, "We've agreed upon the definitions of four project types for our organization - support, derivative, platform and breakthrough. We make sure that every project fits into those categories. It's improved our ability to estimate, manage resources and capture learning. We avoid projects in the gaps between the categories because history has shown us that we aren't effective at delivering on expectations on those types of projects.
• Technology Roadmap
  One of the critical path items for time-to-market for many companies is the deployment of advanced product or process technologies. An automotive electronics manufacturer uses a technology roadmap to integrate the funding of technology projects with product and platform plans.

6. Managing Change: Linking People, Processes and Tools
Implementing IPD is difficult. New tools are involved, new organizational structures develop and new jobs and skills are defined, while old jobs and skills disappear or become less important. All of this involves managing change and exemplary organizations encourage growth-oriented change in their product development process through an effective IPD initiative.

However, in recent years the idea of change initiatives has received a bad name in many organizations. From TQM to customer satisfaction to reengineering, the initiative du jour has often appeared to be a passing fad. To be truly effective and to avoid being subliminally lumped in the graveyard of failed corporate improvement initiatives, focus on:

• A Name
  If it's really an activity it needs a name. Perhaps more importantly it needs a leader - someone who is clearly in charge of the opportunity to enhance competitiveness through world-class product development. To be truly ahead of the curve, provide a budget and a timeframe for expected results.
• Sponsors
  To provide course correction and maintain momentum, identify a sponsor. One large manufacturer in the southwest used its program manager's council to sustain the interest and infuse new life when initial efforts were waning.
• A Plan
  A gameplan. Real and in writing.
• Process Drives Tools
  Most processes are historical. They were never planned, rarely documented and often grew to support a different set of business priorities. Before new tools can take root - simulations, PDM systems, advanced GroupWare - processes often need to be redesigned to support the organization's future competitive reality and requirements. Only then can tools be effectively introduced to the appropriate users with predictable results. Deploying new tools to automate an existing process usually delivers little.

7. Knowledge Sharing and Skill Growth
Mature product development companies have established their ability to consistently execute individual projects on time and on spec. Their attention is focused on methods for harvesting knowledge from one project so that other teams can execute future projects more effectively. They also reinvest in their people as resources, which are central to executing future projects. To test whether you've moved into this advanced form of IPD maturity, look for the following in your organization:

• Advanced Collaboration
  Exemplary product developers make well-planned investments in the latest technology and approaches to foster communication and share information among team members. They go well beyond e-mail and shared project schedules, such as team meetings. They collaborate electronically across physical and organizational boundaries.
• The Science of Cooperation
  A Canadian bus manufacturer recognized that it takes more than common goals to create an effective team. They turned to a method of psychographic profiling known as Belbin analysis to help select team members which would be compatible and would pull in the same direction. Likewise, many organizations expend significant effort on the front end of projects for teams to agree upon decision-making principles and even office layouts.
• Knowledge Archives
  A manufacturer of hand-held devices says, "We couldn't afford to redevelop usability data for every project. So now we work hard to archive our customer research data so that it is at least partially transferable to other products."

  Likewise, an engine manufacturer maintains an elaborate library of competitive information and cites increased competitiveness and shortened planning cycles as the benefit. A business equipment manufacturer captures lessons learned from every project in a structured Lotus Notes database. "The rule is that you're not done until the team has captured what they've learned."

Conclusion

Not every manufacturing company requires a world-class product development competency. However, few companies existing in competitive industries can expect long-term success with a product development system that is clearly weaker than the competition.

Strengthening product development often follows a natural maturation migration path and understanding this natural path allows companies to accelerate progress by anticipating the areas of change that are on the path ahead. Incorporating best practices associated with excellence and maturity helps organizations to move up the maturation ladder.

Our work with excellent product development companies indicates that emphasis on product definition, benchmarking, performance targets and measurement, management involvement, portfolio management, managing change and knowledge capture help build a product development capability that delivers products with a consistent competitive advantage.

These companies realize that if they desire consistently superior products as part of their business strategy, then they need to invest in a superior product development system.

For more information contact Joseph Kormos, principal of Innovative Development Associates (Cincinnati, OH) at (513) 683-1911.