Retooling product development

The success of companies like RIM, Sony, P&G, Apple and GE depend heavily on their ability to develop and launch compelling products on time and on budget. Alas, few organizations are consistently successful.  Plenty of market and academic research shows that upwards of 90% of all new products fail to hit corporate objectives within 3 years, resulting in missed market opportunities, wasted capital, and damaged executive careers.  These breakdowns have many culprits, as we have written previously.  According to a recently published article in the Harvard Business Review, the primary cause of new product failure lies in flaws within the conventional product development approach. Addressing these shortcomings can improve a firm’s ability to successfully design and launch new, innovative products, thereby improving time to market, enhancing product appeal and reducing business risk.

In our experience, a new product’s evolution follows a common trajectory: project managers are tasked to deliver mission-critical yet ambiguously defined new products on time and on budget. In turn, managers cajole their teams to write detailed plans, to remain frugal around program spending, and to minimize schedule variations and downtime. Changing market and client feedback as well as shifting internal priorities complicate matters.  Managers never [sic] seem to have enough resources to get the job done.  All the while, their superiors continue to insist they adhere to predictable schedules, budgets and deliverables. This rigid approach, which may work well in turning around under-performing manufacturing lines, can actually be hurting the product development effort.

The article’s authors, Stefan Thomke and Donald Reinertsen, identified a number of fallacies around the standard product development process that produces delay, compromises quality and raise costs.

Sticking to “great” plans

Many companies put inordinate faith in their new product plans.  However, we have never seen a project plan remain unchanged throughout the design and commercialization process.  Slavish adherence to a first generation plan – no matter how well crafted – will often lead to poor outcomes since product requirements often change, new customer insights are discovered and operational processes take time to solidify.  This is not to say that upfront planning is wrong; managers just need to ensure their kick off project plans and goals are flexible enough to adjust to changing financial assumptions, new customer and channel feedback and actual operational lessons.

The higher resource utilization, the better

Conventional wisdom says that the busier the product development group, the more efficient they become.  The reality is often the opposite.  After a certain point, more work inevitably leads to more setbacks and lower quality work.  These diseconomies of scale trace to the intrinsic variability and opaqueness of development work. Delays can result from multiple projects queuing, the difficulty of managing stressed knowledge workers, and the challenge of working with semi-completed actions and milestones.

Another unexpected problem with running a fully utilized product development group is the tendency for executives to start too many projects reflecting shifts in corporate priorities or personal agendas.  Furthermore, product managers and developers abhor idle time and look to further their careers with new initiatives.  They tend to launch more projects than they can realistically complete given existing resources and reasonable timelines. All of these organizational issues dilute resourcing on all projects and triggers delays for the real high priority projects.

Get it right the first time

As in life, it is challenging to get things right from the get go when there is a high degree of uncertainty. In virtually every company we have worked with, there is always an inordinate amount of pressure on the team to get the execution right the first time.  The problem with this imperative is that it often leads to sub-optimal results (especially when linear project management approaches like Six Sigma are crudely employed). Specifically, the team will often default to the least risky – not the ideal – solution; true project costs tend to be pushed out beyond the initial project horizon and; employees have little incentive to pursue innovative alternatives.  This last point can be particularly dangerous because employees will cling to bad ideas longer than they should.

Organizations can take a variety of steps to overcome these failings, including:

  1. Treat the project plan as a work-in-progress that should evolve to reflect new information and conditions;
  2. Commence projects only when there is a full organizational commitment and sufficient resourcing to ensure success;
  3. Utilize parallel, not linear, project planning schemes to avoid delays and illuminate problems earlier in the implementation process;
  4. Employ quick feedback mechanisms instead of first pass success to rapidly inculcate new customer and operational learnings;
  5. Tolerate some resource slacking to preempt project delays and foster creative solutioning.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.


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