EPSRC Management of Technology Initiative Project Number: GR/K/11468 Project Title: RE-ENGINEERING THE TECHNOLOGY ACQUISITION PROCESS Document Title: Managing the Product Development Process (Part 1: An Assessment) Document Date: 4 May, 2005 S. Jenkins 1, S. Forbes 1 T. S.
Durrant 1 S. K. Banerjee 2 University of Strathclyde Department of Electronic and Electrical Engineering 1 and Department of Design, Manufacture and Engineering Management 2204, George Street Glasgow, G 1 1 XW CONTENTS 1. ABSTRACT 12. PREAMBLE 13.
INTRODUCTION 14. METHODOLOGIES FOR PRODUCT DEVELOPMENT 24. 1 PHASED DEVELOPMENT 24. 2 STAGE / GATE MODELS 34.
3 PRODUCT AND CYCLE-TIME EXCELLENCE - PACE 54. 3. 1 The Phase Review Process 54. 3. 2 Core Team Project Organisation 64. 3.
3 Structured Development Process 64. 3. 4 Product Development Strategy 64. 3.
5 Technology Management 84. 3. 6 Design Techniques and Automatic Development Tools 94. 3. 7 Cross Project Management 104. 4 TOTAL DESIGN 115.
DISCUSSION AND RECOMMENDATIONS 136. CONCLUSIONS 147. REFERENCES 151. ABSTRACT Recent studies have indicated that a company's chances of success in launching new products is dependant upon the management of the new product development process. The increasing rate of technological change coupled with increasing global competition, means that a high rate of new product development and introduction in the marketplace is vital to a company's continued growth and long-term survival. In this paper methodologies for new product development, including: (a) Phased Development, (b) Stage / Gate Models, (c) Product and Cycle-time Excellence - PACE and, (d) Total Design, are investigated.
The strengths and weaknesses of each methodology are assessed and proposals for improved management of the new product development process in manufacturing are discussed. 2. PREAMBLE The paper presents early findings from the work conducted at the University of Strathclyde on 'Re-engineering the Technology Acquisition Process', under a Project sponsored by the EPSRC 'Management of Technology' Initiative. In order to understand the process of technology acquisition in manufacturing organisations, the project team has studied the product development process and its interactions with the requirements for technology acquisition and management. The acquisition of technology represents a strategic decision, based on the type of products that a company wishes to market in the future. The product development process provides a key link between a company's business strategy and its technology acquisition strategy.
The concepts discussed in this paper are being tested with a number of industrial organisations, and results of the study will be presented at the conference. 3. INTRODUCTION In today's highly competitive world-wide markets, the future of all firms depends upon their ability to produce a constant stream of quality new products that meet their customers' needs. There is thus a requirement for developing a methodology that will ensure a high rate of new product success. While management initiatives, such as World Class Manufacturing and Total Quality management (TQM), have concentrated on improving the manufacturing process, the recent thrust of management activity is concerned with understanding, speeding up and improving the product development process. This thrust will prevail, in parallel with continuous improvement in manufacturing.
A major problem for management is that technologies, particularly in electronics and materials, are changing faster than ever. Thus reduction of the R&D cycle time can be an important source of competitive advantage. It is a strategy that carries a certain amount of risk. There are no cast iron guarantees of success, and investing in new products now is a considerable drain on capital, whilst the stock market still demands steadily improving quarterly earnings.
Even in times of recession, however, there are some companies that still manage to continuously produce new and innovative products, that keep them ahead of the competition. Successful companies do have elements in common, including a commitment to innovation throughout all levels of the firm, the ability to anticipate future market needs, and a managed new product development process, which is constantly used and continuously improved. The idea that a the chances of success of a product in the market is linked to the new product development process within the firm is not in itself new. Many studies have focused on the differences between products that were successful and those which failed commercially. (Cooper, 1994) These studies discovered alarmingly high failure rates in new products, but of even greater concern, they discovered that the failure of many of these products had been predictable and even preventable. It has been found that firms that use a formal new product development process have been consistently more successful at new product development than those which do not.
(Cooper, Kleinschmidt, 1993). The aim of any new product development process is to maximis e the success rate for new products, thereby ensuring sustained growth. An effective process can improve the quality and efficiency of new product development. It is often the case that a new product development project is not entirely new. This being the case, if there is no product development methodology in place, the project team might not be able to exploit the knowledge and experience gained throughout previous projects.
They must also plan the process of how to develop the product. A new product development methodology will remove this task from the team, allowing them to concentrate on the actual development of the new product. In traditional firms organised along functional lines, the development of a new product is split along functional lines, with responsibility passing from marketing to engineering, then to manufacturing and finally to sales. This form of 'over-the-wall' approach to product development does not encourage concurrent engineering, since product development is a cross-functional exercise and needs to be organised around a core project team, consisting of members from all functional areas. This limits downstream engineering changes once development is under way, and encourages concurrent engineering, since decisions made are subjected to a rigorous assessment of their effects on subsequent stages in the process. The aim of this paper is to critically examine a range of product development and management methodologies, to identify the success factors and the pitfalls in their implementation, to discuss the strengths and weaknesses of the methodologies, and propose a framework for an improved new product development management process.
4. METHODOLOGIES FOR PRODUCT DEVELOPMENT study has been conducted to compare the following methodologies for the management of the new product development process. These include: o Phased Development. o Stage / Gate methodologies. o Product and Cycle-time Excellence (PACE). o Total Design.
The paper provides an understanding of their implementation and associated management issues. Some effort is devoted to an analysis of PACE, since it is seen as a key methodology for the product development process in a number of companies in the electronics sector. 4. 1 Phased Development Early forms of phased development, such as Phased Project Planning, originally developed at NASA in the 1960's, concentrated largely on the reduction of technical risk. (Smith, Reinersten, 1992). These methods were adopted by several manufacturing companies, in order to give some structure to the new product development process.
Here projects were generally divided into design, development and production phases, and the main criteria for continuation to the next phase were budgetary. In manufacturing companies the addition of a marketing phase prior to commencing product design was deemed necessary. This attempted to ensure that product specifications were in line with perceived customer needs. This process was successful in its original context, in that it allowed management to check progress against a schedule and it ensured that each individual part of a project was completed and performed to specification.
It also gave senior management a sense of involvement and the means of controlling new product development. The Phased Development methodology takes little account of marketing considerations throughout the development of the product and provides no check on the product fit with the business strategy of the firm. Additionally such a rigid definition of phases along functional lines does little to encourage concurrent engineering. If all tasks within a phase need to be completed before management will sign the project off at the review point complex products could end up being delayed by the company's phase review process. This methodology does not clearly specify any elements that will increase communications between the various members of the project team engaged in the development of the product. Matrix management structures were employed to improve the effectiveness of the product development project team.
A potential pitfall of these structures of organisation is that every project member is reporting to two managers, the functional head and the project team leader. This can create a conflict of loyalty, which is usually resolved in favour of the functional department. New product development projects will get completed but the functional departments will retain responsibility for areas such as staff appraisals and training. Therefore new product development projects are often seen as of secondary importance for many employees, since it is the functional manager who has responsibility for their immediate career development. Figure 1 A Typical Stage / Gate Process 4.
2 Stage / Gate Models Stage / Gate methodologies (Cooper, 1990) divide the process of product development into stages, separated by a review point, or gate. At each gate senior management reviews the project, based on a previously agreed set of deliverable's, and decide whether to: (i) proceed to the next stage, (ii) abandon the project, or (iii) redirect the project. In this way senior management become involved in the project and their commitment is communicated to the project team. An example of a Stage / Gate system is shown in Figure 1. This process differs from early phased development methodologies in that the stages are based along logical milestones, or deliverable's, in the product development process, rather than split the project along functional lines. This method of new product development requires that the project is managed by a full-time project team, consisting of representatives from all functional departments.
The project team is managed by a team leader and normally consists of eight to ten members, more and its effectiveness may be reduced. (Whiting, 1991) The team manages the day-to-day activities surrounding the new product development project within each phase. The full-time team members should ideally be located in the same area. This assists effective and easy communications, ensuring that all team members are committed to the project and know their responsibilities.
This form of organisational structure ensures that all team members are aware of the impact of their work on all functional areas, thus it is possible to plan for activities in the future, and overlap activities that can be carried out in parallel. (Towner, 1994) The use of a cross functional team alone however is not sufficient to force parallel development activities. The project team is required to follow a structured development plan, based along logical phases in the project. Inserting gates between each stage enables decision points to be included in the plan. In many firms there are often no effective structures in place to terminate, or redirect projects that are no longer relevant hence projects can fail, but in many cases the cause of failure would have been identifiable quite early in the projects life.
The use of gates allow senior management the opportunity to review the project and to cancel it, if necessary. Management's role in new product development is not to micro-manage each project, but to set the strategic direction for the firm, and to ensure that all new product development projects are consistent with the company's business strategy. The new product strategy of the firm should be predictive, and caution should be exercised in using life-cycle curves to forecast trends. Life-cycles are historical records and, averaged over time, they do appear respectable.
They can even be self-fulfilling, as marketing of a product may be abandoned when it is perceived that the product has reached its limit in the marketplace, and thus an opportunity may be missed for an existing product to enter new markets. Management can attempt to predict trends in customer requirements by analyzing past product performance trends and attempting to forecast changes in the environment. These could be brought about by: the introduction of new technology, demographic trends, legal issues, government policies etc. It is the responsibility of senior management to scan the task environment for discontinuities, which may often be predictable. The time to start new product design is before such discontinuities arise. Figure 2 There are many variations of the stage / gate model in use in industry today, since most manufacturing companies recognise the importance of new products to sustain growth.
There are normally four to seven stages in each product development project, although this will depend very much on the type of product and on the company itself. Booz, Allen and Hamilton (1982) list seven stages for new product development. This is typical of many such models, and is illustrated in Figure 2. The use of a stage / gate model encourages up-front senior management involvement in the project, where strategic level decisions require to be made.
At the first review point, or gate, management will evaluate the concept behind a new product idea. At this early stage is relatively a fairly large number of ideas are evaluated. It is at this point that initial strategic and marketing screens are applied to the concept. If the product does not form a good fit with the company's business strategy it is rejected, or redirected for later review.
Management should therefore be aware of changes within the marketing and technological task environments, which will continuously take place, and constantly revisit and revise the company business strategy, to take account of them. It is not a straight forward decision to reject a project on the grounds of poor strategic fit. The strategy itself may be inappropriate under current environmental conditions and may need changing. The initial market screening involves mostly qualitative measures. The product concept will include the features that the final product must have to be clearly superior to any possible opposition. Senior management must then be satisfied that the outline assumptions regarding the potential market for this product are realistic.
If not, they will either cancel the project, or request that the proposal be modified. Successful completion of this stage will lead to the establishment of a full-time project team which will proceed to the specification and planning stage, where the new product business case will be constructed. The project team will be charged by senior management to produce detailed functional specifications and to evaluate a development plan for the project. At this stage a more detailed assessment is required, which will include market studies and initial financial analysis to ensure the viability of the project. The multi-functional team ensures that areas not normally involved in this process such as production, purchasing and sales, make an input. The use of this collective knowledge means that the product specification will take account of manufacturing and procurement issues and limit the need for downstream engineering changes.
This highlights one advantage of this methodology, namely the focus on the up front activities. During these early stages of a development project there will be comparatively little financial expenditure, and alterations to the specification are cheap and relatively easy to make. After detailed design has commenced specification changes can significantly delay a project and increase its costs. Any changes made to the design are more likely to result in alterations to dependant modules, or even in production equipment. Early product definition has been found to be essential, if a company is to reduce time to market and increase its chances of success. (Cooper, Kleinschmidt, 1993).
4. 3 Product and Cycle-time Excellence - PACE Product and Cycle-time Excellence - PACE, developed by Pittiglio Rabin & McGrath (PRTM), . (McGrath et al, 1992) is a variation of the Stage / Gate approach to new product development. PACE has seven major elements which together form a blue-print for the management of the new product development process. o The Phase Review Process. o Core Teams.
o Structured Development Process. o Product Strategy. o Technology Management. o Design Techniques and Development Tools.
o Cross project management. The first three elements are the key tools that are required for each product development project. The next four elements Provide the support required to enable the process to proceed smoothly. These elements will be reviewed in greater detail, in the following sections.
4. 3. 1 The Phase Review Process As with the stage / gate methodology explained earlier, PACE divides a project into logical phases, or stages, within the development process. The phase review process forms the gates between each phase, through which the decision making process is implemented. Prior to proceeding to each phase, the project will be reviewed by the Product Approval Committee (PAC). The PAC is the senior management group within a company or business unit, who are charged with the authority and responsibility for making all major new product decisions.
(Whiting, 1991). At each phase review the PAC must decide whether the project should proceed to the next phase, be redirected, or be cancelled altogether. The PAC is a fairly small group, normally four or five senior managers. They base their decisions on a previously agreed set of deliverable's then empower the project team to develop the product on a phase by phase basis. The process may be represented as a funnel (Figure 3) with ideas entering at one end, and new products emerging at the other. Figure 3.
Phase Review Process 4. 3. 2 Core Team Project Organisation The core team is cross-functional, and has the specific responsibility to develop a particular product, and to manage all tasks associated with the development process. Core teams usually have five to eight members and each has a core team leader, who guides and directs the team, and a core team facilitator, whose job is to help the team adopt the development process (Whiting, 1991), as well as assisting the team leader in planning and recording any improvements to the process. Other members of the full project team join and leave the development project as required. This approach to team organisation improves co-ordination and communication between project team members and decreases time to market.
(Murphy, 1992). 4. 3. 3 Structured Development Process PACE divides each phase into fifteen to twenty Steps, that fully define the company's product development process.
Each step is then subdivided into approximately ten to thirty Tasks, which in turn are broken down into activities. Phases, Steps and Tasks apply to all projects, although activities are normally project specific. That is not to say that all projects will need every Step within the process. Structured development allows that standard cycle-times for tasks can be recorded and kept on a database. (Burkart, 1994).
As the company becomes more familiar with the process, this database can be used to predict the time and resources required to complete a specific task. The company can use cycle-time estimates to schedule projects. PACE operates at three levels of scheduling, phase, step, and task, depending upon the information required by each group. Senior management (PAC) will receive an overview chart, showing the phase schedule with step detail. The core team leader uses a step schedule with task detail. Finally there is a task schedule with activity detail for core team members and full project team members working on these tasks.
The complexity of the schedule will vary from company to company. It may be PC based in a small to medium sized firm, or require a large mainframe database in large organisations. This system allows the company to set targets for reduction and continuous improvement for task cycle-times, thereby improving its time to market performance. 4. 3. 4 Product Development Strategy company's product development strategy defines the type of product that a company wants to develop.
It provides the PAC with a framework to make decisions and set priorities in the phase review process and guides the core team when defining products. PACE defines two main strategies for new products: (a) Product line expansion, and (b) New product line innovation. There are five approaches that may be employed in product line expansion. o Low-end products: Targets a new market segment by offering a product that is more affordable to a new group of customers.
o Cost reduced products: Replace current products, therefore making them more price competitive and extending their product life. o High-end products: New features and higher performance characteristics. They appeal to a new segment of the market willing to pay more for these features. o Next generation products: Replace the current product line with products that have higher performances and better functionality but at the same or similar price. o Breakthrough products: both increase performance and functionality, whilst reducing the relative price.
They tend to make existing products obsolete. Figure 4 A company needs to continuously evaluate the direction each product line is taking to ensure the correct product mix. Management will therefore need to sequence projects over time and plan for enhancements and replacements for all products in the company's portfolio. Mapping out a product line plan with respect to time, can be used to show how all projects fit within the company's business strategy, and how development resources and new technologies should be acquired through these projects. (Wheelwright and Clark, 1992). An example of a product line plan, for an imaginary product, Product A, is shown in Figure 4.
New product line innovation is the company's framework for new and different product lines. A new product line is most likely to succeed if it is based upon the internal strengths of the firm, either in Product, Market or Technology. (Kuczmarski, 1992). Through diversification a company may wish to create a new product, enter a new market, or apply a new technology. Diversification into new product lines can be risky. The bigger the change, the greater the risk.
To manage this risk companies often use incremental innovation. (Young, 1991). This gives the company a greater opportunity to leverage their strengths across the new product line, and reduces the degree of uncertainty in assessing the chance of success of new products in the marketplace. (Smith and Reinersten, 1991). To illustrate this point see figure 5, which shows the three planes, Product, Technology, Market. A company which tries to move conceptually a large distance on all three planes at the same time is taking highest risk, perhaps in pursuit of an invention, which may potentially yield the highest reward.
However prudence dictates that moves into new products are taken along two planes, as shown by the increments represented by A, B, and C, in Figure 5. Figure 5 Since the most important criteria for new product success is a unique superior product (Cooper, Kleinschmidt, 1993) larger moves would appear to be a better option than minor developments. This appears to run contrary to the belief that incremental innovation has the best chance of success. Senior management needs to ensure there is a balance between the degree of innovation and the risk to which the company is exposed. The degree of risk aversion will depend upon the industry and the company's business plan. Therefore deciding upon the most appropriate new product strategy to pursue, and positioning of products in the market, are possibly management's most crucial tasks.
In a competitive marketplace there are effectively only three approaches to product positioning that may be employed: o Product position nine based on price leadership. There is normally only one price leader in any market. This is the product that is seen, by customers, to be the best value. o Product positioning based upon differentiation.
These products are seen by customers to be superior to the competition in some way. For example, the customer may receive a long term cost benefit, due to lower maintenance costs. o Product positioning based upon focus on specialist niche markets. These products are designed for specialist users, who are often prepared to pay extra for particular features.
4. 3. 5 Technology Management Although part of the new product development process, technology management needs to be implemented differently. The role of technology management is to identify opportunities for applying new technology, to determine core technologies and initiate technology development projects.
The process of technology acquisition should be related to the company's product development plans and therefore to the business strategy of the firm. The decision to acquire a new technology is a strategic one, based on the products that a company will need, or want, to develop in the future. Technology acquisition is a long-term process and conventional financial evaluation techniques, such as Internal Rate of Return or Net Present Value, are inappropriate in evaluating a new technology acquisition project. The decision to invest in a new technology is analogous to investing in options, where the down side is fixed, the price of acquiring or developing the technology, but the up side is potentially very large, since a successful Research and Development programme may open up several new product opportunities. (Newton and Pearson, 1994). In planning the expansion of its product lines, or initiating projects to design innovative new products, senior management need to ensure that the required technologies are available, prior to commencing a new product development project.
Management can use the business plan and environmental scanning, to predict the need to acquire new technologies, and initiate the process of technology acquisition. The key technologies within a product, and / or those required to manufacture it, determine the degree of innovation and risk contained within the new product development project. All products utilise a range of technologies, that will be of varying maturity, and of varying importance to compete in a given market. In analyzing the key technologies in a product, management needs to assess the technologies in three ways: (a) The maturity of a technology will determine the degree to which this technology is capable of providing a competitive advantage. A mature or ageing technology will not provide a competitive advantage. It is embryonic and growing technologies that give a company its competitive advantage.
(b) The competence of the company, in a key technology, is an important consideration in new product development. Management must assess the company's technological competitive position. Since products that are based on a company's internal strengths are most likely to succeed, an unfavourable competitive position in a number of key technologies may make the project too risky. (c) The importance of a technology for competing in a given market must also be assessed. At one end of the scale, there will be certain technologies within a product that are crucial to competing in the market. Other technologies may simply provide minor benefits, or 'would like to have' features.
Management needs to decide whether or not a technology is really necessary to the new product project. 4. 3. 6 Design Techniques and Automatic Development Tools Design techniques such as Quality Function Deployment (QFD), Design for Assembly and Design for Manufacturability can enhance the success of a product, but alone they will not solve all product development issues.
QFD can be used to ensure that the design of the product is driven by features that are of real benefit to the customer, however in complex products QFD can become somewhat cumbersome. If the project team is left with 100 x 100 matrices to complete, QFD could actually slow down the development process. Within PACE, PRTM (McGrath et al, 1992) have proposed a simplified QFD (S-QFD) for new product design. S-QFD begins with defining the 'Voice of the Marketplace' to list the essential attributes of the product.
It is important to restrict this list to twenty or thirty most crucial attributes of the product. Brain-storming techniques are useful when completing this list. The 'Voice of the Marketplace's should include not only customers but other stakeholder groups whom the product affects. These might include the sales force, systems integrators, regulatory agencies etc.
, as well as end users. The next stage of S-QFD is to develop technical interpretations or responses for each market place requirement. Again brain-storming can be used amongst team members, to produce a list of possible technical actions for each marketplace requirement. The team should again attempt to streamline this list to those of primary importance. A series of fish bone diagrams, similar to Figure 6, can then be produced. These show the range of possible technical actions for each marketplace requirement.
Figure 6. Technical Interpretations for Market-place Requirements Once all requirements have been technically interpreted, marketplace requirements and technical actions are plotted against each other on a correlation matrix. This facilitates assessment of the correlation between each market place requirement and the technical actions. This process ensures that each of the market place requirements has an associated technical approach, keeps the issues that are important to the customer at the forefront of the core team's thinking; and that each technical action has an associated market place requirement. The latter prevents engineers from over designing a product by including features that are of no real benefit to the customer, and thus avoids the risk of compromising the design and adding unnecessary cost. 4.
3. 7 Cross Project Management It is unlikely that a company would have only one new product development project running at a given time, and certain activities need to be properly managed across all product development projects. These include resource scheduling, business systems interface, portfolio management, product development process engineering and the interfaces into functional organisations. The management of the company's product portfolio is one of the most important aspects of cross project management. Senior management must ensure that products under development represent an acceptable balance between potential reward and risk, which will depend upon the nature and policies of the firm and its markets. They will need to take account of resource inter dependencies between projects, both in terms of people and capital equipment, and ensure that either the resources required are available, or they will need to prioritize projects.
Input / output inter dependencies will need to be considered when looking at the company's R&D portfolio. (De Maio et al, 1994). These can arise in four principle ways: o Two different products may require the development of some common part. o A product might be developed for inclusion in a more complex system. o Technologies might be developed for one product that are to be used in subsequent products. o A product could open up new market opportunities for future products.
There are several ways in which management may keep track of the firm's product portfolio. Wheelwright and Clark, 1992, classify product development projects into five categories: (a) Research and Development, (b) Breakthrough Products, (c) Platform Products, (d) Derivative Products, and (e) Partnerships and Alliances. Projects are then mapped on an 'Aggregate Project Plan' to enable the current portfolio to be analysed. Arthur D.
Little (Roussel et al, 1991) advocate the use of portfolio matrices, to examine the competitive position of a proposed R&D portfolio. The aim is to achieve a balanced portfolio of R&D projects, which match the company's business strategy. 4. 4 Total Design Total design (Hollins and Pugh, 1990) is concerned with the quality of execution of the new product design process itself, and stresses the fact that the design of a new product requires the input of many functional disciplines, not just designers and engineers. In purchasing a product the customer looks at more than the product's features.
There are often a range of other issues, that are of importance to a customer. These include: (a) Availability of the product, (b) Financing packages that are available, (c) green issues, or even (d) attractiveness of the packaging. In moving from the identification of a market opportunity to selling a new product, these aspects of the 'Total Product' must be considered. Total design is a systematic activity employed to take a firm from market need identification, to selling a product that will successfully meet that need. As with PACE, and other stage / gate methodologies, it advocates the input of staff from all disciplines within the firm, to produce a Total Design Solution. It is however slightly less complete, being more a product design methodology, as compared to PACE which is a product design management methodology.
Total design emphasizes the importance of the front end in product design and commences with a detailed investigation of the market, in order to fully understand customer needs. This involves acquiring and analyzing a large amount of information from many different sources, including patents, journals, manufacturers of competing or analogous products etc. From this analysis the company will produce a Product Design Specification (PDS). The PDS that is produced from the initial market analysis is the basic reference for the new product.
The PDS is important since it encourages quality in up front stages of new product design, and reference to the PDS, throughout the products development, ensuring that a final product is developed which will satisfy the customers' needs. Following the formulation of the PDS the first design review takes place. This is similar to a gate review and is conducted before proceeding to the concept design stage. The first design review investigates whether or not the specification is achievable and realistic, if the market has been fully understood, and target costs are checked to ensure they are feasible.
The design team then moves to the conceptual design stage. Here they must generate ideas and evaluate solutions to meet the PDS. The concept design is checked to ensure that the PDS has been satisfied, and it is then submitted to a second design review. If the concept design is passed at this review, the product team prepares to produce a detailed product design, including the design of all required manufacturing systems.
The design is tested, against the background of the PDS, for each subsequent stage of the product design process. The next review takes place once the detail design is complete. Following prototype production and testing, a further review is conducted. The design is then reviewed again prior to volume manufacture and any development work that is required as a result of testing, or for the development of derivative products is initiated. Total design stresses the importance of the early involvement of manufacturing engineers, in order to facilitate concurrent engineering and ensure that, as far as possible, the product and its manufacturing process are designed along two simultaneous design cores.
(See Figure 7. ). If the new product is a derivative, then the manufacturing process is already essentially in place. Changes to the manufacturing process centre mainly around improvements in manufacturing methods, and the process design core is largely in phase with the product design core. The more innovative a new product is however, the greater the degree of change required in the design process. It is not often possible to produce a detailed design for the manufacturing process, until the new product characteristics emerge, and so the process design core lags the product design core.
Companies should give further attention as to how a total design approach may be incorporated within stage / gate methodologies, such as PACE, to improve the quality of the design process. Figure 7 5. DISCUSSION AND RECOMMENDATIONS The use of multi-functional teams and stage / gate product development methodologies, such as PACE, can reduce time to market and increase the probability of new product success. The use of a structured development process is not in itself a guarantee of effective new product development and these systems do have inherent problems, that should be addressed.
A potential problem appears to be that, if the procedures are too rigid, then they can work against a reduction in development time. In every new product development project, it should be recognised that the team may develop a better way of executing a particular activity. The procedures should be viewed as guidelines and allow for variations to be implemented in special circumstances. The process can then be constantly updated, to take account of the learning effect gained from each project. Senior management empowers the team to carry out the next stage of development at a review point. It is not management's job to micro-manage the project.
If they seek to impose too rigid a structure on the project team, the desired effect of empowering the team with responsibility for all development activities between the review points will not be achieved. (Cooper, 1994) The use of review points themselves can actually delay projects. Whilst using logical milestones in development is an improvement over functional stages, projects might still have to wait at a review point for one task to be finished. This is clearly undesirable, and so the process should not contain hard boundaries between stages.
The stages and review points have a blurred division between them and overlapping of stages should be encouraged. The use of a multi-functional teams should help achieve this, as potential downstream problems are more easily recognised and can be accounted for. In the case of an incomplete stage, senior management must decide, through the review process, on the risks involved in continuation to the next stage. A delay in a new product development project may occur if one module of a complex product is late, for example, due to an extended safety test required by legislation.
If all other modules are complete, it may be more risky to delay continuation and to miss a scheduled launch, than to allow continuation, depending on a successful result of the test. Senior management has the responsibility to assess the risk involved in proceeding with a project, when the preceding stage is incomplete. To make this decision, management needs to be reasonably sure that the missing activities can be completed and that delaying the project could cause the product to be unacceptably late. Activities with long lead-times are similar in certain ways.
This might include production plant, that needs to be ordered before the design stage is complete. Again management must decide if the risk involved in ordering equipment at this point in time is acceptable. Normally this risk can be reduced, for example, by specifying a cancellation clause in the purchase order. The role of the team leader is vital to the success of a structured development process. Team leaders need to be generalists, with knowledge and influence across all functional departments. They require a good deal of drive to see a project through, and they must also posses a breadth of knowledge and experience in both technology and business.
(Donovan, 1994). These personnel are difficult to find but the skills they require can be acquired. It is often possible to use a development project as a 'training course', for future project leaders. (Bowen et al, 1994) A new project leader may first handle a minor derivative project, before taking control of increasingly more complex product projects, as success and experience is built upon. If the project leader is merely a co-ordina tor with no real authority, then functional heads may not embrace the team concept. There is the danger that the team leader will act as a clerk who tracks events and published schedules.
Therefore the team leader should ideally be an influential manager, with experience in more than one function. The core team members should similarly have authority within their function, and their first loyalty should be to the project. The problem of isolating functional heads remains a problem however. The role of the functional manager does not disappear, rather it changes to become more concerned with the continuous improvement of their function. Another common problem with the use of cross functional teams may arise within the team itself. A team must first have the support and backing of senior management and adequate resources to carry out the project.
(O'Conner, 1993). The support of senior management must allow the team control over the project during each stage of development, including risk management. The resources required to maximis e team performance include: (a) adequate training in the use of the process, (b) the provision of a core team facilitator to encourage adoption of the process, and (c) evolution of the process by the team In most companies projects vary in complexity, from fundamental research to incremental development. It may therefore be unwise to structure the development process around the most complicated projects, since this could lead to minor derivative projects being delayed.
The company should have the means by which certain projects can by-pass the phase review process. Projects such as custom engineering requests, maintenance releases, and technology studies fit this description, as do some minor product modifications. The company may wish to categorize projects at the concept stage and have a set of procedures for each classification. The exact content of the procedures will be company specific, however, and it would be unwise to simply copy existing procedures from one company to another and expect them to work without some modification. There may be exceptional cases, where the phase review process needs to be circumvented. Two cases are early announcement and early shipment.
In the case of early announcement the project leader presents a case for the announcement of a project to senior management, prior to the development stage, which will be reviewed by the quality department. This may be necessary if it is known that a rival company plans to launch a similar product and since delay could seriously harm sales. In early shipment, the product might be delivered to a customer prior to qualification. Again the project leader should present the case for early shipment to the executive committee. It must be stressed that the above are exceptions and a strong argument must be presented to allow them to occur. The fact that variations are allowed in the process however gives additional flexibility.
In the use of phased development systems there is always the danger that in attempting to remove as much technical uncertainty as possible, the company may go too far and manage all the technical risk out of the project. This may have the undesired effect of discouraging management from those projects which, whilst risky, could have potentially high reward. In addition management should not ignore commercial risk, which will be increased by lengthening the time to market. 6. CONCLUSIONS To remain competitive, companies need a constant stream of innovative new products. The process of new product development is, like all business processes, a management process.
This process must constantly be reviewed and improved, in order to ensure the continued growth of the firm. The use of a stage / gate methodology, such as PACE gives management the means to control and influence the direction of new product development, an opportunity to link the business plan with the firm's new product development strategy and, ultimately with the technology acquisition process. The process of technology acquisition is the means by which a company gains access to the technologies it will need in the future. The business plan states the markets that the company is, or wants to, compete in, and this specifies the type of products that are needed.
QFD techniques are a useful tool for identifying the type of technology to be acquired. The process of technology acquisition is very much dependant upon the new product development plans of the company. The product development strategy will not only determine the range and nature of new technologies required, but also the degree of competence needed in each key technology. This will assist management take the required make or buy decisions, with regard to technology. A company's new product development process and the technology acquisition process should be determined by identifying the internal strengths of the firm, and matching them to market opportunities.
A new product development project is most likely to succeed, if it gives the company the opportunity to leverage its core competencies across the project. At Strathclyde work is underway to link the management of the product development process with the technology acquisition process, leading to generic models for the interaction between these complementary processes. 7. REFERENCES Booz, Allen and Hamilton (1982), New Product Management for the 1980 s, Booz. Allen and Hamilton Inc. , New York.
Bowen, H. Kent, Clark, Kim B. , Holloway, Charles A. and Wheelwright, Steven C. , (1994), Development Projects: The Engine of Renewal, Harvard Business Review, September-October. Bowen, H.
Kent, Clark, Kim B. , Holloway, Charles A. and Wheelwright, Steven C. , (1994), Make Projects the School for Leaders, Harvard Business Review, September-October.
Burkart, Robert E. , (1994), Reducing R&D Cycle Time, Research - Technology Management, May-June. Cooper, Robert G. , (1990), Stage-Gate Systems: A New Tool for Managing New Products, Business Horizons, May-June. Cooper, Robert G. , (1994), New Products: The Factors that Drive Success, International Marketing Review, Vol.
11, No. 1, pp. 60-76. Cooper, Robert G.
, (1994), Perspective: Third-Generation New Product Processes, Journal of Product Innovation Management, Vol. 11, pp. 3-14. Cooper Robert G. and Kleinschmidt, Elko J. , (1993), Screening New Products for Potential Winners, Long Range Planning, Vol.
26, No. 6, pp. 74-81. Donovan, Sandra S.
, (1994), It's People Who Get New Products to Market Fast, Research - Technology Management, September-October. De Maio, Adriano, Verganti, Roberto and Corso, Mariano, (1994), A Multi-Project Management Framework for New Product Development, European Journal of Operational Research, Vol. 78, pp. 178-191. Hollins, Bill and Pugh, Stuart, (1990), Successful Product Design: What to do and When, Butterworths. McGrath, Michael E.
, Anthony, Michael, T. and Shapiro, Am ram R. , (1992), Product Development: Success Through Product and Cycle-time Excellence, PRTM, Butterworth-Heinemann Publishing. Kuczmarski, Thomas D. , (1992), Screening Potential New Products, Planning Review, July-August.
Murphy, Ken, (1992), Venture Teams Help Companies Create New Products, Personnel Journal, Vol. 71. Part 3, pp. 60-67. Newton, D.
P. and Pearson, A. W. , (1994), Application of Option Pricing Theory to R&D, R&D Management, Vol. 24, No. 1, pp.
83-89. O'Connor, Paul, (1993), Managing Product Teams, R&D Magazine, July, pp. 67. Pugh, Stuart, (1990), Total Design: Integrated Methods for Successful Product Engineering, Addison-Wesley.
Smith, Preston, G. and Reinersten, Donald, G. , (1991), Developing Products in Half the Time, Van Nostrand Reinhold. Smith, Preston, G. and Reinersten, Donald, G.
, (1992), Shortening the Product Development Cycle, Research - Technology Management, Vol. 35, Part 3, pp 44-49. Roussel, Philip A. , Saad, Kamal N. and Erickson, Tamara J. , (1991), Third Generation R&D, Arthur D.
Little, Inc. , Harvard Business School Press. Towner, Simon J. , (1994), Four Ways to Accelerate New Product Development, Long Range Planning, Vol. 27, No. 2, pp.
57-65. Wheelwright, Steven C. and Clark, Kim B. , (1992), Creating Project Plans to Focus Product Development, Harvard Business Review, March-April. Whiting, Rick, (1991), Managing Product Development From the Top, Electronic Business, June, pp. 40-44.
Whiting, Rick, (1991), Core Teams Take the Front Lines, Electronic Business, June, pp. 40-44. Young, Lewis H. , (1991), Product Development in Japan: Evolution Vs. Revolution, Electronic Business, June, pp. 75-77..