Monday, May 31, 2010

Speeding Up New Product Development

As we emerge from the worst economic downturn since the Great Depression, it is clear that speed will be a critical competitive advantage for businesses.  Companies that are flexible and able to adapt quickly to customer demands will be the most successful as the recovery continues.

When it comes to developing new products, companies can no longer afford long cycle times or introducing products that customers do not want to buy.  Quality will also be a given, as people will no longer expect or accept problems with new products.  This means that companies will need to put a renewed focus on the process for developing new products.  Success awaits those organizations that are able to frequently and consistently introduce high quality, reliable products that satisfy the needs of the market.

Lean for New Product Development

There are many companies that practice lean methods for product and service processes but fail to apply the same type of thinking to the development of new products.  Like any process in business, attacking waste in new product development will benefit the company through increased revenues, lower costs, and higher customer satisfaction.  Also, the faster an organization can turn ideas into new products, the faster its investment will produce an income stream for the company.

I have worked with many companies over the years to improve the process for developing new products and services.  The approach to improve the quality, costs, and cycle times for new product development is similar to applying lean to a manufacturing process in that it requires high levels of systems thinking and teamwork, and consistent focus on the customer.

Some of the best practices I have seen from companies that have made significant improvement in new product development include the following:
  • Customer Obsession:  The entire process is based on the customer - which, doesn't necessarily mean directly asking customers what they want and building products based on the feedback.  When it comes to products, customers can only convey what they want based on what they have received in the past.  Since they really do not know what is possible, they will rarely provide direct  feedback for innovative products.

    Understanding the customer's frustrations with your (and your competitors') products, and why and how they use the products will result in much more clarity regarding the customer's fundamental needs; and it is in the fundamental needs where the real value lies.

  • Team-Based Development:  Representatives from every area affected by the introduction of a new product are actively involved throughout the project.  In a typical company, this means, as a minimum, including people from engineering, marketing, operations, procurement, quality, and finance.

    Having all areas involved throughout the project helps avoid potential problems by discussing and addressing concerns as the work progresses.  It also helps each area assure the necessary processes are ready when the product is released, and to confirm that the processes are designed to protect the needs of the customer.
  • Project Management:  New product development projects are led by people with project management capabilities.  Typically, new product development is a cross-functional activity involving effort from marketing, R&D, engineering, manufacturing, and other areas.  Because of this, the person responsible to manage the project does not need to an engineer (in fact, assigning the role to the engineer - or anyone on the team - can distract the person from performing actual design work).  The project needs to be someone who is organized, able to keep the work progressing, and with enough authority to request additional resources or project scope changes, when necessary.  Depending on the size and design of the organization, this can consist of a single, full-time project manager or a project management office (PMO) that can handle multiple or cross-divisional projects.

  • Logical Organization:  To increase the focus on customers when developing new products, some companies have moved the R&D function to report to marketing.  Others have combined engineering and operations to improve communication and teamwork between the two areas.  The key is to understand where the current organization interferes with success and to have the courage to make changes that will improve the situation.

    Some organizations physically relocate team members on a temporary basis in an effort to assure clear and continual communication throughout the project. 
  • Knowledge Management:  Systems that improve organizational memory can significantly reduce new product development time.  Without a system that collects design, testing, and customer information, extra costs and delays can occur because of redoing work that has been done in the past.

  • Process Simplicity:  The development process is simple with very few approval gates.  The team clearly understands their scope and is given the freedom to develop and qualify the product within these limits;

  • Patience:  Improving quality while reducing costs and cycle time for new product development requires consistent focus, commitment from the company's senior leaders, and a good deal of patience.  It is a continual process that, similar to improving a manufacturing process, consists generally of many small improvements that add up over time to significant improvement.  Conducting post-mortem reviews of projects can provide valuable feedback regarding delays, cost overruns, and problems in order to improve future efforts.
Designing a product people want to buy is only one part of the equation - doing it quickly, reliably, and assuring that problems do not occur after release makes up the rest.  There is significant investment involved in attempts to turn ideas into profits, and the better this process operates, the better the return on the investment will be.

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