Lessons From the Best

Joseph Kormos
Innovative Development Associates
Cincinnati, Ohio

What makes a product-development system truly exemplary?

That is a question I’ve tried to answer over the past few years while serving as a judge for a concurrent-engineering award program. After reviewing literally hundreds of concurrent-engineering (CE) and integrated product-development (IPD) programs, I can say with some confidence that a few clear patterns have begun to emerge.

First the essentials: A CE capability for many companies involves four key items. Basic CAD and simulation tools, often in their second or third generation, are a pillar of most successful programs. Second, cross-functional teams are the rule. Third, effective CE initiatives have a formal and well-documented system for managing projects. Finally, there is a robust program for integrating engineering and manufacturing, generally through early design reviews and use of various Design-for-X methods.

It can take even a well-managed organization years to get these four areas right. Others never seem to get there at all.

In examining CE programs, the vast majority we’ve seen might be called stage-two maturity. They’ve defined cross-functional teams that bring some measure of improvement. Products come out more or less on schedule, but with spotty market success. There are fewer producibility issues and more consistency project to project.

Many organizations which get to stage two somehow find it hard to progress further. It’s analogous to a Division-One college basketball player who can’t muster the tenacity to reach NBA caliber. Part of the difficulty is in understanding the skills needed to play at the next level.

We’ve found several important qualities of excellence which have distinguished the top winners and finalists of the SDRC/Machine Design Integrated Product Development Award over the years. They provide a basic roadmap of activities which can help firms that want to rise above their present product-development plateau.

Customer focus and product definition
Missing or poorly defined customer requirements are probably the leading causes of new product failure. Successful products require customer involvement and input. Exemplary IPD activities acknowledge the primacy of the customer and, as a result, build the customer into the project.

Those who manage IPD programs ought to ask themselves a simple question: Do we have a clear method for developing product definitions? For example, one business equipment company we’ve seen uses a product definition scorecard to rate its understanding of user needs, assessed risks, regulatory and channel issues.

Similarly, IPD programs should consistently and effectively capture the voice of the customer. We’ve seen this done well in a variety of ways. For example, one vehicle manufacturer sent all its engineers on the road to talk with drivers and riders.

A sure way to spot a company with a mature IPD system is to ask about key strengths and weaknesses. Mature companies know these without hesitation. We put the question to one manufacturer of point-of-sale devices. The answer was quick and concise: “We’ve got a rock-solid process which effectively involves our suppliers in critical decisions, but we’ve got a long way to go on product definition, positioning and project selection.”

In contrast, a manufacturer of consumer products in the South waxed poetic about its world-class DFX capability. Engineers there waffled when it came to describing the weak points. It wasn’t that they didn’t have any. Their implementation of DFX was neither exemplary nor complete. They just hadn’t done their homework. They literally didn’t know where they stood. Their process weaknesses were obvious after a quick look at their project management procedures.

The difference between these two companies boils down to benchmarking. The common thread among firms that understand what they need to do is a careful comparison of their own practices to those of others.

Sometimes these comparisons employ formal benchmarking teams. But we’ve seen other approaches work just as well. One multidivisional electronics manufacturer conducts internal audits of product-development capabilities semi- annually. A medical equipment company we reviewed gets ideas for improvement by forming a roundtable group with similar noncompetitive companies.

Finally, outside consultants can help. IPD efforts seem to mature more quickly in organizations that have used a consultant specializing in product development. As one finalist put it, “They (the consulting firm) helped us see ourselves in a new light.”

Two of the clearest signs of maturity in IPD are the defining of clear, concrete targets for improvement and the ability to track progress against these goals. Robust metrics are critical to assessing results.

Metrics, for example, helped an aerospace component supplier make great strides in the three years since its IPD program started. “It’s important to let our product-development community know how we’re doing,” they explain. “We monitor a critical set of metrics including time-to-market, milestones achieved, customer satisfaction — about eight in all. More importantly, we use metrics to take corrective action.”

Metrics are important because what gets measured gets done. If improved drafting productivity is your target, by all means measure your productivity. But most high-quality developers have gone beyond simple productivity measures. Their focus has turned to improving the way customers perceive quality and making R&D investments more effective. There is no question that it is more challenging to construct measures that deal with those issues.

Most management teams vastly underestimate the time needed to design and implement a strong metrics program. You’ll need time up front to collect data for a solid baseline. Experts recommend you plan on years, not months, to get metrics functioning effectively.

One of the least utilized tools is predictive metrics. These measure activities or results critical to the major goals you want to achieve. Suppose you want to improve your on-time completion rate. Unfortunately, collecting data on schedule compliance after the product is released is like reading yesterday’s newspaper. The idea is to track things that tend to predict whether the project will come out on schedule.

Metrics we’ve seen tracked in this regard include requirement changes, design changes after prototype, and time-to-achieve-full-staffing. All these can help identify problems early.

Lonely at the top
One of the top complaints we’ve heard from product-development professionals is a feeling of isolation from upper management. Companies with active efforts in CE often lament that they “can’t get the GM to a scheduled meeting, much less explore ideas informally.” We also hear frequently that top managers don’t communicate what they really expect from their product-development capability.

Less common, but no less troubling, is the opposite problem. At a medium-sized business equipment company, many of the top executives had engineering backgrounds. They regularly insisted on personally directing design reviews, redirecting technical approaches, and fighting fires. The product developers never felt neglected, but never felt truly supported either.

Top management in the best IPD programs supports product development but doesn’t run it. One East-coast manufacturer assigns “management angels” to key development programs, for example, to help to remove obstacles.

Studies have shown that management typically pays most attention to product development at the end of the program, when it’s often too late. Mature organizations we’ve seen are adept at engaging management support early — to set charters and strategy, establish direction and expectations, and commit resources.

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 the right projects to work on. This ability to “do the right things,” in addition to “doing things right,” is a key differentiator of excellent IPD companies. Signs of this maturity include few canceled projects and few delays waiting for resources.

Many companies are effective with cross-functional teams. Far fewer are effective at blending cross-functional perspectives in selecting projects. One firm that does this well is a medical equipment supplier whose general manager chairs a project-approval committee. Committee membership includes representatives from engineering, manufacturing, and marketing. They judge set of screening criteria (Does the customer care? Can we win? Do we care? Can we do it?) to manage the flow of projects from concept to launch.

Managing change
It’s no secret that new organizational strategies are tough to implement. This is certainly true of IPD where new tools are involved, old jobs and skills disappear or become less important, and new ones take their place. All of this involves managing change.

However, change initiatives in recent years have received a bad reputation. From TQM to customer satisfaction to reengineering, the initiative du jour has often been a passing fad. To be truly effective, and to avoid being subliminally lumped among the graveyard of failed improvement initiatives, good practitioners focus on:

Naming the program, naming the leader — A real activity needs a name. Perhaps more importantly, it needs a leader. The leader is charged with boosting competitiveness, must demonstrate results, and has a budget and a time frame for expected results.

Sponsors — To provide course correction and maintain momentum, one large manufacturer in the southwest enlisted its program manager council. These middle-level managers helped maintain interest and infuse new life in the CE program before there were any concrete results to point to, when initial efforts were waning.

A plan — Most noteworthy programs have a game plan in writing, with concrete goals and consequences if goals aren’t met. Ditto for processes. Most processes are historical; they were never planned, rarely documented, and often grew to support business priorities that no longer exist. New tools — simulations, PDM systems, advanced groupware and the like — can only provide benefits if the company is geared up to make use of them. Deploying new tools to automate existing processes usually delivers little.

Knowledge sharing
One focus of mature product-development companies is on methods for harvesting knowledge from completed projects to minimize wheel spinning. Qualities common to this advanced form of IPD maturity include advanced collaboration. Exemplary programs generally invest in technology that fosters communication and information sharing among team members. The best firms are well beyond e-mail and shared project schedules. They collaborate electronically across physical and organizational boundaries.

Indeed, the best at this have made cooperation a science. A Canadian bus manufacturer turned to a method of psychographic profiling known as Belbin analysis to help select team members. The analysis showed who was likely to be compatible with what kind of teammates and would pull in the same direction as the rest of the group. Likewise, many organizations spend time up front making sure teams agree upon decision-making principles and even office layouts.

Knowledge archives have become institutionalized at these firms. “We couldn’t afford to redevelop usability data for every project,” explained one manufacturer of handheld devices. “So now we work hard to archive our customer research so it is at least partially transferable to other products.”

Likewise, a manufacturer of diesel engines maintains an elaborate library of competitive information, complete with supplier lists and cost break downs. A business equipment manufacturer captures lessons-learned from every project in a structured Lotus Notes database. They explain, “Our rule is you’re not done until the team has captured what they’ve learned.”

© 2010 Penton Media, Inc.