Improving New Product Development
For many companies new products are essential to maintaining a competitive edge. These can be upgrades like a faster microprocessor, cheaper automobile, or lemon-flavored cola. They also can be breakthrough technologies such as optical disk drives, hybrid-electric cars, or drug-coated stents. Regardless, all of these products go through some type of product development process.
Measuring the Process
A product development process can be characterized by development time, marketability, and development cost. The time it takes to go from an idea to the launch is the development time. Ideally, the development time would only include value-added tasks, but is often extended by product redesign, lost or incomplete test data, or resource reduction through a change in priorities. The marketability is the ability of a product to satisfy a market need. This activity is commonly excluded from new product development with the design team being provided a functional specification for a new product. Finally, the total costs associated with testing, prototypes, contract manufacture, consulting, etc. of a product are its development costs. The best products will be those which will best satisfy the market needs developed in a minimum amount of time and cost. Often, two of these variables are optimized while neglecting the third. Considering this, new product development can be improved by implementing a few simple ideas.
Develop a formal product development process
The first step a company could take is to formally develop a product development process. This can and should be different depending on the product and the business. A highly regulated medical device should not have a similar development path to breakfast cereal. However, there are three benefits to formally developing the process.
Having a consistent terminology will enable better communication and reduce the overall development time. One of the greatest problems in new product development are the different functional areas thinking the product is in one stage of development when it really is in another. Marketing may believe they need to refine the concept while engineering may be completing the final prototype. Quality is performing final product validation on an outdated prototype, and operations are training the workers on obsolete procedures. This discordance can involve lost money in premature testing on prototypes instead of finished product, needless prototyping after the design has already been finalized, and unnecessary market research for a concept that was already locked by the design team.
A defined process will also enable smoother transitions between phases of development. How many times has work started on a project that had no budget assigned? How often has a project been reviewed at the end and it was found critical testing, checks, or inspections were left out because someone forgot to do them? If the process is clearly defined, then these incidents can be avoided. Market research will be done at the beginning and fed into the design team’s initial functional requirements at a specified time. Formal design reviews can have a checklist of which tasks should be done and which come next.
Finally, a formal process should lead to fewer and shorter meetings. Project meetings tend to be mammoth affairs with two or three people from every department and a few consultants calling in as well. Running well into the hours, it does not take many of these to completely throw a schedule off since they can require the same block of time for so many people, they can usually only be scheduled monthly or quarterly at best. A defined development process should identify which functional areas need to meet at which stages. Likewise, because the requirements for each stage are laid out, meetings can be used to resolve design issues and inconsistencies rather than interminable status updates to the schedule. Fewer people, shorter lengths, and less time between project meetings can substantially shorten the schedule saving time and money.
Double the time spent in planning for the design
The second item companies should do to improve their design projects is to double the amount of time spent on planning the design. Most do no planning or at best a couple of hourly meetings. However, it is the planning which will drive the project and ultimately determine how quickly, cost effective, and suitable the final design will be.
The planning should clearly identify what tasks need to be performed and which will not be. Will user surveys and focus groups be conducted to assess consumer requirements or a literature review with comparisons to already marketed products? How will prototyping be done? Who will be the critical suppliers for this project? What testing will be done to show the product’s fitness for use? All of these questions should be resolved in the planning stages. Often times, the design teams want to get into the lab and start making prototypes or spending money on equipment. It takes discipline to review the project concept and determine how best to proceed with the design.
The design planning should also include the creation of a schedule. The schedule includes tasks, responsibilities, predecessor tasks, and due dates. Tasks should not be spelled out in their minutia but rather by their results or outputs. A task called Approved mechanical drawings” is better than a laundry list of tasks that lead to drawing, creation, revision, and routing for approval. Likewise, responsibilities are best assigned to functional areas with names omitted. This permits the department or area manager to assign the best resource at that time to the job. “Engineering” is better than “Joe” is because if Joe is busy that week, someone still must complete the task.
Predecessors are also very important. Because many design teams are comprised of technical specialists in a functional area (e.g. engineering, quality, regulatory, marketing, operations), they are often ignorant of the requirements of the other areas. Establishing predecessors early lets marketing know their market research must be provided to engineering that must provide design specifications to quality that will provide the test data against those specifications to regulatory.
Due dates should also be established. Although they will undoubtedly change or be moved, many requirements are poorly addressed because of timing issues. This is particularly important as the project nears the end because final product validation is often done with an announced launch date. Problems or delays at this stage can be disastrous for the company’s image, so there are large disincentives to finding negative aspects of the design.
Eliminate outsourcing for core skills or technologies
The final area of improvement is outsourcing core skills or technologies. Outsourcing is best done for technologies or skills that the company does not possess and does not desire to acquire. While many companies have web pages, few require the skills internally to develop them, so outsourcing is a good option. Other commonly outsourced services in a manufacturing environment would include graphic design, printing, or pest control. For core skills and technologies, however, outsourcing is a poor option.
The most common source of skilled labor is consulting. Consultants cost more than regular employees, and often do not transfer their knowledge to the organization. This creates a sustaining dependency, and a conflict of interest. The consultant who bills by time has a financial incentive to stretch out a project while the organization is pushing to shorten the development time. Furthermore, external consultants rarely develop strong relationships with internal resources giving them the added cost of having to do everything themselves or bringing in more consultants to help.
Failure to develop core technologies internally is also a mistake. This can be as diverse as a machine shop or a suite of statistical programs. Outsourcing initially seems to be the cost-effective investment as technology transfer invariably costs more and can have a substantial learning curve. Over multiple projects, outsourcing core technology tends to lose money. The best way to estimate this is to review the expenditures from a past project and guess how often the technology will be used in the future. If there is an opportunity to buy a $20,000 web-based survey package, and it costs the company $5,000 to complete a survey for each product, then the company breaks even after four uses.
Likewise, having resources available internally almost always results in quicker response times. Anytime outsiders are used, there is inherent waste in the project due to coordination of times, logistics, and the need to learn a slightly different technology every time a project is initiated. There is also the intangible leveraging that occurs by having essentially unlimited access to technologies internally. Maybe more testing or more complete characterization can occur by having an internal resource that would reduce the risk of developing an unmarketable product.
New product development is the lifeblood of many companies. It is important for those companies to treat this as a business process no less important than current processes that provide products or services to their customers. Once it is recognized as a process, then action can be taken to improve it.