Class 3 (.ppt file)

1

ETM 5391 – New Product Development and Commercialization

Spring, 2004

Instructor: Mr. C. Michael Carolina

Date: March 25 – April 22

2

ETM 5391 Web site:

http://www.okstate.edu/ceat/msetm/courses/etm 5391/.

http://www.okstate.edu/ceat/msetm/courses/etm%205391/

3


Assignment 2

Case Study 1 (HBR 9697052) – Living on Internet Time: Product Development at Netscape, Yahoo!™, NetDynamics, and Microsoft®

In approximately 400 words, (a) compare and contrast the development philosophy, process and culture at Netscape, Yahoo!, NetDynamics, and Microsoft; and (b) rank the companies (1 through 4) in terms of year-over-year growth (e.g. market share, revenue, profitability, dividends, etc.) since the early and mid-90’s—the time frame in the case study.

DUE DATE: 04/15/04

4


Recap of Session II

• NPI Alignment to Business Strategy and Values• Characteristics of Successful Innovation

Companies• Portfolio Management• The Continuum (Checklist) Exercise

– Linkage to Business Strategy– Metrics and Tools– Cross-functional Teaming– Discipline and Commitment

5


Recap of Session II (cont’d.)

• Finding Solutions in the Face of Constraints/Challenges– Capital/Budgets– People Resources– Market Dynamics– Return On Investment– Economic Fluctuation

• Benchmarking

6

ETM 5391 – New Product Development and CommercializationRecap of Session II

• Product Lifecycle: Entry, Growth, Maturity, Decline, Exit

• Strategic Inflection Points on the “S” Curve• The Fundamental Responsibility of Scientist and

Engineers:- Create Value/Improve the Quality of Life- Understand Technology Evolution- Understand Marketing and Market Trends- Understand the Full Stream Process of NPI (“C to

C”)

7



• Characteristics of Successful Innovation Companies– Vision/Mission/Values

– Alignment Around Values

– Understand Core Competence (Maintenance/Acquisition)

• The Checklist/Continuum Process• Competitive Benchmarking

– The Search for Best Practices

– The Quest for Superior Performance

• Focus of Process and Continuous Evolution of the Process

8



The Heavyweight Team Concept– Subject Matter Experts (SME’s)– Communication and Collaboration– DFX– Resource Allocation– Keeping the Project on Schedule, Within Budget

With the Right Quality• Tee Up (HBR) Case Study 1 – Living on Internet

Time: Product Development at Netscape, Yahoo, NetDynamics, and Microsoft

9


Types of Development Teams

Functionally Organized Team Structure

- Work divided among functional disciplines and no one person has overall responsibility

- Leadership occurs primarily with the specialized groups or disciplines

- Projects tend to be narrow in scope

Lightweight Team Structure

- Work of functions coordinated via coordinator and team of representatives from the functional areas

- Representatives pull together information and facilitate interaction

- Project coordinator not responsible for overall project but has opportunity to display diplomatic leadership to keep project on schedule

10


Types of Development Teams (cont’d.)

Heavyweight Team Structure

- Project leader has overall responsibility for project and responsible for integrating the work of the functional pieces

- Project leader supported by a core team of functional leaders

- Focus on system solution

- Team provides leadership within the functions as well as across entire project effort

Autonomous Team Structure

- Dedicated team that is smaller; thinks “out of the box”

- Entrepreneurial/start-up mentality

- Leader has overall responsibility

- Individuals working on project are removed from their normal functions

11


The Continuum Exercise

Checklist• Are strategy and goals clearly defined, understood, communicated,

aligned, executed?• Is there a documented NPI process?• Are there the right metrics around the process?

– Time to market/development cycle (e.g., from concept to customer or from design freeze to ready-to-order)

– Status vs. project schedule– Recovery plan in place– Quality and reliability– Change activity– Target cost– Percent revenue from new products

Poor

0

Average

5

Flawless Execution

10

12


The Continuum Exercise (cont’d.)

• Is there a mechanism to benchmark your organization vs. recognized best-in-class performance standards?

• Is there a mechanism to capture learnings from each introduction that can be used to improve project after project?

• Are the right tools available for project tracking?

• Is there effective integration and communication across the functional teams (design, mfg., marketing)?

• Are there the right skills on the team?

• Is there the right commitment and passion for flawless execution?

Poor

0

Average

5

Flawless Execution

10

13

“We are living in a period of time that will produce more change for humanity than any previous era in history.”

John Peterson

Wave Period Activities Time Span

•------ Hunter/Gatherer Nuts/Berries & Game 10,000 Years

•First Wave Agricultural Farming 1,000 Years

•Second Wave Industrial Age Mass Production 100 Years

•Third Wave Information Age Knowledge Based Decades

14


Lecture 3

4/08/04

GE (Jack Welch)

10 Minute Video

15


GE’s Two-Decade Transformation: Jack Welch’s Leadership

Jack Welch’s View On: • Inheriting GE From Predecessor• Product Exit Strategy• Workout (Town Meetings, Departmental

Meetings)• Globalization• People Development• Compensation Practices

16


GE’s Two-Decade Transformation: Jack Welch’s Leadership (cont’d.)

• Managers as Teachers, Coaches, Mentors• Promotion Practices (Values vs. Results)• Capturing Employee Ideas• Customer Focus (Increasing the Customer’s

Intellect and Helping the Customer Win)• E-Business (Spans Employees, Suppliers,

Customers)• People with Energy and People Who Can

Energize Others

17


Four Types of Product/Process Development Projects

1. Research or Advanced Development Projects

2. Breakthrough Development Projects

3. Platform or Generational Development Projects

4. Derivative Development Projects

18

ETM 5391 – New Product Developmentand Commercialization

Reasons for Benchmarking

WITHOUT BENCHMARKING WITH BENCHMARKING

Becoming Competitive:

•Internally Focused •Concrete Understanding of Competition

•Not Invented Here (NIH) •Proactive Search for Change

•Average of Industry Progress •Business Practice Breakthrough

•Frantic Catch Up Activity •Superior Performance

19


Benchmarking

The payoff: knowing your strategic and operational strengths and weaknesses and those of your competition = GROWTH

20


Benchmarking

Strengths

Weaknesses

Opportunities

Threats

21


Innovation

An economic, social, and environmental responsibility.

22


Innovations built on:

• Technological feasibility

• Addressable market

• Customer/supplier relationship

• Multi-disciplinary, seamless solutions

• Technology forecasting/roadmapping

23


Innovation: a collaboration among• Academia – advancing knowledge through

scholarly activity

• Industry – creating wealth and jobs through the application of technology and business solutions

• Government – providing regulatory framework/governance process

24


Innovation

Looking for:• documented and sustained successes• common themes• correlations• lessons learned

25


“Why Good Projects Fail Anyway”(Nadim Matta & Ronald Ashkenas, HBR, Sept. 2003, page 109-

114)

The case for rapid-results teams to avoid:• “execution risks” – designated activities, won’t be

carried out properly• “white space risks” – required activities won’t be

identified in advance, leaving gaps in the project plan

• “integration risks” – disparate activities won’t come together at the end

26


“Why Good Projects Fail Anyway”Keys to success:• Results oriented – end state

• Vertical – cross-functional effort

• Fast – “100-day” approach (promote/creativity and sense of urgency)

27


Becoming a Fast InnovatorI. Time is the key performance variable to be

managed to attain improved cost and quality.II. Time benchmarks are set by the performance of

competitors and, if faster, by what is technologically possible.

III. The support functions necessary to advance the development process are actively managed to be “invisible.” Their need is to be anticipated; they are to be invested in and kept up-to-date. They are never to be allowed to slow the development process.

28


Becoming a Fast Innovator (cont’d.)

IV. Each program is to be managed and executed by a small, dedicated, decision-empowered, and experienced team. Team members have common goals and are measured and evaluated as part of a team.

V. The development programs are to have five steps, and company will organize itself around these steps:

1. Planning and preparation

2. Product definition

3. Design development

4. Manufacturing ramp-up

5. Product Improvement

29



VI. The objective of planning and preparation is to avoid having to invent in the middle of the development process—make unknowns be knowns.

VII. After definition, the product specification is frozen. The definition is committed to and not allowed to be changed. The improvement phase is to be used for costs and feature enhancements.

30



VIII. Functional expertise resides in the development program. Manufacturing and design resources are full-time participants in the definition team. Manufacturing resources are full-time participants in the design team.

IX. Team members are collocated.

31



X. Senior management reviews are few. The role of senior management is to ensure that the program teams have the appropriate resources, incentives and environment to execute their tasks quickly.

XI. New programs are generated continuously, at regular market-driven intervals, and incorporate more incremental advances and fewer “great leaps forward.”

32

Teradyne Aurora Project(Automatic Test Equipment – ATE)

Video Tape• Cross Functional Team/Internal Board of Directors• Market Concerns

– Microcontrollers– ASICs

• Technology Concerns– CMOS– Windows NT

33

Teradyne Aurora Project(Automatic Test Equipment – ATE) (cont’d.)

Video Tape (cont’d.)

• Discontinuous Change (Disruptive Technology)– Platform– Derivative

• Core Competency• Business Plan/Business Case• Getting Engineers Close to Customer• Understanding the Customer’s Business and

Operating Metrics• Asset/Resource Allocation

34


Summary of the HP Deskjet Printer Project

• Clear Product Definition and Market Segment• Clear Focus/Objectives (Low Cost, High Quality)• Created New Development Process Emphasizing Speed,

Design for Manufacturability, and Teamwork• Effective Use of Early Production Tools (CAD, CAM, CAE,

PDM, SAP Software)• Effective Use of Heavyweight Team Structure• Effective Use of Prototypes/Customer Involvement• Achieved Objectives for Cost, Quality, Customer Satisfaction• Reduced Cycle Time from 36-60 Months to 22 Months• Became the Model for Subsequent Development at HP

Vancouver

35


Intellectual Property Management

• Risk Mitigation• Competitive Position/Advantage• The Cost of Not Investing in R & D• Optimizing Rate of Return• Creating Value for Stakeholders• Some Examples by Sector

36


Intellectual Property Management (cont’d.)

Generally, Biotechs/Pharmaceuticals Agree That Patent Position is A Leading Factor in Deciding Research Focus- Long Development Cycles- Complex Validation/Approval Process (Clinical Testing, FDA Approval)- Exclusivity- Legal- Etc.

• Dell Computer/IBM

37


Management Roles and Responsibilities

Senior Management

- Choose and Prioritize Projects

- Select/Empower Cross-functional Teams

- Monitor Project Progress

- Strategic Linkage

Middle Management

- Assign Resources

- Project Champion/Advocate for Fast Development

- Communicate/Collaborate with Other Middle Managers

- Coach/Mentor/Develop Functional Team Members

- Conflict Resolution

- Celebrate Success

38


Management Roles and Responsibilities (cont’d.)

Functional Team

- Create

- Think “Out of the Box”

- Keep Project on Schedule and Within Budget

- Know When to Ask for Help From Middle or Senior Managers

39


Maintaining Schedule Control

• Resource Commitment – Head Count, Fixed Costs, Expenses

• Pricing For Major Customers and Major Accounts• Potential Slips in Major Milestone Dates (the

executive sponsor wants early warning and recovery plans)

• Plans for the Transition from Development Project to Operating Status

40


Maintaining Schedule Control (cont’d.)

• Thorough Reviews at Major Milestones or Every Three Months, Whichever Occurs Sooner

• Review of Incentive Rewards That Have Company-wide Implications for Consistency and Equity

• Cross-project Issues Such as Resource Optimization, Prioritization, and Balance

Source: Wheelwright and Clark, pg. 212

41


Heavyweight Team Contract Book – Major Sections• Executive Summary• Business Plan and Purposes• Development Plan

– Schedule– Materials– Resources

• Product Design Plan• Quality Plan• Manufacturing Plan• Project Deliverables• Performance Measurement and Incentives

Source: Wheelwright and Clark, Exhibit 8-3

42


Responsibilities of Heavyweight Core Team Members

Functional Hat Accountabilities:

• Ensuring Functional Expertise on the Project

• Representing the Functional Perspective on the Project

• Ensuring That Subobjectives Are Met That Depend on Their Function

• Ensuring That Functional Issues Impacting the Team Are Raised Proactively Within the Team

43


Responsibilities of Heavyweight Core Team Members (cont’d.)

Team Hat Accountabilities:

• Sharing Responsibility for Team Results

• Reconstituting Tasks and Content

• Establishing Reporting and Other Organizational Relationships

• Participating in Monitoring and Improving Team Performance

• Sharing Responsibility for Ensuring Effective Team Processes

• Examining Issues From an Executive Point of View (answering the question, “Is this the appropriate business response for the company?”)

• Understanding, Recognizing, and Responsibly Challenging the Boundaries of the Project and Team Process

Source: Wheelwright and Clark, Exhibit 8-5

44


• Organization Vision/Mission/Strategy

• Business Model/Architecture

• Development Portfolio and Development Teams

• Functional Integration (Wheelwright and Clark, Exhibit 8-1, p. 191)

- Functional Team Structure

- Lightweight Team Structure

- Heavyweight Team Structure

- Autonomous Team Structure

• Tools and Methods

45


So, What Does This All Boil Down To:

• Mission/Vision/Strategy

• Technology Solutions in a Knowledge-based and Global Economy

• Customer- and Market-Focused

• Creating Stakeholder Value

• Speed, Flexibility

• Repeatable, Sustaining NPD/NPI Process

• Effective Use of People and Capital Resources

• Being Competitive

• Maintaining/Building Core Competency

• Clock Speed

46


Objective(s)

Focusing on Things That Make a Difference (Value)

Flawless Execution

Continuous Improvement

47

Successful Execution

“Strategy and planning by successful and losing teams are amazingly similar. The offensive and defensive theories both employed would be virtually identical. The amount of time they spend practicing wouldn’t vary by more than a few minutes and their practice format would be the same. The main difference would be their attention to detail. In the successful organization, no detail is too small to receive attention. No job is minor, and everyone takes great pride in realizing they are important and their responsibilities are critical to the unit’s success.”

Lou HoltzFootball Coach(Currently University of South Carolina; formerlyArkansas, NY Jets, Notre Dame)

48


“In theory, there is no difference between theory and practice. In practice, there is.”

Yogi Berra

Class 3 (.ppt file)

Documents

good projects

heavyweight

teradyne aurora

commercialization

fast innovator

product development

development

team members