Week 6 Discussion

1164060 - McGraw Hill Education ©

Provo Craft’s own Twitter and Facebook pages. As Colby noted, “Social media open a whole new avenue for gathering data directly from your target customer.” Provo Craft also meticulously follows protocols to protect intellectual property. Due to legal considerations, Provo Craft does not solicit ideas directly from customers. Once promising product concepts are identified, they are placed into a product roadmap that projects five years into the future, and the development phase begins.

In sum, Colby says, developing a new product in-house can be considerably expensive, and for those responsible, it can be a “make-or-break career decision.  .  .  . However, you can certainly eliminate risk by following the right processes and building the right team.” He also notes that product innovation is a “continual learning process . . . any time you become complacent in your role, in your people, or in your process, it’s probably time for a change.”

How successful was Provo Craft? At the time of corporate change, the company’s big seller was the Cricut, an electronic cutter with a very loyal fan base. Soon after adopting the new corporate culture, Provo Craft successfully launched several award-winning, innovative new products such as the Gypsy for Cricut (which stores Cricut cartridges, allowing users to take their entire library with them to scrapbooking parties), the Yudu screen-printing machine, the Cricut Cake (a personal electronic cutter that is used to decorate cakes and baked goods using Cricut cartridges), and many others.

Discuss the role of corporate culture at Provo Craft. What were the key changes made in corporate culture that led to the remarkable turnaround in product development? Can you make any recommendations to Mr. Colby to further improve the organizational climate for new products within Provo Craft, based on the material presented in this chapter?

Case: Ford Fusion59

By the mid-1980s, Ford and other carmakers were noticing that car requirements in different parts of the world were converging. For example, North American drivers accustomed to larger cars were demanding smaller ones, while many Europeans were looking for somewhat bigger and more comfortable cars with more powerful engines. This trend suggested to Ford the possibility of developing a new car for the global market, using the skills and specializations of its U.S. and European R&D centers. Out of this effort, the Mondeo (known as the Contour in the North American market) was created.

Ford Europe took project leadership for the Mondeo, as the car was more similar to European than to American Ford models. Ford selected its assembly plant in Gand, Belgium, as the coordination site for the project. Several global working groups addressed specific technical issues. A Program Control Group was assembled consisting of the leaders of the working groups, as well as a Product Committee chaired by Ford Europe’s president. A Coordination Group was established to keep the activities of all other groups coordinated. Coordination among groups was facilitated through the Web, videoconferencing, and other means of telecommunication. Suppliers were also global: 47 were European and another 20 were North American–based. The Mondeo was introduced at the Geneva car exhibition of 1993 and launched in the United States a little over a year later. It was also sold in Japan through a Ford-Mazda joint venture.

Since the Mondeo, their first global car, Ford has continued to refine and upgrade its global car development programs. In fact, Ford attributes much of its recent success to increased efficiencies stemming from its Global Product Development System and Global Vehicle programs. As with car companies worldwide, Ford makes use of global platforms to support multiple brands. But, according to Derrick M. Kuzak, a senior manager of Global Product Development at Ford, the global platform approach is even more all-encompassing. He says, “Think about a product development that allows you to be faster in time to market, depending on the complexity of the vehicle, by 25 to 40 percent. . . . Think about one group doing the engineering on a system for every vehicle globally.” Where in the past, each new products project would have its own, say, exhaust engineer, now one group would handle the exhaust system for all cars sold globally on the same platform. This uniformity contributes to what

1164060 - McGraw Hill Education ©

Ford calls “Vehicle DNA.” Since steering wheel design and engineering is done by one team and applied across all cars, steering wheels on all Fords will have a distinctive, familiar grip or “feel,” regardless of where they were made or sold. This familiarity runs through all components of the car, even down to the same “sound signature” emanating from a Ford I-4 engine. Ford claims to have slashed new car engineering costs by 60 percent between 2005 and 2008 thanks to their global product development efforts, while launching successful new products (including the Ford Fusion) and breathing new life into older models (the F-150 truck).

Raj Nair, vice president of Global Product Development at Ford, says that “global wants” exist in the car market: customers from different parts of the world have similar wants with respect to handling, fuel economy, safety, and design, and there are few regional differences. The goal in the development of the Fusion, therefore, was to design a car that would lead in all the important attributes: excellent fuel economy (up to 100 miles per gallon for the plug-in hybrid) while also fun to drive.

The Fusion incorporates several new technologies that improve safety such as a system that keeps drivers in the correct lane, assists in parallel parking, and senses traffic in the driver’s “blind spot.” In addition, the SYNC® communications and entertainment system allows a voice-activated link to the car’s audio features, and MyFord Touch® permits the driver to interact with various vehicle systems through voice or a touch screen. These features minimize driver distraction and also improve safety. External design focused on a distinctive sleek profile (different from most other similarly sized sedans) that communicates simplicity and nimbleness. The Fusion’s appearance was felt to be the next step in the evolution of a “global design language” for future development of smaller cars in the global product line. The Fusion’s chief engineer, Adrian Whittle, noted that the design objective was to show customers “that Fusion not only delivers a superior visual experience but also feels like quality to the customer.”

One interesting challenge in developing the Fusion for the world market was the design of the front-end architecture. The Fusion would need to meet standards that differ by market and sometimes are in conflict. The final design met head-on and offset barrier standards required by North American law, while at the same time confirming to European pedestrian protection standards. Extensive computer modeling, as well as 180 crash tests, were conducted to ensure all global standards were met. Overall, Ford engineers targeted top ratings on all safety benchmarks set by all markets in which the Fusion would be sold.

The Fusion is produced at manufacturing facilities in Hermosillo, Mexico, and Flat Rock, Michigan. There are a total of 234 suppliers from 32 countries on five continents. Ford claims to have achieved 80 percent global parts commonality.

Ford CEO Alan Mulally refers to Ford’s global collaboration efforts as the “One Ford Culture”: building great cars, improving efficiency, while maintaining a customer focus. According to Mulally, this means starting with a commitment to world-class cars and taking advantage of product engineering and management capabilities located around the world. It also means continuous improvement in all aspects of car design that global customers prioritize: fuel efficiency, safety, design, and handling.

Assess Ford’s efforts at managing the efforts of its various global teams, and how global car development matured from the days of the Mondeo to the development of the Fusion. What are the strengths and, importantly, the weaknesses of the procedure used in the development of the Fusion? What would you recommend for Ford to do differently, if anything? Could they have used global development teams as described in this chapter to any greater extent? If so, how?

1 Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschm idt, Improving New Product Development Performance and Practices (Houston, TX: Am erican Productivity and Quality Center, 2002). 2Peter F. Drucker, “There’s More Than One Kind of Team ,” The Wall Street Journal, February 11, 1992, p. A16. 3New product organizational options have been expressed in scores of ways. But only one listing cam e from em pirical research on the form and on the success or failure of actual new product projects. It was originally stated in David H. Gobeli and Eric W. Larson, “Matrix Managem ent: More Than a Fad,” Engineering Management International, 1986, pp. 71–76. The only change is that what the authors called project team is here called venture to reflect recent preferences. The sam e authors also later published a m uch larger em pirical study on the sam e subject: ErikW. Larson and David H. Gobeli, “Organizing for Product Developm ent Projects,” Journal of Product Innovation Management, 5(3), Septem ber 1988, pp. 180–90.

1164060 - McGraw Hill Education ©

4Gloria Barczak, “Innovation Team s,” in V. K. Narayanan and Gina C. O’Connor (eds.), Encyclopedia of Technology & Innovation Management (Chichester, UK: John Wiley, 2010), Chapter 32. 5S. Wheelwright and K. Clark, Revolutionizing Product Development (New York: The Free Press, 1992). See also discussion in Barczak, op. cit. 6Erika B. Seam on, “Achieving Growth through an Innovative Culture,” in P. Belliveau, A. Griffin and S. M. Som erm eyer, The PDMA Toolbook 2 for New Product Development (New York: John Wiley, 2004), Chapter 1. 7Mariann Jelinek, “Organizing for Innovation,” in V. K. Narayanan and Gina C. O’Connor (eds.), Encyclopedia of Technology & Innovation Management (Chichester, UK: John Wiley, 2010), Chapter 29. 8Gail Edm ondson, “BMW’s Dream Factory,” www.businessweek.com , October 16, 2006. 9See Jelinek, op. cit. 10Barbara Dyer, Ashok K. Gupta, and David Wilem on, “What First-to-Market Com panies Do Differently,” Research- Technology Management, March–April 1999, pp. 15–21. 11Gina Colarelli O’Connor and Richard DeMartino, “Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects of RI Managem ent System s in Large, Established Firm s,” Journal of Product Innovation Management, 23(6), 2006, pp. 475–497. 12Durward K. Sobek II, Jeffrey K. Liker, and Allen C. Ward, “Another Look at How Toyota Integrates Product Developm ent,” Harvard Business Review, July–August 1998, pp. 36–49. 13For a perspective on the im portance of sharing inform ation across functional areas, see Michael Song, Jinhong Xie, and C. Anthony Di Benedetto, “Message and Source Factors, Market Uncertainty, and Extrafunctional Inform ation Processing: Hypotheses and Em pirical Evidence,” IEEE Transactions on Engineering Management, 48(2), 2001, pp. 223– 238. 14Edward U. Bond III, Beth A.Walker, Michael D. Hutt, and Peter H. Reingen, “Reputational Effectiveness in Cross- Functional Working Relationships,” Journal of Product Innovation Management, 21 (1), January 2004, pp. 44–60. 15Donald Gerwin, “Team Em powerm ent in New Product Developm ent,” Business Horizons, July–August 1999, pp. 29– 36. 16Avan R. Jassawalla and Hem ant C. Sashittal, “Strategies of Effective New Product Leaders,” California Management Review, 42(2), Winter 2000, pp. 34–51. 17Jassawalla and Sashittal, op. cit. 18Kenneth J. Petersen, Robert B. Handfield, and Gary L. Ragatz, “A Model of Supplier Integration into New Product Developm ent,” Journal of Product Innovation Management, 20(4), 2003, pp. 284–299; and C. Anthony Di Benedetto, Roger J. Calantone, Erik VanAllen, and Mitzi M. Montoya-Weiss, “Purchasing Joins the NPD Team ,” Research- Technology Management, 46(4), July–August 2003, pp. 45–51. 19Bas Hillebrand and Wim G. Biem ans, “Links Between Internal and External Cooperation in Product Developm ent: An Exploratory Developm ent Study,” Journal of Product Innovation Management, 21(2), March 2004, pp. 110–122. 20For the Dell exam ple: G.Tom as M. Hult and K. Scott Swan, “Special Issue on New Product Developm ent and Supply Chain Managem ent: From the Special Issue Guest Editors,” Journal of Product Innovation Management, 20(5), 2003, pp. 333–336; for the DAF exam ple, Finn Wynstra, Mathieu Weggem an, and Arjan van Weele, “Exploring Purchasing Integration in Product Developm ent,” Industrial Marketing Management, 32(1), 2003, pp. 69–83. 21Stephen K. Markham and Lynda Aim an-Sm ith, “Product Cham pions:Truths, Myths, and Managem ent,” Research- Technology Management, 44(3), May–June 2001, pp. 44–50; and Stephen K. Markham , “Moving Technologies from Lab to Market,” Research-Technology Management, 45(6), Novem ber–Decem ber 2002, pp. 31–42. 22Jane M. Howell and Christine M. Shea, “Individual Differences, Environm ental Scanning, Innovation Fram ing, and Cham pion Behavior: Key Predictors of Project Perform ance,” Journal of Product Innovation Management, 18(1), January 2001, pp. 15–27. 23Howell and Shea, op. cit.; see also Gloria Barczak, “New Product Strategy, Structure, Process, and Perform ance in the Telecom m unications Industry,” Journal of Product Innovation Management, 12(3), June 1995, pp. 224–234; and Albert L. Page, “Assessing New Product Developm ent Practices and Perform ance: Establishing Crucial Norm s,” Journal of Product Innovation Management, 10(4), Septem ber 1993, pp. 273–290. 24Stephen K. Markham , “A Longitudinal Exam ination of How Cham pions Influence Others to Support Their Projects,” Journal of Product Innovation Management, 15(6), Novem ber 1998, pp. 490–504; and Stephen K. Markham and Abbie Griffin, “The Breakfast of Cham pions: Associations between Cham pions and Product Developm ent Environm ents, Practices, and Perform ance,” Journal of Product Innovation Management, 15(5), Septem ber 1998, pp. 436–454. 25Gary Tighe, “From Experience: Securing Sponsors and Funding for New Product Developm ent Projects—The Hum an Side of Enterprise,” Journal of Product Innovation Management, 15(1), January 1998, pp. 75–81. 26Jeffrey M. Davidson, Allen Clam en, and Robin A. Karol, “Learning from the Best New Product Developers,” Research- Technology Management, 42(4), July–August 1999, pp. 12–18; Edward F. McDonough III, “Investigation of Factors

1164060 - McGraw Hill Education ©

Contributing to the Success of Cross-Functional Team s,” Journal of Product Innovation Management, 17(3), May 2000, pp. 221–235. 27Rajesh Sethi and Carolyn Y. Nicholson, “Structural and Contextual Correlates of Charged Behavior in Product Developm ent Team s,” Journal of Product Innovation Management, 18(3), May 2001, pp. 154–168. 28For a discussion of the perform ance appraisal, pay, prom otion, organizational culture, team leader, m em ber selection, em powerm ent, and related topics, see Patricia J. Holahan and Stephen K. Markham , “Factors Affecting Multifunctional Team Effectiveness,” in M. Rosenau, A. Griffin, G. Castellion, and N. Anscheutz, The PDMA Handbook of New Product Development (New York: John Wiley, 1996). 29See Kenneth B. Kahn, “Market Orientation, Interdepartm ental Integration, and Product Developm ent Perform ance,” Journal of Product Innovation Management, 18(5), Septem ber 2001, pp. 314–323. 30For evidence that there is general agreem ent across functional areas, see Roger J. Calantone, C.Anthony Di Benedetto, and Ted Haggblom , “Principles of New Product Managem ent: Exploring the Beliefs of Product Practitioners,” Journal of Product Innovation Management, 12(3), June 1995, pp. 235–247; and X. Michael Song, Mitzi M. Montoya-Weiss, and Jeffrey B. Schm idt, “Antecedents and Consequences of Cross-Functional Cooperation: A Com parison of R&D, Manufacturing, and Marketing Perspectives,” Journal of Product Innovation Management, 14(1), January 1997, pp. 35–47. 31See Eric M. Olson, Rachel Cooper, and Stanley F. Slater, “Design Strategy and Com petitive Advantage,” Business Horizons, 41(2), March–April 1998, pp. 55–61; S. W. F. (Onno) Om ta and Jo M. L. van Engelen, “Preparing for the 21st Century,” Research-Technology Management, 41(1), January–February 1998, pp. 31–35; and Karen Anne Zien and Sheldon A. Buckler, “From Experience: Dream s to Market: Crafting a Culture of Innovation,” Journal of Product Innovation Management, 14(4), July 1997, pp. 274–287. 32David H. Gobeli, Harold F. Koenig, and Iris Bechinger, “Managing Conflict in Software Developm ent Team s: A Multi- Level Analysis,” Journal of Product Innovation Management, 15(5), Septem ber 1998, pp. 423–435; and Barbara Dyer and X. Michael Song, “Innovation Strategy and Sanctioned Conflict: A New Edge in Innovation?” Journal of Product Innovation Management, 15(6), Novem ber 1998, pp. 505–519. 33Kenneth B. Kahn, “Departm ent Status: An Exploratory Investigation of Direct and Indirect Effects on Product Developm ent Perform ance,” Journal of Product Innovation Management, 22(6), Novem ber 2005, pp. 515–526. 34Marjorie E. Adam s, George S. Day, and Deborah Dougherty, “Enhancing New Product Developm ent Perform ance: An Organizational Learning Perspective,” Journal of Product Innovation Management, 15(5), Septem ber 1998, pp. 403–423. 35S. W. F. (Onno) Om ta and Jo M. L. van Engelen, op. cit. 36See Albert Page, op. cit., p. 278. 37Hollister B. Sykes, “Incentive Com pensation for Corporate Venture Personnel,” Journal of Business Venturing, 7, 1992, pp. 253–265. 38Gloria Barczak, Abbie Griffin, and Kenneth B. Kahn, “Perspective:Trends and Drivers of Success in NPD Practices: Results of the 2003 PDMA Best Practices Study,” Journal of Product Innovation Management, 26(1), January 2009, pp. 3–23. 39Perry Pascarella, “Com pensating Team s,” Across the Board, February 1997, pp. 16–22. See also Shikhar Sarin and Vijay Mahajan, “The Effect of Reward Structure on the Perform ance of Cross-Functional Product Developm ent Team s,” Journal of Marketing, 65(2), April 2001, pp. 35–53. 40Shikhar Sarin and Vijay Mahajan, “The Effect of Reward Structures on the Perform ance of Cross-Functional Product Developm ent Team s,” Journal of Marketing, 65(2), April 2001, pp. 35–53; and Erika B. Seam on, “Achieving Growth through an Innovative Culture,” in P. Belliveau, A. Griffin, and S. M. Som erm eyer, The PDMA Toolbook 2 for New Product Development (New York: John Wiley, 2004). 41These exam ples and suggestions are from Pascarella, op. cit., and J. Gregory Kunkel, “Rewarding Product Developm ent Success,” Research-Technology Management, 40(5), Septem ber–October 1997, pp. 29–31. 42Charles Heckscher, “The Failure of Participatory Managem ent,” Across the Board, 54(6), Novem ber–Decem ber 1995, pp. 16–21. Heckscher notes that perm anent or “sem i-perm anent” team s tend to build walls around them selves, and recom m ends that team s be abandoned as soon as possible. 43Much of this section is drawn from Hans J.Tham hain, “Managing Product Developm ent Project Team s,” in Kenneth B. Kahn, George Castellion and Abbie Griffin (eds.), The PDMA Handbook of New Product Development (New York: John Wiley & Sons, 2005), pp. 127–143; and Mitzi M. Montoya, Anne P. Massey, Yu-Ting Caisy Hung, and C. Brad Crisp, “Can You Hear Me Now? Com m unication in Virtual Product Developm ent Team s,” Journal of Product Innovation Management, 26(2), March 2009, pp. 139–155. 44N. S. Lockwood, M. M. Montoya, and A. P. Massey, “Virtual Team s in New Product Developm ent: Characteristics and Challenges,” in K. B. Kahn, S. E. Kay, R. J. Slotegraaf, and S. Uban (Eds.), The PDMA Handbook of New Product Development (Hoboken, NJ: John Wiley, 2013), Ch. 12, p. 196.

1164060 - McGraw Hill Education ©

45Michael Song, Hans Berends, Hans van der Bij, and Mathieu Weggem an, “The Effect of IT and Co-location on Knowledge Dissem ination,” Journal of Product Innovation Management, 24(1), January 2007, pp. 52–68. 46See Robert Jones, Robert Oyung, and Lisa Pace, Working Virtually: Challenges of Virtual Teams (Hershey, PA: Cybertech Publishing, 2005). 47Edward F. McDonough III, Kenneth B. Kahn, and Gloria Barczak, “An Investigation of the Use of Global, Virtual, and Colocated New Product Developm ent Team s,” Journal of Product Innovation Management, 18(2), March 2001, pp. 110– 120. For a good reference on coordinating global R&D efforts, see Yves Doz, Jose Santos, and Peter William son, From Global to Metanational: How Companies Win in the Knowledge Economy (Boston, MA: Harvard Business School Press, 2001). 48The shaving exam ple is from Roger Leenders, Jan Kratzer, and Jo van Engelen, “Building Creative Virtual New Product Developm ent Team s,” in P. Belliveau, A. Griffin, and S. M. Som erm eyer (eds.), The PDMA Toolbook 2 for New Product Development (New York: John Wiley, 2004), Chapter 5. 49Michael Song and Mark E. Parry, “Team work Barriers in Japanese High-Technology Firm s: The Sociocultural Differences between R&D and Marketing Managers,” Journal of Product Innovation Management, 14(5), Septem ber 1997, pp. 356–367; B. M. Wren, W. E. Souder, and D. Berkowitz, “Market Orientation and New Product Developm ent in Global Industrial Firm s,” Industrial Marketing Management, 29(6), Novem ber 2000, pp. 601–611; Preston G. Sm ith and Em ily L. Blanck, “From Experience: Leading Dispersed Team s,” Journal of Product Innovation Management, 19(4), July 2002, pp. 294–304; and K. Sivakum ar and Cheryl Nakata, “Designing New Global Product Team s: Optim izing the Effects of National Culture on New Product Developm ent,” International Marketing Review, 20(4), 2003, pp. 397–445. 50M. Hoegl, H. Ernst, and L. Proserpio, “How Team work Matters More as Team Mem ber Dispersion Increases,” Journal of Product Innovation Management, 24(2), pp. 156–165. 51Steve Bashada, “Visual Issues Managem ent: Im proving Product Developm ent,” Time Compression, Septem ber– October 2009, pp. 24–25. 52Rajesh Sethi, Som endra Pant, and Anju Sethi, “Web-Based Product Developm ent System s Integration and New Product Outcom es: A Conceptual Fram ework,” Journal of Product Innovation Management, 20(1), January 2003, pp. 37–56; and Muam m ar Ozer, “Using the Internet in New Product Developm ent,” Research-Technology Management, 46(1), January–February 2003, pp. 10–17. 53The Ford exam ple and quote are from Gary S. Vasilash, “Developing More Faster at Ford,” Time Compression, Septem ber–October 2009, pp. 34–35. 54See Ajax Persaud, “Enhancing Synergistic Innovative Capability in Multinational Corporations: An Em pirical Investigation,” Journal of Product Innovation Management, 22(5), Septem ber 2005, pp. 412–429; and Ulrike de Brentani and Elko J. Kleinschm idt, “Corporate Culture and Com m itm ent: Im pact on Perform ance of International New Product Developm ent Program s,” Journal of Product Innovation Management, 21(5), Septem ber 2004, pp. 309–333. 55 Edward F. McDonough III, “Meeting the Challenge of Global Team Managem ent,” Research-Technology Management, 43(4), July–August 2000, pp. 12–17. 56Oliver Gassm ann, “Multicultural Team s: Increasing Creativity and Innovation by Diversity,” Creativity and Innovation Management, 10(2), June 2001, pp. 88–95. A good step-by-step resource for m anaging dispersed team s is Parviz F. Rad and Ginger Levin, Achieving Project Management Success Using Virtual Teams (Ft. Lauderdale, FL: Ross Publishing, 2003). 57See Leenders, Kratzer, and van Engelen, op. cit., and McDonough, Kahn, and Barczak, op. cit. 58This case is adapted from Jim Colby, “Provo Craft Develops a True NPD Culture—How A Sm all Com pany Succeeded at Innovation,” Visions, 34(3), 2010, pp. 26–28, and from www.provocraft.com . 59This case is derived from Vittorio Chiesa, “Global R&D Project Managem ent and Organization: A Taxonom y,” Journal of Product Innovation Management, 17(5), Septem ber 2000, pp. 341–359; m edia.ford.com ; netcarshow.com /ford/2013- fusion; and interviews with Raj Nair and Alan Mulally available on YouTube.