Mental Model/Mindsets Paper

3 Structured processes for developing new products

For most companies wanting to become more innovative, which they will almost certainly associate with the development of new products, the starting point is the introduction – or revision – of a new product development process. While structured processes for the development and management of new products are no guarantee for improving innovativeness they are nevertheless an important part in an organisation’s armoury to improve new product introduction rate and maximise the benefits from a company’s product portfolio. One of the key dilemmas is described by one interviewee, ‘‘The problem with process is, if you provide too much detail you create information overload; if you have too little detail – people make mistakes and lose perspective.’’ The processes should be about providing guidance, not dictating what needs to be done.

The last few years have brought a couple of new insights into processes in the context of innovation. First, a structured process alone is often not sufficient; the behaviours of the people will have to change alongside. Second, many companies have realised that one process is not enough, particularly if innovation is to go beyond the incremental. Incremental and radical innovation require different conditions under which they flourish. Leading innovators have started to address this by either having different pathways or by establishing a pre-process phase. We will come back to that in more detail in Chapter 21.

This chapter briefly reviews the evolution of the new product development process, expands on the stage-gate process and product portfolio management as well as the role of the project leader, concluding with some insights into best and worst practice.

THE EVOLUTION OF THE NEW PRODUCT DEVELOPMENT PROCESS

One of the biggest influences on how companies approach product development in the west has been a concept developed by NASA in the 1960s, introduced to make the management of large-scale, complex defence projects easier. The first version ‘Phased Project Planning’, as it was called, described a basically sequential approach consisting of four phases:

• preliminary analysis (phase A) • definition (phase B) • design (phase C) • operation (phase D)

50 MANAGING INNOVATION, DESIGN AND CREATIVITY

In addition checkpoint reviews were introduced to ensure that mistakes would not be carried forward into the next phase. While this approach was originally applied to complex, large-scale projects only, its principles were soon scaled down and translated for new product development in a more general way. The fundamental principles – phases and checks between them – are still valid today, and reflected in the now most commonly used kind of process, the stage-gate process, which we will look at in the following section. Figure 3.1 shows the NASA process as seen in Peter W.G. Morris’s book The Management of Projects.

Preliminary Design Review (PDR)

Critical Design Review (CDR)

First Article Configuration

Inspection (FACI)

Customer Acceptance

Review Readiness

(CARR)

Design Certification

Review (DCR)

Flight Readiness

Review (FRR)

Requirement definition

Development Design

Phase I CARR

Phase II CARR

Phase III CARR

Manufacturing

Product configuration

baseline established

Drawing baseline

established

Design requirements

baseline established

Verification of manufacturing vs design specification and assessment

of test results

Test and checkout

Certify flight and ground systems for

manned flight

Drawing baseline

established

Operations

Delivery Launch Design

start

Figure 3.1 The NASA management process. Source: Morris, P.W.G. (1994). The Management of Projects. London: Thomas Telford. Reproduced by permission of NASA.

A further influential study, with regards not only to the development process but also to new product in general, was undertaken by Booz Allen Hamilton (1982). When they researched how companies define product development stages they found the following steps:

1. development of new product development strategy1

2. idea generation2

3. screening and evaluation3

4. business analysis 5. development 6. testing 7. commercialisation

1Aspects related to strategy are covered in Chapter 6. 2Aspects related to idea generation are covered in Chapter 21. 3More on the evaluation and measurement in Chapters 21 and 25, respectively.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 51

These categories are used with variations throughout the literature and there is a body of literature discussing each of the steps individually. If more steps are proposed, they are generally a breakdown of one of the steps above. Cooper (1986), for example, describes 13 steps whereby the additional steps result from separating activities such as market research and business analysis. Another, broader way of segmenting the development process, identifying three main stages, is provided again by Cooper (1988):

1. pre-development activities 2. product development and testing 3. commercialisation

In his 1992 article Rothwell provides a useful summary of how the new product development process has evolved over time (shown in Table 3.1).

In the shift from a linear, sequential development process towards a more integrated and dynamic process the need for increased speed has been one of the main drivers. Takeuchi and Nonaka (1986) have written one of the most influential articles on this subject, alerting companies to the need to move away from the linear approach. The sequential approach is described as a ‘relay race’ where the baton is passed from one department to the next, often requiring changes to accommodate requirements of a downstream department. This approach could probably also have been called ‘Chinese whispers’ as information passed on is often incomplete or insufficiently explained, leading to misunderstandings and confusion. One of my favourite sketches on this subject stems from Michael Smith – see Figure 3.2 (reproduced as seen in Lorenz, 1990).

Table 3.1 Five generations of new product development models

Generation Type of model Characteristics of model

First Technology push model

Simple linear sequential process; emphasis on R&D, the market is a receptacle for the fruits of R&D

Second Need pull model Simple linear sequential process; emphasis on marketing; the market is the source of ideas for directing R&D; R&D has a reactive role

Third Coupling model Sequential but with feedback loops; push or pull or push/pull combinations; R&D and marketing more in balance; emphasis on integration at the R&D/marketing interface

Fourth Integrated model Parallel development with integrated development teams; strong upstream supplier linkages; close coupling with leading edge customers; emphasis on integration between R&D and manufacturing/design for makeability; horizontal collaboration (joint ventures)

Fifth Systems integrating and networking model

Fully integrated parallel development; use of expert systems and simulation modelling in R&D; strong linkages with leading customers (customer focus at the forefront of strategy); strategic integration with primary suppliers including co-development of new products and linked CAD systems; horizontal linkages; joint ventures; collaborative research groupings; collaborative marketing arrangements etc.; emphasis on corporate flexibility and speed of development (time-based strategy); increased focus on quality and other non-price factors

Source: Based on Rothwell, R. (1992). Successful industrial innovation: critical factors for the 1990s. R&D Management, 22, 221–39.

52 MANAGING INNOVATION, DESIGN AND CREATIVITY

As sales requested it As the drawing office designed it As production engineering saw it

As the works build it As the service engineers installed it As the customer thought he had described it to sales

Figure 3.2 Barking up the wrong tree? Source: Smith in Lorenz, C. (1990). The Design Dimension. Oxford: Basil Blackwell. Reproduced by permission of Basil Blackwell.

Takeuchi and Nonaka (1986) contrast the relay race with a then new approach they compare to a ‘rugby game’ in which the product is passed back and forth between the different departments, like the ball in rugby. They explain that the advantages of the new approach include not only increased speed but also lead to greater consistency and integrity of the product because of the early consideration of concerns and requirements from all departments involved in a product’s development process.

Building on the insights and positive results that companies experienced through early and continuous interaction between all departments, a large number of articles in the early 1990s heralded the use of cross-functional teams as the solution to many a development problem (e.g. Ancona & Caldwell, 1990; Belbin, 1991; Faust, 1993; Nadler, 1991; Oakley 1990a). However, companies implementing teams as a consequence were often disappointed. This may have been attributable to a considerable extent to the fact that teams were told to work in teams – without being given any training or other kinds of support that would aid the shift in working practices and behaviours. I would also like to point out here that which is the most suitable structure to drive a project forward will depend on the level of innovativeness. Small changes can successfully be executed by moving the project through the different

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 53

functions whereas highly innovative projects have more chances of success if they are executed by a dedicated team. We will come back to the subject of teams and structures in Chapter 10.

A final aspect that has received a great deal of attention in the literature is what is often described as the ‘fuzzy front end’ of the development process. Particularly for highly innovative concepts it tends to be difficult to predict how long the development will take, what kind of resources will be required and what exactly the outcome will be. On the other hand, the early stages of product development are quite fundamental as over 80% of a product’s production costs are locked in during these early stages (e.g. Dixon & Duffey, 1990; Smith & Reinertsen, 1995). A lack of attention here can lead to costly and time-consuming changes later in the development process. Smith and Reinertsen point out, ‘‘The calculated cost of delay is often 500 to 5000 times higher than the visible cost of assigned personnel. Managers unaware of these costs will tend to ignore the fuzzy front end. Those who understand these costs will instead focus a great deal of attention on this phase.’’ Khurana and Rosenthal (1997) who have undertaken research into this fuzzy front end of new product development found that success factors related to this stage can be grouped under two headings:

1. Foundation – including aspects such as the existence of a product strategy, the management of the product portfolio (rather than individual projects), the existence of a specific product development organisation structure including a project leader, a core team, an executive review group, and a good communication structure.

2. Project-specific – referring to the existence of the following: a concept statement, thorough evaluation, a product definition, value chain considerations, front-end project planning and definitions, and recognising interrelationships.

However, there are also those who emphasise that different stages of the development process require different cultures, particularly if innovation rather than incremental improvements are concerned. Zien and Buckler (1997) describe what they call three micro-cultures of innovation:

1. The Fuzzy Front End (FFE): experimental and chaotic; requires high tolerance for ambiguity and uncertainty; for people with high structure needs it often seems ‘unreasonable’; but people who like it enjoy it for the quest itself; it is unpredictable, and it depends on much individual activity.4

2. The Product Development Process (PDP): which needs to be disciplined and focused on numerous quantitative goals and measurements; it requires commitment to the goal; is schedule oriented and urgent; can be trained, and is generally not receptive to new ideas; teamwork is of paramount importance.

3. Market Operations (MO): here we seek predictability and order; it has a strong financial orientation; it relies on commitment to established values and businesses; is oriented to rules and routine and slow to change; has to be highly organised and does not welcome revolutionary ideas; tends to be of large size compared to FFE or PDP.

It is often at the intersections of the stages that problems arise. People from one stage have often little sympathy or even respect for those best suited to conduct the next stage. Essential aspects of a project can get ‘lost in translation’

4This is very much the point made in the introduction about the difference of creativity which relies on individuals, and implementation which depends on teams.

54 MANAGING INNOVATION, DESIGN AND CREATIVITY

when a project is passed on. I sometimes suggest establishing the role of ‘the keeper of the essence’, a person who ensures that the key aspects of the concept are maintained and protected through the different development stages. Some companies have started to address this issue by developing dedicated project leaders; however, disconnecting the ideator from the project can also lead to a watering down of the original idea.

THE STAGE-GATE PROCESS

Sunk cost:

past expenditure, which is often thought to be irrelevant to future decisions as the best decisions tend to maximise future cash flow.

The Oxford Concise Dictionary of Business, 1990

I have mentioned earlier that the principles of the stage- gate process go back to the work undertaken by NASA on project management. As the original NASA process, the stage-gate process suggests that a project has to be reviewed at certain points in its development, and a go/no- go decision should be made. This way an organisation can avoid throwing good money after bad – it is never advisable to keep spending money on a project just because quite a lot has been spent on it already (sunk cost).

The stage-gate process as now known and used in product development has been devised by Robert G. Cooper. Both Figure 3.3 and the overview in Box 3.1 are based on Cooper and Kleinschmidt’s 2001 article ‘Stage-gate process for new product success’.

In their article Cooper and Kleinschmidt also share some insights into how to maximise changes for new product success. This includes the already-mentioned necessity to pay careful attention to the early stages, which includes doing background research as well as a ‘sharp and early’ definition of the product, and other points such as the

Gate 1

Gate 3 Gate 4 Gate 5Stage 1 Gate 2 Stage 2 Stage 3 Stage 4 Stage 5

Ideation

1. Preliminary 2. Build 3. Development 4. Testing & 5. Full Production Investigation Business Case Validation & Market Launch

Post Implementation Review

2. Second 3. Decision on 4. Post- 5. Testing & Screen Business Case Development Validation

Review 1. Initial Screen

The Stage-Gate New Product Process by Robert G Cooper

The Stage-Gate New Product Process by Robert G Cooper

Figure 3.3 Stage-gate process Source: Reproduced from Cooper & Kleinschmidt, 2001.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 55

Box 3.1 Process overview

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5

First decision to commit resources, signalling tentative commitment; criteria tend to be qualitative and few in number: strategic alignment, technical feasibility, competitive advantage, opportunity attractiveness; looking at ‘musts’

More rigorous screen; commitment of resources more substantial; often a scoring model is used to measure synergies, market attractiveness, competitive situation, product advantage, profit potential; looking at ‘musts’ and ‘shoulds’

Last point to kill project before heavy spending; sign off of product specification; pass criteria should be tough and rigorous; looking at ‘musts’ and ‘shoulds’ again as well as financial and risk review

Recheck continued attractiveness of project; check against product specification and performance expectations

Criteria here are largely on quality of efforts to date, appropriateness of the production and launch plans, financial viability

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Quick review of project, looking at technical and marketplace merits

Development of business case to verify attractiveness; ‘critical homework stage’ that is often neglected; studies may include: user needs/wants; competitive analysis; concept testing; technical and manufacturing appraisal; legal, patent and regulatory assessment; detailed financial analysis

Deliverable at end of this stage is a lab-tested prototype; emphasis is on technical work, marketing and manufacturing activities run parallel

Testing and validating: the product itself, production process, customer acceptance, economies; activities may include: in-house product test checks (quality and performance); user field trials; pilot production; pre-test market; revised financial analysis

Putting marketing launch plan and production or operations plan in motion

Post-implementation review Often companies review the project and the products performance about 6–18 months after launch to draw out lessons learnt

Source: Cooper & Kleinschmidt, 2001. Reproduced by permission of Cooper & Kleinschmidt.

56 MANAGING INNOVATION, DESIGN AND CREATIVITY

need for market orientation, teams and strong cross-functional cooperation and, most importantly, the need for a superior product. This last point is still the major differentiator between a successful and a less successful or even completely unsuccessful product. And finally, as we mentioned speed earlier, it is interesting that the authors warn to be careful with speed. Or rather, agreeing with the idiom ‘speed not haste’, they say that companies should be careful not to let speed become a goal in itself. The goal should always remain the intro- duction of a successful new product. Cutting corners, particularly in the early stages, generally has to be paid for, manifold, later.5

A further note of caution, in applying a stage-gate process companies should be careful not to let the process become an end in itself. If applied too strictly and rigidly it can hinder rather than help the development of new products; to quote one of my interviewees, ‘‘There can be a tyranny of the process!’’

Leading-edge companies have come to realise this and now talk about using the process as guideline, rather than a ‘bible’ or ‘rule book’. Gates become more fluid and more than one stage can be worked on simultaneously. This prevents individual gates from becoming bottle necks that delay progress of a project unnecessarily. In fact, Robert Cooper himself has pointed this out as early as 1994, announcing it to be time for the third-generation new product development process, one that is characterised by four ‘Fs’:

• Fluid: it is fluid and adaptable, with overlapping and fluid stages for greater speed.

• Fuzzy gates: it features conditional go decisions (rather than absolute ones) which are dependent on the situation.

• Focused: it builds in prioritisation methods that look at the entire portfolio of projects (rather than one project at the time) and focuses resources on the ‘best bets’.

• Flexible: it is not a rigid stage-and-gate system; each project is unique and has its own routing through the process.

The four ‘Fs’ are not only important for the application of the process, they also apply to the treatment of the process itself. It is important to continuously assess and adjust a company’s new product development process to make sure it reflects latest insights, the context of the organisation, and particularly its ambition. What I mean by the latter is that a process for the development of incremental improvements or routine projects should be different from one that aims to produce radical ones – as alluded to earlier. Changes in a company’s structure can also have implications for the new product development process, for example, product development in a functionally oriented organisation is likely to be executed differently from an organisation with a project or matrix structure (for characteristics of functional, project and matrix-based organisations see Table 3.2). Whichever process is chosen, it is essential that reward systems support the behaviours required to fill the process with life – in fact, all systems and aspects of an organisation need to enhance and support each other, a theme to which we will come back to again and again throughout the book.

5Further articles on the stage-gate process are available on www.stage-gate.com.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 57

Table 3.2 Types of organisational structure

Type How it works Appropriate for Problems

Functional structure (basic structure)

The project is planned and executed within a functional structure with moves from department to department in a pre-arranged sequence (relay race) Responsibilities must be clearly defined Need for integration of sequential activities

Improvements of existing products New products of low innovation Sequential processing possible Fosters deep specialisation and expertise

Often strong pressure on the departments to give top priority to short-term projects Conflicting demands on staff (prioritisation of projects) Balance between short-term projects (order and discipline) and innovative projects (freedom and flexibility) Integration of functions

Independent project organisation

Self-contained group, full-time members from various different functions The project manager has full responsibility for the project and is given the necessary resources for planning and implementation Team should be co-located

Large projects which justify employing experts from different functions on a full-time basis For new solutions or new products Firms in dynamic markets

Issue of re-integration of staff Isolation from the rest of the organisation Dispensing people to the project full-time might cause problems in the basic organisation How to maintain specialisation and carry forward learning from previous projects

Matrix organisation

Decision-making responsibility rests with the project team Project manager negotiates with heads of functional departments on necessary resources (staff and equipment) Staff is assigned on a part-time or full-time basis Task often broken down into independent activities and allows simultaneous processing High demands on social and political skills of project manager Clear goals and well-understood technology will result in an effective balance of power

Complex projects which require simultaneous efforts of experts from several disciplines Large projects, here the project manager is often supported by team leaders within the individual functions

Authority can be split between the project manager and the functional manager Projects are cutting across the authority lines of the functional departments (leading to authority ambiguity) Conflict of loyalty of part-time staff who work on more than one project simultaneously Problems of re-integration into functional structure If project is broken down into sub-tasks the need for coordination goes up Competition for resources also leads to an increased need for coordination Time consuming decision-making process

Source: Based on Baker & Wilemon, 1977; Brown & Agnew, 1982; Davis & Lawrence, 1977; Earle, 1973; Greiner & Schein, 1981; Holt, 1987; Kingdon, 1973; Kolodny, 1979, 1980; Rowen et al., 1980; Sayles, 1976; Ulrich & Fluri, 1988; Vasconcellos, 1979.

58 MANAGING INNOVATION, DESIGN AND CREATIVITY

THE DEVELOPMENT FUNNEL AND PRODUCT PORTFOLIO MANAGEMENT

Next to the stage-gate process the best-known and a popular tool in the armoury to improve new product development is the ‘development funnel’, a tool developed by Harvard Business School professors Kim Clark and Stephen Wheelwright in the early 1990s (see Figure 3.4). It encourages managers to take an integrated approach to new product development. Rather than making decisions on individual projects, their approach suggests the management and coordination of product development activities from a company-wide perspective, starting with a link to company strategy. It is interesting to note though that much of the literature seems to treat the development funnel as a variation on the theme of stage-gate processes albeit with a strong emphasis on the need to generate many ideas, and to narrow them down quickly as the project is progressing through the process. I believe that the main advantage of the development funnel is the requirement to take a company-wide perspective.

In the following we will look at the factors behind each of the individual components of the development funnel.

Capabilities Strategy Considering

Core competencies Technological base/stage cycle

Technological integration

Product/Market Strategy

Clarifying position and priorities on new markets/existing markets Derivative product/new concept

Financial contribution

Goals and Development

Objectives

Project Portfolio Planning

Project Management

and Execution

Market Assessment

and Forecasting

Capabilities Assessment

and Forecasting

Post-Project Learning and Improvement

Business Strategy

Figure 3.4 The development funnel. Source: Reproduced from Clark, K.B. & Wheelwright, S.C. (1993). Managing New Product and Process Development: Text and Cases. New York: Free Press.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 59

For capabilities assessment and forecasting a company would undertake an analysis of the current and future product/service capacity, look at current and planned new product/service developments, investigate the efficiency of current processes and review technologies to determine the company’s current position.

Market assessment and forecasting would involve an analysis of existing clients to identify current needs and areas of improvements as well as an analysis of competitors to identify new areas of expansion, and finally, a trends analysis to capture the direction of the industry.

Development goals and objectives comprises the development of a set of specific measures and targets for key portfolio criteria including:

• strategic fit • revenues and profits • client fit • dates of new product/service introductions and technology achievements • new product/service performance objectives and criteria

This component also involves the establishment of targets for entering new segments, developing new technology and technical skills, or creating new markets as well as acting as a guideline for investment decisions.

Project portfolio planning involves the definition of a set of criteria against which projects are selected and resources are allocated to them. Box 3.2 gives an example of the criteria one particular company uses. There should generally be a strong link between the portfolio criteria and an organisation’s overall strategy. When selecting projects the first question should always be, will it help us to achieve our ambition, followed by a second, does this project help us balance our portfolio or are we doing too much of one particular kind.

Box 3.2 An FMCG company’s portfolio criteria

We balance out product portfolio at four levels:

1. Between brands/product portfolios – to make sure there is enough innovation in each area.

2. Between developed/non-developed markets; recognising that non-developed markets take longer for pay-back.

3. Between three levels of horizon which equate to different types of innovation: (a) product extension; (b) existing product into new market or changed product into existing market; (c) more of the blue-sky stuff, not necessarily fitting in at present.

4. Against strategy.

Careful resource planning and management are critical, as successful product development is prevented in many organisations due to ‘project constipation’: too many projects with too little resource. Clark and Wheelwright found that a person operates at their best when being able to focus on no more than two projects (Figure 3.5).

60 MANAGING INNOVATION, DESIGN AND CREATIVITY

100

90

80

70

60

50

40

30

20

10

0 1 2 3 4 5

P e rc

e n t o f T

im e S

p e n t o f V

a lu

e A

d d e d A

ct iv

iti e s

Number of Development Projects Assigned Concurrently to a Single Engineer

Figure 3.5 Value added per project. Source: Reproduced from Clark, K.B. & Wheelwright, S.C. (1993). Managing New Product and Process Development: Text and Cases. New York: Free Press.

Companies should also consider:

• specifying the types and mix of projects along the key portfolio criteria • explicitly linking projects to firm and service line strategies • identifying existing capacity for development • identifying capability requirements for development of current and future generation products/services • providing a resource capacity plan for development efforts • acting as the framework for communicating the portfolio

In the context of innovation it is particularly important to review the product portfolio in terms of the mix between radical and incremental innovation. Most organisations focus on incremental innovation, thereby putting the future of their organisation into jeopardy. Many organisations that have started out with a major innovation or with being very innovative become stale and complacent over time, neglecting three out of the four quadrants that a company’s product portfolio should address (see Figure 3.6). Unless an organisation keeps putting new products into the far three quadrants, over time all its products or services will end up in the bottom left corner. What the appropriate split between the four different quadrants will depend on each company’s specific context and innovation ambition – but without some activity in each, decline is certainly preprogrammed. And, by the way, most organisations concentrate their efforts with about 80% on incremental innovation, and about 10% each on incremental innovations for new markets and radical innovation for existing markets – and none on radical innovation for new markets.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 61

Incremental Radical

Innovation M

a rk

e ts

E xi

st in

g

N e

w Figure 3.6 Innovation categories.

Project management and execution implies the definition of appropriate stages and gates a project must pass through. This process has to facilitate ideation, guide projects efficiently from idea to launch, ensure untenable product/service projects are terminated, identify tasks for each stage, specify clearly identified decision points, and provide information on required documentation and decision criteria. While some seem to view the development funnel as a substitute for a stage-gate process, I rather see the stage-gate process as a tool during the project management and execution stage. And what Cooper (e.g. 2001) calls ‘post-implementation review’, though not officially part of the stage-gate process as such, covers Clark and Wheelwright’s last box, ‘post-project learning and improvement’. However, the execution of a development funnel as described above seems to be an ideal scenario, and is not matched by what Clark and Wheelwright (1993) found (see Figure 3.7).

While their three scenarios certainly do not give the impression of a happy ending, companies should also be wary not to ‘overdo things’, particularly when it comes to perfecting a product before launch. Interviewees in large companies emphasised that working on the ‘100% right theory’ can delay product introduction indefinitely! ‘Failing early and often’ is one of the mantras innovation consultancy IDEO promotes. Rather than trying to get something perfect they suggest getting exposure and feedback as early as possible, so the concept can be improved before being finalised.

One of the reasons for a lack of successful introduction of stage-gate processes and development funnels is that there is often insufficient support through training and holding people accountable to adhering to the new process. As one interviewee commented, ‘‘When the new product development process was introduced, my question was: where is the plan for the behavioural aspects? The consultants did not have any advice on attitude or any supporting training.’’ Leading by example and rewarding people for the successful adaptation of new processes can also help.

Another is that top management’s attention to any one particular project seems to come at the most inconvenient time: towards the end, when most parameters have been fixed and changes are costly and time consuming – as shown in another graph from the 1993 book by Clark and Wheelwright (Figure 3.8).

62 MANAGING INNOVATION, DESIGN AND CREATIVITY

Real Funnels: Group A

? ??

Marketing Inputs

Final Evaluation

Department Changes

Start

Product A Filter

Senior Management Injector

Real Funnels: Group B

Research

Customer

Marketing Engineering

Strategic Planning

OEM

Quality Control

Cont.

Real Funnels: Group C

Central Researh

Local Inputs

Board Heat

Product "A"

Competitor Boot

NIH Resistor (abrasion ;

slows down the flow)

Tech Prod'n Log Sales

LAUNCH HERE

RELAUNCH HERE

1½ – 2years 2– 3 hours

8 –12months

leaky

Figure 3.7 Development funnel realities. Source: Reproduced from Clark, K.B. & Wheelwright, S.C. (1993). Managing New Product and Process Development: Text and Cases. New York: Free Press.

If management comes in towards the end, wanting to change certain aspects of the project will have consequences for project costs as well as project timing. Early involvement and gaining buy-in can help prevent this from happening.

The responsibility for involving relevant parties and securing their buy-in falls generally to the project manager, who sits at the centre of the hour glass of management and the project team. This makes the project manager’s role particularly important.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 63

Knowledge Acquisition

Concept Investigation

Basic Design

Prototype Building

Pilot Operations

Operations Ramp-up

Ability to Influence Outcome

Actual Management Activity

HIGH

LOW

Index of Attention

and Influence

Time

Figure 3.8 Senior management attention. Source: Reproduced from Clark, K.B. & Wheelwright, S.C. (1993). Managing New Product and Process Development: Text and Cases. New York: Free Press.

THE ROLE OF THE PROJECT LEADER

‘‘I believe that it is often the person driving the project who makes the difference between success and failure, particularly for innovative projects.’’

Quote from the Innovation Best Practice interviews, 2003

The issue of ‘the project manager’ or ‘project leader’ has first been brought onto management’s radar through a 1959 Harvard Business Review article by Paul Gaddis. He was the first to alert management to the fact that a new breed of corporate animal was required, the project manager.

In his book on project management Harvey Maylor (1996) suggests that project managers should receive the following from their organisation/management:

• responsibility • authority • accountability • credibility

Explaining that the exact role a project manager takes on will depend on aspects such as the nature of the project (complexity, scale, position in hierarchy of projects), the nature of the organisation that it is being carried out in (sector, activities, organisational structure), the personality of the project manager, and the specific constraints under which the project team is working. He also provides a list of characteristics desirable in a project manager (see Box 3.3).

That the project-specific context not only influences the role of the project leader but also that the project leader needs different characteristics depending on the context has been pointed out by a colleague of Clark and Wheelwright, Takahiro Fujimoto. In his 1991 article Fujimoto categorises products by looking at two aspects: the difficulty (a) of achieving internal product integrity and (b) of achieving external product integrity, and suggests that

64 MANAGING INNOVATION, DESIGN AND CREATIVITY

Box 3.3 Characteristics of successful project leaders

• A desire not just to satisfy but to delight customers and stakeholders alike.

• Accepting of both challenges and responsibility.

• Being focused on action, rather than procrastination – getting the job done rather than avoiding critical or difficult decisions.

• A desire to make the best use of all resources – minimise waste in all activities.

• Does not lose sight of the light at the end of the tunnel – is goal focused.

• Has personal integrity – people find it very difficult to respect and take the authority of a person who has low integrity.

• Is flexible about the route that must be taken to achieve the stated end-goals.

• Has personal goals that are consistent with those of the project organisation – the project team perceives that the project manager and the organisation are going the same way.

• Ability to determine the real needs/desires of the customer; this is done through ‘getting close’ to the customer via visits and both formal and informal discussions, and asking the relevant questions.

• Analytical skills to turn data into information and break down the project into comprehensible component parts.

• Technical skills – the project manager need not be a technical specialist, but must at least be capable of comprehending the work that is being carried out and ‘speaking the language’ of the people involved.

• Team skills – many battles have been won against poor odds by the ability of an individual to motivate and enthuse a team.

• Ability to delegate effectively – not try to do everything personally.

• Ability to manage own time – you cannot expect to manage other people unless you can show that you can manage yourself.

• The balancing of stakeholders’ perceptions of project progress (otherwise known as being able to ‘sell ideas’).

• Negotiation skills – resolve potential conflict situations to create a win–win.

• Problem solving/facilitating problem solving.

• Question all assumptions made by stakeholders at all stages of activities. Source: Maylor, H. (1996). Project Management. London: Pitman

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 65

High Component-driven Complex products products (e.g. machine tools) (e.g. automobiles)

Coordination Engineer = Integrator? Manager = Integrator? difficulty of internal product structure Simple products Interface-driven

products (e.g. packaged goods) (e.g. consumer electronics)

Low Marketing-type product Industrial designer Manager = Integrator? = Integrator?

Low High

Coordination difficulty of product-user interface

Figure 3.9 Types of products and project integrators. Source: Fujimoto, T. (1991). Product integrity and the role of designer-as-integrator. Design Manage- ment Journal, 29–34. Reproduced by permission of Design Management Journal.

each of the four possible project types requires a different type of project manager, or ‘integrator’ as he calls them.6

The four product categories he defines are ‘Component-Driven Products’, ‘Complex Products’, ‘Simple Products’, and ‘Interface-Driven Products’ (see Figure 3.9). To manage each product type a different set of skills is required; for example, for highly complex projects a manager might be the best integrator, that is someone with general, political and negotiation skills – rather than someone with for example a particular specialist technical expertise. The more complex a project – or the more innovative – the greater also the need for effective communication and internal selling.

But the skill set required of a project leader may not only vary from project to project, it may also change during the course of the project, particularly for large and complex projects. The following example from the Eurostar, the high-speed train that connects the capitals of Belgium, France and the UK, illustrates this (von Stamm, 1999a).

While the members of the central project team and most other key people remained unchanged throughout the project, the person for the manufacturing consortium changed twice during the development process. The first change took place in 1991 after time and cost overruns had come out in the open, the second in 1993 when the project went from the development stage into production. Each of the three project managers had a different skill set which was seen to be most appropriate at the time.

The first project manager had been responsible for the development of the TGV Atlantique, the latest version of the French high-speed train, which was seen to be the blueprint for the Eurostar. However, he had not managed international projects before and failed to acknowledge the issues and complications arising from this. He also seems to have underestimated the technical complexity arising from the need to operate the train on four different railway systems (Belgium, France, the UK, and the Eurotunnel). His withdrawal from the project was also meant as a signal

6With ‘internal product integrity’ he refers to problems in achieving consistency among the functions and structures of the product itself, and with ‘external product integrity’ he refers to the difficulty in coordinating the interface (functions and features) between product and user.

66 MANAGING INNOVATION, DESIGN AND CREATIVITY

to the customers – the three national railways – that the imminent problems regarding time and cost overruns had been acknowledged, and that action for change and improvement had been taken.

His successor was chosen for his technical competence – he had high credibility with the engineers working on the project – and his extensive experience in managing international projects. His main aim was to bring the technical problems under control and the project back on track.

When the third project manager took over, the major technical problems had been solved and someone was needed who could make sure that production would progress at satisfactory speed. In fact, someone was needed who had sufficient authority with the French factories to ensure manufacturing would actually happen because here the Eurostar had to compete for capacity with the various TGV models.

An interesting insight from a workshop on project leaders in the context of innovation was that understanding and knowledge of an organisation’s culture – how things get done and how to move through the system – was considered to be the most important factor by workshop participants; it was felt that this could not substituted by anything, neither expertise nor otherwise relevant experience.7

So whether it is the structure and design of the new product development process, or the choice of project leader, the company or project-specific context and requirements need to be taken into account. Off-the-shelf solutions can only be a starting point, not the final solution.

Perhaps one final comment on project leaders. The choice of the ‘right’ project manager is important for another reason: one of the key differentiators between projects that are successfully introduced to market and those that fail, or disappear into the black holes of an organisation is often quite simply the enthusiasm and passion of the project leader. This is particularly important for innovative projects where there is inherently a lot of uncertainty as well as potentially a lack of understanding of the concept, and therefore a greater need for selling and communication. And who is most likely to feel passionate about any particular project, extremely keen to tell anyone who may or may not want to hear about it? Who else but the originator of the idea. This has led some organisations, which have previously given innovative ideas to professional project managers for development, to reconsider their approach. They now provide the idea originators with the training necessary to bring them up to speed with project management best practice, or have a professional project manager work alongside them to complement their skills.

READING SUGGESTIONS

On new product development

Clark, K. & Wheelwright, S. (1992). Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality. New York: Free Press.

Comment: A classic on tools and frameworks for new product development, introducing the development funnel, among other things.

7Innovation Exchange workshop held 16 October 2003 at the London Business School.

STRUCTURED PROCESSES FOR DEVELOPING NEW PRODUCTS 67

Baxter, M. (1995). Product Design, Practical Methods for the Systematic Development of New Products. London: Chapman & Hall.

Comment: While it is written primarily with designers in mind, it provides useful insights into aspects on and around product development, including creativity and innovation. At the end of each chapter Baxter provides a useful summary of key concepts, as well as lists of ‘Design Toolkits’ for various aspects of the development process.

Smith, P.G. & Reinertsen, D.G. (1997). Developing Products in Half the Time, 2nd edition. New York: Van Nostrand Reinhold.

Comment: While focusing on the acceleration of new product development, what problems are and how they can be overcome, this book has lots of useful insights for new product development in general.

Bobrow, E.E. (1997). The Complete Idiot’s Guide to New Product Development. New York: Alpha Books.

Comment: A bit basic but a good introduction to lots of subjects relevant to new product development.

On project management

Maylor, H. (1996). Project Management. London: Pitman.

Comment: I found this a very useful introduction to project management with all sorts of evaluation and assessment techniques.

SOME USEFUL WEBSITES

www.pdma.org

Comment: This website by the Product Development and Management Association provides a useful glossary on new product development terms, as well as book recommendations on and around the subject.

www.stage-gate.com

Comment: This is the website of the consultancy founded by Robert G. Cooper and Scott G. Edgett who are seen to be the originators of the stage-gate process: it provides useful articles, book references and latest insights on and around the stage-gate process.