Product Development Capability Assessment Research Student: Bing Liu
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SDM Product Development Capability Assessment Research Student: Research Advisor: Bing Liu Prof. Warren P. Seering April 18th 2003 ©Massachusetts Institute of Technology - Bing Liu, WP Seering 1 SDM Agenda Research Objective Research Framework Findings Next Steps ©Massachusetts Institute of Technology - Bing Liu, WP Seering 2 SDM Product Development Cycle STRATEGY AND PLANNING PHASE Marketing Project management Technology Engineering Planning Planning EXECUTION PHASE Program/projectmanagement management Program/project Conceptselection selection Concept Productdefinition definition Product Design Design … Manufacturing Services … Development&&implementation implementation Development UnitTest Test Unit DEPLOYMENT PHASE Release InternalValidation Validation Release Internal ProductionRamp-up Ramp-up Production External Validation External Validation Sustaining Sustaining Retirement Retirement ©Massachusetts Institute of Technology - Bing Liu, WP Seering 3 SDM Research Questions What are the most important process elements (PEs) to product development? Are they important in different ways, and why so? How capable is an organization at each of PEs? How can we help organizations improve their product development capabilities? “Who, what, where, how, and why? “ ©Massachusetts Institute of Technology - Bing Liu, WP Seering 4 SDM Research Framework Exploratory To Toidentify identifyvarious variousfactors factorsand and process elements in product process elements in product development development Archival Analysis 352 352PEs PEswere wereidentified identifiedfrom fromthe the review reviewof ofboth bothacademic academicresearch research and andindustry industrypractices practices Survey Descriptive To ce of Toassess assessthe theimportan importance ofeach each PE and to identify organizational PE and to identify organizational capabilities capabilitiesto tothese theseelements elements Assessment Tool Development Explanatory Case study Experiment 86 86people peopleparticipated participatedthe thesurvey survey during CIPD Conference in October, during CIPD Conference in October, 2002. 2002.83 83valid validresponses responses Statistical Statisticalmodels modelsused usedto toanalyze analyze relationship between PEs and relationship between PEs and factors, factors,e.g., e.g.,industry industrysector, sector, financial financialperformance, performance,professional professional experience, etc. experience, etc. ©Massachusetts Institute of Technology - Bing Liu, WP Seering 5 SDM Literature Review - Academic Research Authors V. Krishnan, K.T. Ulrich S.L. Brown, K.M. Eisenhardt Key findings Product Development Decisions: A Review of the Literature Product development in the perspective of decision making. Comprehensive review of the literature. 65 Product Development: Past Research, Present Findings, and Directions Product development as rational plan, communication web, and disciplined problem solving. Comprehensive literature review. 98 Speeding New Products to Market A framework for new product development process improvement. 135 Benchmarking the Firm’s Critical Success Factors in New Prod. Dev. Overall new product performance measured program profitability and program impact. 43 Capability Maturity Model Integration (CMMI) V 1.1 A reference model of mature practices in a specific discipline, used to assess a group’s capability to perform that discipline. 78 Development of a Technical Innovation Audit Framework to audit technical innovation. Four core processes: concept generation, product dev., process innovation, and technology acquisition. 45 U. of Cambridge R.G. Cooper, E.J. Kleinschmidt CMU SEI V. Chiesa, P. Coughlan, C.A. Voss # of PEs Publication ©Massachusetts Institute of Technology - Bing Liu, WP Seering 6 SDM Literature Review - Industry Practices Authors M.E. McGrath Malcolm Baldrige National Quality Awards (MBNQA) PDMA Category industry government industry MIT LAI Center research & industry Arthur Andersen industry K.N. Otto Xerox industry & research industry # of PEs Publication Key findings Setting the PACE in Product Development Proprietary 7 elements product development process model: includes decision making, technology management, pipeline management, etc. A “comprehensive” assessment tool to address business process effectiveness from a business and quality management perspective. A phase based product development process 54 “A lean enterprise is an integrated entity which efficiently creates value for its multiple stakeholders by employing lean principles and practices.” A proprietary benchmarking tools that cover 10 majors areas of product development. 56 Malcolm Baldrige National Quality Awards Criteria NIST The PDMA handbook of New Product Development Lean Aerospace Initiative, MIT Global Best Practices PERFORM Process Assessment Product Genesis Inc. A Malcolm Baldrige based, seven-category project management assessment tool. Considers platform and product complexity issues. Xerox Engineering Excellence Process Strategy A matrix based model to assess product development process 86 49 201 76 120 ©Massachusetts Institute of Technology - Bing Liu, WP Seering 7 SDM Process Elements Abstraction 352 processes compressed to 140 ... ... PE x ... ... ... .. .. not important 1 extremely very important somewhat important important 2 3 4 5 6 7 ©Massachusetts Institute of Technology - Bing Liu, WP Seering 8 SDM Survey Sample 3 4 5 6 7 1 2 3 4 5 6 7 2. Market positioning of the product 1 2 3 4 5 6 7 1 2 3 4 5 6 7 3. Selecting the product architecture 1 2 3 4 5 6 7 1 2 3 4 5 6 7 4. Setting the priority among product requirements 1 2 3 4 5 6 7 1 2 3 4 5 6 7 5. Making the correct make-buy decisions 1 2 3 4 5 6 7 1 2 3 4 5 6 7 6. Establishing a prototyping plan 1 2 3 4 5 6 7 1 2 3 4 5 6 7 7. Setting production ramp-up plans 1 2 3 4 5 6 7 1 2 3 4 5 6 7 8. Choosing cross functional representation PD team 1 2 3 4 5 6 7 1 2 3 4 5 6 7 9. Making investments in infrastructure, tools and training 1 2 3 4 5 6 7 1 2 3 4 5 6 7 10. Coordination among and transition between development process phases 11. Setting milestones for prototype 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 12. Focusing on continuous improvements 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Very capable Extremely capable 2 Somewhat capable 1 Very important 1. Establishing core concept of the product Not Important Not capable How capable is your company at each? Extremely important Somewhat important How important is each to achieving success in product development? ©Massachusetts Institute of Technology - Bing Liu, WP Seering 9 SDM How important is each to PD success? Extremely Important non-negotiable to meet customers’, stakeholders’, and competitive requirements. relentlessly inspected by my senior management. failure implies vast infusion of unplanned resources. Very important high priority, but negotiable. reviewed on exception by senior management. failure recoverable with incremental resources. nice to have. Somewhat important Not important delegated to trusted employee/manager. failure recoverable with only extra effort. will not spend time or resources on this. not cost-effective to address. ©Massachusetts Institute of Technology - Bing Liu, WP Seering 10 SDM How capable is your company at each? produces unprecedented performance. Extremely capable Very Capable Capable redefined the process and practice. are disruptive to competitors. produces benchmark results. is supported by integrated engineering, cross functional teams and processes. has visible strong senior management leadership. produces acceptable and predictable results. have islands of local practice and optimization. follows conventional practices. Not capable produces acceptable results, but not consistent. isolated and inconsistently practiced. skill not widely available in the organization. ©Massachusetts Institute of Technology - Bing Liu, WP Seering 11 • Company size by employees: SDM 100 500 1000 1500 2000 2500+ • Industry sector of your firm _____________________________________________________________________________ • Your years of professional experience _________ years • % of your professional experience in …. planning …………………… ____ % development ……………… ____ % sales/consulting ………….. ____ % design ………………………... ____ % integration and test ………... ____ % maintenance and support … ____ % • How successful would you say your company has been recent years in these areas? poor Market share results …………… ….. Profitably ……………………………… Customer satisfaction………………. Organizational effectiveness………. Product Quality ……..……………….. average very good exceptional 1------2------3------4-----5-----6------7 1------2------3------4-----5-----6------7 1------2------3------4-----5-----6------7 1------2------3------4-----5-----6------7 1------2------3------4-----5-----6------7 • Optional (privacy is guaranteed) I want to receive updates and to participate in the research _____yes_____no Name _____________________________________ e-mail ________ __________________________ _ phone ________-________-______________ ©Massachusetts Institute of Technology - Bing Liu, WP Seering 12 SDM Descriptive Statistics: Industry Sectors Missing 8.2% Other 8.2% Heavy metal Manufacturing 14.1% 4.7% Finance, banking 2.4% Auto 17.6% Electronics 15.3% Food, agriculture 3.5% Biotech, medical 7.1% Aero 4.7% Defense 5.9% IT, Softw are 8.2% ©Massachusetts Institute of Technology - Bing Liu, WP Seering 13 Descriptive Statistics: Companies’ Size COSIZE 60 50 40 Number of responses SDM 30 20 10 0 25 120 100 400 300 600 500 800 750 1400 1300 2500 1500 Company size ©Massachusetts Institute of Technology - Bing Liu, WP Seering 14 The Professional Experience of Participants 14 12 10 8 Number of responses SDM 6 4 Std. Dev = 8.52 2 Mean = 19.6 N = 82.00 0 2.5 7.5 5.0 12.5 10.0 17.5 15.0 22.5 20.0 27.5 25.0 32.5 30.0 37.5 35.0 Years of experience ©Massachusetts Institute of Technology - Bing Liu, WP Seering 15 SDM Ten Most Important PEs in PD 1. 6.0 Product testing 2. 5.9 Product validation 3. 5.9 Regulatory compliance 4. 5.9 Making appropriate levels of resource commitments, people and dollars 5. 5.9 Decision making in development process 6. 5.9 Maintaining knowledge of the competitive environment 7. 5.8 Establishing, maintaining customer relationships 8. 5.8 Development of program schedule 9. 5.7 Promotion of a culture that supports teamwork 10. 5.7 Determining the product's competitive advantages ©Massachusetts Institute of Technology - Bing Liu, WP Seering 16 SDM Most Agreed Important Processes (rated by all participants) 5.86 0.82 Making appropriate levels of resource commitments, people and dollars 5.42 0.84 Employee retention 5.44 0.88 Controlling schedule slips and slip-rate 5.69 0.89 Selecting capable project leaders 5.70 0.91 Promotion of a culture that supports teamwork 5.38 0.92 Motivating breakthrough ideas 5.21 0.93 Collecting knowledge about competitive intensity of the market 5.86 0.95 Decision making in development process 5.89 0.95 Product validation 5.57 0.95 Identifying customer needs by market segment ©Massachusetts Institute of Technology - Bing Liu, WP Seering 17 Importance vs. Agreement (by all participants) SDM Product testing standard deviation 1.95 1.75 1.55 1.35 1.15 0.95 0.75 4 4.5 5 5.5 6 importance Making appropriate levels of resource commitments, people and dollars ©Massachusetts Institute of Technology - Bing Liu, WP Seering 18 SDM Correlation Between PD Capabilities and Performance – Market Share (1) Promot ion of a cult ure t hat support s t eamwork 6 Average Capabilities 5.5 Forecast ing manufact uring volumes 5 Transit ioning t he product t o t he sales funct ion 4.5 4 Making t he correct make-buy decisions 3.5 Meet ing project s financial goals 3 2.5 Development of program schedule 1 2 Market Share 3 Set t ing product ion ramp-up plans ©Massachusetts Institute of Technology - Bing Liu, WP Seering 19 SDM Product Development Cycle Revisit Setting Setting production production ramp-up ramp-up plan plan STRATEGY AND PHASE Making Making correct correct PLANNING make-buy make-buy decision decision Marketing Project management Technology Engineering Planning Planning EXECUTION PHASE Program/projectmanagement management Program/project Conceptselection selection Concept Productdefinition definition Product … Development Development of of program schedule program schedule Manufacturing Meeting Meeting project project Services financial financial goal goal … Promotion Promotion of of culture culture that that supports supports team team work work Design Forecasting Design Forecasting volume volume Development&&implementation implementation Development production production UnitTest Test Unit DEPLOYMENT PHASE Release InternalValidation Validation Release Internal ProductionRamp-up Ramp-up Production External Validation External Validation Sustaining Sustaining Transitioning Transitioning product product to to the the sales sales Retirement Retirement ©Massachusetts Institute of Technology - Bing Liu, WP Seering 20 Reuse of Demanding Making project Encouraging Management of Promotion of a Forecasting Transitioning Making the Meeting Having and Assigning clear Development of Defining the Setting Leveraging Market Producing Managing Maintaining Identifying Maintaining a Obtaining and Moving Motivating Establishing a Setting Building the Setting the Determining the Clarification of Making good Developing or Measuring and Translating Defining Defining Building the Establishing Maintaining a Picking product Improving work Establishing Developing the Developing Controlling Setting the Setting a clear Developing Setting the Fostering Assessing SDM Correlation Between PD Capabilities and Performance – Market Share (2) 7 6 low m ark e t s hare 5 m e dium m ark e t s hare 4 high m ark e t s hare 3 2 1 0 ©Massachusetts Institute of Technology - Bing Liu, WP Seering 21 Correlation Between PD Capabilities and Performance – Profitability (1) SDM 6 Making good use of project performance metrics 5.5 Maintaining a process for conflict resolution and enforcement Average Capabilities 5 Linking project benefits to corporate goals 4.5 4 Meeting projects financial goals 3.5 Leveraging strengths of organizational culture 3 2.5 Having senior management set cultural and behavioral norms for product development process 2 1 2 3 Profitability ©Massachusetts Institute of Technology - Bing Liu, WP Seering 22 SDM Correlation Between PD Capabilities and Performance – Profitability (2) 7 6 5 4 low profit medium profit 3 high profit 2 1 0 ©Massachusetts Institute of Technology - Bing Liu, WP Seering 23 Research Benefits SDM Provide a framework to determine the importance of product development processes and their relationship with organizational capability. Provide an assessment vehicle that helps organizations assess their capabilities and make improvements. Improve predictions of project outcomes. ©Massachusetts Institute of Technology - Bing Liu, WP Seering 24 Next Steps SDM Compare survey findings with references, and assess how well each reference predicted importance Check self-assessment of output metrics with market assessment of their performance Construct a prototype assessment vehicle for program level activities Conduct field trials to determine completeness and effectiveness of assessment prototype. ©Massachusetts Institute of Technology - Bing Liu, WP Seering 25
