ETM 5391 – New Product
Development and Commercialization
Fall, 2003
Instructor: Mr. C. Michael Carolina
Date: September 2, 2003
Engineering and Technology Management
ETM 5391 Web site:
http://www.okstate.edu/ceat/msetm/courses/etm5391/.
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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: 09/06/03
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Recap 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”)
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Recap of Session II (cont’d.)
• 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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Recap of Session II (cont’d.)
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
The Continuum Exercise
Poor
0
•
•
•
Average
5
Flawless Execution
10
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
The Continuum Exercise (cont’d.)
Poor
0
Average
5
Flawless Execution
10
• 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?
Engineering and Technology Management
“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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Lecture 3
9/02/03
GE (Jack Welch)
10 Minute Video
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
•
•
•
•
•
•
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and 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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Benchmarking
The payoff: knowing your strategic and
operational strengths and weaknesses
and those of your competition =
GROWTH
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Benchmarking
Strengths
Weaknesses
Opportunities
Threats
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Innovation
An economic, social, and environmental
responsibility.
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Innovations built on:
• Technological feasibility
• Addressable market
• Customer/supplier relationship
• Multi-disciplinary, seamless solutions
• Technology forecasting/roadmapping
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Innovation
Looking for:
• documented and sustained successes
• common themes
• correlations
• lessons learned
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
“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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
“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)
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Becoming a Fast Innovator
I.
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.
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Becoming a Fast Innovator (cont’d.)
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.
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Becoming a Fast Innovator (cont’d.)
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.
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Becoming a Fast Innovator (cont’d.)
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.”
Engineering and Technology Management
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
Engineering and Technology Management
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
•
•
•
•
Organization Vision/Mission/Strategy
Business Model/Architecture
Development Portfolio and Development Teams
Functional Integration (Wheelwright and Clark, Exhibit 81, p. 191)
- Functional Team Structure
- Lightweight Team Structure
- Heavyweight Team Structure
- Autonomous Team Structure
• Tools and Methods
Engineering and Technology Management
ETM 5391 – New Product Development and
Commercialization
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
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
Objective(s)
Focusing on Things That Make a Difference (Value)
Flawless Execution
Continuous Improvement
Engineering and Technology Management
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 Holtz
Football Coach
(Currently University of South Carolina; formerly
Arkansas, NY Jets, Notre Dame)
Engineering and Technology Management
ETM 5391 – New Product Development
and Commercialization
“In theory, there is no difference between
theory and practice. In practice, there
is.”
Yogi Berra
Engineering and Technology Management