lecture07 vo customer

Mgt 610 Strategic Perspectives on Project Management

(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 1

MGT610

Lecture 7

Stakeholder Perspective:

Identifying Needs for Requirement Definition



Project Value Network

Shareholder

Value

Outcome

Value

Stakeholder

Value Effort

Value

Project

Scorecar

d

Statistical

Project

Control

Stakeholde

r

Deploymen

t What we control in the effort should deploy outcomes that reflect where we expect

to find the project’s value as described in the project’s scorecard.



The Tree Swing Problem

what marketing

suggested

what management

approved

as designed by

engineers

what was

manufactured

as maintenance

installed it

What customers

wanted



Topics and Objectives

• Strategic Thinking: Understanding stakeholder

perceptions about the project’s value

• Filters in the PVN: How will we organize the

stakeholders into segments having compatible

views about value?

• Constancy of Purpose: Understanding

comparative advantage as stable needs having

dynamic tolerances

• Stakeholder Schematics: Coordinating

comparative advantage as a horizontal chain

of value



Session Agenda

Stakeholder Perspective:

Identifying Needs for Requirement Definition

1. Perceptions of value lead to expectations

2. Compatibility of expectations as segmentation basis

3. Stable needs but dynamic expectations

4. Describing expectation as a tolerance



The Fundamental Challenge in Project Management:

Maximizing Project Value by Managing Satisfaction

“If I had to reduce my message for management to just a few words, I'd say it all

had to do with reducing variation”

—W. Edwards Deming

“The central problem of management in all its aspects...is to understand better the

meaning of variation, and to extract the information contained in variation.”

—Lloyd S. Nelson

Maximize

Project

Value

Prerequisite

Maximize

Inflow

Requirement Objective

Minimize

Outflow Minimum Required-

ALAP

Maximum Desired-

AFAP



Framework of 7 Basic Questions for the PVS



Change

of Goals

Stakeholder Satisfaction: Impact of Dissatisfaction

PM barriers:

Conflicts and Goal Changes have Strong negative effects on project success

One major source of variation:

Conflicting and Changing Stakeholder Satisfaction

Strategy:

Avoid changes by identifying stakeholder needs

Conflicts

Success +.41

-.21

-.20

R2= 39%



Stakeholder Satisfaction and Market Value

1999 Macpherson Publishing, Alexandra, New Zealand

From an article by Steve Hoisington of IBM Rochester.



Stakeholder Satisfaction: Quality Problems & Repurchase

Decision

87

50

74

45

83

53

83

53

0

20

40

60

80

100

Automotive

Service

Financial

Services

Packaged

Goods

High Tech

Equipment

No Problem Problem

% W

illi

ng

to

Rep

urc

hase

Source: J. Goodman, “Measuring and Quantifying the Market Payoff of Improved Quality and Service,”Quest for Excellence IV Conference, February 4, 1992.



Stakeholder Satisfaction: Impact of Dissatisfaction Proportion of unhappy customers who will repurchase

(Complaints valued at over $100)

Source: J. A. Goodman and D. S. Ward in Direct Marketing (December, 1993).

Did Not Complain

Complaints Not Resolved

Complaints Resolved

Complaints Resolved Quickly

37%

46%

70%

95%



Stakeholder Satisfaction: Impact of Dissatisfaction

What is your percentage of dissatisfied customers?

– Only 4 out of 100 dissatisfied customers complain!

– Each dissatisfied customer tells 8 to10 people about

his/her dissatisfaction

Market Impact?

– 1000 reported customer complaints are approximately

25,000 dissatisfied customers!

– 25,000 dissatisfied customers are expected to

communicate their dissatisfaction to approximately

225,000 people!



Creating Stakeholder Value

• Customers buy on value. Value as an advantage is

determined by comparing quality relative to price.

– Quality includes all the non-price attributes that count in the

purchase decision--both product and service.

– Value (price and quality) is not an absolute expectation. It leads

to expectations which can be expressed as tolerances relative to

stakeholders’ perceptions about what is possible.

Value

Quality

Price

Product

Service

Initial Price

Life Cycle Costs



Stakeholder Value by Accident



Traditional QFD: Definition

QFD (Quality Function Deployment):

• Is a detailed system for translating the needs

and wishes of the consumer into design

requirements for products or services.

– Developed in Japan by Dr. Yoji Akao and Dr. Shigeru

Mizuno

– Purpose: assure customer satisfaction

– Primary concept: value

– Tools: 7 management & planning tools



QFD Advantages

QFD has fewer engineering changes and adjustments!

Nu

mb

er

of

Ch

an

ges

Time

Traditional

Development

QDF

Development

1st Day of

Production Adapted from Sullivan, 1996



Applying QFD: The Strategic Decision

Allocation of Resources

QFD requires substantial initial investments

vs.

Traditional management requires increasing

investments

Reso

urc

es

Time

Traditional QDF



QFD Advantages

• Shorter development time (30% - 50%)

• Fewer engineering changes (25% - 50%)

• Reduced introduction costs

• Satisfaction of consumer needs and desires

• Improved product manufacturability

• Commonality of language

• Development of a ready reference for the future



QFD Goals

• Increase market share

• Design value into the product

• Translate subjective statements into objective

requirements



QFD Development Process Steps

Identify the Market

Select a Product Concept

Design Product

Design Manufacturing

Prioritize Customer Segments

Understand Customer Needs

And Context, Translate into

Engineering Language

Select the Best Concept

Generate New Concepts

Target Cost

Prioritize Development Projects

Establish Targets

Establish Relationships between

Manufacturing Conditions and

Product Performance



Decomposition of

Needs into

Tolerances and

Operating Limits

Quantifies the

Acceptable

Comparative

Advantage. text

Product

Planning

Ne

ed

s

Design

Targets

Feature

Deployment

De

sig

n

Ta

rge

ts

Feature

Specs

Workflow

Planning

Fe

atu

re

Sp

ecs

Process

Tolerances

Work

Package

PlanningPro

ce

ss

To

lera

nce

s

Operating

Limits

If

New, Important, or Difficult,

Then

Define

Else

Defer Effort Until Required

Focusing Criteria

Needs

Design Targets

Feature Specs

Process Tolerances

Operating Limits

Need Hierarchy

Outputs are caused by tasks.

Value-added tasks should:

• Change the output

• Solve a need by meeting

design targets.

design for

deployment

of best

comparative

advantage

Using a modified QFD

framework,

• Plan the product.

• Plan the workflow.



Stakeholder Management

To avoid goal changes and dissatisfied customers?

1. Plan and implement customer value by creating

output value

2. Apply QFD concepts at the project level

3. Manage customer satisfaction during the project

4. Manage the customer relationships



Simplified Need Identification: Definitions

Needs:

Necessity, a condition in which something necessary or desirable is required or wanted; a requirement.

Expectations:

The condition of looking forward to something

Specifications:

A detailed description of design criteria for a piece of work

Requirements:

Something that is required; a necessity; A requirement is a singular documented need of what a particular product or service should be or do.

Functional requirements - Describe system features or things the system must do.

Non-functional requirements - Describe properties the system must have (e.g. performance, availability, accessibility).

Constraints - Limits the development in some way.



Simplified Need Identification: Need Definition

A need is:

• a condition requiring relief;

• anything that is necessary but lacking;

• necessitate: require as useful, just, or proper;

• a want: have need of …



Simplified Need Identification: Categories of Need

Customer satisfaction is influenced by a variety of needs .

Undocumented

Needs

Documented

Needs

Necessary Satisfiers

Desirable Satisfiers

Customs &

Hidden

Motivators

Exciters

Regulations , Specs , &

Standards

Negotiating

Positions



Simplified Need Identification: Customer Voice

Satisfiers Moments of Truth Expectations

Broad aspect of need.

When experience

is compared with

expectation, opinion of

satisfaction is formed.

The tolerance expressed as

central tendency and

dispersion.

One-word label. How

customer talks about

satisfaction.

Names comparison

opportunity as an event.

Tolerance sets the

acceptable uncertainty for

outcomes and effort.

I want … When I …, I expect …

convenience. go shopping, to drive 5 to 15 minutes to

find a shopping center.



Simplified Need Identification: Customer Voice


I want … When I hear about …, I expect …

Accuracy. the construction process used

to build the house,

USL = 150 days,

LSL = 30 days,

Target = 90 days to

complete construction.

Reliability. the process used for curing the

concrete foundation,

USL = 12 days,

LSL = 2 days,

Target = 7 days to cure.

When the house is built in under 3 hours,

• I perceive the accuracy of construction to be …?

When the concrete is pronounced cured in 20 minutes,

• I perceive its reliability to be …?

I perceive … • Fear,

• Uncertainty,

• Doubt …



Exercise: Simplified QFD for the 4-Hour House

I expect … When I …, I want …

Expectations Moments of Truth Satisfiers



Understand Need: Simplified QFD Information


Broad aspect of

need.

When experience

is compared with



Tolerance for variation

expressed as central

tendency and dispersion.

One-word label.

How customer talks

about satisfaction.

Names comparison

opportunity as an

event.

Tolerance sets the




maintainability. redecorate the house, to spend $0 to $1,000 for

repair problems.

Example: The 4-Hour House should be easy to maintain.

Ambiguous attribute of satisfier;

must translate into hard expectation.

Soft Expectation

Measurable attribute of a satisfier;

a performance benchmark. If met,

should lead to satisfaction.

Hard Expectation



Simplified QFD Information


Broad aspect of

need.

When experience

is compared with



The tolerance expressed

as central tendency and

dispersion.

One-word label.

How customer talks

about satisfaction.

Names comparison

opportunity as an

event.

Tolerance sets the




size. learn about the

available living space,

to find 2,400 sq. ft. +/-

200 sq. ft. of useable

living space in the house.

Example: The house should be of sufficient size.



Project QFD: Essential Chain

critical chain essential path

QFD is the theoretical foundation for project QFD:

– critical chain — best basis for managing schedule

– essential path — best basis for managing value

Delivering value to customers is the prime directive for project managers of product development projects



Appendix



Appendix: Analyzing Stakeholder Data

7 TQM Management & Planning Tools



Appendix: Quantifying Acceptable Variation using SPC Concepts

LQL: Limiting Quality Level for rate of nonconformances which can be

tolerated by the stakeholder’s workflow.

AQL: Level of nonconformances expected out of the effort’s workflow.



Cp and Cpk Describe the Balance in Acceptable Uncertainty

LCL UCL

µ-1σ-2σ-3σ +1σ +2σ +3σ

Inherent Capability if Cp = 1.0 = Cpk

LSL USL

Tolerance

{x|x = LSL ≤ x ≤ USL}

{x|x = LCL ≤ x ≤ UCL}

Inherent Capability = Tolerance Tolerance = 2 * Inherent Capability

LCL UCL


Tolerance



LSL USL

µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ

Tolerance = 1.33 * Inherent Capability

LCL UCL


Tolerance



LSL USL

µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ

Minimum for 6-sigma Quality

Inherent Capability if Cp = 2.0; Cpk ≥ 1.5

Tolerance

{x|x = LSL ≤ x ≤ USL}LSL USL

+1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ

µ

LCL UCL


lecture07 vo customer

Education

project managementc

strategic perspectives

thomas lechler

academic use

stakeholder value customers

objectives strategic

projects value filters

horizontal chainof value