1

New Product Development Process

Product Idea

Product Realization

Process

Market Opportunity

Technology

Opportunity

Real Product

Front end Product Realization

2

Views of Successful Product Realization

Heroic Age– Creative geniuses,– Driven by their understanding of project needs, shielded

from management presentations, etc,– Put in long days and nights,– And create break though products

3

Charles Ginsberg et al with the Ampex VRX-1000

4

List of Famous FailuresFamous System Failures Name Year Reference Was the failure

do to poor requirements?

Probable cause of failure

Hubble Space Telescope 1990 Chapman, et al. (1992)

No Lack of total system test

Ariane 5 missile 1996 Kunzig (1997) No Incorrect reuse of software Faulty scaling up

SuperConducting SuperCollider

1995 Moody, et al. (1997) No Cost overruns, Failure to maintain public support

GE rotary compressor refrigerator

1986 Chapman, et al. (1992)

No Inadequate testing of new technology

Motorola, Iridium 1999 No Misjudged competition and mispredicted technology

IBM PCjr 1983 Chapman, et al. (1992)

Yes Failure to discover customer needs

Space Shuttle Challenger 1986 Feynman, Tufte (1997)

No Bureaucratic mismanagement

War in Vietnam 1967-72 Yes No problem statement, Micromanagement

Edsel automobile 1958 Yes Failure to discover customer needs

Titanic 1912 The movie Titanic No Poor quality control Apollo-13 1970 The movie Apollo-13 No Tacoma Narrows Bridge 1940 No Scaling up an old design New Coke 1988 Yes Arrogance A-12 airplane 1980s No Cost overruns

Chernobyl Nuclear Power Plant

1986 No Bad design, Bad risk management, Cost cutting

Lewis Spacecraft 1997 Failure report (1998) No Design mistakes Mars Climate Orbiter 1999 No Use of different units Mars Polar Lander 2000 No Failure of middle management College students any No Lack of time, effort or ability

(A. T. Bayhill)

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Views of Successful Product Realization

Heroic Age– Creative geniuses,– long days and nights,– etc– break though products

Repeatable Disciplined Product Realization– Talented people,– Following well understood processes – etc– break though products, time after time

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LightSpeedTM CT Scanner

“Biggest breakthrough in CT in a decade,” Gary Glazer, Stanford“Biggest breakthrough in CT in a decade,” Gary Glazer, Stanford

GEs First DFSS System (‘98): Full Use of Six Sigma/DFSS Tools

• Key customer CTQs identified– Image quality– Speed– Software reliability– Patient comfort

• Disciplined systems approach: 90 system CTQs• 33 Six Sigma (DMAIC) or DFSS projects• Scorecard-driven• Part CTQs verified before systems integration

Leading-Edge Technology• World’s first 16-row CT detector• Multi-slice data acquisition• 64-bit RISC computer architecture• Long-life PerformixTM tube

Results • Better image quality

– Earlier, more reliable diagnoses – New applications: vascular imaging, pulmonary

embolism, multi-phase liver studies, ...• Much faster scanning:

– Head: from 1 min to 19 sec (9 million/ yr)– Chest/abdomen: from 3 min to 17 sec (4 million/yr)

• Clinical productivity up 50%• 10x improvement in software reliability• Patient comfort improved - shorter exam time• Development time shortened by 2 years • High market share; significant margin increase

Head

Abdomen

GE Medical Systems

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Disciplined Product Realization “toll-gate” processes …

tools

Engineering/Business Decisions with everyone “on the same page”

Examples

• Multigeneration Product Planning

• Customer – Requirements Definition

• Technical Risk Management

• Management and Control of Defects

• Supplier Management

• Reliability Engineering

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Toll-Gate Process Example*

Product Plan Analysis Phase 1 Phase 2

Visual Freeze = Req. Freeze

Test, Debug

Code Freeze

Require-ments agreement

Product release

• Gate 2: Requirements nailed• Gate 3: All functions working• Gate 4: Bugs and performance acceptable

* After Steve Maguire, Microsoft

Gate 1

Gate 2

Gate 3Gate 4

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Toll Gate and “Concurrent Engineering” “Concurrent Engineering” is an “abstraction” of

effective interaction of cross functional teams

Pilot production/testing Final process design

Preliminary process design

Concept development

Product design

Requirements Definition

Product Launch /Production Scale-up • Toll gate is a “prescription” for

developing products ….

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Concurrent Engineering in a Toll-Gate Process

Modification of cast metal refrigerator handle

Business Case

Design and Process

Confirmation

Detailed Product and

Process Design

Initial Production

Full Production

1. Program Contract

2. Technical Signoff, Order long lead itemsChecklist for tollgate 1:

• Program Definition• Program Plan• Program Resources• Production cost• Technical risk• Return on Investment

• When should we confirm that are no patent interferences?

• When should we review safety (sharp edges or pinching little fingers)?

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Tool Example: Robust Design (Taguchi)

Reducing product failure is valuable - for the customer and for the business

Robust design– Rational decisions based on analysis and

“designed” experiments– Account for variability in manufacture and use

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Robust Design and Appliances

All manufacturers take robust design concepts seriously But some do better than others, with some consistency

0 10 20 30 40

Whirlpool

Kenmore

KitchenAid

GE

GE Monogram

Amana

SubZero

Figidaire

Magtag

repairs (%)

Repair history of Side by Side Refrigerators with Icemakers 1999-2003(From Consumer Reports)

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Business/Engineering Decisions - Quiz

• Rarely enough resources to hit all the targets – performance of the product (or service)

– cost of development and production

– time for development before the market window starts to close

Quiz

How do technical and business people in a world class competitive company respond when constraints close in? 1. Report to upper management that everything is fine, and start

circulating your resume

2. If the first prototype works, ship it and hope that the production units will all work too

3. Throw in the towel

4. Turn the experience into a Dilbert cartoon

5. Manage the conflicting requirements as part of a data-driven, disciplined process with engineers and managers on the same page

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Process Discipline and Bureaucracy

All disciplined processes entail some bureaucracy

Some processes are clearly valuable, some are a waste of time, and some can go either way

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The Next Quality Initiative

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Effective Product Development Process

Develops great products that– work in real use environments– appeal to customers (beyond just working)– have low cost of production and delivery

Develops products fast– meet market windows, recover investment

Develop products efficiently– Low development cost

Business Success

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Product Planning Decision

Product Planning– Lots of great ideas– Fund only those that will contribute most to business

success

Product Idea

Product Realization

Process

Market Opportunit

y

Technology

Opportunity

Real Product

Product Planning

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Specific Types of Product Planning Decision Processes

Quantitative return on investment (ROI) calculations based on discounted cash flow projections

Qualitative view of factors based on data + opinions

Overriding strategic consideration

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Return on Investment (ROI)

ROI = return on investmentFor equity funding, this is the same as Discounted Cash-flow Rate of Return

Higher for a, than for b, since a returns cash sooner

Payback time is sometimes used as a surrogate for ROI

Higher ROI usually means shorter payback

a

b

Payback time for a

Payback time for b

Cas

h flo

w

time

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Funding Decision Process Always more items that can be funded How do we decide? Whether informal or formal, there is a decision matrix like this at work:

A B C AxBxC cum$ (M)

Project a

Project b

Project c

A = return on investment (ROI) if successfulB = discount factor because of risk that we will not be so successfulC = hard to quantify factors, like strategic fit

35%

45%

30%

.8

.6

.7

1.2

1

1.2

34%

27%

25%

10

23

35

Example for $25M program budget

“Below the line”

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ROI – Based Decision Making