ETM 5391 – New Product Development and Commercialization Spring, 2004

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ETM 5391 New Product Development and
CommercializationSpring, 2004

• Instructor Mr. C. Michael Carolina
• Date March 25 April 22

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• ETM 5391 Web site
• http//www.okstate.edu/ceat/msetm/courses/etm
  5391/.

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ETM 5391 New Product Development and
CommercializationAssignment 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-90sthe time frame in
  the case study.
• DUE DATE 04/15/04

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ETM 5391 New Product Development and
CommercializationRecap 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

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ETM 5391 New Product Development and
CommercializationRecap of Session II (contd.)

• Finding Solutions in the Face of
  Constraints/Challenges
• Capital/Budgets
• People Resources
• Market Dynamics
• Return On Investment
• Economic Fluctuation
• Benchmarking

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ETM 5391 New Product Development and
CommercializationRecap 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)

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ETM 5391 New Product Development and
CommercializationRecap of Session II (contd.)

• Characteristics of Successful Innovation
  Companies
• Vision/Mission/Values
• Alignment Around Values
• Understand Core Competence (Maintenance/Acquisitio
  n)
• 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

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ETM 5391 New Product Development and
CommercializationRecap of Session II (contd.)

• The Heavyweight Team Concept
• Subject Matter Experts (SMEs)
• 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

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ETM 5391 New Product Development and
CommercializationTypes 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

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ETM 5391 New Product Development and
CommercializationTypes of Development Teams
(contd.)

• 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

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ETM 5391 New Product Development and
CommercializationThe Continuum Exercise

• 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

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ETM 5391 New Product Development and
CommercializationThe Continuum Exercise (contd.)

• 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?

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• We are living in a period of time that will
  produce more change for humanity than any
  previous era in history.
• John Peterson

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ETM 5391 New Product Development and
Commercialization

• Lecture 3
• 4/08/04
• GE (Jack Welch)
• 10 Minute Video

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ETM 5391 New Product Development and
Commercialization

• GEs Two-Decade Transformation
  Jack Welchs Leadership
• Jack Welchs View On
• Inheriting GE From Predecessor
• Product Exit Strategy
• Workout (Town Meetings, Departmental Meetings)
• Globalization
• People Development
• Compensation Practices

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ETM 5391 New Product Development and
Commercialization

• GEs Two-Decade Transformation
  Jack Welchs Leadership (contd.)
• Managers as Teachers, Coaches, Mentors
• Promotion Practices (Values vs. Results)
• Capturing Employee Ideas
• Customer Focus (Increasing the Customers
  Intellect and Helping the Customer Win)
• E-Business (Spans Employees, Suppliers,
  Customers)
• People with Energy and People Who Can Energize
  Others

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ETM 5391 New Product Development and
Commercialization

• Four Types of Product/Process Development
  Projects
• Research or Advanced Development Projects
• Breakthrough Development Projects
• Platform or Generational Development Projects
• Derivative Development Projects

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ETM 5391 New Product Developmentand
CommercializationReasons for Benchmarking
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ETM 5391 New Product Developmentand
Commercialization

• Benchmarking
• The payoff knowing your strategic and
  operational strengths and weaknesses and those of
  your competition GROWTH

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ETM 5391 New Product Developmentand
Commercialization

• Benchmarking
• Strengths
• Weaknesses
• Opportunities
• Threats

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ETM 5391 New Product Developmentand
Commercialization

• Innovation
• An economic, social, and environmental
  responsibility.

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ETM 5391 New Product Developmentand
Commercialization

• Innovations built on
• Technological feasibility
• Addressable market
• Customer/supplier relationship
• Multi-disciplinary, seamless solutions
• Technology forecasting/roadmapping

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ETM 5391 New Product Developmentand
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

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ETM 5391 New Product Developmentand
Commercialization

• Innovation
• Looking for
• documented and sustained successes
• common themes
• correlations
• lessons learned

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ETM 5391 New Product Developmentand
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, wont
  be carried out properly
• white space risks required activities wont
  be identified in advance, leaving gaps in the
  project plan
• integration risks disparate activities wont
  come together at the end

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ETM 5391 New Product Developmentand
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)

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ETM 5391 New Product Development and
Commercialization

• Becoming a Fast Innovator
• Time is the key performance variable to be
  managed to attain improved cost and quality.
• Time benchmarks are set by the performance of
  competitors and, if faster, by what is
  technologically possible.
• 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.

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ETM 5391 New Product Development and
Commercialization

• Becoming a Fast Innovator (contd.)
• 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.
• The development programs are to have five steps,
  and company will organize itself around these
  steps
• Planning and preparation
• Product definition
• Design development
• Manufacturing ramp-up
• Product Improvement

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ETM 5391 New Product Development and
Commercialization

• Becoming a Fast Innovator (contd.)
• The objective of planning and preparation is to
  avoid having to invent in the middle of the
  development processmake unknowns be knowns.
• 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.

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ETM 5391 New Product Development and
Commercialization

• Becoming a Fast Innovator (contd.)
• 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.
• Team members are collocated.

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ETM 5391 New Product Development and
Commercialization

• Becoming a Fast Innovator (contd.)
• 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.
• New programs are generated continuously, at
  regular market-driven intervals, and incorporate
  more incremental advances and fewer great leaps
  forward.

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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

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Teradyne Aurora Project(Automatic Test Equipment
ATE) (contd.)

• Video Tape (contd.)
• Discontinuous Change (Disruptive Technology)
• Platform
• Derivative
• Core Competency
• Business Plan/Business Case
• Getting Engineers Close to Customer
• Understanding the Customers Business and
  Operating Metrics
• Asset/Resource Allocation

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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

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ETM 5391 New Product Development and
CommercializationIntellectual 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

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ETM 5391 New Product Development and
CommercializationIntellectual Property
Management (contd.)

• 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

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ETM 5391 New Product Development and
CommercializationManagement 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

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ETM 5391 New Product Development and
CommercializationManagement Roles and
Responsibilities (contd.)

• 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

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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

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ETM 5391 New Product Development and
Commercialization

• Maintaining Schedule Control (contd.)
• 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

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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

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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

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ETM 5391 New Product Development and
Commercialization

• Responsibilities of Heavyweight Core Team Members
  (contd.)
• 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

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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 8-1, p. 191)
• - Functional Team Structure
• - Lightweight Team Structure
• - Heavyweight Team Structure
• - Autonomous Team Structure
• Tools and Methods

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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

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ETM 5391 New Product Development and
Commercialization

• Objective(s)
• Focusing on Things That Make a Difference (Value)
• Flawless Execution
• Continuous Improvement

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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 wouldnt 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 units
  success.
• Lou Holtz
• Football Coach
• (Currently University of South Carolina
  formerly
• Arkansas, NY Jets, Notre Dame)

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ETM 5391 New Product Developmentand
Commercialization

• In theory, there is no difference between theory
  and practice. In practice, there is.
• Yogi Berra