Cover

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Cover
Product Development at Dell Computer Corporation
2
Uh-oh
Annus Horribilus
1993
Minimal RD Spending
CRM Backfire
Varied Teams
Unsettled Developers
Dells Near-Death Spiral
Recall!
Title
Increased Industry Pace
Sour Portables
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Lets Not Miss the Opportunity
Growth of Portable PC market compared to Desktop
PC market
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Headed in the Wrong Direction
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Can You Find Dell?
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Top 10 Customer Criteria for Laptop Purchase
Incidence ()
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Option 1 Continue with NiHi

• Pros
• Proven product
• No delays
• Occupies less space
• Deliver good Dell product
• Cons
• Limited differentiation
• E(PM) not highest of options

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Option 2 Go with LiOn

• Pros (assuming success)
• Attain differentiation
• Deliver superb Dell product
• Lock out competitors from supply
• Cons
• Uncertain technology
• Delay to market
• Compounded delay to market upon failure
• Failure would taint brand image of quality
  spillover to desktops
• Occupies more space
• E(PM) lowest of options

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Option 3a Dual Development

• Pros (assuming success)
• E(PM) highest of options
• Delay decision/maintain flexibility real
  option
• Isolate volatility in design and minimize the
  independence
• Cons
• Additional fixed cost of 2.5 million to buy
  this option
• Opportunity cost of pulling people away from
  other projects
• Discarding half the craftsmanship in the final
  product

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Option 3b Over-design

• Pros (assuming success)
• E(PM) 2nd highest of options
• Delay decision/maintain flexibility real
  option
• Piecewise commitment versus binary choices
• Cons
• Additional variable cost, expected to 11
  million, to buy this option
• Occupies even more space than option 2 and less
  attractive to customers
• Not transferable to next product line even LiOn
  is successful

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Comparable Sensitivity Analysis
Confidence Option 1 Option 2 Option 3a Option 3b Recom.
of LiOn (NiHi) (LiOn) (Dual Develop) (Over-design)
100 485 584 582 572 Option 2
90 485 549 572 562 Option 3a
80 485 514 562 553 Option 3a
70 485 479 552 543 Option 3a
60 485 444 542 533 Option 3a
50 485 409 532 524 Option 3a
40 485 374 522 514 Option 3a
30 485 339 512 504 Option 3a
20 485 304 502 495 Option 3a
10 485 269 492 485 Option 3a
0 485 235 483 475 Option 1
Mean 485 409 532 524 Unit million
SD 0 111 31 31
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Short Term Recommendation
Over Design
The Proof Lies in More Than Just the Numbers.
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Short Term Recommendation

• Pros (Dual Development)
• Creates a high barrier to entry by locking in all
  of Sonys LiOn supply
• Eliminates the need to forecast future market
  preferences and reduces projects risk of success
• Able to better capture the VoC
• Empirical evidence has shown the ability to make
  changes close to product launch is positively
  correlated to increased customer quality and firm
  performance
• IBM was successful in adopting this strategy
  during initial launch of their personal
  computers.
• Economic benefit outweighs economic cost

The Proof Lies in More Than Just the Numbers.
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Long Term Recommendation Benchmark to
Best-in-Class

• Overall performance difference resides in the
  first three stages of development
• Design Specification Spending too much
  time upfront trying to predict customer
  requirements
• Design Development Spending too much time
  designing the perfect prototype
• Design Verification Spending too much
  time in simulation testing instead of being
  able to modify actual prototypes

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Flexibility Essential in Rapidly Evolving
Competitive Environments
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Maintain project fluidity avoid the
Freeze/Thaw syndrome
2
Provide decision support tools that aid designers
and managers in making decisions correctly and
efficiently
3
Make piecewise commitments and avoid the
one-release approach.
4
Apply process metrics to ensure process control
Focus on the Management Process not the
Development Process
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• Questions?