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6MythsOf Product Development
HBR’s 10 must reads on innovation
Stefan ThomkeProfessor of Business AdministrationHarvard Business School
Donald ReinertsenPresident of Reinertsen & Associates
The authors
The full article is available at Harvard business review
Technology commercialization managerExploit Technologies Pte Ltd (ETPL)Agency for Science, Technology and Research (A*STAR, Singapore)
B. Eng & Ph.d (Engineering)Nanyang Technological University Singapore
M.B.A.INSEADFontainebleau, France
Presentation by
LI Wei
Many companies treat
MANUFACTURINGproduct development
as it were
The managers WANT
✔Detailed and predictable plans ✗Schedule variations
and waste
It works for factories, but backfireswith product development
Designing Products
Manufacturing Products
Manufacturing is repetitive and predictable
For product development
The output (information) can be anywhereRequirements
constantly change
The tasks are unique
It is important to appreciate the difference and avoid fallacies
6There are
that undermine product development
fallacies
1.High utilization of resource will improve performance
The managers overlookvariabilityOf development work
The variability can cause delays dramatically as utilization increases
Resource Utilization
Waiting Time
50%25% 75%
30x
100%
And, the increased R&D inventory due to delays is predominantly invisible because they largely consist of information
Besides the common solution to provide a capacity buffer, there are other viable solutions
Change the management
control system
Selectively add extra resource
#Limit the
number of projects
Make R&D inventory “visible”
2.Processing work in large batches will be more economical
The managers incorrectly believe that large batches produce “economies of scale”
Large batches do reduce the transaction cost, however, they increase the holding cost
Transaction Cost
Holding Cost
Batch Size
Cost
Holding Cost
Transaction Cost
Total CostOptimal Batch Size
The optimal batch size is the point where the combined holding and transaction cost is lowest
Optimal Batch Sizes
Astonishing results
3.Teams need to faithfully follow their development plan
The managers believe thatdeviations from the plan is poor management
and execution
However, many events can disapprove the initial assumptions of the original plan.
New testing results
Unexpected information or ideas
Shift of customers’ preferences
For all those reasons, sticking to the original plan can be a recipe for
The plan should be treated as an initial hypothesis that is
constantly revised
4.The sooner a project is started, the sooner it will be finished
The managers believe that works started early do not need to be done later
Such thinking usually leads to
Mooooooooooreprojects
a company can vigorously pursue THAN
bite off more than you can chew
Don’t
It will cause the dilution of resource
It will cause the dilution of resource
DANGEROUS
And, it is
ResourceInsufficient
E F
SlowProject Progress
Project Duration
Cost and schedule overruns
Increases
Increase Exponentially
When …
CONTROL RESISTNew project starting rate
Temptation to steal resource from ongoing projects
We must
5.The more features a product has, the better customers will like it
Product development teams seem to believe that adding features creates value for customers
Companies that challenge the belief usually create products that are elegant in their simplicity
To do that, the development team needs to define the problem clearly
problem
It makes the team to FOCUS on the few features that really matter and determine what to hide or omit
6.The project will be more successful, if the team “get it right the first time”
Requiring success on the first pass biases teams toward the least-risky solutions
To avoid making mistakes, teams follow a linear process in which each stage is carefully monitored
Go / No Go Milestone 1
Go / No Go Milestone 2
Go / No Go Milestone 3
This process can cause project overruns because the
feedback of the problem is
delayed
Fail early, fail often
Rapidexperimentation
New information Diverse ideas
Crucial to innovation projects
i
Summary
6 FALLACIES
High utilization Large batch size Following plan strictly
Starting projects too soon
Too many features
The mindset of the first time right
Avoid the mistakes and keep projects on track
