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Engineering and Technology Management ETM 5391 – New Product Development and Commercialization Fall, 2003 Instructor: Mr. C. Michael Carolina Date: September 2, 2003

Engineering and Technology Management ETM 5391 – New Product

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Page 1: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Fall, 2003

Instructor: Mr. C. Michael Carolina

Date: September 2, 2003

Page 2: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 Web site: http://www.okstate.edu/ceat/msetm/courses/etm5391/.

Page 3: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Assignment 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-90’s—the time frame in the case study.

DUE DATE: 09/06/03

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Recap 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

Page 5: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Recap of Session II (cont’d.)

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

• Benchmarking

Page 6: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Recap 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”)

Page 7: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Recap of Session II (cont’d.)

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

• 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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Recap of Session II (cont’d.)

The Heavyweight Team Concept– Subject Matter Experts (SME’s)– 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

Page 9: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Types of Development TeamsFunctionally 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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Types of Development Teams (cont’d.)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

Page 11: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

The 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

Poor0

Average5

Flawless Execution10

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

The Continuum Exercise (cont’d.)

• 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?

Poor0

Average5

Flawless Execution10

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Engineering and Technology Management

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

John Peterson

Wave Period Activities Time Span

•------ Hunter/Gatherer Nuts/Berries & Game

10,000 Years

•First Wave Agricultural Farming 1,000 Years

•Second Wave

Industrial Age Mass Production 100 Years

•Third Wave Information Age Knowledge Based Decades

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Lecture 39/02/03

GE (Jack Welch)10 Minute Video

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

GE’s Two-Decade Transformation: Jack Welch’s Leadership

Jack Welch’s View On: • Inheriting GE From Predecessor• Product Exit Strategy• Workout (Town Meetings, Departmental

Meetings)• Globalization• People Development• Compensation Practices

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

GE’s Two-Decade Transformation: Jack Welch’s Leadership (cont’d.)

• Managers as Teachers, Coaches, Mentors• Promotion Practices (Values vs. Results)• Capturing Employee Ideas• Customer Focus (Increasing the Customer’s Intellect

and Helping the Customer Win)• E-Business (Spans Employees, Suppliers, Customers)• People with Energy and People Who Can Energize

Others

Page 17: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and CommercializationFour Types of Product/Process Development

Projects

1. Research or Advanced Development Projects

2. Breakthrough Development Projects

3. Platform or Generational Development Projects

4. Derivative Development Projects

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Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationReasons for Benchmarking

WITHOUT BENCHMARKING WITH BENCHMARKING

Becoming Competitive:

•Internally Focused •Concrete Understanding of Competition

•Not Invented Here (NIH) •Proactive Search for Change

•Average of Industry Progress •Business Practice Breakthrough

•Frantic Catch Up Activity •Superior Performance

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Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationBenchmarking

The payoff: knowing your strategic and operational strengths and weaknesses and those of your competition = GROWTH

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Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationBenchmarking

Strengths

Weaknesses

Opportunities

Threats

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Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationInnovation

An economic, social, and environmental responsibility.

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Engineering and Technology Management

ETM 5391 – New Product Development

and Commercialization

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

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Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationInnovation: 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

Page 24: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development

and CommercializationInnovation

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

Page 25: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development

and 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, won’t be carried

out properly• “white space risks” – required activities won’t be identified

in advance, leaving gaps in the project plan• “integration risks” – disparate activities won’t come

together at the end

Page 26: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development

and 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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Becoming a Fast InnovatorI. Time is the key performance variable to be

managed to attain improved cost and quality.II. Time benchmarks are set by the performance

of competitors and, if faster, by what is technologically possible.

III. 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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Becoming a Fast Innovator (cont’d.)IV. 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.

V. The development programs are to have five steps, and company will organize itself around these steps:1. Planning and preparation2. Product definition3. Design development4. Manufacturing ramp-up5. Product Improvement

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Becoming a Fast Innovator (cont’d.)VI. The objective of planning and preparation is to

avoid having to invent in the middle of the development process—make unknowns be knowns.

VII. 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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Becoming a Fast Innovator (cont’d.)VIII. 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.

IX. Team members are collocated.

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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Becoming a Fast Innovator (cont’d.)X. 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.

XI. New programs are generated continuously, at regular market-driven intervals, and incorporate more incremental advances and fewer “great leaps forward.”

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Engineering and Technology Management

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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Engineering and Technology Management

Teradyne Aurora Project(Automatic Test Equipment – ATE)

(cont’d.) Video Tape (cont’d.)

• Discontinuous Change (Disruptive Technology)– Platform– Derivative

• Core Competency• Business Plan/Business Case• Getting Engineers Close to Customer• Understanding the Customer’s Business and

Operating Metrics• Asset/Resource Allocation

Page 34: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

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

Page 35: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

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

Page 36: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Intellectual Property Management (cont’d.)

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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Management Roles and ResponsibilitiesSenior 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

Page 38: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Management Roles and Responsibilities (cont’d.)

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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Engineering and Technology Management

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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Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Maintaining Schedule Control (cont’d.)

• 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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Engineering and Technology Management

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

Page 42: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and CommercializationResponsibilities 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

Page 43: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

ETM 5391 – New Product Development and Commercialization

Responsibilities of Heavyweight Core Team Members (cont’d.)

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

Page 44: Engineering and Technology Management ETM 5391 – New Product

Engineering and Technology Management

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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Engineering and Technology Management

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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Engineering and Technology Management

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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Engineering and Technology Management

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 wouldn’t 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 unit’s success.”

Lou HoltzFootball Coach(Currently University of South Carolina; formerlyArkansas, NY Jets, Notre Dame)

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Engineering and Technology Management

ETM 5391 – New Product Development

and Commercialization

“In theory, there is no difference between theory and practice. In practice, there is.”

Yogi Berra