How Lean Product Development Drives Top Line …leanaccountingsummit.com/wp-content/uploads/2013/10/Radeka-Lean... · © 2013 Whittier Consulting Group, Inc • Lean Accounting Summit

© 2013 Whittier Consulting Group, Inc • www.whittierconsulting.com

Lean Accounting Summit October 17, 2013

Katherine Radeka

How Lean Product Development Drives Top Line and Bottom Line Growth


About Me Presenter: Katherine Radeka Katherine Radeka has a rare combination of business acumen, scientific depth and ability to untangle the organizational knots to remove the barriers to change. In 2012, she published the Shingo Research Award-winning book, The Mastery of Innovation: A Field Guide to Lean Product Development.

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This book describe companies’ experiences with real-world Lean Product Development. The case studies include Ford Motor Company, Steelcase, Novo Nordisk, DJO Global, Scania and 13 other companies from a wide variety of industries.


Key Takeaways �  Lean Product Development shares a common framework

with Lean Manufacturing, Lean Office, etc but a different set of practices and tools.

�  Lean Product Developers seek to optimize four value streams simultaneously: Customer, Production, Product Design & Test and Knowledge Creation.

�  The biggest breakthroughs in product development performance arise from lean practices to optimize the Knowledge Creation Value Stream.

�  Results from early adopters show that they see top line and bottom line growth from their efforts.

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Introduction to Lean Product Development •  My Definition •  The Four Value Streams of Product Development •  The Lean Product Development System

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What is Lean Product Development?

Product Developers Systematically solving problems permanently

To maximize (value – waste)

Across the entire system.

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Lean Product Development is something YOU do as a product developer – it is not something done to you.

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A Problem: something that is in your way - a deviation from expected results, a source of friction or non-value-added work, a barrier or obstacle. Lean removes these things, one at a time, so that we can get closer to our target.

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In most of the business, lean eliminates waste because all the decisions to maximize value have already been made. In PD, we make those decisions. So we seek to maximize value for our end customers and for the operational value stream. We may add waste in early development to eliminate waste later when it is more expensive. 8






When we make changes, we need to consider the systemic effects of our actions. It does not help to eliminate waste in product development if the “improvements” lower the value of the final product.

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Product Developers optimize this flow to improve our ability to produce the products we have developed:

•  Reduce manufacturing defects and scrap

•  Improve the flow of assembly

•  Reduce the number of components

•  Reduce the time and impact of quality testing.

Production

Production Value Stream

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The Customer’s Value Stream for Laundry: •  Sort. •  Carry to Laundry Room. •  Put clothes in Washer. •  Add detergent, etc. •  Select cycle. •  Turn on. •  Wait for cycle to finish. •  Put clothes in Dryer. •  Select cycle. •  Turn on. •  Wait for cycle to finish. •  Carry back to closet area. •  Fold / hang up clothes.

Customer

Where is the

Waste?

Customer Value Stream

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Your Product Development Process •  Value stream flows from approved project to

launch. •  This value stream transforms knowledge into

documents and tools that the Production value stream uses to make the product, and the Sales value stream uses to sell the product.

•  We optimize this flow to reduce administrative burden and rework due to preventable errors in the documents and tools.

Product Design & Test

Product Design & Test Value Stream

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•  The most difficult value stream to see.

•  Value flows from an idea or newly-created knowledge to a Knowledge Capture document (A3, Design Guide, Checklist) that encapsulates that knowledge for use within the project and later reuse in other teams.

•  Technology development projects are almost entirely about knowledge creation.

•  We optimize this flow to eliminate reinvention, and

to deepen our ability to innovate.

Knowledge Creation

Knowledge Creation Value Stream

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“LAMDA is the fundamental value creation engine of product development.” ~ Al Ward

The LAMDA Cycle: PDCA for Knowledge Workers

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How It All Fits Together

Customer Value Stream

Product Design & Test Value Stream

Production Value Stream

Knowledge Creation Value Stream 16


•  Seek increased customer and business value.

•  Eliminate as much unnecessary waste as possible: defects, errors, waiting time, hand-offs, reinvention.

•  Reduce / minimize necessary waste: project management, status reporting, excess documentation.

•  Add waste to one part of a system to eliminate even more waste someplace else: early testing, co-development work with suppliers, pursuit of multiple alternatives in early development.

The Value Maximization Mindset

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Indicators of Waste in Product Development

Reinvention: Ineffective use of the organization’s knowledge, unnecessary rework

Invention-on-schedule: High levels of technical risk in the development phase

Development Silos: Departments that don’t share knowledge with each other

Product-centered Design: Inability to leverage technical solutions across products

Unproductive Meetings: Ineffective decision-making and status-reporting

Overloaded Resources: Giving employees more than they can reasonably do.

Excess Requirements: Giving the customer things that don’t add value for them

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The Landscape of Lean Product Development •  Lean Product Development vs Lean Manufacturing •  The Current State of the Field •  The Right Place to Start Depends On Your Goals

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Varieties of Lean Product Development circa 2006

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Product & Process Design & Test Strategy

Development

Transactional Processes Eliminate Waste

Knowledge Creation Processes Maximize Value

Concept Evaluation

Knowledge Development SOP* On-going

Knowledge Creation vs Transactional Processes

*Start of Production


Two Types of Value Streams Lean Approach Lean Manufacturing Lean Product Development Value Stream Transactional Knowledge-Creating Cycle Time Minutes to Weeks Weeks to Years Certainty of Outcome

Very clear from the beginning

Very fuzzy at the beginning - becomes more clear over time

Repeatability Make many copies of the same thing - variation is waste.

Create a unique product - some variation is essential for innovation

Rework Rework and loopbacks point out waste to eliminate.

Rework and loopbacks may indicate new learning – or waste.

Wastes 7 Wastes of Manufacturing + Overload

Reinvention, Late Design Changes, Overloaded Feature Sets, Excess Documentation

Tools 5S, Value Stream Maps Knowledge Capture A3s, Rapid Learning Cycles

Opportunity Minimize waste Maximize value


Varieties of Lean Product Development Today

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•  Learn Before Decide •  Keep Engineers Engineering •  Solve Problems Systematically •  Prevent Reinvention •  Maximize Value, Minimize Waste and Simplify

A Few Guiding Principles

•  LAMDA •  Rapid Learning Cycles •  Set-Based Concurrent Engineering •  The Chief Engineer •  Platform Driven Development

A Selection of Practices

•  Visual Planning Boards •  3P Events •  A3 Reports •  Knowledge Capture Interviews •  Knowledge Supermarkets

A Selection of Tools

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The Growth Engine: The Knowledge Creation Value Stream

•  Learning Cycles in Product Development •  The Four Value Streams of Product Development •  The Lean Product Development System

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Most Product Development Programs are One Slow Learning Cycle

Concept Feasibility Develop Pilot Launch SOP

Make decisions here based on incomplete knowledge

Revisit those decisions here when detailed product / process design and verification testing uncovers problems with the decisions.

Slow Learning Cycle

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Learn as much as possible here to uncover problems early and make better decisions

Systematic Problem-Solving Drives Rapid Learning Cycles

Maintain flexibility as long as possible here since there will always be some things that we still need to learn.

Rapid Learning Cycles


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Reusable Knowledge in the PD Lifecycle Rapid Learning Cycles Build Reusable Knowledge . . .

. . . To Accelerate Future Development Programs

Capture reusable knowledge so that future program teams don’t have to re-learn the same things

Leverage reusable knowledge to focus a team’s rapid learning cycles on new ideas and product-specific details.



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Concept System Design Prototype Test SOP





In Most Companies, The Knowledge Creation Value Stream is Nearly Invisible

Product Flow 29







The Lean Product Development Perspective

Product Flow 30


Mature Lean Product Development: Knowledge Creation Leads to Innovative Products

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The Capacity to Deliver Innovation Leads to Growth

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More and Better Strategic Alternatives

Level, Cadenced Flow of New Products into Production and Sales Tied to Market Pull

Improved Quality & Cost through Reuse

of Proven Solutions

Shorter Increments Between New Products with Increased Capacity

Focused Innovation on New Problems

The Lean PD Benchmarking Study •  The Question •  The Companies •  The Results

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The Lean Product Development Benchmarking Study (2010 – 2012) The questions to answer: � What does “lean product development” mean to the

companies that use it?

� When people say that they use lean product development, what are they actually doing?

� What results do they see?

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63 Participating Companies Industries Represented

High Tech

Industrial Components

Automotive

Architectural Products

Consumer Products

Medical Equipment

Aerospace

Pharmaceutical

Biotechnology

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Who did I talk to? Primary Locations

0 5

10 15 20 25 30 35 40 45 50

North America Europe Australia/New Zealand

South America

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Who did I talk to? Maturity Levels

0: Explorer 1: Pilot 2: Focused Lean

3: Transformation

4: Mature 0

5

10

15

20

25

30

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Phase Three: Lean Product Development Transformation

Leaders engage directly with lean as

models, coaches, teachers and champions

LPD Champions support everyone in using lean as part of

their daily work

Phase Two: Focused Lean Product Development

Leaders experiment with lean ideas on

specific issues

LPD Champions focus lean on

specific problems

Phase One: Lean Product Development Pilot

Leaders stay out of the way and provide “air cover” for pilots Pilot teams experiment with lean

Stages of Lean Transformation

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Results from Companies in Stages 3-4

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�  DJO Global �  Time-to-Market: 60% faster. �  New Products to Market per Year: 300% increase.

�  Ford Motor Company

�  Lead Time for New Model: 40% faster. �  Tool investment cost: 40% less. �  Cost of tooling labor: 50% less. �  Quality: JD Powers: worst automaker in 2003 to best in 2008.

�  Novo Nordisk

�  Larger portfolio of drug development projects with better risk distribution and higher quality projects

�  Increased capacity for core activities in drug development: bench experiments, animal models and clinical trials.


How Long Does This Journey Take? It Depends. . . �  How well-prepared is your leadership team to take on the

challenge? �  Is lean a strategic priority across the entire company? (This can be

a plus or a minus depending upon the program.) �  How well-protected are you from competing initiatives? �  How severe are the problems you need to solve? Is there a clear

Burning Platform? �  How much trust does the broad organization have in the

leadership team driving the change? �  How large are you? �  How diverse are you?

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How Long Does It Take? Some “Rules of Thumb” �  Pilot Teams and Focused Lean projects should show

meaningful improvement in leading indicators within 6 months – or risk losing the organization’s attention

�  The first Pilot Teams to wholeheartedly embrace lean should be 30% faster than a typical team – which sometimes means they deliver on time instead of too late.

�  It takes at least three LAMDA/A3 cycles before most people begin to internalize systematic problem solving within a Lean Transformation.

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Sounds great! Want to get started?

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�  Find some early adopters who are always eager to learn

something new and see the value of change. �  Send them to a conference like the Lean Product & Process

Development Exchange, or send them to my web site. �  Give them The Mastery of Innovation or another Lean PD book

to read – form a book study club. �  Encourage them to experiment with the ideas they find.

Start Here!


How to Reach Me Katherine Radeka [email protected] +1-206-274-6179 Learn more about Lean Product Development at the Lean Product Development Resource Center: http://lpdrc.com Templates, Knowledge Briefs and more!

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Documents

How Lean Product Development Drives Top Line …leanaccountingsummit.com/wp-content/uploads/2013/10/Radeka-Lean... · © 2013 Whittier Consulting Group, Inc • Lean Accounting Summit