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©Massachusetts Institute of Technology - Bing Liu, WP Seering 1
SDM
Product Development Capability Assessment
Research Student: Bing LiuResearch Advisor: Prof. Warren P. Seering
April 18th 2003
©Massachusetts Institute of Technology - Bing Liu, WP Seering 2
SDM
Agenda
Research ObjectiveResearch FrameworkFindingsNext Steps
©Massachusetts Institute of Technology - Bing Liu, WP Seering 3
SDM
Product Development Cycle
EXECUTION PHASEPlanningPlanning
Concept selection Concept selection
Design Design
Development & implementation Development & implementation
Program/project management Program/project management
Product definition Product definition
Unit Test Unit Test
Internal Validation Internal Validation
External Validation External Validation
Release Release
DEPLOYMENT PHASE
Production Ramp-upProduction Ramp-up
SustainingSustaining
Retirement Retirement
MarketingProjectmanagement
Technology
Engineering
Manufacturing
STRATEGY AND PLANNING PHASE
…
Services
…
©Massachusetts Institute of Technology - Bing Liu, WP Seering 4
SDM
Research Questions
What are the most important process elements (PEs) to product development?
Are they important in different ways, and why so?
How capable is an organization at each of PEs?
How can we help organizations improve their product development capabilities?
“Who, what, where, how, and why? “
©Massachusetts Institute of Technology - Bing Liu, WP Seering 5
SDM Research Framework
To identify various factors and process elements in product development
352 PEs were identified from the review of both academic research and industry practices
To identify various factors and process elements in product development
352 PEs were identifi
Archival AnalysisExploratory
ed from the review of both academic research and industry practices
To assess the importanSurvey
Assessment Tool Development
ExperimentExplanatory
ce of each PE and to identify organizational capabilities to these elements
86 people participated the survey during CIPD Conference in October, 2002. 83 valid responses
Statistical models used to analyze relationship between PEs and factors, e.g., industry sector, financial performance, professional experience, etc.
To assess the importance of each PE and to identify organizational capabilities to these elements
86 people participated the survey during CIPD Conference in October, 2002. 83 valid responses
Statistical models used to analyze relationship between PEs and factors, e.g., industry sector, financial performance, professional experience, etc.
Descriptive
Case study
©Massachusetts Institute of Technology - Bing Liu, WP Seering 6
SDMLiterature Review
- Academic Research
Framework to audit technical innovation. Four core processes: concept generation, product dev., process innovation, and technology acquisition.
A reference model of mature practices in a specific discipline, used to assess a group’s capability to perform that discipline.
Overall new product performance measured program profitability and program impact.
A framework for new product development process improvement.
Product development as rational plan, communication web, and disciplined problem solving. Comprehensive literature review.
Product development in the perspective of decision making. Comprehensive review of the literature.
Key findings
45Development of a Technical Innovation AuditV. Chiesa, P.
Coughlan, C.A. Voss
78Capability Maturity Model Integration (CMMI) V 1.1
CMU SEI
43Benchmarking the Firm’s Critical Success Factors in New Prod. Dev.
R.G. Cooper, E.J. Kleinschmidt
135Speeding New Products to MarketU. of Cambridge
98Product Development: Past Research, Present Findings, and Directions
S.L. Brown, K.M. Eisenhardt
65Product Development Decisions: A Review of the LiteratureV. Krishnan,
K.T. Ulrich
# of PEsPublicationAuthors
©Massachusetts Institute of Technology - Bing Liu, WP Seering 7
SDMLiterature Review
- Industry Practices
industry
industry & research
industry
research & industry
industry
government
industry
Category
54Proprietary 7 elements product development process model: includes decision making, technology management, pipeline management, etc.
Setting the PACE in Product DevelopmentM.E. McGrath
A matrix based model to assess product development process
A Malcolm Baldrige based, seven-category project management assessment tool. Considers platform and product complexity issues.
A proprietary benchmarking tools that cover 10 majors areas of product development.
“A lean enterprise is an integrated entity which efficiently creates value for its multiple stakeholders by employing lean principles and practices.”
A phase based product development process
A “comprehensive” assessment tool to address business process effectiveness from a business and quality management perspective.
Key findings
120Xerox Engineering Excellence Process Strategy
Xerox
76PERFORM Process Assessment Product Genesis Inc.K.N. Otto
201Global Best PracticesArthur Andersen
56Lean Aerospace Initiative, MITMIT LAI Center
49The PDMA handbook of New Product Development
PDMA
86Malcolm Baldrige National Quality Awards Criteria NIST
Malcolm Baldrige National Quality Awards (MBNQA)
# of PEsPublicationAuthors
©Massachusetts Institute of Technology - Bing Liu, WP Seering 8
SDM
Process Elements Abstraction
1 2 43 5 6 7
PE x
notimportant
somewhatimportant
veryimportant
extremelyimportant
......
.............
352 processes compressed
to 140
©Massachusetts Institute of Technology - Bing Liu, WP Seering 9
SDM Survey Sample
Not
Impo
rtant
Som
ewha
t im
porta
nt
Ver
y im
porta
nt
Extre
mel
y im
porta
nt
Not
cap
able
Som
ewha
t cap
able
Ver
y ca
pabl
e
Extre
mel
y ca
pabl
e
1. Establishing core concept of the product 1 2 3 4 5 6 7 1 2 3 4 5 6 7
2. Market positioning of the product 1 2 3 4 5 6 7 1 2 3 4 5 6 7
3. Selecting the product architecture 1 2 3 4 5 6 7 1 2 3 4 5 6 7
4. Setting the priority among product requirements 1 2 3 4 5 6 7 1 2 3 4 5 6 7
5. Making the correct make-buy decisions 1 2 3 4 5 6 7 1 2 3 4 5 6 7
6. Establishing a prototyping plan 1 2 3 4 5 6 7 1 2 3 4 5 6 7
7. Setting production ramp-up plans 1 2 3 4 5 6 7 1 2 3 4 5 6 7
8. Choosing cross functional representation PD team 1 2 3 4 5 6 7 1 2 3 4 5 6 7
9. Making investments in infrastructure, tools and training 1 2 3 4 5 6 7 1 2 3 4 5 6 7
10. Coordination among and transition between development process phases
1 2 3 4 5 6 7 1 2 3 4 5 6 7
11. Setting milestones for prototype 1 2 3 4 5 6 7 1 2 3 4 5 6 7
12. Focusing on continuous improvements 1 2 3 4 5 6 7 1 2 3 4 5 6 7
How important is each to achieving success in product development?
How capable is your company at each?
©Massachusetts Institute of Technology - Bing Liu, WP Seering 10
SDM How important is each to PD success?
non-negotiable to meet customers’, stakeholders’,
and competitive requirements.
relentlessly inspected by my senior management.
failure implies vast infusion of unplanned resources.
high priority, but negotiable.
reviewed on exception by senior management.
failure recoverable with incremental resources.
nice to have.
delegated to trusted employee/manager.
failure recoverable with only extra effort.
will not spend time or resources on this.
not cost-effective to address.
Extremely Important
Very important
Somewhat important
Not important
©Massachusetts Institute of Technology - Bing Liu, WP Seering 11
SDM How capable is your company at each?
Extremelycapable
VeryCapable
Capable
Notcapable
produces unprecedented performance.
redefined the process and practice.are disruptive to competitors.
produces benchmark results.
is supported by integrated engineering, cross-functional teams and processes.
has visible strong senior management leadership.
produces acceptable and predictable results.
have islands of local practice and optimization.
follows conventional practices.
produces acceptable results, but not consistent.
isolated and inconsistently practiced.
skill not widely available in the organization.
©Massachusetts Institute of Technology - Bing Liu, WP Seering 12
SDM• Company size by employees:
• Industry sector of your firm _____________________________________________________________________________
• Your years of professional experience _________ years
• % of your professional experience in ….planning …………………… ____ % design ………………………... ____ %development ……………… ____ % integration and test ………... ____ %sales/consulting ………….. ____ % maintenance and support … ____ %
• How successful would you say your company has been recent years in these areas?
Market share results …………… …..Profitably ………………………………Customer satisfaction……………….Organizational effectiveness……….Product Quality ……..………………..
• Optional (privacy is guaranteed)
Name _____________________________________e-mail ________ __________________________ _ phone ________-________-______________
1000500 2500+100 20001500
I want to receive updates and to participate in the research _____yes_____no
1------2------3------4-----5-----6------7
verypoor average good exceptional
1------2------3------4-----5-----6------7
1------2------3------4-----5-----6------71------2------3------4-----5-----6------71------2------3------4-----5-----6------7
©Massachusetts Institute of Technology - Bing Liu, WP Seering 13
SDM Descriptive Statistics: Industry Sectors
8.2%
8.2%
4.7%
2.4%
15.3%
3.5%
7.1%8.2%
5.9%
4.7%
17.6%
14.1%
Missing
Other
Heavy metal
Finance, banking
Electronics
Food, agriculture
Biotech, medicalIT, Softw are
Defense
Aero
Auto
Manufacturing
©Massachusetts Institute of Technology - Bing Liu, WP Seering 14
SDM
Descriptive Statistics: Companies’ Size
COSIZE
Company size
25001500
14001300
800750
600500
400300
120100
25
Num
ber o
f res
pons
es
60
50
40
30
20
10
0
©Massachusetts Institute of Technology - Bing Liu, WP Seering 15
SDM
The Professional Experience of Participants
Years of experience
37.535.0
32.530.0
27.525.0
22.520.0
17.515.0
12.510.0
7.55.0
2.5
Num
ber o
f res
pons
es
14
12
10
8
6
4
2
0
Std. Dev = 8.52 Mean = 19.6
N = 82.00
©Massachusetts Institute of Technology - Bing Liu, WP Seering 16
SDM Ten Most Important PEs in PD
Determining the product's competitive advantages5.710.
Promotion of a culture that supports teamwork5.79.
Development of program schedule5.88.
Establishing, maintaining customer relationships5.87.
Maintaining knowledge of the competitive environment5.96.
Decision making in development process5.95.
Making appropriate levels of resource commitments, people and dollars
5.94.
Regulatory compliance5.93.
Product validation5.92.
Product testing6.01.
©Massachusetts Institute of Technology - Bing Liu, WP Seering 17
SDM
Most Agreed Important Processes(rated by all participants)
Identifying customer needs by market segment0.955.57
Product validation0.955.89
Decision making in development process0.955.86
Collecting knowledge about competitive intensity of the market
0.935.21
Motivating breakthrough ideas0.925.38
Promotion of a culture that supports teamwork0.915.70
Selecting capable project leaders0.895.69
Controlling schedule slips and slip-rate 0.885.44
Employee retention0.845.42
Making appropriate levels of resource commitments, people and dollars
0.825.86
©Massachusetts Institute of Technology - Bing Liu, WP Seering 18
SDMImportance vs. Agreement (by all participants)
0.75
0.95
1.15
1.35
1.55
1.75
1.95
4 4.5 5 5.5 6
importance
stan
dard
dev
iatio
n
Product testing
Making appropriate levels of resource commitments, people and dollars
©Massachusetts Institute of Technology - Bing Liu, WP Seering 19
SDM Correlation Between PD Capabilities and Performance – Market Share (1)
2.5
3
3.5
4
4.5
5
5.5
6
1 2 3
Market Share
Ave
rage
Cap
abili
ties
Promotion of a culture that supportsteamwork
Forecast ing manufacturing volumes
Transit ioning the product to the salesfunction
Making the correct make-buy decisions
Meeting projects financial goals
Development of program schedule
Sett ing production ramp-up plans
©Massachusetts Institute of Technology - Bing Liu, WP Seering 20
SDM
Product Development Cycle Revisit
STRATEGY AND PLANNING PHASE
EXECUTION PHASEPlanningPlanning
Concept selection Concept selection
Design Design
Development & implementation Development & implementation
Program/project management Program/project management
Product definition Product definition
Unit Test Unit Test
Internal Validation Internal Validation
External Validation External Validation
Release Release
DEPLOYMENT PHASE
Production Ramp-upProduction Ramp-up
SustainingSustaining
Retirement Retirement
MarketingProjectmanagement
Technology
Engineering
Services
Manufacturing
…
…
Setting production ramp-up planSetting production ramp-up plan
Transitioning product to the sales
Transitioning product to the sales
Making correct make-buy decisionMaking correct make-buy decision
Forecasting volume production
Forecasting volume production
Promotion of culture that supports team work
Promotion of culture that supports team work
Meeting project financial goalMeeting project financial goal
Development of program scheduleDevelopment of program schedule
©Massachusetts Institute of Technology - Bing Liu, WP Seering 21
SDMCorrelation Between PD Capabilities and Performance – Market Share (2)
0
1
2
3
4
5
6
7
Reu
se o
fD
eman
ding
Mak
ing
proj
ect
Enco
urag
ing
Man
agem
ent o
fPr
omot
ion
of a
Fore
cast
ing
Tran
sitio
ning
Mak
ing
the
Mee
ting
Hav
ing
and
Assi
gnin
g cl
ear
Dev
elop
men
t of
Def
inin
g th
eSe
tting
Leve
ragi
ngM
arke
tPr
oduc
ing
Man
agin
gM
aint
aini
ngId
entif
ying
Mai
ntai
ning
aO
btai
ning
and
Mov
ing
Mot
ivat
ing
Esta
blis
hing
aSe
tting
Build
ing
the
Setti
ng th
eD
eter
min
ing
the
Cla
rific
atio
n of
Mak
ing
good
Dev
elop
ing
orM
easu
ring
and
Tran
slat
ing
Def
inin
gD
efin
ing
Build
ing
the
Esta
blis
hing
Mai
ntai
ning
aPi
ckin
g pr
oduc
tIm
prov
ing
wor
kEs
tabl
ishi
ngD
evel
opin
g th
eD
evel
opin
gC
ontro
lling
Setti
ng th
eSe
tting
a c
lear
Dev
elop
ing
Setti
ng th
eFo
ster
ing
Asse
ssin
g
low m arketshare
m ediumm arketsharehigh m arketshare
©Massachusetts Institute of Technology - Bing Liu, WP Seering 22
SDMCorrelation Between PD Capabilities and
Performance – Profitability (1)
2
2.5
3
3.5
4
4.5
5
5.5
6
1 2 3
Profitability
Ave
rage
Cap
abili
ties
Making good use of projectperformance metrics
Maintaining a process for conflictresolution and enforcement
Linking project benefits tocorporate goals
Meeting projects financial goals
Leveraging strengths oforganizational culture
Having senior management setcultural and behavioral norms forproduct development process
©Massachusetts Institute of Technology - Bing Liu, WP Seering 23
SDMCorrelation Between PD Capabilities and
Performance – Profitability (2)
0
1
2
3
4
5
6
7
low prof it
medium prof it
high prof it
©Massachusetts Institute of Technology - Bing Liu, WP Seering 24
SDM Research Benefits
Provide a framework to determine the importance of product development processes and their relationship with organizational capability.
Provide an assessment vehicle that helps organizations assess their capabilities and make improvements.
Improve predictions of project outcomes.
©Massachusetts Institute of Technology - Bing Liu, WP Seering 25
SDM Next Steps
Compare survey findings with references, and assess how well each reference predicted importance
Check self-assessment of output metrics with market assessment of their performance
Construct a prototype assessment vehicle for program level activities
Conduct field trials to determine completeness and effectiveness of assessment prototype.