Download - Six Myths of Product Development
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6MythsOf Product Development
HBR’s 10 must reads on innovation
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Stefan ThomkeProfessor of Business AdministrationHarvard Business School
Donald ReinertsenPresident of Reinertsen & Associates
The authors
The full article is available at Harvard business review
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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
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Many companies treat
MANUFACTURINGproduct development
as it were
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The managers WANT
✔Detailed and predictable plans ✗Schedule variations
and waste
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It works for factories, but backfireswith product development
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Designing Products
Manufacturing Products
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Manufacturing is repetitive and predictable
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For product development
The output (information) can be anywhereRequirements
constantly change
The tasks are unique
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It is important to appreciate the difference and avoid fallacies
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6There are
that undermine product development
fallacies
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1.High utilization of resource will improve performance
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The managers overlookvariabilityOf development work
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The variability can cause delays dramatically as utilization increases
Resource Utilization
Waiting Time
50%25% 75%
30x
100%
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And, the increased R&D inventory due to delays is predominantly invisible because they largely consist of information
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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”
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2.Processing work in large batches will be more economical
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The managers incorrectly believe that large batches produce “economies of scale”
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Large batches do reduce the transaction cost, however, they increase the holding cost
Transaction Cost
Holding Cost
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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
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Optimal Batch Sizes
Astonishing results
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3.Teams need to faithfully follow their development plan
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The managers believe thatdeviations from the plan is poor management
and execution
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However, many events can disapprove the initial assumptions of the original plan.
New testing results
Unexpected information or ideas
Shift of customers’ preferences
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For all those reasons, sticking to the original plan can be a recipe for
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The plan should be treated as an initial hypothesis that is
constantly revised
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4.The sooner a project is started, the sooner it will be finished
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The managers believe that works started early do not need to be done later
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Such thinking usually leads to
Mooooooooooreprojects
a company can vigorously pursue THAN
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bite off more than you can chew
Don’t
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It will cause the dilution of resource
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It will cause the dilution of resource
DANGEROUS
And, it is
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ResourceInsufficient
E F
SlowProject Progress
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Project Duration
Cost and schedule overruns
Increases
Increase Exponentially
When …
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CONTROL RESISTNew project starting rate
Temptation to steal resource from ongoing projects
We must
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5.The more features a product has, the better customers will like it
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Product development teams seem to believe that adding features creates value for customers
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Companies that challenge the belief usually create products that are elegant in their simplicity
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To do that, the development team needs to define the problem clearly
problem
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It makes the team to FOCUS on the few features that really matter and determine what to hide or omit
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6.The project will be more successful, if the team “get it right the first time”
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Requiring success on the first pass biases teams toward the least-risky solutions
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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
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This process can cause project overruns because the
feedback of the problem is
delayed
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Fail early, fail often
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Rapidexperimentation
New information Diverse ideas
Crucial to innovation projects
i
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Summary
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6 FALLACIES
High utilization Large batch size Following plan strictly
Starting projects too soon
Too many features
The mindset of the first time right
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Avoid the mistakes and keep projects on track