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Methodology

In the area of New Product Development involving the use of globally distributed teams, there is not a lot research specific to this subject. Most documents focus on the area of distributed teams but not relating to new product development. A combination of articles specifically to virtually located teams and teams in new product development were read in order fully examine the subject. Most articles around distributed product development were specific to the Software industry so this narrowed the focus of the research. Articles on the importance of new product development were also reviewed in order to stress the importance of the subject. This literary review is based on articles from peer reviewed articles from ABS journals ranked from 1 to 4. When choosing the final articles, great care was given to pick up to date articles as well as established articles that had a high number of peer reviews. Unless highly rated, articles pre 1990 were ignored. Articles were chosen using Publish or Perish Software with the following keywords – New Product Development, Globally distributed teams, success factors and Agile. A mix engineering, human science and business journals were picked to ensure that there is diverse insight in the area.

Introduction The aim of this paper is to a conduct an investigation into the research completed into the area of Distributed New Product Development (DNPD). By completing a literary review into this area, it will allow us to analysis the current knowledge in this particular field of study and help determine where future research should be focused. A lot of research focuses on the reason why distributed product development teams are utilised however this literary review will focus on the use of distributed teams in the area of new product development (NDP) and explore the challenges and the benefits of such arrangements.

Firstly we need to define what a distributed team is. The literature all agrees on the concept of developing new products in different locations however different terms are used interchangeably to describe the same principle. These include “virtual”, “distributed” and “global”. (McDonagh, 2000) describes a Global NPD team as individuals that live in different countries (geographically dispersed) and are culturally diverse, while (Holstrom, 2006) defines the teams as separated by temporal, geographic and sociocultural distances. Holstrom goes on

Globally Distributed Teams in New Product Development: A Literary Review

Simon Griffiths (14201474)

Smurfit Business School, Blackrock, Co. Dublin

17th March 2015

Abstract

This paper presents the findings into a literature review of the subject of Distributed Global teams in new product development. The paper specifically looks at the area of how teams perform and the challenges that they face. Two main areas of focus are leadership and communication as these pose the greater challenges to successful product development in a distributed team environment.

It was found that the use of global teams in product development is fast becoming normal practice. It is no longer industry specific. What once was a result of cost cutting is now considered best practice as it allows companies to develop in the markets they wish to compete in. It encourages the use of cross functional teams which is vital in today’s new product development.

The results show that there are challenges in leading and communicating within global teams compared to the conventional co-located team. The paper shows the best practices in overcoming these challenges and points out the benefits to this way of working. Leaders need to show more boundary spanning skills when leading teams, while the key to communication is implementing effective processes. Further research is clearly needed in the area as technology is evolving at a faster rate which will change how global teams will interact in the future.

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to describe “distributed development projects are projects consisting of teams working together to accomplish project goals from different geographic locations.” In essence it can be agreed that product development is both globally distributed and virtual. Carmel (1999) describes distributed development projects as “projects consisting of teams working together to accomplish project goals from different geographic locations”. Hertel (2005) re-affirmed this is 2005, thus showing consensus for what distributed / virtual teams are. For the purpose of this paper we will refer to the concept as Global distributed teams in order to be consistent and defines them as teams working together towards a common goal while being separated by geography, culture and time. Technology has been the great enabler for Distributed product development teams to communicate. A lot of the research cites the explosion of teams due to the phenomenon of a connected world to allow these teams to function. (Daim, 2012) reaffirmed what was common place thinking as illustrated by Gildon (2004) and Eppinger (2006). Eppinger went further again in 2009, were he pointed out that teams require “tool, technologies, system and processes. This extension of technology illustrates that the processes need to be put in place in order to enable the technology correctly. The advance in technology enable the distributed nature of product development teams to interact however if it were not cost effective this would not materialise. (Badrinarayanana, 2008) makes the claim that this technology also enables “firms to interact and communicate with business partners in new cost effective ways” (Badrinarayanan, 2008). Cascio in 2002 splits the electronics communication into two parts “real time” or “move the issue” communication. The latter refers to the delay in the reply. With advances in real time communication and fast technology Cascio’s concerns are no longer relevant in 2015.

Having defined what a distributed team we need to define the main points of new product development and its importance to a company. As far back as 1995, Brown acknowledged the importance of product development as critical to a business as she described it as “the nexus of completion form many firms”, (Brown, 1995). Amaral (2012) goes one step further illustrating, that innovation and product development activities are the seen as the crown jewels within an organisation and Mc Donagh (2000) goes on to say without it a company would not survive and nowadays companies desires to compete on a global scale. This sentiment is still applicable today. Above the importance of new product development is acknowledged to be key to a successful business. (Sethi, (2001) tells us new product development is no longer

about developing products in isolation, Marketing , manufacturing , design functions all need to be involved from product conceptualisation to product completion. This concept is known as “cross-functional product development” and is well documented in the literature from Sethi in (2001) to Edmondson in (2009). Takeuchi (1986) talks about the new processes in new product development outlining the importance of the “rugby” approach. This approach describes the importance of using cross functional teams who are flexible and work hand in hand as a team and not working in silos. Ernst in 2002 reaffirms what Takeuci (1986) wrote about talking about “overlapping and parallel activities” with “cross-functional teams” Ernst (2002). Like all areas of working environment, team members should be multi-skilled as it is no longer enough to specialise in one functional area in new product development

This topic is important to research as globally distributed teams are no longer a concept or an ideal way of working; they are a fact of new product development. Gwanhoo makes the point that 90 per cent of the Fortune 500 companies use distributed software development teams (Gwanhoo, 2013). (Hertela, 2005) acknowledges the fact that Research and development is suited for the distributed team environment due to the fact that it is “information-based work”. Relating to global software development (Layman, 2006) has identified cited that GPD, “allows organizations to overcome geographical distances, to benefit from access to a larger resource pool, and to reduce development costs,” (Layman, 2006). He stresses the point even further and calls it a “critical business component. This is contrary to (Gassmann’s 2003] assertion that it is an “operational choice and not a company’s strategy”. Perhaps in 2003 this was an operational decision but more recently it is a strategic decision. Furthermore in 2011, Amaral adds to the point about a larger resource pool and cites the requirement to “satisfy local content regulations to gain access to markets” as well as getting “an insight“ into the local markets there (Amaral, 2011). Not only are different software modules developed in difference locations, Eppinger (2002) showed that it is common for hardware, software and the manufacturer of a company’s product to occur in different locations. What was once seen as a trend is now a reality. The more recent papers all acknowledge the benefits of modern globally distributed product development.

This paper focuses on distributed product development teams in new product development and examines the challenges they process in terms of Communication and leadership as these are the areas that are of most importance when successfully developing new products in a globally distributed environment.

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Leadership Requirements Leadership is important in any team organisation however due to the temporal, physical and cultural boundaries that exist, there are a different set of challenges. As a leader of a team may not be present with the team members, the traditional hierarchical structure of leadership does not exist. Like standard physically located teams the leader needs to be clearly defined and teams need to work synchronously with the leader. A leader must be a strong communicator and “establish standards for communicating contextual cues with each message to reduce the potential for misinterpretations” as outlined by (Zigurs, 2003). (Lee, 2009) makes the point that “participative” leadership is required which then implies that everyone within the teams needs to possess self-leadership characteristics in order to achieve project success. There is no reason why this cannot be extrapolated and applied to conventional teams.

Product development will only be successful if the team carry out the specific tasks required of it. Leaders need to set down clear expectations to the team re-enforcing the fact that all are responsible for the success of the project. (Daim, 2012) outlined the importance of this and cited the importance of “ownership at all levels in order for a new product development to succeed. Each member of the team should have clarity in what is expected from them. The importance of these processes are again emphasised by (Lurey, 2001) who stresses the importance of establishing “positive team processes”. One such process as suggested by (Lurey, 2001) is to create “team-based reward systems”. However this is not always possible in globally distributed product development as often the team leader is working with a third party supplier on an outsourced organisation. In these cases reward based systems will not work effectively. Amaral (2011) suggests that in these instances it is important to align the organisations objectives. This will require not only leadership from the project manager but leadership from the organisation as a whole.

Teams who are co-located are more likely to address issues more readily as they are more likely to confront issues in face to face scenario. Global teams by their nature may have language and cultural difference which add to the conflict. With this in mind, it is important for leaders to have “boundary-spanning skills” (Edmondson 2008). Studies have shown that if there are good communication and conflict resolution systems (Mc Donagh 2001) in place, then there is no reason why distributed product development cannot be a success. It is the leader’s responsibility to encourage communication and prevent misinterpretations that would scupper the success of a new product being developed (Zigurs, 2003). To overcome this locating the leaders together while the teams remain remote is a useful way to overcome this.

This is commonly used in the world of Agile distributed team software development. The aim of this is to allow them to communicate clearly together and then disseminate the information to their respective needs (Sutherland, 2007). As this is applicable to the software industry then it should be applied to other sectors.

The role of the leader in the virtual team still remains unclear. Hertela (2005) spoke about the requirement for further research in the area of training practices and in particular spoke of the need for a contingency model to be put in place to allow leaders and member to interact. It is widely accepted that governance of these projects are also becoming more complex due to the arrangements companies have put in place. Strong co-ordinating skills are required as recommended by Eppinger (2006). Due to diverse nature of these teams, leaders need to be diversity aware and need to be able to handle this diversity effectively. Hertel (2005) suggests that this can be overcome by leaders assigning more specific team roles and get employees to act like “cultural interpreters”. Again there is further requirement for training to make Leaders diversity aware.

Communication is critical to Success Due to the use of cross-functional teams in modern new product development, communication is key in all areas of the team dynamic. Patti (1997) describes the Drexler / Sibbet team performance Model as comprising of seven stages: orientation, trust building, goal/role clarification, commitment, implementation, high performance and renewal which is similar to the concept of Forming, Norming, Performing and Storming. In it he outlined the importance of face to face communication key to the orientation, trust building and renewing component of teams in product development. The goal / role clarification, commitment required same time communication, while the implementation stage outlined that communication can happen at different times. The Drexler / Sibbet Model still stands but the conclusion that orientation, trust building and renewing needs to be face-to-face are no longer applicable with the right processes put in place. Sosa (2002) goes one step further by saying communication is “an important factor” of R & D performance. A successful team is a team that trusts each other and this is built through communication. (Kirkmann, 2002) describes interpersonal trust as being built quicker when a team is co-located, specifically mentioning the importance of “non-verbal” communication. Badrinarayanan (2008) makes the point that once you leverage the advantages of “new communication

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technologies” distributed teams can take the positive parts of co-located teams.

Communications challenges are the biggest issues regarding distributed software development. Communication needs to be structured and formal as described by (Ramesh 2006), whereas agile relies on informal interactions also described by (Ramesh 2006). Both Ramesh and Sutherland have spoken about the importance of balancing formal and informal. By extension this can be applied to all businesses that use distributed development. Through the use of technology this can be overcome.

Barriers to communication and how to overcome them:

In the literature there have been three main boundaries that affect communication within a globally distributed product development team. These are classified as:

1) Physical or Geographical barriers. 2) Temporal boundaries. 3) Cultural boundaries.

Physical or Geographical barriers

This is the most obvious barrier as the team does not sit together. This physical barrier makes it difficult to initiate spontaneous communication which is deemed as key to cohesive teamwork (Kirkmann, 2002). This physical barrier reduces “face - to - face” communication which effects the creation of social bonds (Badrinarayanan, 2008). This can all lead to lack of trust which leads to conflict and misunderstanding (Badrinarayanan, 2008), (Daim 2012). As technology, specifically email is used to bridge this gap further confusion can be caused as people largely communicate through body language and the tone of their voice (Daim 2012). Furthermore using email “spelling and grammatical errors and the perception of impolite tones” (Dain, 2012) by email recipients can further exacerbate the situation. Creating relationships is important for team cohesiveness however social interactions are often seen as the only way to truly understand the strengths throughout a team.

In order to overcome the physical and geographical errors, correct communication processes need to be put in place. Cascio (2012) claims that the trust can be established by hitting checkpoints. Lurey (2002) conducted research into a number of companies were a number of the responses suggested that the distributed teams require structure to perform their work. Putting in the structures is one thing but good project management needs to be in place in order to ensure that these processes are followed correctly. (Sosa, 2002)

Within the software industry AGILE is being used more and more in the area of new product development. It is also accepted that new product development is now global. The agile methodology, “yields greater efficiency and quality” as described by (Sutherland, 2008). One of the 12 principles of AGILE is to have face to face conversation, organise ad hoc meetings, which is perfect for a co-located environment. In a globally distributed team, this is not possible and research has shown that globally distributed teams work well when there are strict procedures governing meetings (Daim, 2012). Sutherland (2008) showed that the Agile methodology had to be adapted by having a fixed meeting across the distributed teams and each team had to prepare before each meeting, thus increasing the speed of each meeting. The ad hoc nature is overcome by allowing each distributed team the ability to meet amongst themselves. In order to work each team must be highly skilled. For teams to work well together there must be trust (Ebert, 2001) which is a major contribution to the success of Agile teams. It is explored that systems need to be put in place to allow agile to work effectively. Rigid agile process needs to be tweaked as the project goes on (Ramesh, 2006). Typical Agile teams require minimal co-ordination however in a distributed form it is required to “informal communication among the team members was facilitated through formal channels” (Ramesh, 2006). This again illustrates the need for processes to be followed.

Temporal Barriers & Cultural Issues

With teams potentially working around the world in different time zones and by that extension in different countries with different cultures, temporal and cultural barriers are key areas that need to be understood. Working in different time zones can create “serious communication bottlenecks” Ramesh, (2006). This is predominantly due to the fact that “synchronous communication as discussed by (Holmström, 2006) is not possible. By not replying in a timely fashion can lead to lack of trust as delays cause a lack of communication and lead to a breakdown in project work. In order to overcome these issues it is accepted in the literature that “protocols and process be put in place”, (Daim, 2012).

For time sensitive product development this round the clock approach is beneficial as it allows for the possibility to “achieve round the clock development” (Herbsleb, 2001). This approach will help speed up the acceleration of the development. (Mc Donagh, 2001) and (Herbsleb, 2001) has discussed the benefits of this approach citing America and Japan as countries that have seen the benefit in software projects.

Synchronisation of communication is required and the 24 / 7 module does not work affectively as found in (Ramesh, 2006) which is seen as a benefit to globally software

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developed countries as seen in (Mc Donagh, 2001). However one of the advantages in (Gwanhoo, 2013) cites global software development as an advantage of new product development. In the Agile world, there is a lack of good record keeping due to the disruptive style to product development however with “temporal distance”, (Holmström , 2006) the use of emails are heavily relied upon. The advantage of this is good record keeping which is vital in new product development (Holmström, 2006).

Cultural diversity does not just represent the cultural differences that exist from country to country. Different units in a globally distributed team will have conflicting processes, behaviours and differences in work styles. Furthermore they may fundamentally have different values systems (Badrinarayanan, 2008). These can be overcome if there are proper processes put in place by the host organisation or the leadership team. Once the cultural expectations are set around performance and location transparency between all globally distributed teams then these cultural boundaries can be overcome. (Sutherland, 2007). In the area of product development (Hertel, 2005) suggests that this cultural difference can help provide synergies that may not normally exist in a co-located team. It is said that diversity can be advantageous for complex team tasks that are not always well defined and require creative thinking along with integration of data. (Hertel, 2005).This fact alone should be considered when developing new products as creativity is the key to innovation.

Conclusion & Discussion The use of distributed teams is used heavily in organisation’s new product development divisions. What started out as a necessity driven by cost is now considered a vital tool in the development of new products. Organisations believe that they can get a competitive advantage by locating cross functional teams in their target market. Using personnel from different cultural backgrounds can also foster new ideas that would otherwise not have been thought of.

The article concludes that there are two main areas that organisations need to address when utilising distributed teams in new product development. Firstly, leadership has the extra complication of having to deal with temporal, physical and cultural boundaries. Leadership in a traditional hierarchical structure is no longer enough and leadership needs to be a partnership. All stakeholders involved need to show self-leadership qualities. New product development will fail if tasks are not carried out, so it is important for a leader to ensure that this occurs. The world of literature is still unclear of what future

requirements are needed for leaders and further research is required in this area.

Communication is critical to the success of any new product and the correct functioning of a team. With the distributed nature of the team, communication is affected by cultural, temporal and distance barriers. Face to Face communication is no longer possible and as a result this can impact the ability to converse without ambiguity and to build trust. With the implementation with directives and procedures, this can be overcome. Surprisingly enough the use of Agile methodology works well in this environment which is counter intuitive considering the informality of communication normally associated with Agile methods.

More focus and research needs to be done into product development that is not software based. The original focus of this document was to look at distributed product development for all industries but there are very few articles that were not related to the IT / Software industry. The current body of research focuses on globally distributed teams within organisations however there does not seem to be research on how teams in one organisation interact with those of another. As teams are cross functional as well as cross organisational, this should be looked at more closely.

Distributed teams in all industries are quite new considering the long history of teams. Perhaps we will just evolve to not requiring the physical location and distributed ways of working will just become engrained in our physique. The connected age is a relatively new and eventually humanity will overcome the current difficulties and embrace it as a way of working.

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