CHAPTER 2

DEVELOPMENT PROCESSES AND

ORGANIZATIONS
 Sequence
 Functions of organization that take part in a product
development

 Three categories of organizational structure of a firm

and strengths and weakness of each

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 Product Development Functions
 Its an interdisciplinary activity and requires inputs
from many functions of a firm.
 Marketing

 Communication between the firm and its

customers
 Design

 Includes engineering and industrial designs

 Manufacturing

 Designing and operating the manufacturing

system
 Its also includes purchasing, distribution and
installation i.e Supply Chain

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 Product Development Organizations
 Essential areas of responsibility for product manager is
setting up the organizational structure of the product
development department.
 Org structure determine: “Who”(Who works together with whom
& who reports to who).
 Large organization: Formal structure required
 Small organization: Semi Formal / Formal structure required.
 Worst practice: Command and Control
 Command-and-control model does not work for product
organizations. Reasons are:-
 Motivation (Team needs to be motivated to do a great job).
 Shorter feedback loops (Immediate response to the customer
complaint).
 Empowered cross functional product teams.

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 Product Development Organizations
 Organizations are formed by Establishing Links
among Individuals.
 A prod Dev Org is the scheme by which individual
designers and developers are linked together into
groups.
 The links among individuals may be formal or
informal and main types are:-
1- Reporting relationships:-
 Reporting relationships give rise to the classic notion of
supervisor and subordinate.
 Reporting relationships refer to the accountability structure
within organization.
 To whom each employee reports and is accountable to.
 It is a formal link.
 Accountability and rewards.
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 Product Development Organizations
2- Financial arrangements:-
 Individuals are linked by being part of the same
financial entity, such as a business unit or department
within a firm e.g Meat section in a super store.

3- Physical Layout:- links are created between

individuals when they share the same office, floor,
building, or site. These links are often informal.

 Any particular individual may be linked in different ways

to other individuals. e.g, an engineer may be linked by
a reporting relationship to another engineer in a
different building, while being linked by physical layout
to a marketing person sitting in the next office.

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 Organizational Links May Be Aligned with
Functions, Projects, or Both

 Regardless of their organizational links, particular

individuals can be classified in two different ways:
 according to their function .
 according to the projects they work on.

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 Function & Project
What is function?
 A function (in organizational terms) is an area of
responsibility usually involving specialized education,
training, or experience.
 The classic functions in product development
organizations are marketing, design, and manufacturing.

What is project with respect to product development?

 In product development, a project is the set of activities in
the development process for a particular product and
individuals, e.g, identifying customer needs and
generating product concepts.

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 Functional & Project Organizations
Functional Organization:-
 In functional organizations, the organizational links are primarily
among those who perform similar functions e.g, a strict
functional organization might include a group of marketing
professional, all sharing similar training and expertise.
 Report to the same manager, who would evaluate them and set
their salaries.
 The group would have its budget and may sit in the same
building.
 Individuals may be involved in many projects.

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Various Product Development
Organizations
 Functional & Project Organizations
 Project Organization:-
 A strict project organization would be made up of groups of
people from several different functions.
 In project organizations, the organizational links are primarily
among those who work on the same project.
 Report to an experienced project manager, who might be from
any functional areas.
 Performance evaluation handled by the project manager.
 Work in the same office or part of building.

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Various Product Development
Organizations
 Matrix Organizations
Matrix organizations:-
 The matrix organization was conceived as a hybrid of
functional and project organizations.
 In the matrix organization, individuals are linked to others
according to both the project they work on and their
function.
 Each individual has two supervisors, one a project
manager and one a functional manager.

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 Example

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 Variants of the matrix organization

 Heavyweight project organization

 Lightweight project organization

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Various Product Development
Organizations
 Variants of the matrix organization
 Heavyweight project organization :-
 A heavyweight project organization contain strong project
links.
 Project Manager has complete budget authority.
 Project manager heavily involved in performance evaluation
of the team members and makes most of the major resources
allocation decisions.
 The functional managers have relatively little authority.
 A heavyweight project team may be called an integrated
product team (IPT), a designer build team (DBT), or product
development team (PDT).

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 Variants of the matrix organization
 Lightweight project organization :-
 A lightweight project organization contain weaker project links
and relatively stronger functional links.
 Project Manager is more of a coordinator and administrator to
update schedules, arranges meetings, and facilitate
coordination etc.
 Functional managers heavily involved in performance
evaluation of the team members and makes most of the
major resources allocation decisions, responsible for budget
and hiring and firing of staff.
 The project managers have relatively little authority and
control in the project organization.

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 Choosing an Organizational Structure
 The most appropriate choice of organizational
structure depends on which organizational
performance factors are most critical to
success.

 Functional organizations tend to breed

specialization and deep expertise in the
functional areas.

 Project organizations tend to enable rapid

and effective coordination among diverse
functions.

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Characteristics of Different Organizational
Structure
 Summary
 Functions of organization that take part in a product
development

 Generic product development steps

 Four different categories of products

 Three categories of organizational structure of a firm

and strengths and weakness of each

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 Q&A

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