New Product Development Process

Market Front end Product Realization

Opportunity
Product
Product
Idea
Realization
Process
Technology
Opportunity

Real
Product

1
 Views of Successful Product
Realization
● Heroic Age
–Creative geniuses,
–Driven by their understanding of project needs,
shielded from management presentations, etc,
–Put in long days and nights,
–And create break though products


2
Charles Ginsberg et al with the Ampex VRX-1000
3
 List of Famous Failures
Famous System Failures
Name Year Reference W as
do
req
Chapman, et al.
Hubble Space Telescope 1990
(1992)
Ariane 5 missile 1996 Kunzig (1997)
SuperConducting
1995 M oody, et al. (1997)
SuperCollider
G E rotary compressor Chapman, et al.
1986
refrigerator (1992)
M otorola, Iridium 1999
Chapman, et al.
IBM PCjr 1983
(1992)
4 Feynman, Tufte
(A. T. Bayhill)
Space Shuttle Challenger 1986
 Views of Successful Product
Realization
● Heroic Age
–Creative geniuses,
–long days and nights,
– etc
–break though products
●
● Repeatable Disciplined Product Realization
–Talented people,
–Following well understood processes
–etc
–break though products, time after time

5
 GE Medical Systems

LightSpeed CT Scanner TM

GEs First DFSS System (‘98): Leading-Edge Technology

Full Use of Six Sigma/DFSS Tools •World’s first 16-row CT detector
•Multi-slice data acquisition
•Key customer CTQs identified •64-bit RISC computer architecture
–Image quality •Long-life PerformixTM tube
–Speed •
–Software reliability
–Patient comfort
•Disciplined systems approach: 90 system Head
CTQs
•33 Six Sigma (DMAIC) or DFSS projects
•Scorecard-driven Abdomen
•Part CTQs verified before systems integration
Results
•Better image quality
–Earlier, more reliable diagnoses
–New applications: vascular imaging,
pulmonary embolism, multi-phase liver
studies, ...
•Much faster scanning:
–Head: from 1 min to 19 sec (9 million/ yr)
–Chest/abdomen: from 3 min to 17 sec (4
million/yr)
•Clinical productivity up 50%
•10x improvement in software reliability
•Patient comfort improved - shorter exam time
•Development time shortened by 2 years
“Biggest
“Biggestbreakthrough
breakthroughin
inCT 6in•High
CTin
market share; significant margin increase
aadecade,”
decade,”GaryGaryGlazer,
Glazer,Stanford
Stanford
 Disciplined Product Realization
● “toll-gate” processes …
●
● tools
●
●
Examples
●
● •Multigeneration Product Planning
● •Customer – Requirements Definition
● •Technical Risk Management
● •Management and Control of Defects
●
•Supplier Management
●
•Reliability Engineering
●
●
● Engineering/Business Decisions with everyone “on the same
page”

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 Toll-Gate Process Example*

Prod Test,
Anal Phase Phase
uct Debu
ysis 1 2
Plan g

Require- Visual Code Product

ments Freeze Freeze release
agreement = Req.
Freeze Gate 3
Gate 1 Gate 4
Gate 2
•Gate 2: Requirements nailed
•Gate 3: All functions working
•Gate 4: Bugs and performance acceptable

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* After Steve Maguire, Microsoft
Toll Gate and “Concurrent Engineering”
● “Concurrent Engineering” is an “abstraction” of
effective interaction of cross functional teams
Requirements
Definition

Concept development

Product design Preliminary process

design

Pilot production/testing Final process design

Product Launch /
Production Scale-up •Toll gate is a “prescription” for
developing products ….
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 Concurrent Engineering in a Toll-Gate
Process
● Modification of cast metal refrigerator
handle

Design Detailed
Busines and Product Initial Full
s Process and Producti Producti
Case Confirma Process on on
tion Design

1. Program 2. Technical
Contract Signoff, Order
Checklist for tollgate 1: long lead items
•Program Definition
•Program Plan •When should we confirm
•Program Resources that are no patent
•Production cost interferences?
•Technical risk •When should we review
•Return on safety (sharp edges or
Investment 10 pinching little fingers)?
 Tool Example: Robust Design
(Taguchi)
● Reducing product failure is valuable - for the
customer and for the business
–
● Robust design
–Rational decisions based on analysis and
“designed” experiments
–Account for variability in manufacture and
use

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 Robust Design and Appliances

Magtag
Repair history of Side Figidaire
by Side Refrigerators SubZero
with Icemakers 1999-
Amana
2003
(From Consumer GE Monogram repairs (%)

Reports) GE

KitchenAid

Kenmore

Whirlpool

0 10 20 30 40

● All manufacturers take robust design concepts seriously

● But some do better than others, with some consistency

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 Business/Engineering Decisions - Quiz
•Rarely enough resources to hit all the targets
–performance of the product (or service)
–cost of development and production
–time for development before the market window starts to
close
–
Quiz
How do technical and business people in a world class
competitive company respond when constraints close in?
1.Report to upper management that everything is fine, and
start circulating your resume
2.If the first prototype works, ship it and hope that the
production units will all work too
3.Throw in the towel
4.Turn the experience into a Dilbert cartoon
5.Manage the conflicting requirements as part of a data-
driven, disciplined process with engineers and managers
on the same page
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 Process Discipline and Bureaucracy
● All disciplined processes entail some bureaucracy
●
● Some processes are clearly valuable, some are a waste of
time, and some can go either way

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The Next Quality Initiative

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Effective Product Development
Process
● Develops great products that
–work in real use environments
–appeal to customers (beyond just
working)
–have low cost of production and
delivery
● Develops products fast
–meet market windows, recover
investment
● Develop products efficiently
–Low development cost

Business Success

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 Product Planning Decision
Market
Product Planning
Opportunity

Product Product
Idea Realization
Process
Technology
Opportunity

Real
Product

● Product Planning
–Lots of great ideas
–Fund only those that will contribute most to business
success

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 Specific Types of Product Planning
Decision Processes

● Quantitative return on investment (ROI)

calculations based on discounted cash flow
projections


● Qualitative view of factors based on data +

opinions


● Overriding strategic consideration



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 Return on Investment (ROI)

ROI = return on investment

For equity funding, this is the
a same as Discounted Cash-flow
Cash flow

Rate of Return
b Higher for a, than for b,
since a returns cash sooner

Payback time is sometimes used

time as a surrogate for ROI
Payback Higher ROI usually means
time for b shorter payback
Payback
time for a

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 Funding Decision Process
● Always more items that can be funded
● How do we decide?
● Whether informal or formal, there is a
decision matrix like this at work:
Example for A B C AxBxC cum$ (M)
$25M program
budget
Project a 35% .8 1.2 34% 10
Project b 45% .6 1 27% 23
Project c 30% .7 1.2 25% 35
“Below the line”
A = return on investment (ROI) if successful
B = discount factor because of risk that we will not be so successful
C = hard to quantify factors, like strategic fit

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ROI – Based Decision Making

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