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Group 2 six myths of product development final

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CRISIL Limited
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The document discusses six common myths of new product development: 1) That high utilization of resources improves performance, but it can actually increase wait times and delays. 2) That processing work in large batches is more efficient, but it can increase transaction and holding costs. 3) That sticking to the original development plan is crucial, but requirements often change, requiring flexibility. 4) That starting projects early means finishing early, but premature projects may waste resources on obsolete work. 5) That more product features increase customer satisfaction, but too many can make products complicated. 6) That getting it right the first time leads to more success, but allowing iteration and learning from failures is better.

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Six myths of Product Development Group 2 Raghav Rishav Shivali Somya Suryoday Ujjwal
The conventional approach New Product Development (NPD) is treated like a manufacturing process The Outcome • Pressure to deliver on predictable schedules • Minimize cost ,schedule variances and waste • This impedes the NPD process Six Fallacies of New Product Development High Utilization can improve performance Large work batches can improve performance Sticking to Original Development Plan Start early, finish early Customers like more features Need to get everything right the first time Introduction
Myth 1-High Utilization of Resources will Improve Performance Rationale provided • Projects take longer time to complete when resources are not fully utilized . • More the time taken, more will be the cost of resources incurred . • Low utilization is a result of a lack of discipline . Reasons for Fallacy • Ignoring intrinsic Variability of Work due to the nature of the process • Not understanding how queues affect economic performance . • Low utilization means high WIP inventory ,but WIP cannot be seen in a product development process • The role of how performance is measured and rewarded
Causes of Fallacy Ignoring intrinsic Variability in the work • Many aspects of NPD are by their nature, variable . • In a transaction processing approach, any increase in work (utilization) leads to a linear increase in the time required . • However, in cases of high variability ,an increase in utilization leads to a non-linear increase in waiting time Lack of understanding of economic performance • High utilization leads to queuing of work ,causing delays . • Queues delay feedback ,which lead to problems getting detected in advanced stages, resulting in a higher cost of resolving them . • Managers may not understand and measure the economic costs of queues and trade-off between underutilization and queuing costs . Measuring and accounting for WIP is not possible • Unlike mfg process , in and NPD, the inventory is intangible-information . • Measuring and accounting for this information is mostly subjective and invisible .
Suggestions for Improvement Change the MIS • Need to look at redefining the performance measures and reward systems . Selectively Increase capacity • Monitor and increase capacity in high utilization and bottleneck processes . • Easiest to implement in areas where testing is carried out in an automated manner . Limit the no. of active projects • This will ensure lesser chances of overshooting the deadlines ,sharper focus, and clearer priorities . Make the WIP easier to see •Use of visual control boards, e.g. Post-it notes Add a capacity buffer •Examples of Google, 3M-but may not be easy to implement
Myth 2: Processing work in large batches improves the economics of process • Another cause of queues in product development is BATCH SIZE • For a 200 component product either build all 200 parts before testing or build 20 before testing and therefore decrease batch size by 90% • Changes in batch size affect • Transaction Cost • Holding Cost
Myth 3: Our development plan is great; we just need to stick to it • Misconception: Once the plan is made, sticking to it crucial • Applicable only when tasks are highly repetitive, like manufacturing routine products • In NPD, requirements change at every step; this myth results in poor product innovation • Regardless of the plan, adaption is needed to tackle the problems • Regardless of the perfection of the plan, flaws would be there; test and refinement are needed • Need to keep flexibility in cost incurred during product development, to add value to final product • Hard to understand customer needs at the outset f product development; also competition may increase while development stage, changes need to be made accordingly
Myth 4: The sooner the project is started, the sooner it will be finished • Common Misconception: We have time to kill, lets start a new project. After all anything accomplished on the new project is work today won’t have to be done tomorrow • Wrong: Any preparation done for a newborn project can easily be rendered obsolete. Newborn projects dilutes the resource pool • Hard Truth: Idle time is anathema, but we have to stick to unfinished projects so that we do not spend unnecessary time and money • Little's Law: Cycle time is proportional to the size of the queue divided by the proportional rate • You can shorten the cycle time by raising the processing rate or by reducing the number of jobs under way
Myth 5:The More features we put into a product, the more customers will like it • Misconception: Adding features creates value for customers • Results in extremely complicated offerings • Examples: Remotes, Car Panels etc • Outliers : Auto setting Hi-fi systems by Bang & Olufsen • To really implement the “less can be more” requires effort in: • Defining the problem • Determining what to hide or omit
Myth 5:The More features we put into a product, the more customers will like it a) Define the Problem • Most important yet underrated part of innovation process • Essential for developing a clear understanding of what the goals are and generate the hypothesis that van be tested and refined through experiments • Involves deep research constant experimentation and understanding what delights the customer • Involves the observation and interview of future users, research on current competitors products and extensive secondary research
Myth 5:The More features we put into a product, the more customers will like it a) Determining what to hide or omit • “Showing –off” technical solutions not preferred by consumers– often products that solve problems the simplest way by getting to the underlying principle of the problem are most liked ( Steve Jobs’ philosophy for Apple’s products) • In an effort to be innovative, companies throw in unnecessary features– often omitted functions are not strategically decided but skipped to cut costs or as time doesn’t permit • Instead focused approach should be preferred ( “Hidden Potential” of the product should be unlocked with “ACE matrix”)
Myth 6: We will be more successful if we get it right the first time • Misconception: “more successful if we get it right the first time” • Impact: Biasing the NPD teams towards the least risky solutions • Reason: Failure leads to embarrassment and exposure gaps in knowledge which can undermine individual’s self esteem and standing in the organisation • Organisations approach: As they emphasize more on budgets, schedules etc, little incentive to pursue innovative solutions to the customers problems • What can be done: Tolerate “getting it wrong the first time” by letting the teams iterate rapidly and frequently and learn quickly from their failures • Experimenting with many diverse ideas • Deploy advanced IT tools and tap the full potential of them • Result: Eliminate poor options quickly and focus on more promising alternatives • Generate new information that innovator was unable to foresee
Practical Guidelines for Overcoming the Fallacies Make queues and Info flow visible Quantify cost of delays and factor into decision making Introduce resource slack where utilization is highest Shift focus of control systems from efficiency to response time Reduce transaction costs to enable smaller batches and faster feedback Experiment with smaller batches Focus on quick feedback rather than first-pass success Emphasize overlapping and iterative –not linear-process design Experiment early, rapidly and frequently Aim for simplicity : Ask what can be deleted Start projects only when ready to make full commitment Treat development plan as a hypothesis (evolve with info )
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Group 2 six myths of product development final

  • 1. Six myths of Product Development Group 2 Raghav Rishav Shivali Somya Suryoday Ujjwal
  • 2. The conventional approach New Product Development (NPD) is treated like a manufacturing process The Outcome • Pressure to deliver on predictable schedules • Minimize cost ,schedule variances and waste • This impedes the NPD process Six Fallacies of New Product Development High Utilization can improve performance Large work batches can improve performance Sticking to Original Development Plan Start early, finish early Customers like more features Need to get everything right the first time Introduction
  • 3. Myth 1-High Utilization of Resources will Improve Performance Rationale provided • Projects take longer time to complete when resources are not fully utilized . • More the time taken, more will be the cost of resources incurred . • Low utilization is a result of a lack of discipline . Reasons for Fallacy • Ignoring intrinsic Variability of Work due to the nature of the process • Not understanding how queues affect economic performance . • Low utilization means high WIP inventory ,but WIP cannot be seen in a product development process • The role of how performance is measured and rewarded
  • 4. Causes of Fallacy Ignoring intrinsic Variability in the work • Many aspects of NPD are by their nature, variable . • In a transaction processing approach, any increase in work (utilization) leads to a linear increase in the time required . • However, in cases of high variability ,an increase in utilization leads to a non-linear increase in waiting time Lack of understanding of economic performance • High utilization leads to queuing of work ,causing delays . • Queues delay feedback ,which lead to problems getting detected in advanced stages, resulting in a higher cost of resolving them . • Managers may not understand and measure the economic costs of queues and trade-off between underutilization and queuing costs . Measuring and accounting for WIP is not possible • Unlike mfg process , in and NPD, the inventory is intangible-information . • Measuring and accounting for this information is mostly subjective and invisible .
  • 5. Suggestions for Improvement Change the MIS • Need to look at redefining the performance measures and reward systems . Selectively Increase capacity • Monitor and increase capacity in high utilization and bottleneck processes . • Easiest to implement in areas where testing is carried out in an automated manner . Limit the no. of active projects • This will ensure lesser chances of overshooting the deadlines ,sharper focus, and clearer priorities . Make the WIP easier to see •Use of visual control boards, e.g. Post-it notes Add a capacity buffer •Examples of Google, 3M-but may not be easy to implement
  • 6. Myth 2: Processing work in large batches improves the economics of process • Another cause of queues in product development is BATCH SIZE • For a 200 component product either build all 200 parts before testing or build 20 before testing and therefore decrease batch size by 90% • Changes in batch size affect • Transaction Cost • Holding Cost
  • 7. Myth 3: Our development plan is great; we just need to stick to it • Misconception: Once the plan is made, sticking to it crucial • Applicable only when tasks are highly repetitive, like manufacturing routine products • In NPD, requirements change at every step; this myth results in poor product innovation • Regardless of the plan, adaption is needed to tackle the problems • Regardless of the perfection of the plan, flaws would be there; test and refinement are needed • Need to keep flexibility in cost incurred during product development, to add value to final product • Hard to understand customer needs at the outset f product development; also competition may increase while development stage, changes need to be made accordingly
  • 8. Myth 4: The sooner the project is started, the sooner it will be finished • Common Misconception: We have time to kill, lets start a new project. After all anything accomplished on the new project is work today won’t have to be done tomorrow • Wrong: Any preparation done for a newborn project can easily be rendered obsolete. Newborn projects dilutes the resource pool • Hard Truth: Idle time is anathema, but we have to stick to unfinished projects so that we do not spend unnecessary time and money • Little's Law: Cycle time is proportional to the size of the queue divided by the proportional rate • You can shorten the cycle time by raising the processing rate or by reducing the number of jobs under way
  • 9. Myth 5:The More features we put into a product, the more customers will like it • Misconception: Adding features creates value for customers • Results in extremely complicated offerings • Examples: Remotes, Car Panels etc • Outliers : Auto setting Hi-fi systems by Bang & Olufsen • To really implement the “less can be more” requires effort in: • Defining the problem • Determining what to hide or omit
  • 10. Myth 5:The More features we put into a product, the more customers will like it a) Define the Problem • Most important yet underrated part of innovation process • Essential for developing a clear understanding of what the goals are and generate the hypothesis that van be tested and refined through experiments • Involves deep research constant experimentation and understanding what delights the customer • Involves the observation and interview of future users, research on current competitors products and extensive secondary research
  • 11. Myth 5:The More features we put into a product, the more customers will like it a) Determining what to hide or omit • “Showing –off” technical solutions not preferred by consumers– often products that solve problems the simplest way by getting to the underlying principle of the problem are most liked ( Steve Jobs’ philosophy for Apple’s products) • In an effort to be innovative, companies throw in unnecessary features– often omitted functions are not strategically decided but skipped to cut costs or as time doesn’t permit • Instead focused approach should be preferred ( “Hidden Potential” of the product should be unlocked with “ACE matrix”)
  • 12. Myth 6: We will be more successful if we get it right the first time • Misconception: “more successful if we get it right the first time” • Impact: Biasing the NPD teams towards the least risky solutions • Reason: Failure leads to embarrassment and exposure gaps in knowledge which can undermine individual’s self esteem and standing in the organisation • Organisations approach: As they emphasize more on budgets, schedules etc, little incentive to pursue innovative solutions to the customers problems • What can be done: Tolerate “getting it wrong the first time” by letting the teams iterate rapidly and frequently and learn quickly from their failures • Experimenting with many diverse ideas • Deploy advanced IT tools and tap the full potential of them • Result: Eliminate poor options quickly and focus on more promising alternatives • Generate new information that innovator was unable to foresee
  • 13. Practical Guidelines for Overcoming the Fallacies Make queues and Info flow visible Quantify cost of delays and factor into decision making Introduce resource slack where utilization is highest Shift focus of control systems from efficiency to response time Reduce transaction costs to enable smaller batches and faster feedback Experiment with smaller batches Focus on quick feedback rather than first-pass success Emphasize overlapping and iterative –not linear-process design Experiment early, rapidly and frequently Aim for simplicity : Ask what can be deleted Start projects only when ready to make full commitment Treat development plan as a hypothesis (evolve with info )