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Product Development Process Murray MacDonald, P.Eng. URRAY ACDONALD CONSULTING Copyright © 2010 Murray MacDonald Necessity of Product Development • New products are typically highly profitable – study1 indicates median ROI of 33%, avg of 96% • Product life cycles are shrinking – study2 indicates 4 x reduction in 50 years • Competitive pressures • Customer expectations “New Products is War” 1 Cooper & Kleinschmidt 2 A.D. Little URRAY ACDONALD CONSULTING Product Development Performance • One in 7 concepts are a commerial success 1 • One in 4 developed products are successful 1 • The “Best” companies have ~50% of sales 2 from new products (<5 years old) – The “rest” have 25% new products • Estimated 46% of resources spent on failures 3 How to be more successful? URRAY ACDONALD CONSULTING 1 A.L. Page 2 A. Griffin 3 PDMA survey Product Development Performance (Reasons for New Product Failures) • • • • Poor Market Analysis Technical Problems or Cost Insufficient Marketing Effort % of Failures Poor Timing Market Analysis Technical or Cost Marketing Effort Timing 0 URRAY ACDONALD CONSULTING 10 20 30 40 Successful Product Development • Doing the project right • Doing the right projects • Based on numerous historical studies Stanford Innovation Project Booz-Allen & Hamilton Song, Montoya-Weiss & Schmidt Cooper & Kleinschmidt URRAY ACDONALD CONSULTING New Product Process Goals • • • • • • • • Quality of Execution Sharper Focus, Better Prioritization Management of Risk Fast-Paced Parallel Processing Cross Functional Team Approach Strong Market Orientation (voice of the customer) Better Homework Up-Front Products with Competitive Advantage URRAY ACDONALD CONSULTING Stage-GateTM Process Gate 1 Stage 1 Scoping Gate 2 Stage 2 Bus. Case Gate 3 Kill Stage 3 Development Gate 4 Stage 4 Testing Gate 5 Stage 5 Launch Annual? Post Launch Review(s) TM RG Cooper & Associates URRAY ACDONALD CONSULTING Stage-GateTM – Gating • Defined Gate Keepers (variable per gate?) – with criteria for decision making • Concise and visible Deliverables – focus on information for decision making • Outputs: 1) Decision – Go/Recycle/Hold/Kill 2) Approved plan for next stage 3) Agreed deliverables for next stage URRAY ACDONALD CONSULTING Stage-GateTM – Risk Mgmt • Rule # 1 If uncertainty is high, keep stakes low • Rule # 2 Raise stakes as uncertainty reduces Uncertainty Uncertainty Stakes Idea Launch Stakes Idea ? Launch • Give conditional approvals – additional reviews, more planning URRAY ACDONALD CONSULTING Stage-GateTM - Implementation • Senior management commitment • Team for design and implementation – audit exiting, benchmark others • • • • Training & communication Metrics – visible, score card IT support Process Manager URRAY ACDONALD CONSULTING Stage-GateTM – Picking Winners • Recognize prioritization is a weak area – avoid “favourites”, be objective • Tough decisions based on consistent measures – benefits, portfolio management, financial model – Use scoring or checklist – formal record Project ABC - XYZ Criteria A Criteria B Criteria C Criteria D Criteria E Criteria F URRAY ACDONALD CONSULTING Stage 3 – Development & Validation • • • • • Clear project definition, expectations Quality of execution, records for verification Prioritize and focus Plan work, then work the plan Parallel activities - concurrent engineering – involving Marketing, Manufacturing, Quality,... • Customer testing or involvement - prototype vs production URRAY ACDONALD CONSULTING Product Development Portfolio (Product/Technology Strategy) • Need project mix of risk/resoucre/complexity New Technology or Risk Existing Feature Updates Derivatives New Platforms Restructuring Simpler Complex • Need long term strategy or road map – with reviews (annual?) URRAY ACDONALD CONSULTING Stage-GateTM Variations • Evolution to 3rd and 4th generation S-G • Scaling process to match risks – Express/Lite FuzzyGates – conditional decisions • Fuzzy – with planned follow up(s) – facilitates Concurrent Engineering • Incorporate Technology Development URRAY ACDONALD CONSULTING Stage-GateTM Variations Full Stage-Gate Gate 1 Stage 1/2 Bus. Case Gate 3 Stage 3/4 Dev.&Test Gate 5 Stage 5 Launch Post Launch Review(s) Stage-Gate Express Stage-Gate Lite Stage 1/2 Bus. Case Gate 3 Stage 3/4/5 Dev.&Launch Post Launch Review(s) TM RG Cooper & Associates URRAY ACDONALD CONSULTING Stage-GateTM Variations Gate 1 Stage 1 Scoping Gate 2 Stage 2 Assessment • Technology Development Gate 3 Stage 3 Detailed Investigation Gate 4 To New Product Gate 2 (sometimes Gate 1 or 3) – fundamental science or technology platform • Criteria more strategic than financial • Typically spawns multiple commercial projects URRAY ACDONALD CONSULTING Concurrent Engineering • Paralleling activities • Multidisciplinary teams • Requires: -Stable requirements -Communications -Planning • Better Products in Shorter Cycletimes More New Products URRAY ACDONALD CONSULTING Concurrent Engineering - Changes Cost of Changes (%) Concept Development Validation Production 1 Hawtal Whiting Inc. URRAY ACDONALD CONSULTING Activity Concurrent Engineering Product Planning Eng’g – Feasibility Historical Western Engineering – Design Testing – New Testing - Validation Activity – Feasibility Manuf’g Product-Planning Manuf’g Tooling Eng’g – Feasibility Engineering – Design Testing – New Testing - Validation Manuf’g – Feasibility Manuf’g - Tooling URRAY ACDONALD CONSULTING Concurrent or Japanese Product Development Tools • • • • • • • Risk Assessment – formal document/checklist Failure Modes & Effect Analysis (FMEA) Quality Function Deployment (QFD) Planning - MS Project Tolerance Analysis Test Plans – Functional & Stress Failure Analysis URRAY ACDONALD CONSULTING Risk Assessment • Risk is inevitable - the price of innovation • Identify Measure Assess Mitigate • Manage through the Stage-Gate process – use an assessment tool – reassess at each gate – looking for reductions • Part of Process Reporting URRAY ACDONALD CONSULTING Risk Assessment Risk Element Value Confidence Risk Plan? Mitigation Plan Comments Availability of Technology 1....10 1....4 VxC Y/N Supply Issues Time Scales Manufacturing Capability Capital Requirement Market/Customers Competitive Conditions Customer Commitment Pipeline (#,type) Patents/Legal Issues Total Weighted Risk Sum (VxC) from RELTEC Corporation URRAY ACDONALD CONSULTING Failure Mode & Effect Analysis-FMEA • Identify potential sources of failure • Assess Probability, Severity and Detection • Calculate Criticality or RPN (Risk Priority Number) = P x S x D (each with value 1 to 10) • Determine Action Plan as needed • Follow up on impact of Actions (if any) – as part of Gating decisions URRAY ACDONALD CONSULTING Failure Mode & Effect AnalysisFMEA Failure Mode and Effects Analysis Worksheet Facility:LLS Prod.TR1 Cabinet Description/PN:F787720 FMEA: Design/Process CAN00524P Document #:FMEA-R01 Team Members: x x x x x Date(Orig): x x x Date(Rev): Facilities Affected:LLS Design Responsibility: URRAY ACDONALD CONSULTING Action Taken 0 Detection R P N Person Responsible Occurrence Design Verification (Control) Resulting Conditions: Recommended Actions/Status Severity Potential Cause of Failure Detection Potential Effect(s) of Failure 0 Occurrence Potential Failure Mode Severity Existing Conditions: Item and Function R P N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 from Emerson Network Power Project Planning (MS Project) • Five “Ps” – Planning Prevents P... Poor Performance! • Using shared tool – across departments – possibly customers and suppliers – MS Project or other PDM • Early focus on “high level” and “flesh out” later – Add detail at each gate for next stage • Tracking and reporting (for Gates) URRAY ACDONALD CONSULTING Tolerance Analysis • Review of tolerance accumulation/buildup • Using one of: - critical only - sub system levels - computerized – statistical • Remedial - tighter tolerances - refined process - design change URRAY ACDONALD CONSULTING Tolerance Analysis Total tolerances ~ +/- 1.25 +/-0.35 +/-0.35 +/-0.10 URRAY ACDONALD CONSULTING 2 x 4.00 d +/-0.05 Tolerance Analysis Differential Amplifier R1a +/- %err R2a Vi 1 mV ~ Vo = R1/R2 Vi + ~4 x %err Vcom R2b R1b Vcom 1V ~ for R1/R2 = 100 , Vo = 100mV + URRAY Rerr = 1% 40mV ACDONALD CONSULTING 0.1% 4mV 0.01% 0.4mV Testing Plans • Need a Plan – detailed – Reflecting FMEA and Design Reviews input • Stress - Abnormal operation - Temperature (accelerated life) - Vibration - Stability • Failure Analysis URRAY ACDONALD CONSULTING Quality Systems – ISO 9004 • Document what you do – formal system Do what you document - auditable • Focus on deliverables and records from Gates • Reflect Continuous Improvement • Retain flexibility (using Express/Lite & Gates) • Document retention system URRAY ACDONALD CONSULTING Continuous Improvement • On agenda of an effective Post Launch Review • Create a knowledgebase – and foster design reuse • Add teeth to Gates and design reviews • Refine process and deliverables Plan Do Adjust Review URRAY ACDONALD CONSULTING Summary • • • • • Formal Stage-Gate New Product Process Effective Gates – with teeth Flexible – process variations, Fuzzy gates Shared tools – using IT Evolve process – continuous improvement Winning at New Products - Accelerating the Process from Idea to Launch by Robert G. Cooper URRAY ACDONALD CONSULTING (www.stage-gate.com) Q&A Product Development Process Murray MacDonald, P.Eng. URRAY ACDONALD CONSULTING