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Practical cross-functional coverage of the entire product development process from idea generation through delivery of the final assembled product.
Peter A. Koen, Greg M. Ajamian, Scott Boyce, Allen Clamen, Eden Fisher, Stavros Fountoulakis, Albert Johnson, Pushpinder Puri, and Rebecca Seibert
The innovation process may be divided into three areas: the fuzzy front end (FFE), the new product development (NPD) process, and commercialization, as indicated in Figure 1-1. The first part-the FFE-is generally regarded as one of the greatest opportunities for improvement of the overall innovation process. Many companies have dramatically improved cycle time and efficiency by implementing a formal Stage-Gate(tm) (Cooper 1993) or PACE(r) (McGrath and Akiyama 1996) approach for managing projects in the NPD portion of the innovation process. Attention is increasingly being focused on the front-end activities that precede this formal and structured process in order to increase the value, amount, and success probability of high-profit concepts entering product development and commercialization.
The purpose of this chapter is to provide the reader with the most effective methods, tools, and techniques for managing the FFE. The chapter begins with a brief discussion of the literature and the rationale for developing the new concept development (NCD) model. The next section describes the NCD model. The remaining sections provide a description of the most effective methods, tools, and techniques to be used in eachpart of the NCD model.
LITERATURE REVIEW AND RATIONALE FOR DEVELOPING THE NCD MODEL
Best practices are well known at the start (Khurana and Rosenthal 1998) and within the NPD portion (Brown and Eisenhardt 1995; Cooper and Kleinschmidt 1987; Griffin and Page 1996) of the innovation process. Similar research on best practices in the FFE is absent. Many of the practices that aid the NPD portion do not apply to the FFE. They fall short, as shown in Table 1-1, because the nature of work, commercialization date, funding level, revenue expectations, activities, and measures of progress are fundamentally different.
Lack of research into best practices made the FFE one of the most promising ways to improve the innovation process. An Industrial Research Institute multicompany project team began studying the FFE in the middle of 1998 to describe and share best practices. However, our work was stymied at first due to the difficulty of comparing FFE practices across companies. The comparison was complicated because there was a lack of common terms and definitions for key elements of the FFE. Without a common language and vocabulary, the ability to create new knowledge and make distinctions between different parts of the process may be impossible (Krough, Ichijo, and Nonaka 2000). Knowledge transfer is ineffective or unlikely if both parties mean different things, even when they are using the same terms. These insights led us to believe that we could improve understanding of the FFE by describing it using terms that mean the same thing to everyone.
To address this shortcoming, we developed a theoretical construct, the NCD model (Koen et al. 2001). It is intended to provide insight and a common terminology for the FFE. Typical representations of the front end consist of a single ideation step (Cooper 1993). However, the actual FFE is more iterative and complex. To create the model, participants provided in-depth reviews of the FFE experience in their companies. Factors common to FFE activities at all companies were identified next. Differences in both terminology and content among FFE activities were then discussed and resolved. We argued with intensity for a long time trying to devise a sequential FFE model similar to the traditional Stage-Gate(tm) process. All of us had demonstrated success with Stage-Gatez(tm) processes for NPD and assumed that a similar sequential process would work for the FFE. Our argument made us realize that a sequential process model was not appropriate. This important realization allowed us to move from a sequential process model to a nonsequential relationship model.
This chapter presents our understanding of effective tools and techniques in the FFE using the NCD model. The methods, tools, and techniques discussed were determined from the best practices within our companies, an extensive search of the literature, and a review of techniques utilized by consulting firms and our colleagues. In addition, all of the authors have considerable personal experience with the FFE.
The remaining sections start with an overview of the NCD model. Following that, each part of the model is described along with the methods, tools, and techniques that the authors believe are effective.
NEW CONCEPT DEVELOPMENT MODEL
The NCD model shown in Figure 1-2 consists of three key parts:
The engine or bull's-eye portion is the leadership, culture, and business strategy of the organization that drives the five key elements that are controllable by the corporation.
The inner spoke area defines the five controllable activity elements (opportunity identification, opportunity analysis, idea generation and enrichment, idea selection, and concept definition) of the FFE.
The influencing factors consist of organizational capabilities, the outside world (distribution channels, law, government policy, customers, competitors, and political and economic climate), and the enabling sciences (internal and external) that may be involved. These factors affect the entire innovation process through to commercialization. These influencing factors are relatively uncontrollable by the corporation.
Several characteristics of the model are worth noting. The inner parts of the NCD are called elements, as opposed to processes. A process implies a structure that may not be applicable and could force the use of a set of poorly designed controls to manage FFE activities. In addition, the model has a circular shape, to suggest that ideas are expected to flow, circulate, and iterate between and among all the five elements. The flow may encompass the elements in any order or combination and may use one or more elements more than once. This is in contrast to the sequential NPD or Stage-Gate(tm) process, in which looping back and redirect or redo activities are associated with significant delays, added costs, and poorly managed projects. Iteration and loop-backs are part of FFE activities. While the inherent looping back may delay the FFE, it typically shortens the total cycle time of product development and commercialization. Clearer definition of market and technical requirements, sources of risk and a well defined business plan for the new product may enable more effective management of the development and commercialization stages with fewer 'redo' or 'redirect' activities. In contrast, the overall project cycle time and costs grow exponentially whenever there is redo activity as the project moves downstream through the NPD or StageGate(tm) process (Wheelwright and Clark 1992).
An example of looping back and iteration took place when Spence Silver at 3M first identified the strange adhesive that was more tacky than sticky and which later enabled the development of the 3M Post-it notepads. Initially there were no product ideas for this concept-though Silver visited most of the divisions at 3M in order to find one. The initial idea was to develop a bulletin board coated with the tacky adhesive, to which people would attach plain-paper notices. This concept was never realized, and a new concept, which eventually became 3M Post-its, was later proposed by looping back into opportunity identification and opportunity analysis from idea generation and enrichment. Constant iteration and flow within the FFE is a hallmark of activities in this stage of the product development process.
Even though the key elements of the FFE will be discussed in a clockwise progression, they are expected to proceed nonsequentially, as shown by the looping arrows between the elements. Further, the separation between the influencing factors (i.e., environment) and the key elements is not rigid. Interactions and intermingling between the influencing factors, the five key elements, and the engine are expected to occur continuously.
The following sections discuss influencing factors, the engine, and each of the five key elements in more detail. Methods, techniques, and tools utilized will be indicated. Two examples-one market-driven and one technology-driven-highlight the characteristics of each part of the model.
INFLUENCING FACTORS (THE ENVIRONMENT)
The FFE exists in an environment of influencing factors. The factors are the corporation's organizational capabilities, customer and competitor influences, the outside world's influences, and the depth and strength of enabling sciences and technology. Sustained successful product development can occur only when FFE activities can be accomplished with the company's organizational capabilities. Organizational capabilities determine whether and how opportunities are identified and analyzed, how ideas are selected and generated, and how concepts and technologies are developed. Organizational capabilities can also include organized or structured efforts in acquiring external technology. Electronics and pharmaceutical companies have a long history of augmenting their product development efforts with external licensing, joint development agreements, and the development of testing methodologies and protocols (Slowinski et al. 2000). These capabilities exert influence and give the organization the ability to deal with the influencing factors.
Enabling science and technology is also critical, since technology typically advances by building upon earlier achievements. Science and technology become enabling when they can be used repeatedly in a product or service. "Enabling" is not the same as "mature," which is defined on a technology trend line or penetration curve. It is the point when the technology is developed enough to build it into a manufactured product or regular service offering. Enabling technologies usually provide some degree of enhanced utility, cost avoidance, value, or quality improvement for the customer. Technologies typically become enabling early in their life cycle.
The outside world, government policy, environmental regulations, laws concerning patents, and socioeconomic trends all affect the FFE as well as the new product development or Stage-Gate(tm) part of the innovation process. Some of these factors are indicated in Porter's "five force" model (1987). Porter's model evaluates the relative power of customers, competitors, new entrants, suppliers, and industry rivalry-a power relationship that determines the intensity of competition and often inspires innovation.
Complementors are companies that are not direct competitors, that serve to help grow one's industry, and should be considered a sixth force (Grove 1999). For instance, complementors to Microsoft are Intel and Dell. Each of these companies complements the others in building an industry. Government law and policy should be considered a seventh force, because of their impact on the use of and profit from a technology.
These factors, constantly influencing people's thoughts and actions, are primary contributors to "serendipitous discovery" of new ideas. Just as a healthy marine environment is essential for a healthy population of aquatic species, so is a supportive climate essential for a productive FFE. These influencing factors are largely uncontrollable by the corporation. However, the response by the engine (corporate culture, leadership, and strategy) greatly affects the NCD's five activity inner elements. The response may also impact the organizational capabilities of the company-internal development as well as external access through joint development or licensing-although these capabilities usually change much more slowly than the response by the engine.
Effective Methods, Tools, and Techniques
The ability to execute the strategy or plan of action when changes occur is a key tool for addressing influencing factors. For example, Corning enjoyed huge success in developing the successful ceramic substrate for catalytic converters. That success was a direct result of senior executives' early awareness of the Clean Air Act's requirement for reduced emissions and of the huge potential of the business. These factors were so compelling that Corning, in 1970, directed hundreds of scientists and engineers to focus on this single challenge. The resulting product has been used in more than three hundred million automobiles.
New alliances and partnerships may provide the capabilities needed for addressing influencing factors. Examples may be found in the automotive and automotive materials industries. Energy conservation and the drive to improve the quality of life and reduce pollution motivated people in these industries to establish research alliances, industry consortia, and industry-government collaborative R&D ventures. U.S. automakers and their suppliers, government labs, and several universities formed the U.S. Council for Automotive Research (USCAR), an alliance to generate and develop concepts such as a highly fuel-efficient (over eighty miles per gallon) vehicle. This new spirit of collaborative research changed the way the automakers accepted new processes and techniques. Alternative materials such as aluminum, polymers, and composites were able to show their advantages in safety, fuel economy, and vehicle performance.
When the global steel industry sensed a competitive threat, they reacted in turn. Steel industry leaders thought USCAR members could develop new structures and materials that might displace steel. In response to the challenge, more than thirty-five steel producers from around the world formed the Ultra Light Steel Auto Body research consortium. That consortium contracted research to generate and develop new ways to use steel in cars. They developed concept vehicles and built prototypes to show how vehicles and individual components made out of steel can be as much as 40 percent lighter than conventional components with no cost penalty. They accomplished this through novel architectures, new manufacturing techniques (e.g., hydroforming instead of stamping and welding of parts, tailor-made blanks, laser welding for assembly), and advanced new steel formulations (e.g., complex microstructures to provide for ultrahigh strength combined with light weight and good formability to address engineering and styling demands).
The influencing factors at work on the automakers and their suppliers are inspiring approaches to innovation that bring together the best attributes of multiple materials and organizations' technologies. Overall, the materials innovations are helping produce automobiles that are safer and more fuel-efficient, with longer service lives, adding to customer value.
Excerpted from The PDMA ToolBook 1 for New Product Development Excerpted by permission.
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PART 1: PROJECT LEADER TOOLS TO START THE PROJECT.
Fuzzy Front End: Effective Methods, Tools and Techniques (P. Koen, et al.).
Hunting for Hunting Grounds: Forecasting the Fuzzy Front End (C. Miller).
Telephoning Your Way to Compelling Value Propositions (G. Castellion).
Focusing NPD Research on Customer-Perceived Value (C. Miller and D. Swaddling).
PART 2: PROJECT LEADER TOOLS TO USE ANYTIME.
Product Champions: Crossing the Valley of Death (S. Markham).
Managing Product Development Teams Effectively (R. Leenders, et al.).
Decision Making: The Overlooked Competency in Product Development (M. Deck).
How to Assess and Manage Risk in NPD Programs: A Team Based Approach (G. Githens).
PART 3: PROCESS OWNER TOOLS.
Capturing Employee Ideas for New Products (C. Gorski and E. Heinekamp).
Lead User Research and Trend Mapping (L. Meadows).
Technology Stage Gate(TM): A Structured Process for Managing High Risk New Technology Projects (G. Ajamian and P. Koen).
Universal Design: Principles for Driving Growth into New Markets (J. Mueller and M. Story).
PART 4: PORTFOLIO TOOLS.
Portfolio Management: Fundamental to New Product Success (R. Cooper, et al.).
Assessing the Health of New Product Portfolio Management: A Metric for Assessment (R. Meltzer).
Risk Management: The Program Manager's Perspective (D. Dunham).
Process Modeling in New Product Development (P. Bunch and G. Blau).
The PDMA Glossary for New Product Development.