Concept Selection Product Design and Development Chapter 8 Karl T. Ulrich and Steven D. Eppinger.
Chapter 3: Product Planning Product Design and Development Fourth Edition by Karl T. Ulrich and...
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Transcript of Chapter 3: Product Planning Product Design and Development Fourth Edition by Karl T. Ulrich and...
Chapter 3: Product Planning
Product Design and DevelopmentFourth Edition
by Karl T. Ulrich and Steven D. Eppinger
Session Outline
• Product development opportunities Sourcing ideas on a regular basis
• Market competition Planning products w.r.t competition
• Technology The concept of technology S-curves
• Portfolio planning The need for balanced portfolios; product-process change map & aggregate product planning
• Mission statements For each project
Objectives & Strategy
• Product development teams generally begin with a project mission statement. – This relates strongly to concepts of corporate strategy.
• A cross-functional planning process develops the product development team's mission statement.
• Note: The multiple-product, multiple-project context of product development in established firms.– The ability to choose the right set of development projects and to
define the scope of these projects in such a way that they are complementary
PlanningPlanning
Product Development Process
ConceptDevelopment
ConceptDevelopment
System-LevelDesign
System-LevelDesign
DetailDesign
DetailDesign
Testing andRefinement
Testing andRefinement
ProductionRamp-Up
ProductionRamp-Up
Four Phases of Product Development
The product planning phase precedes the product development process.(i.e., before substantial resources are applied)
It considers the portfolio of projects that an organization might pursue
Product Planning
• Ensures product development projects support the broader business strategy of the company.
Addresses:• What product development projects will be undertaken?• What mix of fundamentally new products, platforms and
derivative products should be pursued?• How do the various projects relate to each other as a
portfolio?• What will be the timing and sequence of projects?
Product Development Teams
• Work on selected projects and start with a mission.The mission statement answers:• What market segments should be considered in designing the
product and developing its features?• What new technologies (if any) should be incorporated into
the new products?• What are the manufacturing and service goals and
constraints?• What are the financial targets for the project?• What are the budget and the time frame for the project?
The Product Planning Process
The product plan identifies the portfolio of products to be developed by the organization and the timing of their introduction to the market through proper allocation of resources.
The planning process considers:• Product dev. Opportunities identified from various sources• Suggestions from marketing, research, customers, current
product development teams• Benchmarking of competitors
Inefficiencies
Some inefficiencies in organizations that do not engage in product planning:
• Inadequate coverage of target markets with competitive products.
• Poor timing of market introductions of products.• Mismatches between aggregate development capacity and the
number of projects pursued.• Poor distribution of resources, with some projects overstaffed
and others understaffed.• Initiation and subsequent cancellation of ill-conceived projects.• Frequent changes in the directions of the projects.
Xerox Lakes Project Example
Xerox Document Centre 265
Xerox’s Competitive Strategy Exploit
technological innovation in a rapidly changing
market
DIGITAL COPIER PLATFORM
(AS OPPOSED TO EXISTING LIGHT LENS )
TQ-1: How might a portfolio of development projects differ for product technologies at position A or B?
Concept of S-Curves
Draw S-curves of your choice. What are the disruptive technologies here? What dimensions of performance are affected?
The Product Plan
The product plans developed by keeping in mind:• Company’s goals• Capabilities• Constraints• Competitive environment
The product plan is regularly updated to reflect changes in:• Competitive environment• Technology• Info on successes of existing products
Product Plan
Exh 3-2: The product plan identifies the portfolio of projects to be pursued by the development organization. This plan divides projects into four categories.
The Product Planning Process
1. Identify opportunities. 2. Evaluate and prioritize projects.3. Allocate resources and plan timing.4. Complete pre-project planning.5. Reflect on the results and the processes.Note: Selecting a promising project is iterative in nature
Step 1: Identify opportunitiesSources of product development opportunities:
– Marketing/Sales – Research/Technology Development (Xerox PARC) – PD Teams – Manufacturing – Customers – Third party: Suppliers, Inventors, and business partners– Other business groups (Xerox Supplies Division)
Some proactive approaches:– Document frustrations and complaints– Study Competitors’ products (Competitive benchmarking)– Track the status of emerging technologies– More…see text
XeroxSome opportunity statements proposed at Xerox:• Create a document distribution system in which a networked
printing, device resides on each office worker’s desk and automatically drives mail and other documents.
• Create document delivery software that allows the digital delivery and storage of most intra-organizational documents via a worker’s personal computer.
Opportunity statement: Lakes Project• Develop a new black & white (B&W), digital, networkable,
document center platform for the office market, including scanning, storage, fax, distribution, and printing capabilities
Step 2: Evaluate and Prioritize ProjectsCompetitive strategies
– Technology leadership – Cost leadership – Customer focus– Imitative
Market Segmentation
Technology Trajectories
Product Platform Planning
Evaluating Fundamentally New Product Opportunities
Balancing the portfolio
• Technology leadership Basic R & D
• Cost leadership Superior manufacturing methods; Design for manufacturing to reduce costs
• Customer focus Rapid development of derivatives through carefully designed product platforms
• Imitative Fast development process
Competitive Strategies
NOTE XEROX: Paradigm shift in business practice to participate in digital revolution of office
aligned with the growth of the Internet….
from “print & then distribute”
to “distribute & then print”
Market Segmentation: Market Segment Map
Exh 3.4: Product segment map showing Xerox B&W digital products and the competition in three markets (Segmentation based on number of users sharing office equipment) . Key performance
dimensions pages per minute & networking capability
Technology Trajectories
Q: How near or far is the ultimate performance limit?
Exh 3.5: This technology S-curve illustrates that Xerox believed digital copier technologies were
just emerging and will improve product performance in coming years. Xerox believed that it could develop a full-featured digital copier in the
near future with performance exceeding that of light-lens copiers.
Product Platform Planning: Platforms vs. Derivatives
Exh 3.6: A platform development project creates the architecture of a family of products. Derivative products may be included in the initial platform development effort (Platform
A) or derivative products may follow thereafter (Platform B)
Platform Set of assets shared across a set of products (e.g. components & sub assys)Derivatives For different segments
Exh 3.7: This technology roadmap shows the life cycles of several digital
photocopying technologies & identifies which technologies
would be used in each product. For Lakes
platform Higher speeds and color capabilities
required of its derivatives.
Product Platform Planning: Technology Roadmap
Note: decisions about product platforms are closely related to the
technology development efforts of the firm
Some criteria for evaluating fundamentally new product opportunities:– Market size (units/year * average price)– Market growth rate (percent per year)– Competitive intensity (#competitors & their strengths)– Depth of the firm’s existing knowledge of the markets– Depth of the firm’s existing knowledge of technology– Fit with the firm’s other products– Fit with the firm’s capabilities– Potential for patents or other barriers to competition– Existence of a product champion within the firm
Evaluating Fundamentally New Product Opportunities
• Exh 3.8: The product-process change matrix– The extent to which the project involves changes in the product line
and/or the production processes– Helps identify projects breakthrough opportunities as well as
incremental improvements
• Firms typically benefit from a diverse set of projects
• Firm’s choice of competitive strategy influences product development portfolio:
(FIRM STRATEGY) (PORTFOLIO)– LOW COST STRATEGY MORE OF PRODUCTION PROCESS IMPROVEMENT PROJECTS– HIGH PRODUCT VARIETY DERIVATIVE PRODUCTS UPON EXISTING PLATFORMS– TECHNOLOGICAL SUPERIORITY TECH DEV. & BREAKTHROUGH PROJECTS
Balancing the portfolio
Product-Process Change MatrixExtent of Production Process Changes
Ext
en
t of P
rod
uct C
han
ges
NewCore
Process
NextGeneration
Process
SingleDepartment
Upgrade
Tuning andIncremental
Changes
NoProcessChange
NewCore
Product
NextGeneration
Product
Additionto Product
Family
MinorProduct
Enhancement
NoProductChange
LakesProject
Research andTechnology
Development
BreakthroughDevelopment
Projects
PlatformDevelopment
Projects
DerivativeProduct
Development
CurrentProduct/Process
Support
Step 3:Allocate Resources & Plan Timing
Resource Allocation– Careful use of the limited development resources– Avoid starting too many projects. May result in:
• Skilled engineers and managers stretching their capabilities• Affects productivity, time-to-market, quality, and profitability
– Aggregate Product Planning (Exh 3.9): • makes efficient use of resources within budgeted resources
Project Timing– Timing of product introductions– Technology readiness– Market readiness– Competition
The Product Plan (Exhibit: 3.2)– Set of projects approved by the planning process and sequenced in time.– Mix of: Fundamentally new product, platform and derivative projects.– Updated periodically as a part of the strategic planning activity.
Aggregate Resource Planning. .
0%
20%
40%
60%
80%
100%
120%
140%
Year 1 Year 2 Year 3
C a p a c i t y U t i l i z a t i o n
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Product Plan
Exh 3-2: The product plan identifies the portfolio of projects to be pursued by the development organization. This plan divides projects into four categories.
The Product Plan (Exhibit: 3.2)•Set of projects approved by the planning process and sequenced in time.•Mix of: Fundamentally new product, platform and derivative projects.•Updated periodically as a part of the strategic planning activity.
Step 4: Complete Pre-Project PlanningProduct Vision Statement
Develop a networked, mid-range digital platform for imaging, marking, and finishing
Mission Statements– Brief (one sentence) description of the product– Key business goals– Target market(s) for the product– Assumptions and constraints that guide the development effort– Stakeholders
Assumptions and constraints– Manufacturing– Service– Environment
Staffing and other pre-project planning activities
Lakes Project Mission StatementProduct Description Networkable, digital machine with copy, print, fax, and scan functionsKey Business Goals Support Xerox strategy of leadership in digital office equipment Serve as platform for all future B&W digital products and solutions Capture 50% of digital product sales in primary market Environmentally friendly First product introduction 4thQ 1997Primary Market Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)Secondary Markets Quick-print market Small ‘satellite’ operationsAssumptions and Constraints New product platform Digital imaging technology Compatible with CentreWare software Input devices manufactured in Canada Output devices manufactured in Brazil Image processing engine manufactured in both USA and EuropeStakeholders Purchasers and Users Manufacturing Operations Service Operations Distributors and Resellers
Product Description Networkable, digital machine with copy, print, fax, and scan functions
Key Business Goals Support Xerox strategy of leadership in digital office equipment Serve as platform for all future B&W digital products and solutions Capture 50% of digital product sales in primary market Environmentally friendly First product introduction 4thQ 1997
Primary Market Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)
Secondary Markets Quick-print market Small ‘satellite’ operations
Assumptions and Constraints New product platform Digital imaging technology Compatible with CentreWare software Input devices manufactured in Canada Output devices manufactured in Brazil Image processing engine manufactured in both USA and Europe
Stakeholders Purchasers and Users Manufacturing Operations Service Operations Distributors and Resellers
Lakes Project Mission Statement
Assumptions & ConstraintsSome may ask:• Why manufacturing, Service and Environmental strategies
should be part of the mission statement for a new product?
Some may even hold: • Decisions about these issues should arise from customer needs
for new products and should not be determined in advance.
Why then do we have Xerox mentioning these in the project mission statement?
Assumptions & Constraints (contd..)
• For complex projects (as in this Xerox example), the design of the manufacturing systems are equally complex.– Thus manufacturing facilities involved in the product need to be identified
very early in the process.
• Some product requirements cannot be derived strictly from customer needs. – Environmentally responsible design (as a Corporate Responsibility of
Xerox
Mission statements must reflect such corporate objectives and constraints.
Assumptions & Constraints (contd..)For Lakes Project of Xerox
Manufacturing• Capabilities, capacities, and constraints of existing manufacturing processes
– Which internal production facility to be used?– What key suppliers to be involved and when?
– For Xerox: Input devises at Canada, Output devices in Brazil etc.
Service• Note: Customer service and service revenue important in this business• Strategic goals for improving service quality
– Designing components requiring few parts – Designing for ease of serviceability (quick service)
Environment• Design for environment
– Developing new products with environmental sustainability– Xerox’s “Zero to landfill” policy with an energy efficiency goal “most efficient machine in its
class”– Remanufacture or recycle [no part should be disposed by the customer to end up in a landfill]
Step 5: Reflect on the Results & the Process
Some suggested questions:• Is the opportunity funnel collecting an exciting and diverse set of product
opportunities?• Does the product plan support the competitive strategy of the firm?• Does the product plan address the most important current opportunities
facing the firm?• Are the resources allocated product development adequate to pursue the
firm’s competitive strategy?• Have creative ways of leveraging finite resources been considered…?• Does the core team accept the challenges of the resulting mission
statement• Are the elements of the mission statement consistent?• Are assumptions listed in the mission statement really necessary or is the
project over-constrained? Will the development team have the freedom to develop the best possible design?
• How can the product planning process be improved?