The future of product development. McKinsey reports that while companies need to make better products more efficiently, conventional performance innovations in product development have hit a plateau. [CNET News.com]
I'm running out to a 'crab feast,' but saw this article and got all excited. I love product development and the challenges it presents, along with the growth it provides. Here's some of my favorite clips from the article:
The new approach does have its challenges. Without skilled leadership and some new organizational capabilities, companies may lose control of a disciplined process that has improved performance significantly. They will have to manage their resources more flexibly and monitor their teams’ ability to generate the right information and to use it effectively. Yet for many companies, the opportunity to change products significantly later in the development cycle while also developing better ones more quickly is just too compelling to pass up.
The information-driven approach
In practice, the new approach requires some fundamental changes in product development. Rather than rigidly adhering to a standard sequence of activities, the work of teams that develop new products is organized to ensure a continual flow of high-quality information into the development process. Companies solve problems and synthesize new information continually instead of merely collecting bits of information from various functions and compiling the results just before gate meetings. By using a more flexible, information-driven methodology, teams reach better solutions more quickly.
The first step for any team that develops a new product is to determine which attributes are critical to its success. Taking an information-based approach, a team goes a step further by identifying the information that's required to make each key decision along the way. Companies then reconfigure the development process around these needs, ensuring that the right information is gathered at the right time and then flows to the right people.
A team that used an information-based approach began by creating three simultaneous work flows: one for the needs of customers and the design features of the product, a second for its cost and a third for its reliability. The three subteams communicated daily and assessed all of their findings every week. By organizing around the flow of information, the team looked at market research through a new lens and made an important discovery: Customers care most about the cost and reliability, not their throughput performance and other advanced features, as the team had previously assumed.
More importantly, the new approach inspired the team to react to this new information in a new way. Customer service and operations were consulted early in order to analyze what had made previous models break down and to estimate the trade-offs between design features and costs. Instead of having the marketing department undertake the research and throw the results "over the wall" to R&D, the product team and the marketing department conferred frequently.
They could therefore quickly tweak the design of the product and determine the implications for its cost and reliability as well as the reactions of potential customers. In this way, the team settled on the product’s concept and features in two months instead of the six that were previously needed. In the end, it designed a new machine that cost 20 percent less to manufacture than did previous models, took 40 percent less time to develop and had 50 percent fewer breakdowns. Since launch, the company has nearly doubled its market share in that product category.
The challenge
Strong project leaders--the key to any good product-development organization--are even more important in the information-based approach. In conventional product development, process discipline keeps the organization in check and thus limits a good manager’s ability to make the process more efficient and effective, though it also controls the potential negative impact of a poor project manager.
With the new approach, project leaders drive performance by focusing on the highest-value activities, skipping unnecessary ones, and shaping the team and the work flow in response to new information. Successful project leaders must therefore be both inspired managers and skilled problem solvers. They must bring the right individuals and information together to develop the best solutions for problems, coach subteams to perform at a higher level and have a working knowledge of all areas of their projects, including the technical side, marketing, operations and supply chain management. Above all, senior executives must trust these leaders to make sound, fact-based decisions about the direction of their projects without always seeking input from above.
Do such people exist? The good news is that they do, but only the very best project leaders can now perform at this level. In our experience, the potential of the best leaders is stifled by the current inflexible approach. Giving them enough flexibility and authority to make decisions will unleash their potential and raise the performance of their teams a few notches.
Commentary later.
2:08:17 PM 
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