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* Welcome *
Welcome to this issue of 2PLM, an e-zine distributed every two weeks on
a free subscription basis. The article below,
Next Generation Product Development,
was written by Michael McGrath regarding
his recently published book, Next Generation Product Development : How to Increase
Productivity, Cut Costs, and Reduce Cycle Times.
A thought leader on product development
issues, he has also written Setting the PACE in Product Development: A Guide to Product
and Cycle-time Excellence, and Product Strategy for High-Technology Companies: How
to Achieve Growth, Competitive Advantage, and Increased Profits.
Details
* Next Generation Product Development *
Next Generation Product Development forecasts a new era of product
development management practices and describes the opportunities they offer
for significant competitive advantage.
Product development management has evolved through major generations, with each
successive generation enabling far greater performance than the previous one.
The 1990s saw the emergence of the Time-to-Market (TTM) Generation, industry
leaders whose development of time-based new product development strategies
greatly accelerated the rate of product introductions. Eventually, all
companies were forced to adopt these practices to remain competitive.
The maturing of this TTM Generation coincided with a major downturn
in the economy. The burst of the bubble hit technology-intensive companies
particularly hard. As tight R&D budgets imposed increasing constraints
on new product development, many companies searched for ways to do more
for less - resulting in the R&D Productivity Generation. Just as the
TTM Generation of the 1990s gave rise to strategies for time-based
competition, the R&D Productivity Generation will give rise to
development of R&D productivity-based competition and corresponding
strategies and practices.
The practices of the R&D Productivity Generation fall into three broad
categories : resource management; project management; and a new perspective
on how product strategy and portfolio management fit together. Underlying
all of these new management practices is an enterprise product development
system, broadly referred to as Development Chain Management (DCM).
Resource Management
There are several methods for improving the utilization, capacity, and
efficiency of valuable R&D resources:
- Short-term utilization management supports utilization, R&D productivity,
and project assignment management
- Medium-term resource capacity planning and management enables even greater
utilization improvements, extends the visibility of resource needs beyond
assignments, and aids in dealing with resource constraints
- The resource management transaction process provides a system and process
for project managers to identify needs and request assignments, and enables
resource managers to fill those needs and initiate adjustments where necessary
- Resource-based project planning and resource requirements management enable
project managers to schedule resources more efficiently to reduce the cost
of their projects, greatly increasing the return on R&D investments
Project Management
The new generation will bring the transformation of project management from
a technique to a management process, enterprise project planning and
control, which will enable:
- Active and collaborative project plans, allowing team members to
work together through a virtual situation room
- The networked project team, with team members seamlessly collaborating,
and communicating for greater efficiency
- Enhanced phase review management, providing visibility of resource
decisions, automatic monitoring of project tolerances, and an executive
information system
- Financial planning and project budgeting that is automated and
fully integrated with product development
- Coordinated management of groups of related projects with distributed
program management
- More effective management of collaborative development across
a range of collaboration categories
- Context-based knowledge management, delivering appropriate
information and experience to the developer when he needs it
Product Strategy and Portfolio Management
New portfolio management practices will emerge, such as dynamic portfolio
and pipeline management, comprehensive financial management, and
integrated product strategy, based on "on-demand" portfolio analysis.
In addition, two new major financial management capabilities will be possible:
- Comprehensive financial management of R&D that consolidates
critical financial information across all projects
- Reconciliation of functional budgets with project budgets,
so that CFOs know what percentage of the R&D budget was allocated
to new products
In this new environment, product strategy information is integrated with
product development information, providing a powerful strategic engine. For
example, future products included in a product line plan will provide
longer-term visibility to pipeline and resource management. Collectively, the
capabilities of this new generation will enable companies to simulate
and optimize alternative product strategies.
Benefits of the R&D Productivity Generation
Next Generation Product Development illustrates the range of
benefits that can be achieved in the R&D Productivity Generation:
- A reduction of the cost-per-applied developer of 20% because of increased
capacity utilization
- A corresponding reduction in the cost-per-project of 30%, with 20% due
to capacity utilization improvement, 5% to developer productivity gains,
and 5% to more efficient resource use
- A corresponding increase in R&D capacity of 40%, with 20% due
to capacity utilization, 5% to greater pipeline effectiveness, 5% to
improved capacity from outsourcing, 5% to improved developer productivity,
and 5% to greater project resource efficiency
Conclusion
Next Generation Product Development demonstrates that the R&D Productivity
Generation will transform the way companies manage R&D, and
provides a roadmap for companies to take advantage of this emerging
opportunity. The question most companies need to address is whether
they will lead the way in this transformation or follow their competitors.
Michael E. McGrath, co-founder and chairman of leading management consultancy PRTM, initiated
PRTM's product development consulting practice, referred to as PACE (Product And Cycle-time
Excellence). He has directed many of PRTM's projects in reducing time to market
in companies across many different industries. Write to him at mmcgrath (at) prtm.com.
GGI 2004 Product Development Metrics Survey
In the April 12, 2004
issue of 2PLM
we mentioned that
completed Product Development Metrics survey forms were due back to GGI
in Needham by June 1, 2004.
Please note that the deadline for returning surveys has been extended
to June 15.
Download a free PDF copy of the Product Development Metrics Survey questionnaire
here. For
more information, please contact Anne Schwartz at +1 781/444-5400 x204 or by
mail.
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