Assessing the value of a new technology or a new product Plus Managing the features of a project

1. Assessing the value of a new technology or a new productPlusManaging the features of a project Eli Schragenheim elyakim@netvision.net.il

2. Problem Areas in Projects • Deciding which project to take. • When the project is our own initiative. • How can we assess the value of the proposed project? • When the initiative comes from a potential client. • How important is the project to our client? • What added value can we add to the project that the client would appreciate? • What is the required investment? • Both financial and capacity – verbalizing the trade-offs. • How to assess the impact of uncertainty?

3. Problem Areas in Projects • What features should be included in the project? • When the project is our own initiative. • What features would significantly enhance the profitability of the project? • The perception of value of the client would be higher with these features. • What features should NOT be included? • When the project is the client’s initiative. • What features we should persuade the client to add. • What is the right timing for deciding upon the including of a feature within a project?

4. And the third area • How to manage the progress of the project, ensuring on-time completion according to specifications and budget? • This is where TOC focuses today with its CCPM methodology. • Still, questions regarding what should be included in the initial planning and what should be decided within the projects are still open.

5. The problem of defining “value” • The perception of value of a product depends on several parameters: • Answering a practical need. • Relative to other products designed to answer that need. • Giving the perception of “status”. • The need is target mainly to other people viewing and appreciating the product I have. • Causing esthetic or artistic excitement. • A subjective view of the excitement the product gives. • This view could change dramatically with time. • The value of a “reference”. • What can the product be compared to? • What efforts were put in producing and delivering the product?

6. Problematic assessment of value • We use money to buy whatever we think gives us value. • The translation of value into money is problematic. • We do not really know how to assess the value. • Especially when you get more than one type of value. • For instance, a very useful product, but it is not nicely looking. • The references are confusing. • We might refuse to pay for something that gives us huge value just because the referenced products are relatively cheap. • Still, we need to generate value for our clients and we need to find ways to help them understand the full value.

7. How to assess the value of new technology? • Goldratt has developed six questions to guide us in assessing the future value of a new technology we may develop or acquire. • The emphasis is on assessing the practical need. • One critical assumption regarding the practical need: If the need is real then there is a way to convince people of the need and thus create a high perception of value. • New technology is clearly focused on the practical needs rather than on the other aspects of value. • We need to check the validity of the insights for new technology also for new products and even features.

8. Why is it importantto determine the value of a new technology? • Companies invest huge amount of money and other resources to develop new technologies. The return on that investment is considered to be “high risk”. • Lack of understanding of the potential value to the customers leads to unfocused development, mainly going after the technology because “we can do it”. • Better understanding the value to the clients could lead to much more successful marketing and sales efforts to launch the new technology and earn much more profit. • If we could use the insights also for the development of new products and features we’ll gain huge practical value.

9. First question • What is the power of the new technology? • The main capability and features. • Should we include also the contribution to status and esthetics? • The point here is only to supply the necessary inputs for the following questions. • We need to understand what could be done with the new technology. • And we need to know what could NOT be done. • Note, this is the only question from the view point of the technology expert. • All the rest will focus on the consumer.

10. Current limitation removed • What current limitation or barrier does the new technology eliminate or vastly reduce? • If there is any value the technology is capable to provide it must eliminate or vastly reduce a currently existing limitation for the user. • Otherwise, what’s the added value? • So, any “need” means something we like to have, but we do not have it now. • Thus in viewing any new “idea” we have look for something people want, but cannot get. • Note, this is true for a practical need. • For instance, the cellular phone eliminated the need to find a phone in order to call. • The fact that regular phones are connected to cables, rather than wireless net, is not the real limitation.

11. Examples • What limitation was reduced by projecting from the computer? • After all we did make presentations before that? • One limitation could be: being able to introduce substantial changes very close to the time of the presentation itself. • Another limitation: projecting animation and simulations. • What limitation was reduced by the new LCD television? • What is the practical limitation, and what supports the “status” value? • What about the ‘Vista’ operating system? • Personally it is something I truly like to know!

12. What is done to bypass the limitation? • What policies, norms and behaviors are used today to bypass the above limitation? • The value of eliminating the limitation depends on what is currently done to overcome it. • If the limitation is really important, then some ways to deal with it are in use. • For instance, public phones were quite common everywhere. • People were used to call home and office in regular manner. • People might still behave like they did so far due to inertia. • This should be of major concern, because the value is not fully materialized  thus the perception of value is not high. • Have you heard of technologies that were launched “too early for their time”?

13. Examples • Before the invention of the cars people used to live real close to where they worked. • Before the digital camera, and because printing many pictures was expensive, people used to print “contacts” of the whole film to know what to print. • Once upon a time, before the copiers, people used to print documents using a copy carbon paper to have a copy of original document. • People were making complicated multiplications calculations using a “logarithmic ruler”.

14. A note regarding the value of products and features • What is the value of adding features to a product? • Overcoming the basic obstacle that the technology has eliminated is not changed by most new products. • Most of the new features help to overcome some hassles. • The value is additional convenience, but usually not overcoming real obstacles. • Still, some new products, sometimes even just new features, do succeed to eliminate a limitation and then they have a similar effect like a new technology. • Example: adding wheels to luggage.

15. What should the behavior be? • What policies, norms and behaviors should be used once the new technology is in place? • This is a key question Marketing has to come with a clear answer! • With the new technology being available, what kind of use, including the behavioral patterns, the user should employ in order to draw the highest value? • The answer would clarify the real value of the technology: The full additional value gained by the use of the technology. • And what new negative ramifications are raised by the use of the new technology and how to trim or deal with them.

16. On the role of inertia • We cannot consider all the ramifications of a change. • More, we are afraid of the unknown consequences of the change. • Our intuition and instinct follow the norms and behaviors we did for long time. • Thus, it usually takes a lot of time for people to get used to new technology and change their behavior to draw the most of the new technology. • The more ramifications of the change would be clear upfront to the potential users, the quicker will the value be materialized.

17. Examples • Most users of MP3 still download from the Internet full albums. • Rather than the tracks they really are interested at. • Actually the whole notion of an album is based on the former technology of CD. • How much music an album should have was heavily influenced by the limitation of the old LP records. • Most people still print their pictures rather than watch them in the computer or TV. • We use the Google search quite often, but, do we really know to use sophisticated search? • How to get what we REALLY look after?

18. Between the individual and the organization • Observation: There are clear differences between the behavior of the individual as such and his/her behavior as part of an organization. • The behavior within an organization is much more conservative, much less risk taken and changes are far more slower. • This is due to the need to justify one’s decision. • This need creates organizational fear from any uncertainty, and most notably induced going very slow about changes. • Thus, the analysis on what norms and behaviors should change to draw the best of a new technology or product, is more critical to organizational market.

19. The old and new behavior with cellular phones • During trips people were used to leave behind a list of phones of where they are going to be. • The use of beepers was quite spread. • It took time to realize we should give mobiles to kids. • So we can contact them when we are worried. • It took time to realize the new technology is not strictly business. • A new technology of sending text messages appeared. • Overcoming the limitation of having to have the other party on the other side. • Fax was used as way to bypass the limitation.

20. Organizational behavior with cellular phones • Currently there is no service to provide the cell number of a person we look for. • Even when that person would like his number to be published. • It took a lot of time until most organizations made full use of cell phones as an integral part of their activity. • Still, in many organizations the telephone operator would usually not connect you to the cell phone of an employee you look for. • What is the role of the secretary if one can call the cell phone of the CEO directly? • Is there any clear policy about giving away the cell numbers?

21. And an addition to this step • The new technology also generate some negative ramifications that need to be addressed. • So, the process should include the analysis of the negative branches (NBRs). • It is always better to tell the potential user that such-a-negative exists especially when a solution has been developed. • It should be part of the new norms of behavior to tackle the negatives and come up with solutions. • OR, it’d be left to the next step, the actual development of the features to address the negative issues. • Example: The Internet creates “too much information” . • Example: Radiation from cell phones.

22. What if we would have considered the above questions before launching the new technology? • We could achieve the following: • Be able to radiate the real value to the client. • Thus, be successful in the introduction of the new product. • Be able in guiding the clients to actually draw the full value. • Enhancing the long term success of the new product/technology. • Dramatically reduce the high risk associated with developing a new technology. • Being able to focus the development more effectively. • On the RIGHT features to assist the added value for the time.

23. Polishing the development • On the view of the above, what changes to the new technology should be introduced? • What are the most important features? • How can we trim the negative ramifications? • The former analysis should be the key in planning the project. • It is especially critical in software development. • Because most software packages include huge amount of features that are not needed. • But they contains bugs that spoils their effective use. • And the time of the development stretches.

24. Making it happen • How to cause the change? • We refer here to the change in policies and behavior. • TOC has developed the six levels of resistance to better understand the sources of resistance and how to overcome those. • The most important insight: most resistance is not because of “people resist change”, but because of real fears, concerns and mainly real negative branches. • The other very important insight is to identify as many of the negative branches as possible and look to eliminate them. • Example: How to change the work culture so that more people can work from their home.

25. Open discussion • A new product/technology, the electronic book (ebook - Kindle), is considered. • It is in the size and weight of a regular book • It has a very clear LCD screen • What is the main current barrier that the ebook is supposed to eliminate? • The need to buy books at a shop? • Not being able to move quickly to another book? • What are the current practices that might block drawing the full value of ebooks? • What about the use in universities where the ebook could contain the whole course?

26. Decisions under uncertainty • It is worthwhile to delay decision under uncertainty to as late as possible. • The rationale is that the future will provide better information that is less vulnerable to uncertainty. • For instance, a change in the economic situation that impacts consumption could be critical for deciding upon the features of a new product. • On the other hand, delaying such a decision could cause a considerable damage. • How should we treat such decisions when we plan a project of developing a new product?

27. Planning and execution • Planning means making decisions ahead of time. • Which makes most decisions vulnerable to uncertainty. • There must be a reason for a specific decision to be taken at the planning session. • Rather than leaving it to the last moment. • When most plans suffer from too many “last minute” changes it means the planning is too detailed to be effective. • Actually it causes serious damage. • So, what decisions should be included in the planning? • And what should be left for the execution?

28. Acknowledging the distinction between planning and execution • Basic rules for planning: • Considering the objectives of the whole system. • Concentrating on the actions that any deviation would negatively impact the objectives. • Includes protection on the planning instructions. • Introducing buffers should a central part in any planning. • Basic rules for execution. • Get the right priorities to keep the planning intact. • Use the flexibility to face Murphy by reacting to the emergencies as reflected by the priorities.

29. Two conflicts about features • When should the decision concerning the features in a project be made? • Before the start of the project, or within the project? • One need is to know the scope of the project a-priori. • It is mandatory for identifying the critical chain, the budget and the requirements for resources. • Another need is to make the best decision of what to include and what not to include. • To include a specific feature or not to include? • What is the net value of the feature? • What is the impact of the feature on the timeline, budget and resource requirements of the project?

30. The timing cloud Ensure the right decision on choosing the project, including the proper budget, timeline and resource allocation. Include all features in the project plan Achieve a successful project Decide upon the inclusion of features at the appropriate time within the progress of the project. Make the right decision for every single feature in the project.

31. The damage of a feature that does not add considerable value • A redundant feature wastes time, efforts and negatively impacts the valuable use of the product by the user. • Many times it is on the expense of features that would have added real value. • Redundant features are similar to overproduction of stock in manufacturing. • Huge damage for nothing.

32. The assumptions regarding the critical decision to go on a project • In order to assess the desirability of a project we have to know what features would be included. • Every feature requires money, time and human resources. • Thus, late decision about a required feature would compromise the timely completion and would cause considerable over budget. • Insights to the above assumptions: • There is a group of features that it is enough that one will be missing to robe all the value of the project. • Other features add real value, but the project would be valuable even without them. • Sometimes adding a feature comes “free”.

33. The “right” decision on a feature • The inclusion of the right feature adds value to the project as a whole. • The value of a feature to the project might be impacted by time. • What seems to be nice but not important might become the standard tomorrow. • We have more flexibility by including certain features while the project is in progress. • Insight: There is no need to decide a-priori on the exact allocation of resources to the projects. • The real allocation is highly impacted by the inherent uncertainty.

34. A possible direction of solution • In the start of the project we define the backbone of the project. • The must-have features that the project has no value without them. • It is possible to decide upon the start of the project based on the must-have and the value that would be achieved by that. • Still, a group of “nice to have” features could be maintained and included if the time and resource availability allows it. • The critical chain is determined by the must-have features.

35. Managing the nice-to-have features • A group of features is managed as possible addition to the project. • Once planned each feature includes the rationale of its added value. • the chain of tasks that are required. • the earliest input that would allow starting the feature. • The latest task that the feature must integrate into in order to be included. • It is possible to add or delete features. • There is a procedure to decide to include a feature within a project.

36. The benefits of the idea • The notion of what is absolutely necessary for a project (must-have) creates more focused decision to start the project and better understanding of the value. • Delaying the decision regarding the nice-to-have features improves the total content of the project. • The human resources are better utilized due to the clear priorities. • First of all: must have. • Nice to have are also nice when possible.

37. Negative branches and obstacles • Many projects would complete only the must-have and lose the appreciation of the market. • Isn’t it what happens today when some of the better features are not done due to developing lesser features? • The existing software packages do not support the floating potential features. • The distinction between “must-have” and “nice-to-have” is not all that clear and it could lead to bitter discussions. • Can we be assisted by the previous topic of the presentation to get a clearer definition? • More ….

38. About Eli Schragenheim The two faces of Eli Schragenheim Eli Schragenheim is a very sensitive person. Thank you so much for listening to him! And in return Eli is happy to answer questions.