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The Characteristics of Product Platform Development Projects

Liberec Economic Forum – LEF 2013. The Characteristics of Product Platform Development Projects. Peter E. Harland & Zakir Uddin 16 September 2013 Liberec , Czech Republic . Dr. Peter E. Harland Junior P rofessor in Innovation Management a nd Entrepreneurship.

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The Characteristics of Product Platform Development Projects

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  1. Liberec Economic Forum – LEF 2013 The Characteristics of Product Platform Development Projects Peter E. Harland& Zakir Uddin 16 September 2013 Liberec, Czech Republic

  2. Dr. Peter E. HarlandJunior Professor in Innovation Management andEntrepreneurship • Joint Master degree in Business Aministration andElectrical Engineering and PhD at TU Darmstadt, Germany • Research Assistantat TU Darmstadt and TU München • 10 Yearsselfemployed(Consulting and Publishing House) • Endowed Junior Professorship in Innovation Management and Entrepreneurship at TU Dresden, International Institut Zittau • Head of Master Program Project Management

  3. IntroductionProject types as success factor in product development Extent of product change Research projects Additionto productfamily Derivativesandenhancements New coreproduct Next generationof core product Breakthrough or Radical projects New coreprocess Platformor Next generationprojects Next generationprocess Extent of process change Singledepartmentupgrade Incremental or derivative projects Tuningandincrementalchanges Source: RevolutionizingProduct Development Wheelwright & Clark,1992, p. 93

  4. OverviewThe Characteristics of Product Platform Development Projects • Product platforms • Product platform development projects (PPDP) • Expected effects, decisions, Risk management in PPDP • Conclusion

  5. ProductPlatformPrinciple ProductC ProductB ProductA Product Platform (same parts) ProductC ProductD ProductD ProductB ProductA A collection of modules or parts which are common for a number of products, and this commonality is developed intentionally to attain certain effects;own definition based on[McGrath 1995] [Meyer and Lehnerd 1997] Athe collection of assets [Robertson and Ulrich 1998]

  6. Examples of product platforms • Product platforms are a well-known concept in industry: • Skoda/Volkswagen automotive platform (Karlsson and Sköld, 2007), e.g. MQB Octavia/Golf • Sony Walkman platform (Sanderson and Uzumeri, 1995) • Black & Decker power tools platform (Meyer and Utterback, 1993) • Hewlett Packard’s Deskjet printer platform (Meyer and Lehnerd, 1997) • Intel Microprocessor (Cusumano and Gawer, 2002)

  7. Service Platforms Process C Process B Process A Service Platform (same processes) Process D Process D Process C Process B Process A

  8. Motivation forproductplatforms • Modularizationwith same parts in all products, scaled parts, productspecific parts and/or customized parts • Standardization of moduls (e.g. using norms) to achieve economy of scale • Diversification of modulsto reach new customers Standardization of products Individualizationofproducts

  9. Standardization

  10. OverviewThe Characteristics of Product Platform Development Projects • Product platforms • Product platform development projects (PPDP) • Expected effects, decisions, Risk management in PPDP • Conclusion

  11. Product Platform Development Project Framework Company (or profit center) SteeringCommittee Project Manager PM Targets: increase of profit and market share Decisions Internal factors Product platformeffects External Definition and development ofproduct platforms factors Product Development Project (PDP) Product Platform Development Project (PPDP) Source: Modification from Harland and Yörür (2011)

  12. ProductPlatformDevelopment Projects (PPDP)vs. Product Development projects • PPDP are much more future-oriented than product development projects (PDP) i.e. ‘visionary’ in nature [Cooper 2001] • PPDP occur early in the life cycle (Tatikonda, 1999). • PPDP’s Output is not a new product, but pieces or elements that enable the development of subsequent products” (McGrath 1995). • Longer development time for initial product based on a new platfom (McGrath 1995) • Shorter development time for products based on existing platform • Usage phase of a platform is often longer than the usage of single products (Meyer & Utterback, 1993). • PPDP’s results have to be accepted by a limited number of internal customers: Project leader of product development projects • PPDP entail more product and process changes than derivative products. (Koen, 2005)

  13. OverviewThe Characteristics of Product Platform Development Projects • Product platforms • Product platform development projects (PPDP) • Expected effects, decisions, risk management in PPDP • Conclusion

  14. Challenges and decisions in PPDP Several products without platform Diversity Innovation Diversity Development Production Methods platform . Production Development Same components (standardization) . Production Development Same moduls ( platform strategy) . Production Development Standard product Synergies Development . Production

  15. Literatureresearch Effectsdescribed in industrycases (n=67) Cover multiple market segments Reduce production costs Reduce time to market Effectsdescribed in arguments (n=318) Reduce development costs Increase product variants Reduce (product) costs Improve design flexibility Cover global market Reduce customer lead time Increase quality 0 10 20 30 40 50 60 67 paper, 385 identifiedeffects, after classification 27 effects, top 10 ofthesearedisplayed

  16. PlatformEffects Competitive advantage Increase revenue Improve coherenceof products IncreasePrice Increasecompetitive advantage Covermultiple market segments Increasemarketshare Increase product variants Increasevolume Coverglobal markets Simplify marketing, salesand service Increase profit Strategic option: decrease price Sales, Marketing and Service costs Economy of scale Reduce sales, marketing and service costs Improvedesign flexibility Use resourcesefficiently Reduce time to market of products Development costs Decrease costs Reduce complexity in design Reducequotation lead time Reduce development costs Reducecustomer lead time Reduce customizing lead time Improveproduction flexibility Production costs Improve global operations Reduce production lead time With impact on Reduce productioncosts consist of Reduce complexity in production with optional impact Reduce procurement costs Increase quality Reduce logistic costs Effects found in productplatform literature Reduce risk Decrease investment risk othereffects Company overheadis not considered

  17. PlatformEffects Increaserevenue Increase revenue IncreasePrice Increasemarketshare Increaseof competitive advantage Increasevolume Increaseprofit Strategic option: decrease price Reductionof Sales, Marketing and Service costs Economy of scale Decrease costs Decrease costs Reductionof Development costs Reductionof Production costs

  18. Fuzzytargets: Platformvariantsfunnel Funnel IdeaFunnel PlatformVariants idea product family idea idea idea concept idea idea idea Customer Input market

  19. Idea Funnel Platform Variants Funnel idea product family idea idea idea concept idea idea idea Customer Input market projectmanagementdecisions market related decisions targetmarketdefinition function definition p roduct family definition goods and service bundling variantsandoptionsdefinition platform roadmap definition variants and options specification price strategy market entry strategy synergy related decisions technology usage platform project strategy b uilding blocks strategy interface strategy platform strategy (communality) platform strategy (frequency of module usage) core platform definition and variant dimension definition customer integration customer ideas sales information customer surveys sales activities Platformvariantsfunnel

  20. Productplatform developmentproject (PPDP) riskmanagement Future platformbasedproduct development projects (PDP) Future customer requirements Risk Management in Platform Projects Identification of expected effects PPDP risk identification Anticipation PPDP risk analysis Proactive/ reactivemeasures PPDP risk response planning Estimation of expected effects PPDP risk monitoring and control Transfer PPDP risk reporting

  21. OverviewThe Characteristics of Product Platform Development Projects • Product platforms • Product platform development projects (PPDP) • Expected effects, decisions, Risk management in PPDP • Conclusion • Product Platforms are important for companies to solve actual problems • Expected effects, decisions, Risk management are different than in regular PDP • Scientific literature about PPDP is still limited • this paper contributes to further research by structuring the problem • Knowing the characteristics of product platform helps companiesto be aware of possible situations and to deal with them easilyas PPDP have • high complexity • high number of interactive decisions • uncertainties in technologies and customer requirements

  22. Thanksforyourattention Harland Team in a Platform Project, 2012

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