New Product and Process Development (1)

1. New Product and Process Development (1) 김은희, 조인성

2. Goodness of Fit • 디자인의 궁극적인 목적은 form 이다. • Form 형성의 이유: 세상이 완전히 regular or homogeneous 하다면 force 와 form 이 필요 없지만,irregular 한 세상에서는 form 이 필요함. • 모든 디자인의 문제는 두 가지의 entities, 즉 form 과 context 사이의 fitness 를 성취하기 위한 노력으로 부터 시작되며, • Form : 문제에 대한 해결책을 의미. Context에 대한 명확한 이해를 바탕으로 디자인 을 구성함. • Context : 문제를 정의. 본질적 속성을 구성하는 요건. • Design: form 과 context 를 구성하는 총체에 관한 것. • 즉 , 우리가 디자인에 대해 말할 때, 진정한 목적은 form 그 하나만이 아니라, form 과그것의 context 를 조합하는 앙상블을 말하는 것임. The rightness of the form depends on the degree to which it fits the rest of the ensemble. • 다양한 ensemble 의 예 (p.16)

3. 그렇다면 form 과 context 사이의 fit 를 characterizing 해보자. • Real world 에서 우리가 다루고 있는 context 를 설명할 unitarydescription 은 없음. • Context 는 매우 복잡하고 여러 변수를 동시에 고려해야 하는 속성이 있으므로 단일한 방식으로는 설명이 불가능 하고, • Form 역시 테스트 하는 것은 비용이 많이 들거나 불가능 할 수 있으므로 • Form과 context 는 적절한 수준에서 상호 fitness 하는 관계가 바람직하고, 이를 위해서는 context 자체에 대한 명확하고 구체적인 설명이 필요함. • Good fit 이란? • 어떤 면에서 완벽하게 만족할 만한 기준을 제공해줄 수는 없으므로, good fit에 대한 요구조건은 무한함. • 그러므로 fit 에 대한 기준으로써 잠재적인 misfit 리스트를 이용함. (ex) misfit 의 예 (p.23)

4. Source of Good Fit • Unselfconscious culture • 교육이 규칙(general principle)이 명확하지 않은 상황에서 이루어지고, • 노동의 분할이 한정적이기 때문에 어떤 분야에 대한 전문성이 거의 없음. • Communication 기술이 발달하지 못하여 written records 나 architectural drawings 이 없고, intercultural exchange 가 거의 없음. • 다른 문화나 상황에 대한 정보가 거의 없고, 기록이 부족하므로 같은 경험만 반복적으로 전해지고, 사람들의 행위는 habit 에 의해 지배됨으로 개인이 창의성을 발휘할 필요가 없고, 물리적 패턴을 반복하며 익히게 됨. 따라서 같은 form 이 계속 반복적으로 만들어짐. • 문화의 Form-making 이 imitation 이나 correction 을 통해 informally 하게 학습되어 지면 unselfconscious culture 로 부름. • Selfconscious culture • 교육이 formal 하게 이루어 지며,teaching 이 명확한 규범을 기반으로 이루어짐. 사람들은 일반적인 규칙에 따라 빠르게 더 많이 배울 수 있음. • 공식적인 instruction 에 의지하며, 직접적이고 명확한 원리를 알고, 지도할 수 있는 형태로의 규칙을 만들 수 있어야 함. • 새로운 purpose 가 항상 새롭게 발생함. • 현대의 context 는 구조적으로 매우 복잡하고 변수 사이의 연계성이 높으므로 복잡성과 연계성에 대한 이해가 필요함. • 문화의 form-making 이 명확한 규칙에 의해 academically 지도된다면 selfconscious culture 로 부름.

5. The Natural and Artificial Worlds • Natural science • Knowledge of things in the world, characteristics, properties, behavior, interaction. • Goal is to find pattern in apparent chaos. • The task of science is to show that the wonderful is not incomprehensible, to show how it can be comprehend- but not to destroy wonder • Artificial science: • Knowledge about artificial objects and phenomena. • Four distinctions between natural and artificial • Artificial things are synthesized by human beings • imitate appearances of nature, but lack some aspects of reality of natural • can be characterized by functions, goals, adaptation and • are often discussed in terms of imperatives along with descriptive.

6. Inner environment vs. outer environment • the real nature of the artifact is the interface. • Interface is considered as a meeting point between “inner environment”, the substance and organization of the artifact itself, and an “outer environment”, the surroundings in which it operates. • The design artifact mediates the demands of the outer environment through a set of operative principles in its inner environment. • Design is concerned with how things to be and the natural sciences are about how things are. • Optimization theory- in designing, it based on utility theory and statistical decision theory, and it is used as a logical framework for rational choice among given alternatives by deducing which of the available alternatives is the optimum.

7. Choosing satisfactory alternatives • A practical procedure pursuing not the best but better, satisfactory alternatives, satisficing design solutions. • Searching for all alternatives is the computations required astronomical and cannot be carried out by humans and existing or even prospective computers design as resource allocation • Cost minimization as a design criterion has changed from implicit to explicit consideration & design functions as resource allocation • In Designing • The complex system that might to be constructed in a hierarchy of levels • Design of complex system decompose it into semi-independent components corresponding to its many functional parts. • Mutually rewarding conversation and experiences sharing helped us combat our own multiple-cultures isolation

8. Fuzzy Front End of New Product Development NPD (New Product Development) One Market Success 1.7 Launched 10 to Front End 4 to Development Takes 40-60% of total development time and determines 80% of total costs (Smith, Reinertsen 1995, p. 49, Schmidt 1995)

9. Product development cycle Incremental technology improvements need to be motivated then anticipated and then acquired. Implementation of new technology next requires research in how to embed the technology into a new model of a product, plan that new model, design, and produce the new product model. In the product - development cycle, the technology implementation stage begins with research (benchmarking), which then leads to product planning (necessary and desired features), and then into product design before product production Frederick Betz, "Managing Technological Innovation: Competitive Advantage From Change", 3rd Edition, John Wiley & Sons,

10. What is new product development? • Ulrich and Eppinger (2004:2) define NPD as ‘the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of a product.’ • Addressing this larger context, Wheelwright and Clark (1992: Chapter 1) defined NPD as ‘the effective organization and management [of activities] that enable an organization to bring successful products to market, with short development times and low development costs.’ • Clark and Fujimoto (1991: 7) add that ‘performance results from consistency in total organization and management.’ C. H. Loch and S. Kavadias, Handbook of New Product Development Management: Butterworth-Heinemann, 2007.

11. NPD 관련 기존 연구방향 • NPD encompasses a large number of topics and challenges in a firm, such as strategy formulation, deployment, resource allocation, and coordinated collaboration among people of different professions and nationalities, and systematic planning, monitoring, and control. • In that light, NPD has long been an important topic for several business research disciplines, certainly economics, marketing, organizational theory, operations management, and strategy. C. H. Loch and S. Kavadias, Handbook of New Product Development Management: Butterworth-Heinemann, 2007.

12. Product Development: Past Research, Present Findings, and Future Directions (1995) - Shona L. Brown and Kathleen M. Eisenhardt • Innovation 관련 연구 분류: • economics-oriented tradition: patterns of innovation across countries and industrial sectors, evolution of technologies • organizations-oriented tradition: microlevel regarding how specific new products are developed -> 이 분야에 집중 • Product development의 중요성 • Product development is critical because new products are becoming the nexus of competition for many firms(e.g., Clark & Fujimoto, 1991) • Product development is thus a potential source of competitive advantage for many firms (Brown & Eisenhardt, 1995) • Thus, product development is among the essential processes for success, survival, and renewal of organizations, particularly for firms in either fast-paced or competitive markets

13. 눈문 구성 • Product-development literature를 three streams로 분류 • ①Rational plan, ②communication web, and ③disciplined problem solving • The research within each stream is theoretically and methodologically similar. • Synthesize these research findings into a model of factors affecting the success of product development • Potential paths for future research

15. Product Development as Rational Plan • [pioneering work] Myers and Marquis(1969) and SAPPHO studies (Rothwell, 1972; Rothwell et al., 1974) • This rational plan perspective emphasizes that successful product development is the result of (a) careful planning of a superior product for an attractive market and (b) the execution of that plan by a competent and well-coordinated cross-functional team that operates with (c) the blessings of senior management. • Simply put, a product that is well planned, implemented, and appropriately supported will be a success.

17. a product that is well planned, implemented, and appropriately supported will be a success.

18. Product Development as Rational Plan [장점] • This broad-brush approach leads to an excellent and a comprehensive overview of the product-development process, which emphasizes features of the product, internal organization, and the market. [단점] • The findings of many studies read like a "fishing expedition“- too many variables and too much factor analysis. In this research stream, it is not uncommon for a study to report 10 to 20 to even 40 or 50 important findings • the research stream relies heavily on retrospective sense making of complex past processes, usually by single informants. • Most important, the research in this stream often presents results without relying on well-defined constructs.

19. Product Development As Communication Web • [pioneering work] Allen at MIT (1971, 1977) • early studies highlight the importance of external communication to success. Specifically, these studies observed the presence of "gatekeepers"-(i.e., high-performing individuals who also communicated more often overall and with people outside their specialty) (Allen, 1971). • Von Hippel (1986) noted how important communication with key customers was regarding better product designs. • more effective teams engaged in both political and task-oriented external communications, • the relationship among the mean tenure of a team, the degree of external communication, and performance. but this relationship reversed and performance dropped off after five years. • Two theoretical theme: information-processing view, resources dependence view

22. Product Development As Communication Web [장점] • In contrast to the first perspective, this stream is narrowly focused on one independent variable-communication. Thus, these studies emphasize depth, not breadth as in the rational plan, by looking inside the "black box" of the development team [단점] • the principal shortcoming of this perspective is that it is so focused on communication by project team members that other factors are neglected. • performance measures frequently are very subjective, and so it is difficult to know whether the results would replicate for more objective measures of performance, such as product profitability. • this stream does not distinguish between different types of products, such as incremental versus breakthrough versus platform products.

23. Product Development as Disciplined Problem Solving • [pioneering work] studies of Japanese product-development practices in the mid-1980s (e.g., Imai et al., 1985; Quinn, 1985) • Successful product development is seen as a balancing act between relatively autonomous problem solving by the project team and the discipline of a heavyweight leader, strong top management, and an overarching product vision. • The researchers observed that strong formal ties to suppliers and R&D networks were very important to the product-development process. • the authors observed that product development was accelerated by overlapping of development phases and cross-functional teams only if supported by continuous communication among project members. • senior management should engage in "subtle control."

24. They(Clark & Fujimoto, 1991) reported that extensive supplier networks coupled with overlapping product-development phases, communication, and cross-functional groups (what they term integrated problem solving) improved the performance of development teams. • Iansiti (1992, 1993) deductively examined the mainframe computer industry. The primary result is that a high system focus (i.e., a combination of technical integration, exposure to systems integration, and accumulation of interaction knowledge) predicted both lead time and productivity. • One focuses on factors such as planning and overlap that are relevant for more stable products in mature settings (e.g., Clark & Fujimoto, 1991; Iansiti, 1992), and the other focuses on experiential product design that is relevant for less predictable products in uncertain settings, such as personal computers, work-stations, and peripherals.

27. Product Development as Disciplined Problem Solving [장점] • In contrast to the rational plan stream, this stream is more specific about the effective organization of work and is more focused on the development process and product concept than on the financial success of the product. • In contrast to the communication web perspective, this stream has a broader scope and considers the role of suppliers and senior management in addition to project leaders and teams. [단점] • One is that there is a lack of political and psychological realism. • Second, some of the constructs are challenging to comprehend. For example, subtle control, product vision, and system focus are vague concepts. • Finally, there is an extensive reliance on a Japanese viewpoint.

28. TOWARDA N INTEGRATIVE MODELO F PRODUCTD EVELOPMENT • Project Team • Project Leader • Senior Management • Suppliers and Customers • Financial Success

29. AGENDA FOR FUTURE RESEARCH • One research opportunity is to examine the primary links of the model-that is, the links among process performance, effective product, market factors, and financial performance. • A related research opportunity is determining the relative importance of these factors. • examine whether process performance, product effectiveness, and munificent markets are actually independent variables. • A second area of research is the organization of work. As was noted, two models have emerged to describe alternative organizations of work. • yet this second model(experiential product development) has received only limited empirical examination. • For huge and lengthy projects, Benghozi (1990) suggested that innovation routines, which include dynamic planning, monitoring, and scheduling projects over time as the environment changes, are needed. • Third, our understanding of how senior managers affect development is incomplete.

30. Strategy, structure and performance in product development: Observations form the auto industry (1991)- Michael A. Cusumano and KentaroNobeoka Japanese firms: integration of workers and suppliers, as well as the development and systematic application of innovative managerial and quality-control techniques for manufacturing

31. product development as ideally composed of three elements: a product strategythat determines task requirements in individual projects; project structure and processes (the organization and management systems); and product as well as project performance.

33. Key variables • Product strategy • product concept, which may include the pricing segment (luxury versus economy) or size of a model, as well as the degree of new or sophisticated technology incorporated into different components • Task requirements is the individual project strategy, which includes project (or task) complexity and project scope. • Structure and process • include the internal organization and management of product development, as well as the utilization of external resources. • Performance • Input measures : engineering hours and “lead time” • Output measures: technical performance, styling or the match of the product with the target customers’ tastes, • Market performance: market or production share and growth in share.

34. Major findings - Product strategy to performance • Product-strategy taxonomy: high-end specialists, volume producers • Japanese manufacturers in general displayed higher development productivity in terms of engineering hours and lead time. • Japanese firms were more dependent on suppliers than the U.S. or European manufacturers -> reduced project scope, the number of in-house engineering hours as well as the amount of time projects required • The number of model lines a company offered also correlated closely with its total sales volume. • The specific assumption of this study, although not tested with performance data such as market shares, was that shorter product life cycles for replacing existing models and adding new models provide an advantage in that faster firms can more quickly and broadly expand their product lines as well as introduce new technology or better meet customer demands as these change over time.

35. Major findings - Product strategy to performance

36. Major findings - Product strategy to performance replacement rate: (the total number of new models in this period – the number of new models that were new product lines rather than replacements for existing models,) / the number of models the firm had in the base year expansion rate: the number of totally new models / the number of models the firm had in the base year.

37. Major findings - Product strategy to performance Design for Manufacturability (DFA): asked 19 automobile companies to rank competitors’ products in terms of ease of assembly.

38. Major findings - Structure and process to performance • Japanese manufacturers, in general, have “heavier” heavyweight product managers than their U.S. or European counterparts. • Japanese projects, in addition to their superior performance characteristics in general, had higher overlapping ratios. • Japanese projects had more informal and intensive “information processing” among various stages that seemed to make this higher degree of overlapping possible and useful. • Japanese auto producers developed extensive networks of subsidiaries and other suppliers, and then subcontracted huge amounts of manufacturing work as well as cooperated in technology acquisition and components development

39. Major findings - Structure and process to performance

40. Research critique • Product strategy to performance • Clark and Fujimoto: did not adequately treat the level of difficulty • Sheriff and Nobeoka: do not adequately explain how they arrived at the weights used for different types of changes or components • one project per company does not say much about which company is consistently superior in product development • Krafcik’s productivity research, centered on assembly operations rather than components manufacturing as well as assembly. • there is the issue of economic returns to investments in product development apart from market share • product-development performance and project complexity with changes in sales and profits but uses financial data at the company level

41. Research critique • Structure and process to performance • no study concentrates on the supplier coordination process in product development, and there are even fewer studies on other forms of inter-organizational coordination. • pay more attention to adjusting for differences in vertical integration for development • needs further exploration is internal project management • mechanisms through which product managers contributed to higher design quality or higher development productivity • multiple project coordination • Have studied only a sample of one project per manufacturer.

42. Technology integration: Managing technological evolution in a complex environment (1995)- Marco Iansiti • This work aims to fill some of the gap between these two bodies of knowledge: existing research on organizational response to technological evolution, and on the management of R&D organizations. • Development performance under discontinuous technical change • By discontinuous, we mean that relationships between product functionality, process requirements and disciplinary expertise change, necessitating a substantial evolution in the knowledge base of the development organization (as in Anderson and Tushman, 1990; Henderson and Clark, 1990).

43. 연구 모형 System-focused organizations will be associated with high levels of development performance in environments characterized by discontinuous technological change. System-focused organizations will be associated with a broader approach to solving problems than other organizations-this will involve information search and processing activities that cross a broader base of existing disciplinary expertise. In a complex environment characterized by technological discontinuities, high problem-solving efficiency(and development performance) will be associated with approaches that sample a broad base of disciplinary expertise.

44. Empirical approach • Mainframe processor, 27 projects, 61 problem-solving efforts

45. Empirical results - Problem solving and performance <P1> In a complex environment characterized by technological discontinuities, high problem-solving efficiency(and development performance) will be associated with approaches that sample a broad base of disciplinary expertise. • 개발성과 지표(종속변수): personyear, 개발시간 • R&D 조직에서의 지식의 진화와 관련 있음 - disciplinary knowledge bases are linked to each other • Integration group members had managed to resolve a difficult problem early by framing it broadly and by making use of a novel combination of context-specific knowledge bases. 큰 문제해결 폭은 더 작은 person year(더 큰 생산성) 더 빠른 개발속도 -개발성과와 context-specific breadth는 유의 -개발성과와 context-independent breadth 유의하지 않음 P1 성립

46. Empirical results - System focus and performance <P2> System-focused organizations will be associated with high levels of development performance in environments characterized by discontinuous technological change. • <표6> The correlation between individual indicators of system focus(Table 2) and development speed and productivity • (-)의 유의한 상관성 • System focused 프로세스는 개발성과와 연결됨을 보여줌 P2 성립 System focus와 개발성과(personyear, 개발시간)와 유의(-)하게 나타남(0.1%수준)

47. Empirical results - System focus and performance <P3> System-focused organizations will be associated with a broader approach to solving problems than other organizations-this will involve information search and processing activities that cross a broader base of existing disciplinary expertise. • 문제해결의 넓이(폭), system focus, 개발성과간의 논리적 고리 P3 성립 문제해결의 폭은 system focus와의 관련성이 유의적으로 있음을 보여줌(0.1%수준)

48. Empirical results - Development process and problem-solving approach System-focused organizations: do a good job of identifying potential problem areas early in the project, before concept selection was completed.

49. Discussion • Literature Review Paper v.s. Empirical research • Physical Product와 Software Product는 어떻게 다른가? • NPD v.s. NSD(New Service Development)의 유사점과 차이점은? • 미국에서의 일본 및 한국 차에 대한 품질 이슈를 어떻게 봐야 할 것인가? • 제품의 출시 간격이 시장 성과에 미치는 영향은 무엇인가? • 주기적 구매 제품(자동차, 스마트폰, …) • 비주기적 구매 제품

50. [첨부] Past overviews of NPD research - 1