New Product Development 2

1. 2014_01_기술혁신세미나 Session 11 New Product Development 2 OM 박사과정 김수연 OM 석사과정 김인희 OM 석사과정 김경순

2. Introduction NPD 성과 기업 내부 역량 기업 외부와의 NW • Manufacturing capability • Integrated Problem Solving • Leadership(PM) & Organization • Flexible Development Process • : overlapping, • Etc • : reward, CAD, … • Development productivity • Lead time • Product Quality • Cost • Supplier Involvement • Market Feedback

3. Product development performance : strategy, organization, and management in the world auto industryClark, K. B. and T. Fujimoto (1991).

4. 1. Manufacturing Capability • Elements of successful NPD • : Focus on Design process, Solution of technical problems • : Manufacturing capability(ability to make things rapidly & efficiently) is a critical • sources of advantage in product development • Manufacturing Productivity& Development Productivity • : positive correlation

5. 1. Manufacturing Capability • Hidden manufacturing activities in the development process • 1. Prototype Fabrication Test engineers can begin prototype evaluation earlier Short (6 mo) More engineering changes resulting from tests can be made in time Reasonably high Reduce the negative impact of late engineering change Mostly production suppliers Prototype as problem detector

6. 1. Manufacturing Capability • Hidden manufacturing activities in the development process • 2. Die development • 1) Lead time(Performance of die development) • 2) Cost(Performance of die development) • - Japan : at most 20 % of the cost of a die • - US: 30~50 % of the cost of a die JIT Philosophy : Japanese firms have less WIP dies than US Supplier Network • US • : arm’s-length contractwith separate companies • Japan • : close & long term relationship with major suppliers

7. 1. Manufacturing Capability • Hidden manufacturing activities in the development process • 3. Pilot Run & Production Start-up • 3.1. Pilot run • - A full-scale rehearsal of the commercial production system • - Objective: to find and solve problems undetected during the prototype production • & testing • Reducing the opportunity cost for the pilot run by minimizing lost production. • Future workers can get early training in a very realistic setting. • Workers tend to get excited about a new model they see on the line. • Workers become motivated to learn more about a new model.

8. 1. Manufacturing Capability • Hidden manufacturing activities in the development process • 3. Pilot Run & Production Start-up • 3.2. Production Start-up(Ramp-up in assembly) • - The start-up of commercial production system • - Objective: same as pilot run • - Effective production ramp-up depends on manufacturing capability and its fit with • choice of ramp-up curve • Complexity ↓ • Task Continuity ↓ • Stable operating • condition ↓ • Task Continuity ↓ • Stable operating condition ↓ • ∵ manufacturing capability • (process control) U.S. & Europe Japan Japan

9. 2. Integrating Problem Solving Cycle • Successful product development can be achieved by • :Effective integration of different functional groupandengineering discipline • - cross functional team, simultaneous engineering • 5 Dimensions of Integrated Problem Solving Reduce lead time Rich, dense, early communication Limited communication

10. 2. Integrating Problem Solving Cycle • Successfulintegration problem solvingcan be achieved by • :Stage overlapping (high degree of simultaneous activity) • : Intensive Communication (rich, frequent, bidirectional information flow)

11. 2. Integrating Problem Solving Cycle • Integrated Problem Solving & Development Performance • 1. Integrated Problem Solving • - “ideal profile index” composed by 9 characteristics • (ex: high simultaneity ratio, early feedback from manufacturing, etc) • 2. Development Performance • - lead time, development productivity, total product quality Japan Effect Positive correlation

12. 3. Leadership and Organization • 조직의 형태와 리더십은 제품개발성과에 영향 미치는 중요한 요소임 • 3 Dimensions of Product Development Organization

13. 3. Leadership and Organization • 4 Modes of Development Organization • Broader responsibility and clout. • : internal/external coordination • : product planning & concept development

14. 3. Leadership and Organization • Patterns of organization and leadership • - Measure • Specialization: Number of people who participate in a project on a long-term basis • Internal Integration: Engineering coordination indicator (based on PM role) • External integration: Concept development & Market link indicator (Based on PM role) • Performance: Development Productivity, Adjusted lead time, TPQ Index Specialization External Integration Internal Integration U.S Japan Japan

15. 3. Leadership and Organization • Organization & Performance • Shaded diagram refer to high significant of relationships(.03) • External integration, in contrast, is closely associated with total product quality but not with lead time or productivity

16. 3. Leadership and Organization • Organization & Performance • Lower performers generally lack integration. • Some Japanese firms employing the middle weight system are both fast and efficient. • The very different circumstances of high-end specialists were acknowledged earlier, but even volume producers occasionally spawn light weight pm achieving solid results in a single dimension of performance(TQM).

17. Discussion Questions 1. Dimension of integrated problem solving에서 우측으로 갈수록lead time을 줄일 수 있는 좋은 problem solving form이라고 하였다. 이에 대한 반대 의견은? 2. 본 연구에서 제시한 5가지 dimension 외에 추가할 수 있는 dimension에는 무엇이 있을까? Reduce lead time Rich, dense, early communication Limited communication

18. Discussion Questions 3. 본 연구에서는 신제품 개발 조직 구조가 functional structure일 때보다 heavyweight product manager일 때, 더 좋은 성과를 가져온다고 하였다. Heavyweight product manager를 가져가는 조직 구조의 단점은 무엇이 있을까?

19. Developing product on “Internet Time”: The Anatomy of a Flexible Development Process Alan MacCormackRoberto VergantiMarco Iansiti(2001)

20. 1. Research Objective Many literatures on the Effective Development process before this article Previous authors have developed theoretical models which demonstrate the value of greater flexibility in a design process faced with uncertainty. 3. This study attempts to examine the underlying mechanisms through which firms directly influence the flexibility of their development processes

21. 2. Models of the Product Development Process Figure 1 - A stage-Gate Model of Product Development (Traditional Water fall model) • The product concept is defined and frozen prior to the start of detailed design, and the functionality this specifies in each module is completed prior to the start of system level test. • The First challenge this model faces is that it assumes all information about potential design choices is known or can be discovered during concept development. • Second challenge is that feedback on how the product performs as a system is not obtained until late in a project, when the functionality in each module has been fully developed

22. 2. Models of the Product Development Process Figure 2 - A More Flexible Model of Product Development • Recent studies have began to investigate more flexible models of development characterized by the overlapping of development stages (e.g. Krishnan et al. 1997). • In this model, development becomes an “evolutionary” process of learning and adaptation (Tushman and O’Reilly 1997). • This model commonly used for software development. • These models have been proposed to address flaws in the traditional waterfall model of development.

23. 3. Hypotheses • These two objectives (i.e. maximizing product performance and facilitating process flexibility) are often incompatible from a design standpoint; hence, the selection of the “optimal” product architecture becomes a more complex problem (Ulrich 1995). • Hypothesis 1. In uncertain and dynamic environments, greater investments in architectural design will be associated with better performing projects. • Where information about the user environment is tacit or “sticky” (i.e., not easily captured by traditional market research techniques) there is value in mechanisms which facilitate the release of early product versions to users when a project retains the ability to change the design. • Hypothesis 2. In uncertain and dynamic environments, earlier feedback on a product’s system-level performance will be associated with better performing projects. • Lower-level learning results in knowledge that can be directly applied to a specific context, whereas higher-level learning results in a deeper knowledge of the process of problem solving, especially with respect to analyzing new frames of reference. • Hypothesis 3. In uncertain and dynamic environments, development teams with greater amounts of generational experience will be associated with better-performing projects.

24. 4. Measures • Sample: 29 completed projects(unit of analysis) from 17 firms in internet software industry. • Performance(Dependent variable): Product Quality. Overall quality was defined as a combination of product features. Use the assessments of a panel of experts gathered using a two-round Delphi process. • Control variable: Resources. Resources allocated to each project to control for the potential impact of resources on product quality. • Development Process(Independent variables) • Investments in Architectural Design: The ratio of architecture design resources to development and test resources. • Early Market and Technical Feedback: Percentage of the product’s functionality that has been developed when each milestone(prototype during the concept development stage, system integration, the first beta release point) is reached. • Generational Experience: the proportion of team members with greater than two generations of experience.

25. 5. Results

26. 5. Results Feedback 중 Tech Feed back의 경우 프로토타입과 베타테스트와 상관관계가 높게 나와 제외하고 분석을 시행함.

27. 5. Results 상관분석 결과 Control 변수로 사용한 Resource와 경험 변수가 상관관계가 높은 것으로 나왔음.  구성원의 경험이 Performance에 영향이 없는 것이 아님. 자원의 효율적 배분에 크게 영향을 끼치는 것으로 해석할 수 있음

28. Discussion Questions • NPD 과정에Consumer를참여시키는 것이 오늘날 trend이다. Supplier 및 Consumer와의 전략적 관계를 통한 NPD가 가져올 수 있는 이득은 무엇이 있을까? Source: M. A. Kaulio(1998), TQM

29. Discussion Questions • Successful Customer involvement Case • LDD = Lego Digital Designer  Design by customer. • 신제품 개발의 혁신 동력을 다양한 User로 부터 효율적으로 확보

30. Project Scope and Project Performance: The effect of parts strategy and supplier involvement on product development Kim B. Clark(1989)

31. 1. Introduction • The importance of product development has motivated significant attention to the determinants of performance by both practitioners and academics. • This study examines one aspect of project strategy, project scope and its effect on project performance(Lead time and project manhour).

32. 1. Introduction • Project Scope • The extent to which a new product is based on unique parts developed in-house. • Unique parts have been selected, the firm may rely on a supplier for engineering work. • Two elements of scope • The choice of unique versus off-the-shelf parts • Choice of supplier involvement • Once unique parts have been selected the firm may rely on a supplier for engineering work, reducing internal engineering efforts in the project.

33. 2. Measure • Scope and Engineering Manhours • Decisions about scope have a direct impact on observed manhours in the project • C: Fraction of parts that are off-the-shelf • S: Fraction of engineering effort for unique parts done by suppliers • b: Fraction of total engineering effort that is part specific • b*c: Fraction of off-the-shelf parts • b*s(1-C): Fraction of unique parts developed by supplier NH = 1- b[C+S(1-C)] NH = 1 – (b*C) – [b*s(1-C)]

34. 3. Results Summary data on performance and content by region

35. 3. Results • Scope and Engineering Manhours (regression analysis) • Adding measures of project scopehas a dramatic effect on the regression. • Interaction between price and NH  imply that the impact of scope on manhours depends on the complexity of the product. • Japanese dummy excluded from the regression: the coefficient on the supplier variable increases by a factor of 2.7  quality of the relationship and the way that it is managed is important.

36. 3. Measure • Scope and Lead time • Impact of scope on lead time is not straight forward. • Lead time: Time elapsed between start of the development project and market introduction. • Lead time is determined by the critical path in the network • Supplier involvement may reduce lead time if a supplier were more capable in executing parts engineering

37. 3. Results • Scope and Lead Time (regression analysis) • Strong positive impact of scope on lead time increase in scope from the Japanese level of 0.57 to the U.S. level of 0.66 would increase lead time by 3.9 months • The effect of Interaction between price and NH is insignificant scope on lead time does not depend on the complexity of the product. • Japanese firms derive real advantages from their supply base.

38. 3. Results • Who does the work, and how the content gets implemented (off-the-shelf vs unique parts), makes a difference in the length of the planning process.

39. Discussion Questions • 기업이NPD에 Supplier를 참여시키고, 이들의 역량을 적극적으로 활용하는 것이 항상 긍정적인 영향만을 가져다 줄까? Supplier의 참여로 발생하는 문제는 어떤 것이 있을까?

40. Discussion Questions • Executives, viewing manufacturing mainly as a cost center, give shot shift to the impact that outsourcing or offshoring it may have on a company’s capacity to innovate. • Indeed, most don’t consider manufacturing to be part of a company’s innovation system at all. • Massive migration of manufacturing from United States has seriously eroded the domestic capabilities needed to turn inventions into high-quality, cost-competitive products, damaging America’s ability to retain a lead in many sectors.

42. Discussion Questions • The problems In managing supplier Involvement • (FINN WYNSTRA et al. 2001) • The relation as a source of problems • The supplier as a source of problems • The manufacturer as a source of problems • Solution • Identifying specific processes and tasks that need to be carried out, aimed at the integration of product development and sourcing processes; • Forming an organization that supports the execution of such tasks; and, finally, • Staffing the organization with people that have

43. Accelerating Adaptive Processes: Product Innovation in the Global Computer IndustryKathleen M. EisenhardtBehnam N. Tabrizi(1995)

44. 1. Comparison of compression and experiential model

45. 2. Compression model H1: More time spent in planning is associated with shorter development time. H2: More supplier involvement is associated with shorter development time. H3: More designers using computer-aided design(CAD) is associated with shorter development time. H4: A higher degree of project overlap is associated with shorter development time. H5: Multifunctional teams are associated with shorter development time. H6: Greater reward for schedule attainment is associated with shorter development time.

46. 3. Experiential model H7: More design iterations are associated with shorter development time. H8: More time spent in testing throughout the development process is associated with shorter development time. H9: Less time between milestones is associated with shorter development time. H10: Greater power of the project leader is associated with shorter development time.

47. 4. Methods • Data from 72 product development projects drawn from European, Asian, and U.S. computer firms. • Computer companies that compete in the personal computer(PC), minicomputer, mainframe, and peripherals segments of the industry. • Unit of analysis: product development project • Within each company, two product development projects within a single product group were used.

48. 5. Result Opposite Opposite Compression Model Opposite Experiential Model Compression Model Experiential Model Compression + Experiential Parsimonious model

49. 5. Result Split-sample Analyses Certain products

50. 5. Result Split-sample Analyses Less Certain products