Docstoc

Class Intro

Document Sample
Class Intro Powered By Docstoc
					        Session 2
Turning Technologies into
 Profitable Products and
         Services
      Steven P. Nichols
Class               Topic                                   Assignment
                    Intro. to Managing Prod. Dev. &
    1    9-Sep-06   Production                              Readings + Class Prep.


    2   23-Sep-06   Capturing Value + Function Analysis     Readings + Class Prep.


    3    7-Oct-06   Functional Analysis Class Discussion    Readings + Class Prep.
                    (Continuing Invention)                  Function Analysis (Team)
    4   14-Oct-06   Prod. and Venture Design (1:30 pm)      Readings + Class Prep.


    5   28-Oct-06   Product Portfolio and Capacity          Readings + Class Prep.


    6   11-Nov-06   Global I2P Morning Session              Readings + Class Prep.


    7   11-Nov-06   Global I2P Afternoon Session            Readings + Class Prep.


    8    2-Dec-06   Mass Customization + Prof Resp          Readings + Class Prep.
                                                            I2P Analysis (Individual)
                    Project Presentations + Strategic Use
    9   16-Dec-06   of IP + Review & Discussion             Readings + Class Prep.
                                                            Final Presentation (Team)
                                                            Oral/Written
                                                                                        2
Agenda
• Wrap-up from Last Class
  – Unbundling the Corporation
  – Architecture: Openness and Proprietariness
  – TiVo/Iridium
• Introduction to Product Development
  Infrastructure
• Designing the Business Model
  – Product vs Service Business Model
  – Growth Through Services
• Function Analysis
Takeaways from the Last Class
• Building an enduring
  company requires careful
  design of the business
  operating system.
                                              Focus
      • Understanding the
        economics, and putting
        together processes,
        policies, and people that Fit
        well.
      • Focusing on the core
        business without getting
        distracted.
      • Remaining Flexible to
        changes in the environment
                                        Fit           Flexibility
                                                             4
  Takeaways from the Last Class
• How does one build a
  sustainable economic
  advantage
                                          Focus

• What are your product’s
  distinguishing characteristics?

• Do customers care about those
  characteristics?
                                    Fit           Flexibility
                                                         5
        Product Objectives?
• Separate the customer from her money in
  a way that the customer would rather have
  your products and service than their
  money
• That is: Value Added to Customer




                                          6
               Challenges
• Can you design your competitor out of the
  market?
• Can you sustain that advantage?
  – Continue to improve match of customer needs
    and product features
  – Intellectual Property protection
  – Lock-In (Installed Base/Service/Contracts)
• Cf
  – Competitive behavior
  – Anticompetitive behavior
                                              7
              Challenges
• Can you provide these products and
  services in a way that add value to
  – Your customers?
  – Your venture?
  – Your investors?
  – Your self?
• Can you transition from a technology and
  business idea to a successful product and
  successful venture?
                                              8
  From Technology to Markets
• Need to transition from acting as a “tech
  scout” to execution of products and profits
  – “We’re a classic MBA case study in how not to
    introduce a product. First we created a
    marvelous technological achievement. Then
    we asked how to make money on it.”
  – Iridium CEO John A Richardson, August 1999



                                                9
           A Business Model
• Business Model
  – The concept and delivery of the offering and the
    configuration of resources and value chain
    activities which results in differential value to
    customers and superior returns to investors.
• A more useful definition:
  –   What do you sell?
  –   Who do you sell to?
  –   Where do you sell?
  –   When do you sell?
  –   Why do you make money?

                                                        10
5 Forces of Tech Commercialization
                                   What

                                       What do you sell: Product,
                                       Service, IP, Experience


                                   Why?
    When                                                            Who
                                Why do you
  –When do you                  make money?             Who do you sell to? Who
  sell? (Early                                          do you partner with?
  innings, later in
  the cycle etc.),
  disruption etc.
                                   Where

              –Where do you sell/make? (Which segments, which countries?)   11
  Speed is Critical in the Product
               Cycle
• Cycle time advantage (even if small) is critical
  because it compounds over multiple cycles.
  Frequent cycles reinforce the advantage.
     Generation
     Technological
     Improvements                                          Fast-Cycle
                                                       6
                                                           Competitor
                                                   5

                                           4
                                                             Slow-Cycle
                                       3                     Competitor
                                                       4
                               2
                                               3
                     1a
                                   2
                          1a
                                                               Time
          0      0
    The Technology Adoption-Diffusion
           Cycle (Moore, et al)
              Bowling
              Alley     Main street




gatekeepers




   5%
                                      13
          Cracks in the Adoption Cycle
                     (Moore)


     No useful
    application Confidence    Willingness       No pain
                               to learn




Tech
enthusiasts             Pragmatists   Conservatives   Skeptics   14
   Visionaries
             The Approach
• Build a series of niches based on solving a pain

• Cover as many applications as possible

• Go for critical mass to propel you across the
  chasm

• Generate a tornado
  on the other side


                                                     15
               Types of IP
•   Patent
•   Trade secret
•   Copyright
•   Trademark




                             16
Selecting Your Strategy

       Big Co. A
          Vs.
       Big Co. B




                          17
Selecting Your Strategy

       Big Co.
         Vs.
      Small Co #1




                          18
Selecting Your Strategy

       Big Co.
         Vs.
      Small Co #2




                          19
       TiVo
A Time of Strategic
     Inflection
 Case Discussion



                      20
          TiVo



Case Discussion and Critique
         What/Who is TiVo?
• What does TiVo offer? What is the
  company? What is the Product
  – Technology?
  – Target Customers?
  – Options?
  – Value Proposition?
• What business is TiVo in?


                                      22
   TiVo Options/Business model
Option:            Pro   Con
Become a
Entertainment
services
company
Premium Setup
box manufacturer
Licensor of TiVo
technology
Commodity setup
box manufacturer
                                 23
Other options
                  Takeaways from Tivo

• TiVo shows the difficulty in penetrating an
  established market.
• Strength and Threats from Existing Architecture
• Could a Product Line Strategy have worked?
   –   In this case, the market can be segmented into creative users, passive users, sports fans, and busy
       users.
   –   Sports fans and passive users (couch potatoes) prefer the pause live program function. Busy users
       prefer the season pass (recording) function.
   –   Creative users like the network programming function.
   –   Different products may be offered to cater to these different segments.

• Is the technology a full product or a feature?


                                                                                                             24
    Factors Influencing the Success
              of Adoption
• Advantage
   – Are compelling advantages offered by the product in question?
• Compatibility
   – Is the product consistent with the lifestyle, environment of customer?
       • (Example: Molecular Imprints printing field)
• Complexity
   – Is product easy to understand and use?
• Observability
   – Are the results/benefits of adopting product observable, describable to others?
• Riskiness
   – Are there foreseeable negative economic, social or physical consequences?
• Divisibility
   –  Can the product be adopted on a gradual or limited basis?
   Source: Everett Rogers, The Diffusion of Innovations, Free Press, 1983.
                                                                               25
             Takeaways from Tivo

• Product-Service Definition and Positioning
  – A collection of functions does not maketh a compelling product.
  – Bundling features may raise the product cost and does not appeal to any
    one segment. It also makes the product hard to describe.
      • Another Example: Hospital “Clean Hands” detector
  – There is also a positioning problem – TiVo is not a perfect substitute for
    VCR’s, cannot play video-cassettes.
  – Is licensing the functionality to cable and satellite companies a better
    approach?

• Understanding the Diffusion of Innovations
  and rate of Customer Adoption?
• How strong is the “first to market”
  advantage(?)
                                                                                 26
                            TiVo Updates



A new TiVo option grabs photos and music from folders on a PC for enjoyment on the TV


 Software Anoints the PC as an Alternative to TiVo
 By J.D. BIERSDORFER   NY Times


        People who adore the idea of TiVo but can't afford it may want to weigh the option of recording
 television shows on the hard drive of a personal computer. Personal Video Station 3 is the latest version of
 a software program from SnapStream Media that bestows TiVo-like powers on the humble PC.
 Personal Video Station works with a TV tuner card that is installed in the computer. Once the PC is
 connected to the television, the software can be programmed in much the same way that a VCR is. New
 features in the latest version include subscription-free local program listings that you can use to record
 shows with the press of a button, and the ability to watch shows in full-screen mode on the monitor.
 Personal Video Station 3, which is to be released today, has a suggested price of $99.99 but will be offered
 for $49.99 for a limited time at www.snapstream.com. Compatible TV tuner cards are available at the site. 27
 Unbundling the Corporation:
 Key Role of Interaction Costs
“All else being equal, a company will
 organize in whatever way minimizes
 overall interaction costs”
   -Costs of interacting with outside parties is the
    main reason firms do activities.

    -Does a decline in a firm’s interaction costs
    means a reduction in firm scope?
                                                       28
   One Company Three Businesses
   Different economies drive three different businesses
       within a company.
                   Innovation            Customer              Infrastructure
                                         Relationship

Economics          Speed                 Scope                 Scale
Culture

Competition


   Conflicts arise between three different businesses, and compromises have to be
        made.
   “Scope, speed, and scale cannot be optimized simultaneously.”
        RBOC Example
                                                                                    29
         Critiquing Unbundling

Interaction costs may have been reduced but
  have not completely disappeared!

• Dual advantages provide a powerful barrier to
  entry.

• Decisions about scope are contingent on the
  venture’s current position and capabilities.

                                                  30
        Types of Architecture
• Open architecture: Rules to interface with system
  openly published.
   – Closed architecture: Rules to interface with the
     system are a secret.
• Examples: Cf: Microsoft/Linux
• Proprietary architecture: Intellectual property for
  the architecture owned by a firm.
   – Examples:
• Non-proprietary architecture: Intellectual
  property is public property.
   – Examples:

• Can a proprietary architecture be open?

                                                        31
Open, proprietary architectures

• Why open proprietary architectures may
  be valuable?
  – Openness contributes to market share – why?
  – Proprietary control imposes order and raises
    the stakes.
  – Why is the proprietary approach derided?
  – What about Linux?
  – What is the appropriate role of standards and
    regulation?
                                                32
Linux Challenge (From Information Week)
 • As vendors scramble to port business
   applications to Linux, the lack of a standard set
   of features for the open-source operating system
   is causing headaches and user uncertainty.
    – There are at least 15 English-language distributions of
      the operating system for the Intel platform--and none of
      them are exactly alike.
    – Though they are similar, since they each start with some
      version of the same freely available source-code base,
      the differences are such that there is no guarantee that
      your commercial Linux application will run on all of them.
    – Vendors porting commercial applications to Linux are
      finding that the subtle (and sometimes not-so-subtle)
      differences in Linux distributions can cause problems for
      customers and developers.
                                                              33
 Source: Information Week (Jan 24, 2000)
Winning Architecture Strategy: Balance
            in Openness

• Opening the architecture just the right amount is
  the key to competitive success. IBM Vs. Apple in
  the Personal Computer Industry
  – IBM opened the PC architecture too much without
    maintaining any proprietary control. Intel and Microsoft
    gained.
  – Apple tied its OS to hardware too closely, preventing
    the mass adoption that the IBM PC enjoyed.
• Opening the right amount combined with an effort
  to keep the system moving forward can be a
  powerful approach.
   The Rise and Fall of Iridium
• Additional Observations?




                                  35
   Capturing Value Through a Product
                  Line
• A product line not only helps meet the differing needs of
  different customers (“horizontal differentiation”), but also
  helps in capturing value from customers with different
  willingness to pay.

• The Value Capture Problem:
   – How do you charge each customer according to their ability and
     willingness to pay?
   – Product line can help segment a mass market




                                                                  36
 Versioning or Quality-Based Discrimination

• Offer multiple products and price them accordingly for
  self-selection.
Many Ways to version based on:
   – Convenience
   – Comprehensiveness
   – Speed
   – Data Processing
   – User Interface
   – Customer Support
• Goldilock Pricing: Why 3 versions may be preferable to
  two?
   – “Extremeness Aversion”
                                                           37
Enspire Learning

  Case Discussion
Who is Bjorn Billhardt?
      MBA Student Feedback
• “This is the first online module that I have
  enjoyed.”
• “Usually you have to click all over the
  place.”
• “The information was very clear and
  strongly helped reinforce my knowledge of
  the material.”

       – HBS Case 9-802-001

                                             39
     Different Segments of the E-
            Learning Market
• What is the relative attractiveness of the
  different segments of the e-learning market?
  – What are the segments?

• Why does Enspire prefer to be in the content
  creation/production segment?



                                                 40
         Product or Service?
• Which business model should Enspire adopt?



• Which customer should Enspire first target
  (beach head)?

• What development approach (Hire content
  experts)? Specialize in Customized learning
  tools? Others?
                                                41
          Challenge in Hiring
• “Production staff would have to be more
  interested in understanding the customer
  and designing content that worked well for
  students than in the details of
  programming software, creating graphics,
  or producing animations.”
     • See case p. 9



                                           42
              Decision
• How should Enspire proceed?




                                43
     Enspire Case Takeaways

• Enspire discussion shows the trade-offs between the
  product and service business models.
   – Products are scalable, but not sustainable.
   – Services are sustainable, but not scalable.
• What do you see as the product-service decision in other
  industries?
• Is delivery as a service an option for some of your
  technologies?
• Are services a viable option for product companies?



                                                        44
Enspire 2004 Presentation

         Bjorn Billhardt
 (See Blackboard any time after
          noon today)
Growth Through Services

       A Discussion
   Relationship with Bundling?
• What points do Hagel and Singer make in
  “Unbundling the Corporation”?

• Do you Agree?

• Does “Unbundling” have anything to do
  with “Creating Growth with Services”
  (Sawhne and Krishnan)?
                                            47
       Repeated Observation
• “What the customer buys and considers
  value is never a product.”
• “It is always what a products does for him.”
          » Peter Druker (cite in “Creating Growth with
            Services”)




                                                          48
   Basis of Temporal and Spatial
              Linkage
• Firm has established a market and a
  relationship with the customer.
• Firm has specialized knowledge of
  customer needs and experiences.
• Firm has subject matter expertise related
  to customer needs.
• Can the Firm expand the relationship and
  interaction for mutual profitability?
                                              49
      Business Units Architecture
     (Mature Business => Steady
 •
                  State)
            Customer
                          Needs
                                                 Marketing
                                                                 Design Input

                       Sales
           Product &              Distribution               Science/Engineering
Customer   Money
                       Sales
                                          Final Product

                                                 Manufacturing

                                                                   Manufacturing
                                                                   Specifications



                                                                          50
  Speed is Critical in the Product
               Cycle
• Cycle time advantage (even if small) is critical
  because it compounds over multiple cycles.
  Frequent cycles reinforce the advantage.
     Generation
     Technological
     Improvements                                          Fast-Cycle
                                                       6
                                                           Competitor
                                                   5

                                           4
                                                             Slow-Cycle
                                       3                     Competitor
                                                       4
                               2
                                               3
                     1a
                                   2
                          1a
                                                               Time
          0      0
          Risks of Services
• Key challenges with service expansion
  – New business model – Lack of familiarity
  – Lower margins (at least for some services)
  – Capability risk
  – Avoiding customer free-riding
• Growth without “adjacency moves” causes
  undue risk.
• Think of growth through linkages

                                                 52
 Growth Through Adjacencies
• Linkages are one-step moves from the
  core business
  – Overlapping capabilities in terms of customer,
    product
  – Aim is to minimize risk, maximize profit
• Types of linkages for an installed base
  – Temporal linkage
  – Spatial linkage
  – Process linkage
  – Pattern linkage                              53
          Creating Growth
• Define Temporal Expansion

• Define Spatial Expansion




                              54
           Creating Growth
• Define Temporal Expansion
  – Growth from services that add new activities
    to a primary activity chain


• Define Spatial Expansion
  – Growth from services tha add new activities to
    an adjacent chain


                                                   55
  Temporal Linkages and Customer
           activity chain
         Description

• Understand the complete
  chain of activities around a
  discrete customer set                                  Customer
                                                         Activities
• Identify breaks or gaps in the
  activity chain to highlight
  areas for potential expansion           Gaps in
  and a potential                         activities
  complementary market.            The diagram depicts all of the activities that
                                   surround a specific need. Growth avenues
                                   can be found by mapping the activities,
                                   identifying those that are not performed, and
                                   filling those needs through new offerings




                                                                              56
Boeing’s temporal expansion

                                Operate
         Finance                Planes
                                                            Repair
         Planes                                             Planes
           85% of all commercial aircraft flying today are
           Boeing aircraft, yet Boeing owns less than 5% of
           the $60 billion commercial aircraft services
 Buy       business. Boeing plans to increase its $3.2 billion
Planes     commercial aircraft services business to equal its
           $30 billion product business in 5-10 years.           Maintain
                                                                 Planes
            Modify
            Planes                     Upgrade
                                        Planes
                                                                       57
     Temporal linkages: Diagnostic questions

•   How do customers become aware of the need for
    your products?
• How do customers find your products?
• How do customers evaluate and select your
  products?
• How do customers order and purchase your
  products?
• How are your products installed and maintained?
• How are your products and services paid for
  (financed)?
                                                58
     Temporal linkages: Diagnostic questions
                   (Continued)
• How are your products stored?
•    Where are your products used, and what processes are
    they part of?
•   How are your products customized and configured for
    customers?
•   What help do customers need to use your products
    effectively?
•   How do you handle returns and exchanges?
•   How are your products repaired or serviced?
•   How are your products disposed of?
                                                          59
         Exploiting spatial linkages

               Description

                                                     Adjacent      Current
• Identify adjacent segments by looking
                                                      market       market
  for customer sets that have needs that
  are similar to currently served
  customers, and can be served with
  capabilities, offerings, and channels
  that are not very different from the core
  business.

• Identify adjacent needs for current         The diagram depicts two markets, each
  customer segments that can be served        with a related set of customer needs,
  by redeploying, disaggregating, scaling     and a common branching-off point
  up, and scaling down existing
  offerings.




                                                                                  60
       Example: Intuit and the SOHO
      market (Small Office/Home Office)
   • Intuit originally designed Quicken to serve consumers; however, as it discovered small businesses were
     utilizing its products for accounting purposes, Quicken moved to fill that need in the adjacent market


Description of Background:
- Intuit’s original product was Quicken, a personal financial
  management software for consumers.
                                                                                 Quicken              Quicken.com
- Small business owners began using Quicken for accounting                  Internet Gateway
  purposes.
- In response to customer inquiries about how to use Quicken for                                       Home
  various business purposes (i.e. payroll and bill pay), Intuit launched       SOHO
  QuickBooks in 1992 for small business owners.                                                         Web
                                                                                Web
- Using QuickBooks, small business owners can not only perform the
  simple check register tasks that were included in the original Quicken
  product, but can also create custom invoices, enter sales, perform
  payroll, and manage inventory in QuickBooks
                                                                                  SOHO                  Home
                                                                                Desktop                Client-
Analysis:                                                                                              server
- By meeting a customer need and leveraging its name brand, Intuit         Quickbooks,                        Online
                                                                            Quickpay                        Banking,
  owned approximately 80% of the small business financial software
                                                                                                          Bill Payment
  business by 1999.                                                                            Home
- In 1999, QuickBooks Pro was ranked 5th as the top selling business
  software and QuickBooks 6th                                                             Desktop

                                                                                           Quicken                  61
                                           Source: Nexis, company search
Example: GM and new service
         platforms
                                                                Home           Home
                                                                sales        relocation

                                                                                          Satellite
                                                      Home           Home                  Data
                                                     Mortgage       Services
                          Auto
                                                                    (GMAC)
                       financing
            New                    Vehicle                                             Satellite
           vehicle                 service                                               TV
                                                             Home
            sales                                          insurance        Home
                                                                          monitoring
  Used
 vehicle              Automotive            Auto
  sales                Services          insurance

                                                                         Travel
                                                                        services
           Vehicle                                                                        Satellite
            repair                  Roadside
                                   assistance        Emergency                             radio
                        Parts,                        services                            service
                     accessories                                        Telematics
                                                                         Services
                                                        Vehicle          (OnStar)
                                                                                           Cellular
                                                      monitoring                          Voice/data
                                                       services                            services
                                                                        Personal
                                                                        Concierge                      62
                                                                         services
           Exploiting process linkages
               Description
                                                                                       New and
                                                                                       broader
• Broaden the way you define the core                                                   market
  business, thereby expanding your scope
  of activities and increasing the potential
  market size.
                                                                  Existing
• Take over part of your customers’                               market
  operating processes, by taking
  advantage of the fact that you perform
  these activities better than customers
  can perform them.

• This strategy allows firms to become
  more deeply embedded in their                The first ring of activities within the diagram
  customers’ operating processes, and          depicts a set of activities around a narrowly
  therefore increases customer loyalty.        defined market. As the company broadens itself to
                                               provide a broader array of products and services,
                                               the size of its market opportunity becomes larger.

                                                                                            63
Example: Logistics services at
           UPS
                                        Transportation
                      Supply chain
                                           network
                      management
                                         management



          Assembly                                          Service
          & Testing                                      parts logistics
                                                         management


                                 Package
     Warehouse                   delivery
      design &                   business                    Logistics
     management                                             technology
                                                            management




                   Customer                       Reverse
                     Care        Logistics        logistics
                  management      service        management
                                 business
                                                                           64
           Pattern Linkages
• Can you generate insight from the data
  produced by the customer’s use of the
  product?
  – Progressive’s Autograph application
  – Is there an opportunity for Microsoft?




                                             65
    Mitigating Risks in Service
             Expansion
• Try incremental expansion.

• Keep either customer or product familiar.

• Partner with providers that offer service
  capability.


                                              66
           Key Takeaways

• Do not ignore business model when
  commercializing technology
• Consider the service business model,
  internet makes it more scalable.
• “Servicize to learn, Productize to earn”
• Use linkages to expand into services for
  product companies.

                                             67
Consider Laser Interaction
      with Material




                             68
SLS Process?




               69
            Function Analysis
•   Purpose of Function Analysis
•   Team Presentations in Session 3
•   Function Diagram plus description
•   You should have user names and
    passwords




                                        70
      Executing on Product
         Development
  How to be consistent and predictable in
launching products while gaining speed and
                flexibility?

Companies face different challenges in this
                   area!
 What are some examples of challenges?

                                          71
Challenges Major Corporations
            Face
• What are some challenges the mightiest
  of firms face?
  – Do they lack resources?
  – Do they lack know-how?
  – What are their issues and problems?


• Examples of situations and steps taken:

                                            72
 Issues Facing Small Growing
            Firms
• When a company is small, it has some unique
  advantages in product development.
  –
  –
• As it grows, it faces several new challenges.
  –
  –

• Some companies are unaware of their
  problems. Others over-react. Solutions require
  fine judgment. Cookie-cutter solutions from
  consulting firms do not help!                  73
 Consistency and Predictability
• What do consistency, predictability mean?
  –
  –
• Why are these important as a firm grows?
  –   What makes achieving consistency & predictability difficult?

                   Is it because the destination is new?

              Why is developing new products not trivial?
                                     –


                                                                     74
Consistency is Not Easy Either!

            Who is the
      Sam                    John
            better shot?




            Who would you
             hire as body-
               guard?;-)
                                    75
     Classifying and Managing Risk




     Technical Risk                 Market Risk



Inability to meet product     Inability to sell the product
      specifications        despite meeting specifications!




                                                        76
Speed May Increase Project Risk


  • Why attempts to speed increases risk?
    – GE Compressor Example
  • A structured approach such as a phase
    review process can help ensure risk
    management while implementing
    acceleration methods.



                                            77
 Speed Without Increased Risk
• Efforts to speed-up, if not managed carefully, can lead to
  less than thorough development and higher risk.
• A structured approach such as a phase review process
  can help ensure risk management while implementing
  acceleration methods.


 Idea

                   Phase           Phase             Phase               Phase
                           Gate            Gate                Gate                Launch
         Gate                                                              4       Gate
                     1      1        2      2          3        3
          0




         Initial        Decision on       Post-               Launch             Post-Launch
        Screen         Business Case   Development           Readiness            Business
                                         Review               Review              Analysis
                                                                                               78
                                                  Compare

       1.                           3.                    5.                      7.                            9.
  Imagine                       Incubate              Demonstrate              Promote                       Sustain
    the dual                                            contextually              adoption       8.
                   2.            to define         4.                     6.                             commercialization
(techno-market) Mobilize                                     in                              Mobilize
                                               Mobilize                Mobilize
     insight                                              products                         complimentary
                Interest                       resource              market consti-
                       and                        for
                                                            and         tuents               assets for
                    endorse-                    Demo     processes                            delivery
                      ment
                               Commercializ-
                                  ability




Idea


                        Phase                    Phase                 Phase                 Phase
                                      Gate                   Gate                  Gate                Launch
             Gate                                                        3                     4       Gate
                          1            1           2          2                     3
              0




             Initial            Decision on               Post-                  Launch              Post-Launch
            Screen             Business Case           Development              Readiness             Business         79
                                                         Review                  Review               Analysis
Rationale for the Phased Approach
  • What do the phases do?
    –
  • Why reviews?
    –
    –
  • What are the origins of this approach?

  • What are good and bad practices in
    product development project
    management?                              80
Project Management at Dell Computer Corp.




 Learning Objectives

 Framework to understand project management maturity

 Developing products in fast-moving environments:
 Tension between structure and flexibility
                Dell Case (Continued)

•   The Dell case shows stages of project management maturity at a growing
    firm
•   Managing technology and customer preference uncertainty is a key
    challenge in managing projects.
      – Deferring the decision through over-design or parallel path helps the
         team keep its options open.
      – Organizational implications of deferring decision making.
      – Overcoming Established Mindsets
•   What Dell Did?



•   Key Insight: Managing the balance between structure and flexibility in
    projects.


                                                                                82
Takeaways: Managing Project Uncertainty
   Idea

                     Phase           Phase             Phase               Phase
                             Gate            Gate                Gate               Launch
           Gate                                                              4      Gate
                       1      1        2      2          3        3
            0




           Initial        Decision on       Post-               Launch             Pre-Launch
          Screen         Business Case   Development           Readiness            Business
                                           Review               Review              Analysis


• As time progresses, the stakes go up. Project
  risks must be reduced before the stakes become
  too high.
• Incremental approach to increasing the stakes
• Buying a series of looks at the project outcome.
                                                                                             83
  Benefits from a Phased Project
• Reviews serve to make management
  intervention effective and avoids escalation of
  commitment.
• Many reviews make it difficult for weaker ideas to
  reach the market. Also, many “mini-launches”.
• Early reviews reduce the probability of late
  appearance of bugs/quality problems.
• Cross-functional team presentation at reviews
  promotes shared understanding of the process
• Venture capital approach to investment.



                                                       84
                  Negatives:


Reviews can slow down the program
Can get bureaucratic and sequential.




                                       85
        Speed Can Be Critical in
          Commercialization
• Cycle time advantage (even if small) is critical
  because it compounds over multiple cycles.
  Frequent cycles reinforce the advantage.
     Generation
     Technological
     Improvements                                          Fast-Cycle
                                                       6
                                                           Competitor
                                                   5

                                           4
                                                             Slow-Cycle
                                       3                     Competitor
                                                       4
                               2
                                               3
                     1a
                                   2
                          1a
                                                               Time
          0      0
A More Concurrent Phased
        Process
                                   TIME (months)                                 KEY ACTIVITY

0             3              6           9           12            15        18

    Profile                                                                      - Project scope
                                                                                 - Schedule
                                                                                 - Cost/res ourc es



                  Planning                                                       - Bus iness plan
                                                                                 - Senior management
                                                                                   review



                             Impleme ntation                                     - Design
                                                                                 - Build
                                                                                 - Tes t


                                                                                 - Manufacturing qualification
                                          Qualification
                                                                                 - Prototype test s
                                                                                 - Launch readiness
                                                                                 - Manufact uring ramp-up

                                                                                 - Marketing communication
                                                          Launch
                                                                                 - Sales/s ervice training
                                                                                 - Manufacturing readiness
                                                                                 - First shipment


                                                                    Acceptance
                                                                                 - Early market
                                                                                   surveillance

                                                                                                                 87
Phase
Rev ie ws
 Critical Path and Critical Chain
           Management
• Most projects have a particular set of
  activities whose completion dictates the
  schedule;
  – These activities are said to be in the critical path
  – Determines points of leverage for managerial attention.

• Approach to critical path management:
  – Break down the project into activities; obtain time
    estimates and precedence relationships.
  – Determine slacks and the critical path
  – Perform sensitivity analysis
                                                              88
           Example: Product Launch at 3M
Activity       Label   Duration   Predecessors
Service        A       8          -
Training
Technical      B       10         -
Documentati
on
Field          C       6          A
Readiness
Assessment
Field Tests    D       3          A
Drop Ship      E       5          B, D
                                                 6
                                  8              C
                                  A
                                                 3
                                                 D        5
                                  10                      E
                                                     89
                                  B
Earliest start schedule on a
         Gantt chart
 A
 B
 C
 D
 E

 0
     2   4   6      8     10   12   14   16
              Time (weeks)




                                              90
Prototyping and Technology
     Commercialization
 Prototyping to Mitigate Risk
• Prototypes bridge design and production, and serve
  several purposes:
     •
• The 4F’s of Prototypes: Form, Fit, Function,
  Fabrication
• A number of different options exist for
  prototypes:
  – Analytical Vs. Physical Prototypes
  – Focused Vs. Comprehensive prototype
• Flexibility, Cost, and Effectiveness are issues
  in deciding what kind of prototypes to develop.
Cost-Representativeness Tradeoff



         Conventional Prototyping




                              Rapid Prototyping



                Representativeness

                                                  93
 Prototypes as Project Milestones
• Prototypes help synchronize work of multiple
  participants. Milestones are very important for
  projects. (Build consensus, demonstrate
  progress, motivate)
Issues in Managing Prototyping
• Number of prototypes: How many prototypes
  to do?
  – Can too many prototypes be harmful?
  – Typically, Alpha, Beta and Pre-production
• Timing of prototypes: When and how to
  schedule prototypes?
  – prototyping early or later?
          Planning Prototypes in a
              Project/Venture

1. List the types of uncertainties facing the project

2. Define the Purpose of the Prototypes (reduction of
   xxx uncertainty)

3. Establish the level of
   approximation/representativeness

4. Decide the number and timing of prototypes based
   on the risks and resources available.

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:3
posted:3/30/2012
language:
pages:95