Not a Brain Cell to Waste

I've been fortunate since I started my consulting practice. I've met some amazing people. I've had a lot of fun in places as diverse as Quebec, Minneapolis, Penang, Amsterdam, Orlando, San Diego and Providence, RI to name just a few. I've done well financially and I have enough people coming to me that I don't need to "sell" so much as just ask good questions of the people who come my way.

But that's not what gets me into every morning. If it were just about the fun or about the money, I wouldn't do it - there are easier ways to do both. No, the thing that gets me up every morning is my commitment to the engine of innovation, and its ability to solve problems that make peoples' lives better.

In yesterday's New York Times, Thomas Friedman wrote an article Georgia on My Mind (registration required) where he questioned the two political candidates' commitment to driving the engines of innovation. He took an American perspective on this - claiming that the United States must continue to invest in new technology development to thrive.

I take a more global perspective. I believe that we need innovation to solve many problems that don't begin or end at the borders of any particular nation: eliminating the possibility of terrorism as a tactic while addressing the root causes that foster it, finding alternative clean energy sources, solving public health issues, providing food and clean water to six billion people, bringing developing nations into the global economy, etc, etc. We are here because the engine of innovation opened up lines of communication and possibilities that we could not even imagine at the beginning of the 20th century. We have so many challenges left to solve in the 21st century.

The principles and practices of lean product development help ensure that we use the best of our knowledge to make decisions and eliminate wasted effort, reinvention, unnecessary activities, etc. so that we can solve these problems at the pace we need to solve them.

Whatever product your company makes, your shareholders, executives and customers need you to do it as well and as fast as possible. However your products contribute to the greater good (and we all do, somehow, or our products would not deliver enough value to sell), we also need your best work.

For all of us to live in peace and prosperity, we truly don't have a brain cell to waste.

Time-to-Market for Innovations

There is one measure of time-to-market that is critical for any product development organization: time-to-market for innovations. That is, how long does it take for a truly innovative feature that directly impacts customer value to become part of a product that a customer can buy?

Some of the things that we do in product development to speed time-to-market (platform-based development, standardized work for development and testing, partner co-development) can actually hurt this metric, by making it much harder for new technologies to make their way into the product stream.

There are three different ways to manage this risk:

• Develop advanced technologies off the schedule for new product development, and incorporate them into new products as they mature. This mitigates the risk that an innovative feature will need to be removed from a product late in the game to maintain schedule or simply because it's not ready for prime time.
  
• Provide a "waiver" process to selectively exempt products from platform requirements, so that platform-based products will have a little breathing room to incorporate innovations without putting the entire product family at risk.
  
• Use standardized work appropriately - which means that the people doing the work create the standards, continuously seek ways to improve them and recognize the situations where the standards make no sense. In those cases, provide a means for disregarding the standard if the team can create a strong business case for doing so.
  

Market Pull Signals and Time-To-Market

How much does customer demand for new products drive your development process? The answer will tell you how important time-to-market is relative to other indicators of product development performance.

"Market pull" is an indicator of customer demand for new products. An effective product development organization times its product releases to synchronize with market pull signals.

Some products have very strong pull signals - such as any product that sells best in the summer or at Christmas. A successful company in such a market will have already figured out how to deliver products on time to meet that market window. Others have only weak signals, such as mature products with long lifespans of five years or more. In those markets, product developers may choose to invest extra resources into lowering product costs or adding more features than rushing to market with a product that is only a marginal improvement over an existing product.

Depending on the nature of the pull signal, speeding up time to market may or may not have any impact on the product's return on investment. If it doesn't, then you will need other measures to translate increased R & D productivity into business results, such as number of new products released, lower warranty cost or cost to manufacture. If you insist upon an effort to reduce time-to-market in such an environment, don't be surprised if the product development teams display disinterest.

How to Talk to Product Developers about Value

I have a hint for those of you working in "lean six sigma change agent" roles or similar areas where you are expected to evangelize lean into product development: you need to stop talking like manufacturing people, and start talking value in terms that are meaningful to product developers.

Let's take "takt time" or "cycle time" for instance. A typical product development project takes months, if not years - unlike the hours or days a manufacturing process takes. A product development organization can usually tell you how long it will take to develop a "typical" product with a given scope. Better ones can give a pretty accurate estimate for the time from the end of feasibility to the beginning of production for several different types of projects.

But the term "cycle time" doesn't reflect the way product development managers think about time. These managers develop and execute product strategies that detail the products to be delivered into specific markets at specific points in time. Development managers think in terms of how far in advance the projects need to start in order to finish on time. This metric is called "time to market" or "speed to market" to reflect the managers' focus on delivering the product.

"Takt time" is even worse because it implies regularity and consistency that simply doesn't reflect realities in product development. We may do a simple refresh on last year's product for 2008 so that we can leapfrog the competition with a completely new product in 2009. Not even Toyota, with its annual demand for new car models, is as consistent as a takt time would indicate.

You need to be similarly careful when talking about costs. When you talk about cost reductions, do you mean development cost, tooling cost, direct material cost, cost to manufacture, cost to service and support, or sales and marketing costs? If you use a value stream map as your primary tool, the only cost you can impact is development cost, but that is usually only a small part of the overall product cost. If you are focused on Design for Manufacture and Assembly (DFMA) or of of its variants, then how are you measuring the impact to total product cost?