Preface to Exploratory Product Development™

Product developers are under tremendous pressure these days. Executives in product development are asked to bring new products to market faster while being smarter about choosing which projects to pursue. To top it off, their R&D budgets and the size of their product development staffs are decreasing.

With reduced resources, businesses are finding it harder to jump through all the hoops between a product idea and its market. Lack of resources and bureaucratic complexity can hold up a project for months, costing millions of dollars in lost sales revenue.

Pressures like these are not going away any time soon. We have been advising clients experiencing these pressures over the last 25 years, and we have witnessed their daily frustrations. Common themes we see across many companies include missed launch dates, missed sales goals, internal conflict, budget overruns, and the wrong products released to the marketplace. Often, the most common stressor is a feeling of uncertainty: Are we doing the right thing?

At first, to address those problems, we implemented phased-and-gated processes, the traditional best-practice product development system. Companies saw improvements on many measures, but still we heard some common complaints. Our clients told us that when they followed the traditional phased-and-gated process, they experienced burdensome documentation, a slow pace, and creativity-killing rigidity.

For us, the straw that broke the camel’s back came in the form of a very dissatisfied R&D director at a Fortune 500 company where we assisted in the design and implementation of a traditional phased-and-gated process. While the director accepted that the phased-and-gated approach would provide helpful structure, he was particularly resistant to its adoption, determining that it would be too slow and insufficiently adaptable to the ebbs and flows of his business. Additionally, he lacked sufficient resources to complete the comprehensive documentation that the process required. Even if the documentation requirements could be fulfilled, he personally could not allocate enough time to meet his gatekeeper obligation for review.

But if the industry-standard best practice—the phased-and-gated approach—wasn’t the best methodology for his company, what was? At the time, there were no good alternatives. That’s when we went to work in earnest on the development of our new approach. We knew product development could be improved, and now we have the answer: Exploratory Product Development™ (ExPD), a two-pronged approach to improving product development. ExPD treats product development as a system with all elements fully integrated, and it offers a fundamental redesign of the development process based on reducing uncertainties and risk.

Prong 1: The Product Development System

Some academics and practitioners have tried to simplify product development into two neat, pithy phrases: “choosing the right project” and “doing the project right.” These statements oversimplify the goal and imply that the work, coordination, and decisions involved in choosing the right projects and doing the projects right are simple and straightforward. The truth is, product development is much more than these two tasks, and to see that, we only need to look at who is involved in product development.

Virtually every department in an organization is touched by product development, meaning that multiple people, functions, processes, and infrastructures must be coordinated. As a result, product development is complex and needs to be managed as a system. In consulting with clients, we have always treated product development as a system, integrating these important elements: strategy, market understanding, process, teams and organization, portfolio management, and metrics.

In contrast, traditional best-practice systems don’t treat product development as an integrated system. Managers, pressed for time and resources, tend to limit their focus to just the product development process. And that causes many of the problems we see:

  • A lack of a strategy to guide product development
  • Insufficient understanding of the market to identify important customer problems
  • Lack of a defined and strategically integrated portfolio management system, which leads to the selection of the wrong projects
  • Inadequate infrastructure of tools and metrics to support product development
  • Lack of clear roles and responsibilities for both the project and executive team
  • Organization, team structure, and culture that are unaligned with the goals of product development

When developing ExPD, we sought to develop a comprehensive approach that addresses and integrates these important system elements.

Prong 2: The Product Development Process

Another way in which ExPD’s two-pronged approach differs from the traditional processes is in its fundamental redesign of the development process in order to reduce uncertainties and risk. Traditional phased-and-gated processes address risk by spelling out every step of the process: who is responsible, what deliverables should look like, and how decisions are made. The idea is to make sure nothing is missed; it’s a means of reducing the risk of failure and loss from poor project implementation and decision making. But this approach creates its own risks.

Being slow when the rest of the world is changing quickly from globalization, increased competition, and new technologies carries its own set of risks. You can lower profits if you miss opportunities or release outdated products. If you delay activities and decisions to specific points in the process, you run the risk of wasting resources on projects that should be killed. In sum, the typical focus on avoiding project risk misses a needed focus on myriad other risks. You need a new way of managing risk, all risk.

To address that need, ExPD introduces the concept of a risk-driven process. This means the process activities are determined by the need to identify and resolve important risks, which rapidly drives down overall risk and improves the likelihood of a successful product. With ExPD, we introduce the concept of profiling risk for measuring and monitoring risk.

Our Sources of Influence

As we formulated ExPD, we sought to develop a process that that would identify the assumptions, constraints, risks, and unknowns associated with the development of a new product, and this would guide the activities throughout the project. As our design work progressed, we were fortunate to come into contact with three major sources of expertise and influence that aligned with our new orientation.

The first of these was Preston Smith, a recognized authority in the field of flexible product development and author of Flexible Product Development: Building Agility for Changing Markets. Preston is a strong advocate of the flexible approach over the more rigid phased-and-gated approach, and he graciously provided his insight as we integrated his concepts into our methodology. Upon Preston’s retirement, we assembled a repository of his essays and articles on our firm’s website, at “Preston’s Corner.”

Our second source of influence was an article in the Harvard Business Review entitled “Discovery-Driven Planning,”1 in which authors Rita Gunther McGrath and Ian C. MacMillan examine the difference between planning for a known business and planning a new venture. They explain why the planning tools customarily used for product planning are rendered ineffective by the high levels of uncertainty and risk associated with a new venture. Instead, they proposed a systematic process for identifying, testing, and managing assumptions—an approach that we determined is adaptable to product development. We saw such an adaptation during an engagement with a client, where the innovative R&D director demonstrated an impressive method for integrating assumption-based testing into the product development process.

Our third major source of influence was a workshop with Steve Blank, author of The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company,2 CEO of the Lean Launch Pad, and the widely recognized creator of the customer development methodology that launched the lean start-up movement. We were fortunate to have participated in Steve’s Lean Launch Pad Faculty Workshop at the University of California, Berkeley. Despite his primary focus on business start-ups, we found many of his concepts applicable to our work in product development with established organizations.

Each of these three major sources of influence—Preston Smith, McGrath and MacMillan, and Steve Blank—came into play just at the time we were working on an alternative to a more traditional phased-and-gated process.

Our Community of Experts

In addition to these three major influences, we built a community of experts to review our book and ExPD approach. Over the years, we have worked with various professionals from these communities, each bringing their own language, training, experiences, and tool kits. One common theme across these communities is their desire to improve product development. Our principal reviewer is Preston Smith, and other expertise came from the following communities:

  • Agile/Flexible
  • Design Thinking
  • Engineering
  • Industrial Designers
  • Lab—Prototyping Specialist
  • Lean LaunchPad and Lean Startup
  • Marketing/Product Management
  • Operations Management
  • Product Development/Innovation

ExPD Is a New Mind-Set

In spite of its shortcomings, the phased-and-gated approach is appropriate for companies that need a lot of structure and guidance. We are very familiar with this methodology, and we have experience consulting and training with companies on how to use it. In fact, our familiarity with the phased-and-gated process is what has enabled us to see how product development can be done differently.

When we showed the ExPD methodology to the R&D vice president of innovation strategy at a Fortune 500 company, her first response was, “This is a great process, but do you think people will actually be open to doing the necessary thinking? Most product developers want to be told what to do. They don’t want to think; they want a more structured approach.”

She was right that some companies prefer a structured approach, which is intended to provide oversight and control in an environment that is often chaotic. It achieves this by explicitly spelling out a series of phases, activities, deliverables, evaluation points, and evaluation criteria, each supported by comprehensive documentation. This approach can be extremely helpful for organizations that have an undocumented process in an environment that is often ad hoc and reactive. We also find that a structured process works well for employees who are new to product development and need explicit instructions.

ExPD is for organizations looking for a better, faster, less risky approach to product development. This is a good thing: it means a company adopting ExPD is creating a competitive advantage over companies that follow the traditional approach.

Our Approach for This Book

We decided that the most interesting and effective way to introduce ExPD would be to tell a story that shows how an actual ExPD system would be implemented. Thus, our book is based on a story meant to spark your imagination. We also provide plenty of background information to help you translate the story into your own organization: supporting theory, best practices, real-life experiences, practical tips, and links to video clips that illustrate major points within each chapter.

We hope this story-based but practical book will help you develop a more comprehensive system-based, risk-managed, flexible, and efficient product development function in your organization.

Download a copy of the Preface

For more information, or to participate in a pilot, please contact:
Mary Drotar

1. Rita Gunther McGrath and Ian C. MacMillan, “Discovery-Driven Planning,” Harvard Business Review (1995): 44–54.
2. Steve Blank and Bob Dorf, The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company (Pescadaro, CA: K&S Ranch Publishing, 2012).