1998 Product Development Management Columns
Too many companies have climbed on the rapid-development bandwagon without any understanding of why they were there. Typically, someone in senior management initiates such a program with a proclamation that the organization should (or will) cut its development time in half. For example, this happened at a major electronics manufacturer in the U.S. Then a corporate staffer at this firm surveyed all divisions and found, when asked how much each division was cutting its time to market, that the answer was always the same: 50 percent. Good listeners! However, when asked why they were doing this, they all had various vague answers. The executive had not communicated the business imperative behind the number.
In fact, across-the-board compression is inappropriate, because some projects demand more, some less. Some projects should not even be accelerated, because profit drivers for these projects are in other areas, such as cost, quality, or reliability. It might be argued that speed would be nice to have, along with everything else. The problem here, of course, is that speed is not free.
Without having a business rationale behind it, the speed objective often gets misinterpreted negatively, primarily in two ways. Some people think that the executive is suggesting that they skip steps for speed. Apparently, this is just what is happening in one motor vehicle company that has accelerated recently and has seen its warranty costs jump. The other misinterpretation is that speed is just a guise for squeezing more work out of people; when the workers figure this out, the acceleration program loses its credibility.
Many companies have made impressive gains in speed by justifying it clearly in terms of marketplace dynamics, then calculating how much a month of delay costs the company in profit. (These calculations are illustrated in Chapter 2 of our book: Developing Products in Half the Time: New Rules, New Tools.) Companies such as Motorola, Chrysler, and Black & Decker have not sacrificed quality to gain speed. Instead, they have made acceleration a corporate program and invested in it heavily to make the changes needed. Motorola has spent generously on training, and Chrysler put $1.1 billion into a new technical center plus great sums on design automation.
Some executives get off on the wrong foot by confusing cycle time with productivity. They figure that if they can develop products twice as fast, they can ship twice as many new products this year. This is a doubling of their productivity, and this is what they are really after. The flaw in their logic is that accelerated projects usually must have higher “burn rates,” that is, more resources are consumed per unit of time. Besides, getting into the accelerated mode requires an up-front investment, as indicated for Motorola and Chrysler.
Chrysler has demonstrated they can develop new cars faster and more productively. But if you starve the program from the outset by thinking primarily in terms of cost savings and productivity, you will never make the fundamental operational changes needed to achieve either objective.
If you wish to get your new products to market sooner, clearly understand and communicate to the lowest level why the marketplace demands this. As you get into your calculations, you will discover where acceleration will pay off most and where it is not the prime objective. Make it clear that acceleration is needed without sacrificing quality and that acceleration is not developing two products for the cost of one. Finally, invest generously in switching people’s behaviors to the new mode, starting with your own behavior. Demonstrate your personal interest in the change by practicing more MBWA (management by walking around).
(c) Copyright 2013 Preston G. Smith. All Rights Reserved.