Three steps to engineering and marketing strategic alignment

In today’s global markets, the need for innovative solutions is greater than ever. Increased product complexity means high cost of fixing or updating products. Increased competition means that products need to satisfy market needs well to succeed. Concurrent engineering across complex supply-chain also necessitates much better alignment between marketing and R&D. A lack of strategic alignment between marketing and engineering leads to many issues:

  1. Difficulty adapting to changing market needs
  2. Limited business/marketing visibility into development
  3. Differing expectations about project objectives/timeline
  4. Disconnected plans and wishful launch dates
  5. Late changes and cost overruns

Here are three steps organizations can take to better align marketing with engineering, product or technology development:Read More

User-centric Design – Volvo Example

Image From Autoblog

An interesting post at Autoblog has some data about product usability:

“Volvo CEO Stefan Jacoby has said his company’s products are “too complicated for the consumer,” according to Automotive News. Jacoby said 75 percent of Volvo customers don’t know “all the possibilities they have with their car.” He contrasted the automaker with Apple’s intuitive products, which make consumers feel in control of a device instead of overwhelmed by its capabilities.

In the past, we have discussed user-centric design and what we can learn from Apple. It is relatively easy to design pure hardware or software user interfaces. It is also relatively easy to manage pure hardware or pure software development efforts. Challenges arise when the product integrates custom hardware with integrated software: As development cycles, design processes and testing methodology tend to be quite different. What is a potential solution?Read More

Beyond Phase Gates – Agile R&D


Phased development with gate reviews has delivered many benefits to product development organizations. This process ensures business perspective is incorporated into product development. Gate reviews are generally led by senior managers. Their engagement drives organizational consensus and resource commitment. Gate reviews also guide the organization away from risky endeavors by focusing on predictability and return on investment.

However, stage gate process also introduces some challenges. This process is only applicable to large new product development efforts because of the additional overhead and required senior management time commitment. The gate review process is hard to implement on small sustaining engineering projects where the goal is fixing some issues or improving manufacturability. It is hard to apply this process to small technology development, advanced R&D or disruptive innovation projects. In many organization this means that small projects do not follow any consistent process. Hence managers loose visibility and control over the entire portfolio.

The stage gate process can be seen as waterfall model. This model assumes customer needs and functional requirements are completely known before development is started. For products with long development cycles or in rapidly changing markets, stage gates introduce many challenges:

  • Difficulty adapting to changing market needs
  • Limited business/marketing visibility into development
  • Late or uncoordinated requirements changes
  • Surprise issues and unexpected risks
  • Disconnected test plans and expensive testing

More importantly, this model reduces experimentation and prevents disruptive innovations from getting to market. As Clayton Christensen pointed out:

“The Stage-Gate system assumes that the proposed strategy is the right strategy; the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance. The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative.”

So what is the solution? Implement Agile Development..,
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Managing Innovations based on Delivery Time Frames

Source: Venture Beat
I have meaning to write about the article in Venture Beat Making corporate innovation work. It categorizes innovations based on time horizons and suggests that management processes be modified based the category:

* Horizon 1 activities support existing business models.
* Horizon 2 is focused on extending existing businesses with partially known business models
* Horizon 3 is focused on unknown business models.

It is important to keep in mind that these time horizons are being described at project start. The actual completion time changes with development progresses or resource allocation. For example, a Horizon 3 project that was started 5 years ago will be near completion now and may even be considered a Horizon 1 project. So, management and application of processes needs to change as the project progresses.

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Need for Structured R&D Roadmaps – Daimler Example

Source Daimler
It takes a long time to develop new technologies and integrate them into products. The wired article How Daimler Built the World’s First Self-Driving Semi has a great example:

Daimler, which owns Mercedes-Benz, has been working on autonomous driving for two decades.
…
As amazing as this thing is—it’s a fully autonomous 18-wheeler that works—company execs say it won’t can’t change lanes on its own, it won’t be market-ready for a decade, and could never replace human drivers.

Clearly, developing technologies takes a long time. So successful development needs intermediate productization of technologies.

Much of the technology in the Inspiration—the radars and cameras, the computing power and electrical architecture—has a long track record of commercial use in active safety features like lane departure warning and adaptive cruise control.

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Is Concurrent Engineering Beneficial to Complex Systems?

Source Jalopnik

Concurrent Engineering is simultaneous development of different subsystems, technologies and manufacturing process of a product across suppliers. This iterative development process can accelerate time to market and lead to cost/performance optimization at a system level.

As we have discussed in the past, concurrent engineering is absolutely critical to fast-paced high-tech and electronics industries. Global competition means that companies cannot afford to wait for suppliers complete their development to start planning theirs. In fact, this trend is only accelerating.

However, concurrent engineering adds to product development complexity and makes management even more challenging. If leading-edge companies such as Toyota face challenges due to complexity, is it worth applying these methods to low volume products in industries such as Aerospace and Defense or to a lesser extent Medical Devices?

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Developing Product Platforms – Microsoft Example


Recent news suggests that a new version of Microsoft’s critically acclaimed Surface Book is entering mass production. It appears that Microsoft had to make significant changes to the original Surface Book to meet some of its business goals…

The sources believe Microsoft’s decision to lower the price range for its new Surface Book is because the existing Surface Book’s high price level has significantly limited demand, while the detachable design also created conflict with its Surface Pro product line in terms of product position. Because of the two factors, the sources estimate that Microsoft only shipped 500,000 Surface Books in 2016.With the Surface Book to be positioned as a traditional notebook product and feature a friendlier price level, the sources expect related shipments to reach 1.2-1.5 million units in 2017, while the Surface Pro, despite weakening demand for tablets, will enjoy on-year shipment growth of 20% to reach six million units in 2017.

New product platforms that are significantly different from existing product-lines are notoriously hard to develop. It appears that even a very successful product platform such as Surface Book may actually need updates.
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Indirect Benefits of R&D – Chrysler Example


The article Heritage: Prowler was a vehicle ahead of its time. | driveSRT has some interesting data points about R&D portfolio executives. New technologies can have benefit far beyond the product for which they were developed. 

“Magnesium instrument panels, aluminum hoods and aluminum suspensions, vital crash safety design. All are key traits featured on new SRT vehicles that originated on the Prowler.”

Focusing solely or primarily on NPV for financial metrics to prioritize portfolios will lead us away from long-term discriminators. It is possible to compute financial return on sustaining product development or on products that are close to getting to market. However, it is difficult, if not impossible to accurately compute the return on investment for technologies that apply to multiple products (it requires estimating the part of the products NPV is generated by the technology). In fact, focusing solely on financial metrics will likely scuttle innovation.

What are some solutions:

  • Use financial metrics as one of many criteria for prioritization.
  • Set aside a fraction of the overall R&D budget for innovation and do not use financial metrics for innovation projects.
  • Demonstrate R&D value by tracking insertion of technologies across product lines (InspiRD can help)
  • Design off-ramps and integration of technologies along the path to full productization. This is what Chrysler SRT appears to have done successfully in case of Prowler.

Disruptive Innovations are Expensive

Companies around the globe pursue breakthrough technologies to grow. Surveys show that executives remain dissatisfied with the return on innovation investment.

The article Source: The big costs behind Google’s moonshot start-ups provides some useful data.

The debate among tech analysts isn’t about whether the moonshots will lose money, but rather how large the losses will be. Estimates cited in a recent Wall Street Journal article range from as little as $500 million in operating losses to $4 billion a year — and separately, one analyst, representing the “high estimate on the Street,” has placed a $9 billion price tag on Google’s far-flung efforts.

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