Courier: R&D Planning & Portfolio Management at Microsoft

I have been meaning to write about development and cancellation of Courier, an innovative tablet concept from  Microsoft.  The c|net article on the subject provides quite a bit of useful information – both about innovation management best practices and some opportunities for improvement.  Courier was developed at Microsoft’s Skunkworks (Pioneer Studios).  They invested quite a bit of resources in the concept (130 employees and $25M in funding).  The concept was very well received (See Courier: First Details of Microsoft’s Secret Tablet in Gizmodo):

It feels like the whole world is holding its breath for the Apple tablet. But maybe we’ve all been dreaming about the wrong device. This is Courier, Microsoft’s astonishing take on the tablet.

However, they had to cancel the product because it did not fit into Microsoft’s product portfolio (See Microsoft confirms, kills Courier in one fell swoop — Engadget):

Well this is depressing. Word has just gone fluttering out of Redmond that work on the Courier project — a heretofore rumored dual-screen tablet which rightfully set the tech world ablaze — has been spun down by the company.

It is unclear which, if any, technologies developed as part of the innovation project ever got transitioned into the rest of the portfolio.  The cancellation led to significant organizational strife and hard feelings.  I think R&D managers can learn a lot from this event.

Courier’s death also offers a detailed look into Microsoft’s Darwinian approach to product development and the balancing act between protecting its old product franchises and creating new ones. The company, with 90,000 employees, has plenty of brilliant minds that can come up with revolutionary approaches to computing. But sometimes, their creativity is stalled by process, subsumed in other products, or even sacrificed to protect the company’s Windows and Office empires.

So lets dig in…
As we have discussed in the past (here and here), Microsoft’s portfolio process seems to be driven by senior executive champions. In case of tablets, there were two competing groups led by two senior executives working on competing products.

One group, led by Xbox godfather J Allard, was pushing for a sleek, two-screen tablet called the Courier that users controlled with their finger or a pen. But it had a problem: It was running a modified version of Windows.
That ran headlong into the vision of tablet computing laid out by Steven Sinofsky, the head of Microsoft’s Windows division. Sinofsky was wary of any product–let alone one from inside Microsoft’s walls–that threatened the foundation of Microsoft’s flagship operating system. But Sinofsky’s tablet-friendly version of Windows was more than two years away.

The senior executive ownership has some benefits: They get to ensure the product received the right kind of focus and resources to get it to market.  The approach may help overcome the valley of death in innovation maturation.  However, it also a key disadvantage: disconnected and conflicting projects in the R&D portfolio:

The Courier group wasn’t interested in replicating Windows on a tablet. The team wanted to create a new approach to computing.

The two lines of R&D were somewhat incompatible and underlying culture of executive champions prevented  integrated portfolio management.  Microsoft’s CEO, Steve Ballmer, had to call in Bill Gates to determine the path forward.  Gates did a product review and did not come out in favor of the new innovation (because of how far it was from the traditional Windows/Office business model):

“This is where Bill had an allergic reaction,” said one Courier worker who talked with an attendee of the meeting. As is his style in product reviews, Gates pressed Allard, challenging the logic of the approach.

Within a few weeks, Courier was cancelled because the product didn’t clearly align with the company’s Windows and Office franchises, according to sources.

The cancellation had a significant immediate impact on Microsoft’s business:

Rather than creating a touch computing device that might well have launched within a few months of Apple’s iPad, which debuted in April 2010, Microsoft management chose a strategy that’s forcing it to come from behind. The company cancelled Courier within a few weeks of the iPad’s launch.

Furthermore, the move away from innovation had a long-term impact on the product development cycle and the product portfolio at Microsoft:

But using Windows as the operating system for tablets also implies that Microsoft will update the devices’ operating systems on the Windows time frame, typically every three years. Compare that to Apple, which seems likely to continue to update the iPad annually, a tactic that drives a raft of new sales each time a new generation hits the market. By the time Windows 8 rolls out, Apple will likely have introduced its iPad 3. Moreover, Amazon’s much anticipated Kindle Fire tablet, which goes on sale November 15, will have nearly a year head start on the Windows-powered tablet offerings.

So what if anything could have been done differently and what can we learn from this?  First, many companies try to overcome the bureaucracy of a large organization by creating skunkworks (See Nokia).  The idea was similar at Microsoft:

The gadget was the creation of Allard’s skunkworks design operation Pioneer Studios and Alchemie Ventures, a research lab that also reported to Allard. (The lab took the German spelling of “alchemy” to highlight the stereotypical Teutonic traits of structure and regiment it hoped to bring to its innovation process.)

However, Skunkworks like environments are hard to integrate into the overall culture.  They tend to become quite segregated causing many of the innovations wither on the vine:

Allard created a fantasyland inside Microsoft where Apple fanboys could tinker on stylish products that would never see the light of day. They point to the opulent 36,000-square foot office of Pioneer Studios, headquartered in Seattle’s Pioneer Square, that featured huge open spaces, dotted with cushy Eames lounge chairs, angular white desks, blond wood floors, and exposed brick walls. It may have been 16 miles from Microsoft’s far more corporate Redmond, Wash., campus, but it was a galaxy away in terms of workplace design.

Clearly, Pioneer studios had envisaged this scenario and tried to form project networks that brought innovation cultures to the rest of the company:

He encouraged employees to seek out new colleagues with diverse backgrounds who could challenge Microsoft’s conventions and push the company to approach new opportunities in different ways.

Microsoft made an effort to implement a structured innovation management process:

Allard created Alchemie to focus on innovation process to make sure that the efforts of Pioneer were not scattershot. It studied best practices, both within and outside Microsoft, to “design a repeatable, predictable and measurable approach for building new business” 

Additionally, they integrated some cutting-edge innovation management practices such as clear timeline for technology insertion and a stage gate process to ensure the innovation projects do not spin to far from reality:

In fact, one of the mandates of Alchemie was to look only at product ideas and business concepts that were no farther than three years into the future. The Alchemie book includes something of an innovation process road map that lays out four “gates” that ideas needed to pass through to move from incubation to product development. And a source said that Courier had made it through all four gates.

Another interesting concept they implemented was clearly defined purpose and freedom to explore new solutions:

“Infuse them with our purpose,” Allard wrote. “Give them the tools. Give them lots of rope. Learn from them. Support where they take you. Invite them to redefine The Tribe.”

The Courier team also had a well defined mission – Free Create – that further focus development:

The phrase at the core of the Courier mission was “Free Create.” It was meant to describe the notion of eliminating the processes and protocols that productivity software often imposes on workers.

The idea of Free Create was imbued into the entire development process – which is a great idea.  Not sure of the business case for traveling to Milan to understand Moleskine…

The metaphor they used was “digital Moleskine,” a nod to the leather-bound notebooks favored in the design world. In fact, according to a few team members, a small group led by Petschnigg flew to Milan, Italy, to pick the brains of the designers at Moleskine to understand how they’ve been able to create such loyal customers.

One more interesting concept about Innovation Management was implemented: Disconnected prototypes allowing different subsystems to mature separately. This approach is advantageous in that it allows more experimentation and we have seen that experiments boost productivity.  Steve Jobs followed a similar approach when developing the iPhone.

When Courier died, there was not a single prototype that contained all of the attributes of the vision: the industrial design, the screen performance, the software experience, the correct weight, and the battery life. Those existed individually, created in parallel to keep the development process moving quickly. Those prototypes wouldn’t have come together into a single unit until very late in the development process, perhaps weeks before manufacturing, which is common for cutting-edge consumer electronics design. But on the team, there was little doubt that they were moving quickly toward that final prototype.

It appears that the Courier team made significant progress (and used significant resources along the way):

Courier was much more than a clever vision. The team, which had more than 130 Microsoft employees contributing to it, had created several prototypes that gave a clear sense about the type of experience users would get.
It’s clear there were substantial resources behind the effort. The commemorative book, designed to resemble the journal-like look of the Courier, lists the 134 employees who contributed to the gadget’s creation. Moreover, Petschnigg writes on his LinkedIn profile page that he “managed $3.5 (million) seed funding, (and) secured $20 (million) to develop this new product category.”

However, there was a clear lack of coordination at the product portfolio level and there were no processes to align development plans across different product lines or R&D projects:

Early on, the group opted to use Windows for Courier’s operating system. But it wasn’t a version of Windows that any consumer would recognize. The Courier team tweaked the operating system to make sure it could perform at high levels with touch- and pen-based computing. What’s more, the graphical shell of Windows–the interface that computer users associate with the operating system–was entirely removed. So while it was Windows under the hood, the home screens bore zero resemblance to the familiar PC desktop.

This is a key problem with the Skunkworks innovation concept.  A separate culture quickly becomes insular and product lines divergences can not be reconciled:

“A big lesson is that it may be easier to go into your quiet space and incubate. But when you want to get bigger and get more resources, you want to make sure you’re aligned,” a Courier team member said. “If you get Sinofsky on board from the start, you’re probably going to market.”

So the challenge again appears to be with Microsoft’s R&D planning and portfolio management process.  It is relatively easy to become innovative (may be not $25M, but at least to some level), however, it is not easy to align product portfolios to bring innovation to market:

For Courier to come to life, the team creating it would have to convince the Microsoft brass that the device would offer the company substantial opportunities that Windows 8 could not. In the end, that proved to be too large a hurdle for J Allard, Courier’s leader and Microsoft’s chief consumer technology visionary. 

One way to address this challenge is to have more detailed R&D plans that can be shared and linked across different product lines.  These plans could have allowed teams to decide how they can bring different development paths together over time without an outright cancellation of Courier.  Well communicated plans and roadmaps could have facilitated collaboration between Courier and Windows 8 teams.  This collaboration could have ensured that more of the technologies developed under courier could have been integrated into Windows 8.  This unfortunately did not happen.

It’s unclear what, if any, pieces of the Courier technology are finding their way into other Microsoft products.

The only way any new innovation got introduced to Microsoft was through unmanaged diffusion:

Courier team members scattered. Many moved on to other products at Microsoft, such as Xbox, Windows Phone, and Bing.Others are involved with different incubation efforts at the company. 

A final lesson could be better portfolio management processes such as more frequent portfolio reviews where executives could have either reconciled development plans or eliminated the project before significant resources and emotions were invested:

And a few employees who contributed to the product’s development have left the company altogether, joining other tech firms such as Amazon, Zynga, and Facebook.

An example of a good R&D plan

As we have discussed in the past, R&D management is challenging because most new products require many technologies to mature simultaneously and many engineering disciplines to work together. The only real answer to effective R&D management is effective R&D plans.  R&D planning remains very hard and we have been discussing some approaches to address them.

  1. Good R&D plans have multiple milestones with clearly defined objectives at System AND Technology level.  These milestones bring constituent technologies together to evaluate / guide integration.  
  2. Good plans drive reuse of development between various development projects to reduce development costs and improve efficiency.  
  3. Good plans have multiple points of insertion from technologies into delivered products – i.e. Different subsystems from different development projects mature at different times and get inserted into delivered products.  These multiple insertion paths reduce long-term risks and improve return on investment.

I have been looking for good examples of effective R&D plans.  The article Mitsubishi Integrates Inverter With EV Motor System from Tech On discusses demonstration of a new product under development:

“Mitsubishi Electric Corp developed a motor system whose output power is more than 70kW for electric vehicles (EVs) by integrating an inverter and a motor on the same axis.”

This integration has many benefits including reduced volume, reduced weight and improved installation among others.

The integration enabled to shorten electric lines between the inverter and motor as well as to integrate pipes for water cooling that are required for each of the inverter and motor in the old system.
The mass of the new system is about 10% less than that of the old one. And the total efficiency of the new system is 3-5 points higher than that of the old system under the JC08 test mode.

This demonstrates one aspect of a good R&D plan: Clearly delineated objectives and goals.  These goals should be measurable so that progress can be evaluated at multiple points along the development pipeline. The company plans to commercialize the system only in 2017.  However, they are demonstrating some of the capabilities in the integrated system in 2012!  It is important to address integration challenges early and not wait till technology development is complete.

It is also important to identify major development hurdles and clearly define targets for technology development.  In this case, the company has identified heat from the inverter as the key challenge and identified multiple technology development paths to address it.  This clarity drives innovation:

Because the motor and inverter generate a large amount of heat, the company not only increased cooling capability but also made improvements to each of the motor and inverter to reduce heat generation. Specifically, it changed the magnetic design of the motor and employed a silicon carbide (SiC)-based power device for the inverter. With the SiC-based power device, the loss of the inverter was reduced by half, compared with the inverter of the old system that uses a silicon (Si)-based power device.

Since development of power devices is expensive, they have insertions of the SiC devices before the final system delivery.  Multiple insertion paths reduce the risk of wasted development effort:

The company aims to commercialize the system in 2017. And it plans to commercialize an EV motor system whose inverter using a Si-based power device and motor are separated in 2014.

Finally, there are incremental objectives for development at each stage, further enhancing management’s ability to monitor and guide R&D:

Currently, the motor system can be used for rotating tires and for simulated driving based on actual driving patterns in a laboratory. To commercialize the system, it is necessary to improve its structure for volume production, fine-tune it and further reduce its weight by 10 to 20%, Mitsubishi Electric said.

Roadmaps as a foundation for effective R&D management (Part 1)

I am writing a paper on the use of R&D plans as a foundation for effective R&D management.  As a part of the effort, I am collecting prior research on R&D planning and roadmapping.  I plan to summarize some of the interesting papers I find along the way.  The first is from a roadmap seminar given by two MIT professors at Harvard Business School in 2004.  It provides a good background on some work done on longer-term technology planning and touches upon near-term product planning.

Roadmaps provide a framework for thinking about the future. They create a structure for strategic planning and development, for exploring potential development paths, and for ensuring that future goals are met.

One reason for developing roadmaps is to address many sources of uncertainty in the face of complexity:

One must weigh many sources of uncertainty and try to comprehend how a large number of complex and dynamic factors might interrelate and influence development of a process or a technology. … Roadmapping is not the only tool for this type of strategic planning, but it is practical and straightforward in its approach and gaining increased attention and usage.

The article lays out two types of roadmaps: Exploratory and Target Driven.

Exploratory roadmaps are what are sometimes called Technology Push roadmaps that are envisioning emerging technologies.  These roadmaps are used to “Push” technologies into products without there being a well defined need for the technology’s benefits:

Exploratory Mapping is used as a framework to explore emerging technologies and to examine potentially disruptive technologies. The process creates a map of the technology landscape by surveying possible future scenarios. There is not necessarily consensus on the technology or its evolution at this stage.

It appears that some of the leading work on exploratory roadmaps was done at Motorola:

“Roadmaps provide an extended look at the future of a chosen field of inquiry drawn from the collective knowledge and imagination of the groups and individuals driving change in that field. Roadmaps include statements of theories and trends, the formulation of models, identification of linkages among and within the sciences, identification of discontinuities and knowledge voids, and interpretation of investigations and experiments.” – Robert Galvin

Roadmap implementation is hard, and data shows that less than 10% of R&D organizations use roadmaps.  In my experience, exploratory roadmaps are the prevalent form of roadmaps implemented.  They are used more like a marketing document for the technologists to get continuing funding rather than a real planning document (More on this in a future post). The other form of roadmaps is to communicate products under development: Target Driven Roadmaps:

Target-Driven Roadmapping used to drive toward a specific technical target. The technology objective is clearly articulated and there is a level of consensus on what the targets should be. The roadmap serves to drive innovation and resources toward reaching that end goal.

These can sometimes be called as Technology Pull roadmaps – where different technologies are “pulled” forward to satisfy specific market needs.  Some work has also been done in Target Driven roadmaps.

“Typically based on strategic plan requirements, roadmaps incorporate product attributes and layout goals, development requirements, allocations priorities, and defined evolution plans for flagship or core products and platforms.- Strauss, Radnor & Peterson

Even so, the roadmaps are still used mainly for communication rather than as a foundation for R&D management:

The output of the technology roamapping process is typically a product-specific roadmap which, in simple visual representations of hardware, software and algorithm evolution, links customer-driven features and functions to specific clusters of technologies.” – Strauss, Radnor & Peterson

This is borne out by the article as well.  They suggest that

While the processes and outputs of these two types of roadmapping can vary significantly,
there are common elements. Roadmapping requires:
– a social and collaborative process;
– an analytical method of assessing and planning future development;
– a means of communicating using visual or graphic representations of key targets or goals as a function of time.

Clearly, roadmaps do provide a structured foundation for R&D collaboration.  Although the second bullet mentions an analytical method for assessing R&D, I am yet to come across an organization that uses roadmaps for that purpose.  In fact, very little of the article is dedicated to the second point.  The article focuses on social / collaborative use of roadmaps and outlines a workshops-based process to develop roadmaps.  This seems to have become the primary form of roadmapping.  In many organizations I have visited, roadmapping has a tendency to become a bureaucratic check box and is hardly ever used for driving innovation.  In fact, most of the benefits of true roadmapping process outlined in the article (and described below) are hardly ever achieved.

1. Establish a vision for the future.

Roadmaps can definitely communicate a vision and is a great benefit of roadmaps.

2. Encourage systems-thinking. A comprehensive roadmapping framework forces the roadmap participants to think about technology development within the context of a larger system and aids better understanding of the linkages among technology, policy, and industry dynamics.

This is where structured target driven roadmapping becomes important.  In most physical systems, this is hard to do in a workshop / social environment.  Product development plans are complex and require knowledge of tens (if not hundreds) of engineers.  Organizations need better roadmapping processes that places technology roadmaps in a system context.

3. Planning and coordination tool. Roadmaps align technologies and products with market demand by representing the co-evolution of technology and markets. Roadmaps can help in uncovering common technology needs within an organization, enabling the sharing and consolidation of R&D, supply-line and other common resources

This is probably the most important benefit of roadmaps.  However, as President Eisenhower said, “Plans are worthless, planning is everything.”  Most roadmaps are static, kept in PowerPoint documents and revisited once a year (at best).  Hardly an effective foundation for planning and coordination.

4. Accelerate innovation. Roadmapping provides a better understanding of the potential paths for innovation, helping to visualize new opportunities for future generations of product developments. 

This is the critical and often overlooked benefit of roadmaps.  Innovation happens at the intersection of technologies (not just one technology).  So, an iPhone requires capacitive touch screen, low power electronics and user interface (among others) to come together for innovation to be delivered to market.  Nokia for example had a touch screen phone years before iPhone, but could not bring it to market.  Not only do the technologies need to mature simultaneously, all the related engineers need to know what others are capable of doing with them.  Roadmaps can allow all team members to understand the projected state of other technologies and hence drive innovation.  Since the number of technologies involved in modern systems is quite large, the workshop-based roadmapping process described in the paper is probably not sufficient to drive innovation.

5. Communications. Within corporations, roadmaps can provide a crucial link between management teams, marketing, engineering and R&D – improving communications and providing a clear sense of near term and long term targets. 

Pretty self explanatory and some what related to point 1.

My thesis remains that R&D plans can actually become a foundation for effective R&D management and can do much more than the five benefits outlined above.  Plans can help optimize resource allocation.  R&D plans can be used to measure and guide R&D operations.  They can also be used to forecast skill-set needs.  However, that will require plans that are a bit more controlled than those developed primarily for communication. More on this soon…

How to Innovate When Platforms Won’t Stop Moving

The article How to Innovate When Platforms Won’t Stop Moving in MIT Sloan Review has several interesting pointers towards R&D management:

Businesses must cultivate agility — the ability to adapt quickly to or even anticipate and lead change. Businesses must develop deep differentiating capabilities that enable them both to separate themselves from competitors and endure disruptions. Companies such as Apple and IBM show how agility and capabilities can enable organizations to shape-shift as industry models rapidly change.”

Prof. Cusumano has four suggestions on how to be more agile (rearranged based on needs for R&D):
1. Emphasis on flexibility: As markets, customer needs and platforms are changing rapidly, we need to change our development approach so products can be successful despite changes.  This is hard to do using current processes and tools for R&D management, however, it is good to keep in mind.

The key for many firms is not to always be creating plans and pushing products out to market but to find ways to react very quickly to new information or responses from customers and other partners to what you are doing or intending to do. 

2. Capabilities rather than strategy: One approach to flexibility is to develop capabilities that can be reused if market changes.  Capabilities are broad tools while products are targeted towards specific needs.  My suggestion is for R&D managers to characterize plans and projects as leading towards key capabilities in addition to products that satisfy particular strategies.  This way a minor change in processes can help lead us to flexibility.

For example, the future is unpredictable, so strategy needs to change, but companies can still build unique capabilities that provide a stable base for new products and services as well as help them navigate through change. 

3. Economies of scope rather than scale: In case flexibility adds costs to development, one way to make the business case for the additional investment is to see that a broad set of capabilities will let companies address more market niches.

Economies of scope are also useful here because customers today often want a variety of new products and features but do not want to pay much money for them. Companies need to go beyond traditional scale economies and find ways to leverage existing knowledge in the form of reusable components and frameworks to produce a variety of products and services as efficiently as possible.

4. Information Pull Rather than push:  To understand what capabilities to focus on, companies need better market information.

Managers also need to create mechanisms that “pull” information from the market in something resembling real time, such as customer-driven product development processes or production management systems that allow firms to change their product mix very quickly.

How do we identify what market information to focus on?  Look for “megatrends”:

Managers certainly need to ask themselves — and the smartest people they can find around themselves, inside and outside the company — what are the potential megatrends that could disrupt their businesses in the future or make their business models obsolete. In the industries that I study, for example, there have been two such trends emerging over the last several decades: the rising importance of industrywide platforms as opposed to stand-alone products, and the rising importance of services or service-like versions of products.

That brings us to platform-based design (PBD), which underlies points 1 to 3 above.  Prof. Cusumano is focusing on computing industry where platforms provide standards (e.g. PC, WCDMA, 802.11) and standard interfaces (e.g. PCI express, USB) that can be used to define flexibility.  There are other forms of platform-based design that can be used in industries such as medical devices which do not depend on standardization.  I recently presented a paper on this form of PBD.  Please email if you would like to find out more.

Finally, this focus on flexibility may require more significant changes than just R&D:

IBM did a number of studies and figured out that it had all these processes that were designed to ensure quality, but they also meant that it was extremely slow to develop anything new. Different markets, like the PC market and then later the Internet market, required much faster decision making. They didn’t require the same kind of quality standards, but different kinds of standards. And so IBM did decentralize its decision making, but without physically breaking up the company. IBM reorganized into a small number of groups that mapped better to how customers needed to integrate the new technologies.

Apple Without Steve Jobs

As most regular readers may know, I admire Steve Jobs for his ability to manage R&D and deliver innovative products.  Here is a summary of a series of articles that might help us learn a bit more of his methods.  Let us start off with INSEAD Knowledge (Apple Without Steve):

Steve Jobs was a master at the five skills of disruptive innovators. He personally excelled at connecting the unconnected, or associational thinking. He was constantly on the hunt for new insights by observing the world through the eyes of an anthropologist. He regularly networked for new ideas with people who were 180 degrees different than himself. And he constantly experimented with different prototypes of every product and service Apple ever produced. At the very core, Jobs was exceptional at asking provocative questions, ones that challenged the status quo, inside Apple and out. Put simply, Jobs thinks different because he acts different — habitually.

It is a great summary of skills we might all want to develop. However, it is easier said than done! The simple (but wrong) path would be to ask “What would Steve Do” and try to imitate.  As shown by Disney (when Walt Disney passed away), imitation would inhibit innovation. Knowledge at Wharton points out that it would be a mistake to copy Jobs and suggests the following to the new CEO [Cook]:

A copy of anyone is going to come off looking bad. It will never be as good as the original, and people will spend their time focusing on the differences,” Cappelli notes. “I think [Cook] should be himself.” But when it comes to Apple’s business strategy, Cappelli says it would be unwise to depart in any significant way from the path set under Jobs. “I think a ‘steady as she goes’ approach is a good idea, and also about the only option at this point.

A better approach would be to ask “How would Steve address this situation” and “What should I do.”  Jobs answer to this seems to have been Apple University (LA Times):

With Apple University, Jobs was trying to achieve something similar, people familiar with the project say. He identified tenets that he believes unleash innovation and sustain success at Apple — accountability, attention to detail, perfectionism, simplicity, secrecy. And he oversaw the creation of university-caliber courses that demonstrate how those principles translate into business strategies and operating practices.

It is a fine line though.  The same article says this as well:

“It became pretty clear that Apple needed a set of educational materials so that Apple employees could learn to think and make decisions as if they were Steve Jobs.”

Another article in Knowledge @ Wharton points out that:

But there is no getting around the fact that, as it moves from a company built around one man’s vision to more of a team approach, Apple will have to start doing things differently. And beyond any leadership challenges, the company is also operating in a highly competitive and quickly evolving sector where a number of companies are grappling to take the lead on smartphones, tablets, digital music and cloud storage initiatives. “At this point, Apple has a firm, loyal customer base,” says Wharton legal studies and business ethics professor Andrea Matwyshyn. “What happens in two to three years may be different story.”

So, the idea is for the Apple executives (or all R&D managers) to be themselves.  Instead of trying to imitate or think like Jobs, learn from him and bring their own unique flavor to the company:

But Apple’s success is due to more than Jobs alone, says Wharton operations and information management professor Eric Clemons. “Apple leadership has been brilliant,” he notes. “The team, clearly led by Jobs, but clearly more than Jobs alone, has become the best technology style house in the world. We pay a premium for Apple products because of how they look and how they feel foremost, and then how easy they are to use and to integrate into the rest of our technology and into our lives.”

p.s.: One last bit of useful info about small team organization structure at Apple:

Mueller’s research illustrates the challenges Apple may face as it transitions from moving product decisions primarily through Jobs to a team of executives and managers. In a study that looked at 212 knowledge workers in 25 teams ranging from three to 19 members in size, she found that larger groups at the top often “experience more coordination loss or difficulty and inefficiency.” “It is so hard to get ideas through the pipeline at large companies,” Mueller says. “Creativity is viewed as risky and the corporate culture is designed to squash creative ideas. Will the average person rising through the ranks be rewarded for being creative?

Impact of component shortages on R&D

In Apple R&D and Steve Jobs Methodology: User Centric Design, we discussed how digital technologies let Apple focus on user experience.  The ability to focus on user experience, in turn, made Apple succeed where Japanese manufacturers failed – because Japanese companies focused primarily on components.

Apple’s success has had a big impact on the industry landscape.  There has been significant consolidation in component manufacturers.  More importantly, other companies have increased their focus on user centric design.  The result is that everyone is demanding the same set of components from a decreasing pool of suppliers.  The balance of power is now shifting again – from system designers to component manufacturers.

The article Getting Through the Shortages: No More Being Choosy in Nikkei Electronics has some very interesting data for R&D managers and strategy developers: “

The shortage in key components that began in summer 2009 is shaking the electronic equipment industry, and bringing about major change in the balance of power between equipment and component manufacturers. In response, equipment manufacturers are beginning to take action to ensure continued access to essential components at low cost.

Here is a great graphic from the article showing an strong increase in profits at the component manufacturers:

 So, what are the lesson for R&D managers:
1. Plan and design modular products: If one component becomes hard to obtain, you should be able to swap it out with another.  Modular products are always a great idea, but in case of supplier concerns, they become even more important.  The article had a great example of HTC Desire that shipped with an OLED screen, but had to be converted to LCD because of supply problems at Samsung.

2. Find commonalities between products:  If you can use same components across all your products, your volumes will increase and it will give you a greater clout with the suppliers. This is a challenge for R&D, because common parts will inhibit complete performance.optimization for each products.  Here is the graphic from Nikkei:

3. Secure supply by prepaying for parts: Self explanatory.  But still important for R&D managers because you will be locking in a particular component for a long term.  Designs around them will need to be robust enough to accommodate the parts from the long term supplier.
There is a lot more about R&D strategy and planning at the R&D Management Blog.

Article first published as Impact of Component Shortages on R&D on Technorati.

Build a Flexible Business Plan

Harvard Business Review has a very good four minute video on how Build a Flexible Business Plan,  Here are the take home messages:

  1. Start from the heart: Only go after what you are passionate about
  2. Think big but start small: Have a large vision but figure out small steps on how to get to it
  3. Have a basic framework: PIMM – or People, Idea, Model (business model) and Market
  4. Know your trade-offs: People are more important than Idea (A-team can improve the idea, but idea can not improve a B-team).  Idea is more important than business model (you can change a business model around an idea). And business model is more important than market (you can change the market applicable to a business model).
  5. Keep it iterative.
Great video worth watching.

Asking Yourself the Hard Questions

Industry Week article Asking Yourself the Hard Questions has some interesting points about R&D strategy and planning:

Truth can’t be the first casualty when businesses are making major strategic decisions

The article suggests that leaders need to be more open and sincerely request feedback on strategy and plan. They need to encourage subordinates to ask tough questions:

Of course, asking tough questions won’t do you much good if you’re only talking to yourself. Good leaders need to be able to create an atmosphere in which employees can honestly say what they think. This can be particularly tricky if an executive is known to fall in love with his own ideas. Why risk the boss’s wrath, employees quickly figure out, if their views won’t be heard anyway? In situations where employees can speak freely, this is not a license to be disrespectful, nor is it an invitation to chaos. Think of it more as preventive medicine. It will almost always be cheaper and easier to prevent a problem, or to minimize a problem, than it will to fix it after months or years of denying there is a problem.

I think this approach of asking tough questions is absolutely critical while setting up R&D plans and technology roadmaps.  Since most technology plans are developed by experts and there are not too many people who can question them without repercussions, it is important to institute a culture of constructive skepticism.  Furthermore, most organizations have many myths surrounding R&D  planning and a tough questioning is important to finding the right strategy.  In fact, one can even consider having a well balanced checklist to ensure that the tough questions are asked and addressed in strategy formulation.
One thing not to do is form a tiger team or a commission tasked to study strategies.

In Washington, of course, politicians have developed a clever method for avoiding the hard questions. They appoint a commission to study difficult issues and then release a report. Washington is awash in commission reports, which is a barometer of how divisive and difficult our politics are now. These reports lay out the hard facts and suggested remedies and then, time and again, their remedies are ignored because — that’s right — the remedies require politicians to make tough choices.

China’s Drones Raise Eyebrows at Air Show –

Here is an interesting article in the WSJ with significant impact on long-term R&D strategy: China’s Drones Raise Eyebrows at Air Show

Western defense officials and experts were surprised to see more than 25 different Chinese models of the unmanned aircraft, known as UAVs, on display at this week’s Zhuhai air show in this southern Chinese city. It was a record number for a country that unveiled its first concept UAVs at the same air show only four years ago, and put a handful on display at the last one in 2008.”

Amazing progress on Chinese front. During the cold war, USA and Russia kept pumping money into R&D.  This long-term research provided sustainable lead to countries and was a source of significant innovations such as ASICs, Interenet, etc.
I think the difference between the cold war and now is the significant increase in the rate at which technology is changing. Slow progress over decades just won’t be sufficient against newcomers because they will be starting from a much more advanced computing platform.  They will be able to model new environments/materials and manufacture with increasingly more capable machines.  In fact, in many cases a long legacy is  a drag on new innovations.
The answer, however, is not the complete elimination of long-range research.  The answer is to develop more robust R&D plans, so that impact of changes in one technology can be propagated quickly across the entire system development.  The answer also is a frequent re-balance of R&D portfolios to account for changing technology/market/geopolitical landscapes.
I guess R&D managers need even more powerful tools and processes.

Planning as learning

Here is a a very influential HBR article from Arie deGeus from back in 1988 (it has been cited over 1,200 times).  The key message is this:

Benefits accruing from planning are not just the objectives and strategies that emerge, but the learning that occurs during the planning process

Planning as learning is very important in R&D management as well.  It is not just the planning at senior management level – it is the institutional learning from distributed planning.

… they depend on company’s senior manager to absorb what is going on in the business environment and to act on the information with appropriate business moves.  In other words, they depend on learning.  Or, more precisely, on institutional learning, which is the process by management teams change their shared mental models of their company, their markets, and their competitors.  For this reason, we think of planning a learning and of corporate planning a institutional learning.

deGeus is talking about corporate strategy which can be planned by a select few.  R&D, however, requires knowledge a lot of people to come together. Most managers I know depend on their various technologists to bring forward plans.  More importantly, to get a product to market requires knowledge of many different technologists and planning is extremely critical to get all the pieces moving in synchrony.

Even so, planning is not as formalized in R&D as in corporate strategy / finance.  One reason for this might be that R&D planning is much more complicated and full of jargon.  There are few who can understand jargons of two or at best three disciplines (e.g., structures, life and CFD).  Plans for each discipline are filled with discipline specific jargon, and it is often difficult to combine them.  Unfortunately, it takes many more disciplines to get a product to market.  That does not mean we should not try though.  The software I am developing is proposing a new framework to do just that…

While I am on the subject, here is another HBR article that talks about planning as learning…

Aire deGeus, Planning as Learning, Harvard Business Review Vol 66 (2), pages 70-74.