Friday, August 01, 2008

New Product Development & Project Management

A product manager is always eager to get a new product out into the market place. New product development will always need money for development & testing. As the product manager tries to work with other departments within the company, he is faced with one ominous question: When will the new product be released?

In most companies, new product development has not evolved into a perfect science – where there is perfect predictability with measured milestones. Ideally one would love to have such predictability – but when the development process involves charting into unknown territories: New technology; new materials; untested manufacturing process, there is only one certainty - “We do not have an exact answer.”

The product manager will have to deal with the uncertainty of the product release. The best way to deal with this uncertainty is to play a role of project manager.

A smart project manager will answer the question by showing a complex project plan, with clearly identified obstacles, milestones and resources needed for project completion. In short answer the question by saying if we get the following resources and if we overcome the following obstacles and if we achieve the following milestones, we can release the new product by this date.

This is almost akin to saying “you cannot schedule invention” – but in a nice way.

New Product Development & Projects

New product development requires a planned effort by employees dedicated for it. The scope and size of the efforts depends on the type of product being developed. Often times, product development will become a project. In case of complex products, this might involve multiple projects. For sake of simplicity & ease of understanding, I am considering a simplified case where the entire product development is represented by a single project.

Product Management & the Product Manager

In mature companies, there will be dedicated staff for project management. In addition, there will be a program management office. But in a vast majority of companies – there will not be any project manager assigned for new product development project.

In case there is no dedicated project manager, then it is imperative for the Product manager to don the role of a project manager. In such a case, the product manager also doubles as a project manager. Even in case of having a dedicated project management & program management office, the uncertainties in new product development will force the product manager play a role of project manager.

Establish a Project Office

The first step in developing a new product is to establish a Project Office. The project office is a dynamic team of stake holders who can help the project and can give constructive inputs to the project team. Note that the project office is different from the project team. The project team consists of members who work on the project – engineers, developers etc. The project office consists of various stake holders.

This should be a formalized team of several managers as needed by the product:

  • Project manager
  • Product manager
  • Engineering Manager
  • QA manager
  • Finance manager
  • Representatives from various stake holders
  • HR manager (if human resources is a critical issue for the project)
  • Vendor relationship manager
  • R&D manager
  • Production Manager
  • Sales Manager(s)

The project office meets once a week or once a fortnight based on the need. (The meeting can also be via conference calls or net meeting)

The purpose of this project office is to communicate the project’s progress, the current constrains faced and its impact on the project.

Project Manager and the product manager should drive the project office and educate all the stake holders about progress & constrains. It is the responsibility of the various stake holders to remove constrains for the project team and ensures that the project moves smoothly as per plan.
Points of Interest to the Project office

Various stake holders in the new product development have various interests. For example production manager needs to know when & how to schedule the production of the new product, Finance manager needs to know when he should release the budgets for procuring new tools, equipment, etc. To address these questions, the project office should publish:

  • Current Project schedule

    Project schedule & project status must be current at all times. Project should be broken down into various work-based-package elements and tasks within work packages. All these must be updated and kept current on weekly basis. The project details must be shared with all stake holders. There are times when the project schedule will change – i.e., slip. When a slip occurs, all stake holders should be made aware of it & the reason behind it.In complex projects – such as Tata Nano, it is best to have a project war room – where all the project details are available and often displayed.

  • Identified Project Risks.

    All projects have risks. Some are identified while some are not. Identifying the project risks is the first step towards mitigating those risks. Publishing all the project risks to stake holders is a sure way to seek help from stake holders to mitigate those risks.The entire project team – project manager, team members, engineering teams, product manager, manufacturing teams & and all associated members in the project team and the project office have the responsibility to identify project risks and inform it to the project office.

    Project manager along with Product manager have the responsibility to orchestrate the current risks to all stake holders.

  • Project constraints

    All projects will have constraints. The most prominent of them is the resources constrain: People, materials, tools, skills etc. These constrains are internal in nature, i.e., the company can solve it internally – by providing the required budget. In addition product development projects have external constrains when the project has dependency on external third party resources or information.

    For example, in a new car development, the constraint will be supply of component & component related information (drawings, specs etc).

    External constrains can be inform of government regulations, non-standardized specifications, non-ratified industry specifications etc. External constraints are mostly informational in nature. For example, if the product requires FDA approval in case of automatic insulin injector.

    Lack of knowledge or skills within the project team is also a constraint. When developing a state-of-art product, the project team may not have all the skills or the knowledge needed. For example, several years ago, I was involved in developing a new generation of microprocessors which needed a new manufacturing process in nano technology. The manufacturing process was so new, that none of the project team members had any knowledge of the electrical circuit behavior in the new manufacturing process. In another example, the project team had no knowledge about thermal characteristics for packaging.

    Product manager along with other stake holders must deal with these external constrains and provide guidance to the project team. While the Project manager must deal with the internal constrains.

  • Project (product) acceptance criteria.

    Every product development effort must start with the end product in mind. The end product must have certain features, functionalities, performance metrics, packaging needs, market release date, a selling price, cost to manufacture etc. All this together form the product requirements criteria. If there are “N” product requirements, not all the requirements can be met – mainly due to opposing factors, project constrains etc. It is therefore important to identify the basic minimum set of product requirements that must be met – in order to declare the project successful – and this is called as project acceptance criteria.

    Product Manager must publish a “Product Requirement Document” also called as “Product specification Document”. This document will list all the requirements on the product. In today’s dynamic world, the competitive pressures may force changes on the product requirement as the project progresses. This results in scope creep and may result on wasted efforts.

    The best practice to manage this will be to develop a market requirement document. This is a live document which captures all the market requirements, and this document can be updated or changed at any time as the market needs changes. The market requirements can be served either with a single product (aka “One size fits all” approach) or with multiple products. (Address the market needs in form if different segments). It is the responsibility of product management to figure out how best they can serve the market requirements – either with a single product or with a suite of products. For example, Microsoft used to have a single version of the Operating System (product) to meet all the market requirements – DOS, Windows 3.0, Windows 95, Windows NT, Windows 3.1, Windows 98, etc. But as the market demands increased, it found a need to have multiple products: Windows XP Home edition, Windows XP enterprise edition, Windows Vista Basic, Windows Vista Home edition, Windows Vista premium etc.Similarly, Auto manufactures have several versions or products to meet the needs of customers. Toyota has several brands and in each brand has several variants to meet different needs of its customers: Camry LE, SE, XLE, Hybrid, Corolla LE, XLE, S, &XRS models

  • Project status Tracking

    Project tracking is often viewed as a function of project management. It is role of the project manager to collect various project metrics and publish them regularly. However, it is the responsibility of all the stake holders – i.e., members of project office to provide those metrics and timely updates.

    For example, one of the metrics that should be provided by production manager is: predicted cost of manufacturing the new product. As the cost of raw materials or machinery or labor changes, the cost of manufacturing should be updated as well. This increase/decrease in costs must be tracked as part of the product development project.

    Similarly, Finance manager must update the “hurdle rate” and the expected margins – based on the market changes to interest rates. Sales manager should provide the changes to expected market demand or the demand forecast etc.

    These inputs must the provided at regular basis and the data is made available to all members of the project office, so that one can take meaningful decisions in benefit of the entire project.

    In addition to inputs from stake holders, the project manager must publish the project status & progress with respect to the original plan and the actual.

    The project metrics should be simple and easily understandable by all members in the project office. It is essential that they personally feel comfortable with the data and the parameters must truly reflect the state of the program’s progress. Simply tracking statistics such as the number of people on the job or the number of hours logged, the number of prototypes built tells the company very little.

  • Current Action Items & their owners.

    An ongoing project will have action items, their owners and the deadlines by which those action items be completed. Members of the project office should know what these action items and also know the impact of these action items on the project.

Project Results

When new products are introduced, the outside world (every one who was not involved in the project) will view it as a single breakthrough – more like a flash in a pan. But for project members, the new product was a result of long arduous journey – with several milestones that marked a systematic progress towards the final goal. In many cases, the successful project will have random changes which nearly destroyed the project.

If the project has a long development schedule stretched over several months or years, then the project teams should celebrate successful accomplishment of major milestones. Keeping track of all milestones and achieving them in a systematic way is the only way to achieve the project goal.

Project Exit Criteria

New product development projects will have several challenges – both internal & external to the organization. Internal challenges may be:

  • The development budget was slashed.
  • Critical people left the project.
  • Critical resources needed for the project was not available at the right times.
  • The project missed critical milestones.
  • Other internal challenges.
  • Cost of the product exceeded the market expectations

External challenges include:

  • Market requirements changed.
  • Business environment changed significantly.
  • Cost of the raw materials increased beyond the projected levels
  • The product development needed things that were beyond the present limits of technology.
  • Government regulations changed or industry standards were revised.
  • Etc

These challenges are asynchronous in nature. It is the responsibility of the project office to continuously monitor such challenges and mitigate the risks. However there will be times when such challenges will overwhelm the project team – then it is best to terminate the project.

To facilitate fast decision making, product manager & the project office must publish the project exit criteria at the start of the project, and this should be a living document that gets updated periodically.

People involved in the project become so attached to it, that they tend to think that killing a project signifies a personal failure. Such emotional connections will hamper rational thinking and decision making. But continuing on a bad project is like throwing good money after bad. History has shown that bad projects are often tough to kill. So it is the responsibility of the product office to closely monitor the product development project and take timely decisions.

Also see: Why Bad Projects Are So Hard to Kill

Closing Thoughts

New product development will usually consist of multiple projects or it may be one project with several sub-projects. Successful product development projects will need involvement from all stake holders. It is therefore essential to create a project office – where all the stake holders are involved and are engaged in new product development. Ideally it is good to have a dedicated project manager – but in case of small/medium sized firms which may not have dedicated project managers, then the product manager will have to play a dual role.

Successful new product development will also need a well defined product acceptance criteria or product requirements document. A prudent product manager should also know when to kill the project and should have a well established project exit criteria & the project office must play its role in determining the continuation of the project or to terminate the project.

5 comments:

Yashila said...

My cousin recommended this blog and she was totally right keep up the fantastic work!

Product Development

Prof Manish Parihar said...

Good work... !

Kenley William said...

The PMP Certification establishes a common language among project managers and helps each other work within a common framework. Once you have the PMP, you need to consider how you're applying the processes, tools, and techniques to projects. I took a training course for my preparation in http://www.pmstudy.com and got ready for the exam on day 5!

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