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Archive for October, 2014

Product development – ten best practices

Friday, October 17th, 2014

Product development is a critical function for product-based businesses. The ability to develop new products with features and functionality that are valued by users, to bring them to market quickly, cost effectively and at acceptable quality and then to support and enhance them during their lifetime has always been a complex undertaking.

Today’s additional requirements to serve a global market, to exploit new technologies – including the opportunities provided by the internet – to meet ever higher customer expectations and to compete against new low cost, but increasingly high value, rivals from China and other emerging economies simply adds to the challenge.

How do companies ensure that their product development practices are good enough?

Over the past decade Codexx has worked with a number of clients on assessing and improving product development practices, most recently we performed a global R&D benchmarking assessment covering Europe, US and China. In 2010-12 Codexx carried out two major research studies on what we call ‘the innovation journey’ for technology-based product businesses, from new ideas to value (e.g. [products) in the marketplace. This covered 43 technology businesses in the UK and Denmark.*

New Directions 18 - Figure 1

Figure 1: An end-to-end product innovation process

From our experience, we have put together a ‘top ten’ list of practices that we consider have a key impact on the success of product development. In no particular order:

  •  Become a user. Get the ‘voice of the user’ into R&D and keep it there. This can be done in a number of ways: by ensuring that development engineers and product managers spend time with relevant users, or by nominating a ‘user advocate’ in the development team, or by regularly and systematically bringing field feedback into R&D. A measure of the importance of this practice is that our innovation journey study found that end-user involvement in new product development was the practice with the fourth highest correlation with innovation performance.
  • Effectively explore new ideas. This means using a rich approach to exploration that involves personnel from development, marketing and production as well as potential users and partners, to determine the potential user and business opportunities and also the risks of new concepts and to identify potential improvements. The use of rough-prototyping is very effective here to help evaluate the concept. This level of exploration ‘shakes up’ the concept to determine whether it has sufficient merits to consider taking it forward. In our innovation journey study of 2012-13, the effective use of rough prototyping for idea exploration was the practice with the second highest correlation with overall innovation performance.
  • Enhance existing products. It can be easy for R&D to over-focus on new products, at the expense of enhancing existing products – from an engineering perspective it can be seen as less challenging and less exciting. But enhancing an existing product instead of investing in a new one has many advantages – less technical risk, less investment, easier for sales personnel to sell (minimal training required). Enhancements can be through updated technology elements in an existing platform, through accessories (which can be provided by 3rd parties) or through software and services. This does not mean we are ‘anti-new products’, but simply that the development investment portfolio should give sufficient weight to existing product enhancement as well as new products.
  • Establish an ‘end-to-end’ product innovation process. Whilst most product businesses will have a formal New Product Development (NPD) process, this only covers part of the journey from new ideas to products in the market. The NPD process needs to be complemented by a front-end process for idea generation and exploration (covering the key ‘fuzzy front end’ of product development), a back-end support & enhancement process and a parallel process for capturing learning from the field (as shown in Figure 1). Front-end exploration projects will often “fail” in the sense that the results are disappointing – which is an acceptable outcome as not all new ideas should (or can) proceed. Engineers must be judged on whether they do good, disciplined investigations in this stage, not on whether the ideas work out. Some element of waste is inevitable at the front end. Without such an end-to-end approach, the NPD process will waste resources on weak concepts and deliver sub-optimum products to the market. Product innovation must be guided by a clear stage gate process with an objective Go/No go at all the stage gates, especially, of course in the ‘Fuzzy Front’ end. Few companies are good at biting the bullet and stopping unpromising projects early on. But these processes have tendency to become more onerous with time as extra checks are inserted every time a problem occurs. This can become a bureaucratic nightmare. Beware of making the process any more formal than is absolutely necessary.
  • Reduce development time and team size. A major proportion of development cost is engineering hours – and this is a function of team size and project duration. So short development times and small teams have many benefits. Small teams are easier to coordinate, require less project management time and thus are able to make faster decisions. Shorter development cycles are less likely to require specification ‘resets’ due to competitive product announcements, new technologies, regulatory changes or delays from resource shortages. Frankly long development cycles and large teams generate waste in lost time, rework and non-value-adding coordination. Philosophies such as ‘Lean Startup’ (see the book by Eric Reis of the same name) support fast development time as this enables products to get to market faster and then user-based learning can start. So the mantra ‘keep it short and keep it small’ should be the guide for product development.

New Directions 18 - Figure 2

Figure 2: A system for innovation within an organisation

  • Employ platform thinking. This approach supports fast development time by introducing modular thinking into product design, to create a platform-based architecture. Thus new products become a mix of existing, evolved and new modules – for example a new mobile phone may have the same casing and screen, but updated processor, camera and new version of the operating system. This approach reduces development cost and risk and enables innovation to be focused on the new platform modules (rather than unnecessary re-invention). Platform thinking is well established in sectors such as automotive with cars such as the Volkswagen Golf and Audi A3 sharing much of the floorpan and chassis. Our innovation journey study showed that the separation of technology and product development (which is a key aspect of platform thinking) and the re-use of design or technology elements in new products were both top ten practices for correlation with overall innovation performance.
  • Ensure development proven practices are deployed. There are some proven practices for the design of new products such as documented user requirements – to provide a firm base for specification, QFD (Quality Function Deployment) – to build a functional specification that is aligned with user requirements, FMEA (Failure Mode Effect Analysis) – to identify potential design weaknesses, Design Peer Reviews – to provide an independent ‘fresh view’ on a design before it is frozen and Post Project reviews – to capture lessons learned and required improvements to working methods. These good practices are well known, so it can be surprising how poorly these are in place in product development teams. We have been in firms where these practices have simply ‘faded away’ or only have ‘lip service’ paid to them. It is the responsibility of development management to ensure that these proven development practices are in place and used effectively.
  • Establish an innovative culture. We have worked in product development teams where employees have said ‘We don’t have time for innovation, we’re too busy developing products’. Of course incremental product development is indeed one type of innovation. But the point is well made – employees need to have time, management support and encouragement to identify new ideas and concepts. This requires a supportive culture for innovation – a key element of the ‘climate’ for innovation within a firm. This is one of the seven key practice areas required for an effective innovation system (see Figure 2). A key aspect of an innovative culture is a clear and overt tolerance for failure when new ideas don’t work out. Of course, this is not the same as a tolerance for bad work…
  • Don’t overload! Management ambitions can lead to the commitment of new projects and a development roadmap that simply exceeds development capacity. The result is a climate of project slippage and postponement – which further wastes development resources in re-planning and stop-start activities. Development capacity should not be loaded more than 80% of capacity to avoid short-term overloads of some resources and also to allow personnel time to get involved in new concept exploration work, platform development or other improvements. Overloading inevitably leads to queueing, and extra inefficiency comes if engineers need to swap from project to project.
  • Have an effective Go/No Go to market. Stage-gate management in product development is a proven and effective way of managing cost and risk exposure. Just as cost and risk exposure significantly increase once a new product concept is accepted for development, so does cost and risk exposure increase significantly once a product is released to be taken to market as large investments in manufacturing and sales are required. This is why the decision to go/no go to market needs to involve all the key functions affected (such as marketing, sales, manufacturing and development) – it is not a decision for development management alone. Indeed marketing involvement in signoff of product release to market was the practice that had the highest correlation with high innovation performance in our innovation journey study.

Thanks to Rick Mitchell, Visiting Professor of Innovation Management at the University of Cambridge for his contribution to this article.

*‘The Innovation Journey for technology-rich product businesses – Phase 2 – Final study report’, October 2013, Codexx Associates Ltd, The University of Exeter Business School, The University of Aalborg Business School. More information.

For further information on our innovation and product development solutions, contact us at www.codexx.com.

Study of innovation in 35 UK & German law firms – report published

Friday, October 3rd, 2014

 

Front page pictureToday Codexx published the final report on a study of innovation in 35 UK and German law firms, carried out in 2013 with the support of the University of Exeter Business School and the University of Leipzig Graduate School of Management. The objective of the study was to understand the current level of innovation, the methods being applied, the results achieved and the challenges faced by law firms in these two countries. Participating firms have already received a copy of the report, including their scoring in the study, to help in their innovation activities.

Alastair Ross, Codexx Director and author of the report said “Innovation is increasingly important for law firms, particularly those in the UK faced with new ABS entrants from deregulation, new internet-based business models and price-focused clients. It is very encouraging to see progressive firms seizing the opportunities for improved competitiveness through innovation. It is also useful to understand the typical difficulties that firms are facing in their innovation activities. This will help firms in developing their innovation capabilities and assist Codexx in providing best guidance to our legal clients.”

Report highlights:

  • 35 law firms in the UK and Germany were surveyed for their innovation methods and results during 2013.
  • Innovation was defined as anything new to the firm that generates value.
  • Overall UK and German firms,  scored similarly – at a middle to low level compared to best practices.
  • UK firms focused their innovation mainly on process improvement and German firms on services.
  • The study showed that improved innovation practices resulted in better business performance.
  • Firms’ key challenges in improving their innovation were in resourcing, culture and leadership.

 

Overall scatter picture

 

Executive summary:

  • A study of innovation practices and performance in law firms in the UK and Germany was performed during 2013, led by Codexx in partnership with the University of Exeter Business School and the University of Leipzig Graduate School of Management. The study involved a total of 35 firms, 14 in the UK and 21 in Germany. Firms participating from the UK were typically larger than those from Germany with a median yearly revenue of £70m compared to £17m.
  • We defined innovation as anything that was new to a firm and brought value – this broad definition covered incremental as well as ‘step-change’ innovation.
  • This study followed a previous one run by Codexx in 2006 with 16 UK law firms. The objective of the 2013 survey was to perform a more in-depth study of UK firms’ approach to innovation, particularly since the 2008 economic downturn and the legal services deregulation. The opportunity to perform a similar study with German firms and contrast approaches and outcomes brought additional value.
  • The study found an overall similar level of innovation practices and performance in the participating UK and German firms, which was typically at a middle to low level, compared to best practices. Whilst UK firms had their main focus on process innovation, German firms’ focus was on service innovation. The difference, we believe, results from the impact of the legal services deregulation and the post 2008 economic challenges in the UK, with firms giving increased focus to efficiency.
  • The study also found a good level of correlation between innovation practices and performance – showing that if these practices were put in place, it was likely that improved performance in key metrics such as revenue from new services and cost reduction from process innovation, would follow.
  • Analysis of those firms who were leading in innovation performance, showed that UK performance leaders had an average level of practices ahead of the study sample in every practice area, though this was not the case for German leaders (this might indicate some practice inconsistencies in the generally smaller German firms). This finding gives support to the recommended comprehensive approach to innovation, establishing a system to cover the the key practices.
  • Firms identified their key innovation challenges as in resourcing innovation, establishing a supportive culture and process and in leadership. Improving innovation resources and process were cited as common improvement priorities for firms.
  • The report defined five guiding principles for law firms seeking to improve their innovation capabilities, based on Codexx experience in working with law firms in innovation since 2005.

Practice leaders v sampleFor more information on the study or to request a copy of the report, contact Alastair Ross at Codexx.

Energizing Change

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