Senior management unable to guide the firm to maturity.
Improper structure of Product Development Process
THE NEXT GENERATION: WHICH BATTERY Holliday & his team entertained only a few realistic development option:
Computer with a proven battery technology (NiHi):
McCarty & Taylor, the mechanical engineer, favored this option such as communication control or memory management accessories.
Go with the new battery technology (LiOn):
Dell could incorporate new Lithium ion batteries into the notebook. This option mean incorporating an unproven & more expensive technology, which would also take up more space than traditional batteries.
Defer commitment to either battery technology:
Dell could continue to pursue the laptop development without committing to either battery technology at the current phase review.
If LiOn fails at launch, a switch to NiHi would require substantial rework (70% of original schedule and 30% of cost). Because competitors would have an established product on the market before them. Dell would lose about 50% of projected units sold.
If LiOn causes a failure, there could be spillover effects into the desktop business. Dell regulation for qualify could be tarnished.
Option 3: Defer commitment until qualification phase review (dual development or design)
The analysis assumes that Sony will give us enough information at the end of the qualification phase to determine with full certainly if LiOn will work or fail. If it fails Dell can drop it and revert to option 1.
*these are the actual project cost incurred. They include additional designers and engineers, material & tools cost, etc. if we follow a dual path until the qualification phase review. Te costs do not include the product opportunity forego if we had to pull people away from other projects. * Because of the LiOn battery different dimension and properties we would have to “overdesign” the computer case, the charging circuitry and battery management software to a accommodate either battery technology which would add about $12 cost/unit.