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David Vermette Writing Sample: MRT White Paper Excerpt

Throughout the 1990s, I managed a series of primary research studies that produced two influential white papers. These studies were sponsored by a partnership between Product Development Consulting, Inc. (PDC), The Management Roundtable (MRT), and (in 1993), the Boston Consulting Group (BCG). The 1993 study was featured on page A2 of the Wall Street Journal, July 20, 1993 and later became a key source for a Harvard Business Review article authored by PDC President, John Carter and BCG Principal, Tom Hout. I was the manager of this effort as an employee of PDC and was later hired as a free-lancer by MRT to expand on the work. I authored two white papers for MRT presenting the findings. The first of these white papers was subsequently republished or covered in Managing Automation, CAE, IOMA Journal, Society of Concurrent Engineering National Newsletter, Time-Compression Technologies, Software Strategies, and other trade publications. These white papers are still cited today, most recently at the annual conference of Boston’s branch of the Usability Professionals Association (UPA), May 7, 2012.

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David Vermette Writing Sample: MRT White Paper Excerpt

  1. 1. WHITE PAPER EXCERPT Product Development in the 1990s: Communication and Integration David Vermette Senior Associate Management Roundtable, Inc.An ongoing study of product development and product definition reveals a clear patternof what distinguishes successful from less successful product developers. The moresuccessful groups, in terms of rapid product development, market share, and market sharegrowth, tend to encourage communication between functions in their organization;between suppliers and buyers; between product developers and customers; and betweentheir own company and other companies. They also have a much greater degree ofintegration of the various functions in their organization. They involve non-engineeringfunctions early in the product development process and allow these support functions toinfluence R&D decision-making. They co-locate product development personnel; theygive sufficient authority to project managers to get the job done; and they use intranets tocommunicate data across functions and business units.Contrary to some widely held views, the data do not support the idea that measurementand control, in themselves, generate product development success. In fact, the lessmeasurable factors in the process, such as knowledge of the customer and a feel forchanges in the marketplace, seem to have more of an impact on product developmentsuccess. Tools and techniques that promise greater control over the product definitionand development process, such as QFD, Design Reviews, or Rapid Prototyping tools, donot have any observable relationship to success. Some of these practices are contra-indicated by the study. These findings confirm the “Law of Requisite Variety,” aprinciple of cybernetics, which states “the element in a system that has the mostflexibility will be the controlling, or catalytic, element in that system.”1 Those practicesthat tend toward flexibility and adaptability are more likely to be the catalytic elements inproduct development than those that encourage uniformity.There is no off-the-shelf solution, no silver bullet for product development success.However, successful companies increase flexibility in their organizations by fostering aculture of communication and integration. The answer isnt procedural or operational –its cultural.The StudyTwo Boston-area based firms, The Management Roundtable and Product DevelopmentConsulting, Inc. conducted this study using mailer questionnaires. The surveys wereadministered annually from 1991 to 1995. The questionnaires were not identical eachyear, but were changed and updated according to the knowledge gained in each iterationof the study. This article concerns areas where there were sufficient data over the courseof the 1990s to draw conclusions over time.1Ashby, W. Ross: An Introduction to Cybernetics. London: Methuen and Co., 1964. Quoted and cited inDilts, Robert: Applications of Neuro-Linguistic Programming. Cupertino, CA: Meta Publications, 1983. 1
  2. 2. The following observations apply to five industry groupings: Aerospace & Defense,Automotive, Computers, Electromechanical Systems, and Medical companies.Organizations within these categories are not necessarily market competitors. Thegroupings represent organizations within a range of products that have a similarcomplexity, a similar product development process, including a roughly similar time-to-market, and which confront similar challenges in developing new products. The fiveindustry groupings allow a broad enough aggregation of the data from which to drawconclusions, while avoiding “apples to oranges” comparisons between industries.The analysis focused on three major success factors: fast product development, marketshare, and market share growth. In four of the five questionnaires, the respondents wereasked to provide their average time-to-market – from first full funding commitment tofirst ship – in months.2 The median time-to-market was calculated for each industrygrouping, in each year. Those respondents who had a faster than median time-to-marketwere placed in the “faster” group; those with an equal to or greater than median time-to-market were placed in the “slower” group.The “higher market share” and “lower market share” groups were created using twoquestions found in the 1993, 1994, and 1995 questionnaires. The respondents were askedto rate their market share as either “high,” “medium,” or “low.” In the next question therespondents were asked to rate how their market share appeared to be changing: “rising,”“constant,” or “falling.” Those respondents reporting a “high” and “rising” share, a“high” and “constant” share, or a “medium” and “rising” share (i.e. up and comingcompanies) were placed in a “high share group.” Any other combination of responses tothese two questions placed the respondent in the “low share group.”Comparable product developers were divided into groups based on success factors andthen we observed how these different populations behave. This analysis reports whatthey do and not necessarily why they do it. The survey data is best understood asdescriptive rather than prescriptive. However, the studys overall description ofsuccessful product developers is clear, consistent, and compelling.Summary: Practices of Rapid Product DevelopersFast product developers have a balanced staff, providing sufficient support to engineeringfunctions throughout the development process. They have an integrated productdevelopment process, involving adequately staffed organizations early in the process, andmaintaining their level of involvement throughout. They do not rely on R&D spendingor technologies to ensure success but foster communication inside and outside of theorganization. They focus on total quality, based on industry benchmarks, across allaspects of the company.2 In 1994, the question was simplified. The respondent was asked if his or her company was a fasterproduct developer than competitors. Those who answered affirmatively were put in the “faster” group;those answering negatively were put in the “slower” group. After the data for 1994 were analyzed, this wasjudged to be a less accurate way of deducing time-to-market, and the previous, more objective way ofasking the question, in terms of time-to-market in months, was reinstated in the questionnaire for 1995. 2
  3. 3. Summary: Practices of High Share Product DevelopersA clear picture of the high share, high growth company also emerges from the study:• They don’t use a functional, chimney type of organization but tend to have either teams or a matrix structure• They use TQM to create a quality focus and to help manage processes• They co-locate product development personnel and give sufficient authority to the project manager• They use Concurrent Engineering to involve non-engineering functions in the product development process from the earliest stages of the project• They transfer data electronically to expedite information exchange across functions and business areas• They don’t spend more money on R&D than the competition – they find better and less expensive ways of working• They allow non-engineering functions to influence R&D• They inculcate a flexible approach to R&D strategy, incorporating the best elements of technological advances from both within and outside of the company• They encourage joint technology development where applicable• They have a shorter order-to-delivery cycle thus showing responsiveness to customers• They focus on developing a feel for changes in the market and a superior knowledge of the customerConclusionThe study concluded that successful product developers were characterized by thequalities of communication, integration, and flexibility. At a higher level, these qualitiesmay be united under the banner of relationship. Each of these qualities speaks to therelationship between one company, function, business unit, plant, and another.Successful companies are complex systems and behave in ways that reflect the behaviorof other complex systems. Take, for example, biological systems, the evolution of aspecies. Two crucial capabilities are mutation and the transmission of these mutations tooffspring. These capabilities are described by the single word: adaptation. Without this,there can be no evolution. The same seems to apply to the complex species of productdevelopment organizations. They need to have an ability to adapt to changingcircumstances and they need to be able to communicate these adaptations to other areasof the company. This points back to the Law of Requisite Variety. It is the flexibleelements in a system and not the predictable, uniform elements that matter most.Another biological analogy applies. For many centuries it was believed that the health ofa system within the human body, such as the digestive or respiratory system, wasindicated by its maintaining equilibrium. Health was tied to predictability. Recentstudies show something quite different. For example, researchers at Harvard MedicalSchool found that a healthy heartbeat is one that is variable and, within a range,unpredictable. On the other hand, a uniform and predictable heartbeat is stronglycorrelated with cardio-vascular disease. 3
  4. 4. “The conventional wisdom in medicine holds that disease and aging arise from stress on an otherwise orderly and machine-like system – that the stress decreases order by provoking erratic responses or by upsetting the bodys normal periodic rhythms. In the past five years or so we and our colleagues have discovered that the heart and other physiological systems may behave more erratically when they are young and healthy. Counterintuitively, increasingly regular behavior sometimes accompanies aging and disease.”3Health is correlated with variety and not uniformity.This five-year study seems to confirm the same truths in relation to the complex systemof product development in large organizations. Healthy product developers increase thevariety of functions involved in R&D; they increase the flexibility of informationexchange; they increase the variety of sources of new technology by bringing in newtechnologies and developing them jointly; they increase their ability to respond and adaptto changing circumstances through knowing their customer and cultivating a feel formarket changes.Product development improvement efforts have tended to focus on decreasing variationand quantifying processes. This uniformity was intended to generate greater control.What characterizes successful product developers, however, is something different: theyincrease the variety and flexibility in their environment by engendering communicationand integration.Copyright 1997 David Vermette and The Management Roundtable, Inc. All Rights Reserved.3Ary L. Goldberger, David R. Rigney and Bruce J. West, “Chaos and Fractals in Human Physiology,”Scientific American, February 1990: 42-49. 4