This document discusses Medtronic's shift to a platform-based approach to product development. It notes that platforms can help address problems like unexpected delays, consumer needs, or success by linking breakthrough technologies to derivative products through a common architecture. A platform strategy is designed to facilitate diffusion, commercialization, and standard-setting. The document analyzes how Medtronic's new approach encourages cumulative innovation and derivative products to leverage its technology investments across markets.

1. CLASS 16:
Medtronic

2. AGENDA
• Platforms and the Aggregate Project Plan (**)
• Medtronic (**)

3. The Role of Product
Platforms in the
Aggregate Project Plan

4. Motivation: Three Nightmares
• Unexpected Delays: Coming to the market with the
right technology at the wrong time
• Unexpected Consumer Needs: Coming to the market
with the wrong technology at the right time
• Unexpected Success: Coming to the market with a
single version of a technology which turns out to
have multiple potential uses

5. The Aggregate Project Plan is a tool for pursuing
a portfolio approach to product development…
Radical
Off the shelf
Product
technology
Breakthrough
Platform
Derivative
Product
Support
Entirely new
benefit Improvement No change
Marketing Impact

6. A Technology Platform Provides a Linkage from Breakthrough
Technology to Derivative Products through Investment in a
Common Architecture
B
B1
B2
B3
b30 b31
b40
X1*
X2A*
X2B*

7. Do Platforms Help Address Product Development Problems?
PROBLEM
Unexpected Delays
Unexpected
Consumer Needs
Unexpected Success
Does a platform help? Examples

8. A Platform-Based Approach Might Address Some of
the Key Incentive Problems in Product
Development…
The Problem
Engineering
Enthusiasm
Reporting
Failure?
Short-Term
Managerial Focus
Responsive
Salesforce
How does a platform-oriented
approach help?

9. Platform strategies are designed to facilitate diffusion,
effective commercialization, and standard-setting
Diffusion Strategy
Commercialization
Standard-Setting
Does a platform help? Examples

10. Product development must be aligned with (and
responsive to) overall firm strategy and positioning….
Key Issue Firm A Firm B Firm C
Strategy First mover with
innovative, high
performance
products
“Best Overall” High variety at
low cost: focus
on market
niches,
customization
Timing, Rhythm FAST!
12-18 months?
Moderate:
Generations
last 3-5 years
Fast
customization
Capability High powered
technical team
Linking
customers and
opportunities
Understanding
customer needs
in depth

11. While most platform development has taken place under a
“traditional” stage gate approach, recent work emphasizes a more
flexible process of iteration and coordination
Concept
Development
Launch
Lead
Time
Traditional
Approach
Concept
Development
Launch
Flexible
Approach

12. “Internet Time” Product Development yields at least
three key benefits….
KEY BENEFITS
Sensing the Market
Testing Technical
Solutions
Integration
How? Examples

13. We’ve Got Rhythm!

14. What Went “Wrong” at Medtronic?
Other Examples?
Problem Source

15. A New Management Philosophy
What? How?
Sacred Commitments
A Sense of Urgency
Productive employees
are happy (not reverse)
Managing means
responsibility, not status
You only get what you
measure
Focus on market share

16. Measuring Product Development Performance
Measure? Accuracy?
Speed
Cost
Innovativeness
Product Quality

17. A New Incentive Scheme
Implementation
Challenge?
Incentive
Scheme
Goal

18. Product Concept Definition
• Environmental Assessment
• Technological Assessment (Unarticulated Customer Needs)
• Environmental Assessment (Articulated Customer Needs)
• Brady Business Objectives (??)
Feature Definition Process
• Feature Tradeoff Process
• Market Value Assessment
• Feasibility Assessment Process
• System Definition
A “Balanced” Product Design Process

19. Processes & Practices
Benefits Implementation Challenges
Speed
Platform Strategy
Documentation
Phase Definition
Rhythm!
Market Input

20. How did the Medtronic plan change?
Radical
Off the shelf
Product
technology
Breakthrough
Platform
Derivative
Product
Support
Entirely new
benefit Improvement No change
Marketing Impact

21. A Strong Platform Strategy Enables…
• A Novel Customer Value Proposition….
• In New (and Fast-Growing) Markets….
• Protected from Direct Rivalry….
• Achieved at an Effective Cost….
• And Reducing the Cost of Future Development Activities…

22. Does Medtronic’s strategy encourage cumulativeness?
Example
Types of
Cumulative
Innovation
Encouraged by
Platform Strategy?

23. Managerial Implications Cool-Down!!
• Over the past two decades, platform-based strategies have
become powerful weapons for leveraging innovation investments
across markets, facilitating diffusion and commercialization
strategy
• Rather than a focus on budgets or technical details, platform
strategy links resource allocation, platform architecture and
firm strategy
• Overall, development strategy should encourage "ownership“
• Translating new technology into competitive advantage requires linking
commercialization to the firm’s overall strategy
• NB: Derivative innovation results in, at best, incremental profit.
• Challenge lies in implementation
• Using a strategy to make choices requires commitment to a process and
philosophy at the most senior levels
• Effective product development requires sacrifice in effort, risk, and design