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Set-Based Decision Making

  Taming System Complexity

              Michael Kennedy
 Founder – Targeted Convergence Corporation
    michaelk@targetedconvergence.com




                                      Copyright © 2011 Targeted Convergence Corporation
                                      All Rights Reserved.
Theory Versus Practice


Theory - Is when everyone knows why, but
  nothing functions.

Practice – Is when everything functions, but
  nobody knows why.

                            German Soccer Coach




                                    Copyright © 2011 Targeted Convergence Corporation
                                    All Rights Reserved.
Theory Versus Practice


  In theory, phase gates systems should function well.
      In Practice, they don’t.

  In theory, knowledge management systems work.
      In Practice, they don’t.

  The Toyota Product Development system functions
   very well.
      Theoretically, it is hard to define why.

If you can’t define why it works, how can you achieve it?

                                          Copyright © 2011 Targeted Convergence Corporation
                                          All Rights Reserved.
What is the State of Hardware
Product Development?
 Here is what I see over and over:
   Schedules and detailed requirements are set early
   The system concept is set quickly
   This begins wide sets of planned tasks to meet
    requirements (Phase-Gate Planning)
   Eventually the critical knowledge gaps emerge
   The loopbacks start and continue for the life of the
    program

Consistent Results: project delays, cost overruns, 70% of
engineers firefighting, problems repeat on next projects

                                              Copyright © 2011 Targeted Convergence Corporation
                                              All Rights Reserved.
The Fundamental Problem

                         Made and unmade decisions in the
                                “Fuzzy Front End”
                                cause loopbacks!
Fuzzy Front-End



  Concept   Planning   Design   Validation             Manufac                    Customer
   Phase     Phase     Phase     Phase                  -turing                    Usage




                                             Copyright © 2011 Targeted Convergence Corporation
                                             All Rights Reserved.
The Fuzzy Front-End, aka:



   The Land of Little Scrutiny
    Start design early to finish on time.

    Choose fast and be specific.

Product and process decisions are made:
    Before customer needs are understood

    Before feasibility is proven

    Without knowing why past products
     succeeded or failed




                                             Copyright © 2011 Targeted Convergence Corporation
                                             All Rights Reserved.
It Get’s Worse
                                    Fuzzy Front-End


                                        Concept     Planning    Design        Validation           Manufac-            Customer
                                         Phase       Phase      Phase          Phase                turing              Usage




  Fuzzy Front-End                                                         Knowledge doesn’t flow
                                                                            between projects.
      Concept   Planning   Design      Validation   Manufac-   Customer
       Phase     Phase     Phase        Phase        turing     Usage




                                                                           Copyright © 2011 Targeted Convergence Corporation
                                                                           All Rights Reserved.
What challenge is product development trying to
solve?

                     Business Goals	




                                           Technical
                                           Capability	



                   Customer Interests	



  Product development is about innovating a solution that:
     Achieves your business goals
     Satisfies your customers’ interests
     Fits within your technical capabilities

          The goal is to find that sweet-spot.
                                                           Copyright © 2011 Targeted Convergence Corporation
                                                           All Rights Reserved.
Unfortunately, in the Fuzzy Front End,
we have a very fuzzy view of that sweet spot

                           Business Goals	




                                                         Technical
                                            ?            Capability	



                       Customer Interests	


  Fuzzy Front-End
                                                      We	
  have	
  unclear	
  visibility	
  to:	
  
      Concept   Planning      Design    Prototype            Our	
  business	
  goals	
  
                                                    Manufac-   Customer
       Phase     Phase        Phase      Phase       turing     Usage
                                                             Our	
  customers’	
  interests	
  
                                                             Our	
  technical	
  capabili8es	
  
                                                      So,	
  what	
  do	
  we	
  do?	
  
                                                      Tradi8onally:	
  	
  we	
  GUESS!...	
  
                                                                         Copyright © 2011 Targeted Convergence Corporation
                                                                         All Rights Reserved.
Here’s what’s going on

   Fuzzy                                              Success
   Front                                              Assured
                       Detailed
   End
                       Design      Does it work?



                                                             Ramp-up
             Select one,
             and hope it
             works!
                            This Time Frame is Unstable

  Detailed
   Specs                          We call this point
                                   based Design
                                             Copyright © 2011 Targeted Convergence Corporation
                                             All Rights Reserved.
Toyota is in a Different Paradigm
                  Traditional                          Toyota
  Product      Specific as possible           Rough targets to start.
   Specs       Early as possible.             Details evolve with the project.

  Design
               Made as early as possible.     Delayed as long as possible.
 Decisions

  Testing      Mostly after design, to fix.   Mostly before design, to learn

  Project
               Administrative – to manage     Technical – to manage knowledge
               process compliance              growth into products
Management
 Innovation                                   New product breakthroughs, but
               New product concepts
   Focus                                      mostly subsystem platforms




                                                           Copyright © 2011 Targeted Convergence Corporation
                                                           All Rights Reserved.
The Toyota Philosophy


Product development is not about developing cars,

   it is about developing knowledge about cars.

   Great cars will emerge from the interaction.




                                    Copyright © 2011 Targeted Convergence Corporation
                                    All Rights Reserved.
At Toyota, Product Development looks like this

                                                                         Focused Knowledge
                                                                         Development across
                                                                         projects
                              RAPID CYCLES OF LEARNING         Design Phase       Validation Phase             Launch Phase
                                        & CONVERGNCE




                                                                                               And the pull of
   RAPID CYCLES OF LEARNING        Design Phase    Validationt Phase    Launch Phase
             & CONVERGNCE


                                                                                               the knowledge
                                                                                               into a cadence
                                                                                               of products
                                                                                       Copyright © 2011 Targeted Convergence Corporation
                                                                                       All Rights Reserved.
At Toyota, Product Development looks like this

                                                       Focused Knowledge
We call it                                             Development across
Set-Based                                              projects
Decision             SET-BASED               Design Phase       Validation Phase             Launch Phase
                        DESIGN
making


      SET-BASED
         DESIGN
                  Design Phase   Validationt Phase    Launch Phase
                                                                             And the pull of
                                                                             the knowledge
                                                                             into a cadence
                                                                             of products
                                                                     Copyright © 2011 Targeted Convergence Corporation
                                                                     All Rights Reserved.
Set-Based Design
looks like this:


              Captured Knowledge for Future Use!
              Both Successes & Failures

Fuzzy Front
End
                               Detailed    Confirm it
                               Design      Works                     Ramp-up




                        This Time Frame is Stable and Known

                                              Copyright © 2011 Targeted Convergence Corporation
                                              All Rights Reserved.
Set-Based Design
looks like this:


                 Captured Knowledge for Future Use!
                 Both Successes & Failures

Fuzzy Front
End
                                      Detailed    Confirm it
                                      Design      Works                     Ramp-up




              Success          This Time Frame is Stable and Known
                        Detailed
              Assured
                         Specs
                                                     Copyright © 2011 Targeted Convergence Corporation
                                                     All Rights Reserved.
Set-Based Thinking
looks like this:

                What are These?
                  Are they System concepts only?
                  Are they subsystem variations?
                  Or, are they something else?




                                 Copyright © 2011 Targeted Convergence Corporation
                                 All Rights Reserved.
Toyota has taught the answer to that question


Tradeoff and limit curves are the visual
    representation of basic product and
    process physics and economics

They are the Toyota’s engineer’s primary tool to:                  Safe
                                                                   region
  Understand
  Communicate and negotiate between
   specialties and functions
  Train new engineers
  Record knowledge
  Negotiate and communicate between
   customer and supplier
                                                    Infeasible
  Conduct design reviews
  Communicate between developers and
   managers
  Design quality into the product




                                                            Copyright © 2011 Targeted Convergence Corporation
                                                            All Rights Reserved.
Introducing Limit & Tradeoff Curves


Tradeoff and limit curves are the visual
    representation of basic product and
    process physics and economics

They are the Toyota’s engineer’s primary tool to:          Safe
                                                           region
  Understand
  Communicate and negotiate between
   specialties and functions
  Train new engineers
  “The most important thing I learned
  Record knowledge

   at Toyota was their dependence onInfeasible
  Negotiate and communicate between
   customer and supplier              and the
  power of limit and tradeoff curves”
  Conduct design reviews
  Communicate between developers and
   managers
  Dr. Allen Ward
  Design quality into the product




                                                    Copyright © 2011 Targeted Convergence Corporation
                                                    All Rights Reserved.
Generalizing and Visualizing the Knowledge


   Muffler: goal is to minimize both noise and
   back pressure

                                    Existing Product
        Noise level




                                                    Did you learn
                                                    anything for
                               Prototype 2         future design?
                      Prototype 1
                                                   Was that best
                                                      trade-off
                      Back pressure                for customer?
                                                Copyright © 2011 Targeted Convergence Corporation
                                                All Rights Reserved.
Generalizing and Visualizing the Knowledge


   Muffler: goal is to minimize both noise and
   back pressure
        Noise level




                               Prototype 2
                           Prototype 1



                      Back pressure
                                             Copyright © 2011 Targeted Convergence Corporation
                                             All Rights Reserved.
Generalizing and Visualizing the Knowledge


   Muffler: goal is to minimize both noise and
   back pressure
                                                           So, all you
                                                         really learned
                                                         was that one
                                                        trade-off point!
        Noise level




                                           Is the lesson that you can’t get
                                           more quiet than this?

                                       Or something in between?

                      Or is the lesson that the smallest backpressure is this?

                      Back pressure
                                                      Copyright © 2011 Targeted Convergence Corporation
                                                      All Rights Reserved.
Generalizing and Visualizing the Knowledge


   Muffler: goal is to minimize both noise and
   back pressure
                                            The Toyota Way:
                                            Multiple prototypes
                                            are built and tested
        Noise level




                                            to failure
                                   Safe
                                   region    This is Set-Based
                                                 Thinking!

                      Infeasible              Don’t capture
                                                 points,
                       Back pressure          capture sets!
                                               Copyright © 2011 Targeted Convergence Corporation
                                               All Rights Reserved.
Set-Based Decision-Making is optimizing tradeoffs
   between Customer Interests using Set-Based
   Knowledge from others
                                                       Existing Product




                                 Noise level
                                                                                                         Detailed
                                                                                                         Design

                                               Infeasible
                     Set-Based                    Back pressure
                     Decision-                                            Set-Based
                      Making                                              Knowledge
                                                  Solution
Project Team
                                                    sets
                                 Mfg cost



  Making decisions without
  understanding the impact                                  Existing
                                                            Product                                    Production
  on customers is the major                                                                             Support
     cause of loopbacks                            Back pressure




                                                                          Copyright © 2011 Targeted Convergence Corporation
                                                                          All Rights Reserved.
Set-Based makes your Knowledge concrete such
that…

  … it can flow between
   areas of expertise                               Existing Product




                              Noise level
   (collaboration).                                                                                   Detailed
                                                                                                      Design
  … it can flow between
   projects (reuse).                        Infeasible

  … it can be continuously                    Back pressure
                                                                       Set-Based
                                                                       Knowledge
   improved.                                   Solution
  … it can make visible                         sets

   what needs to be           Mfg cost

   learned to further
   converge.                                             Existing
                                                         Product                                    Production
                                                                                                     Support
                                                Back pressure




                                                                       Copyright © 2011 Targeted Convergence Corporation
                                                                       All Rights Reserved.
Set-Based Knowledge Flow

                                                         K          K                  Knowledge is created
  How Set-Based                                                                        from product VS #2 and
Supports Knowledge                              K                   K                  is added to the golden
                                                                                       arrow along with
       Flow                           K                       K                        Knowledge from VS #1

                                           Set-Based Phase     Design     Validation                  Customer
                                                                                        Mfg.
                                                               Phase      Phase                       Usage



                      K           K                                       PRODUCT #2 Value Stream
                                                          P
                                                    Some previous Knowledge is used
              K       K                             in the next product value stream



                                 A
                                           Continuous Improvement thru          D
      K                K
                                            Set-Based Problem Solving



                                                          C
                                                                                       K       = Re-useable Knowledge,
   Set-Based Phase   Design   Validation                 Customer
                                             Mfg.                                               Curves, Guidelines, etc.
                     Phase    Phase                      Usage
                                                                                           Both previous successes as well as
                                                                                             failures provide knowledge for
                                                                                                        future use!
                        PRODUCT #1 Value                                                    Copyright © 2011 Targeted Convergence Corporation
                            Stream                                                          All Rights Reserved.
This was the learning: robust, approved

                          Then they learn
                          some more




Then they standardize
for Set-Based reuse


                                     Copyright © 2011 Targeted Convergence Corporation
                                     All Rights Reserved.
The Limit Curves provide the knowledge foundation


                 CGx vs. Launch Conditions




                                             Copyright © 2011 Targeted Convergence Corporation
                                             All Rights Reserved.
The knowledge is also the Basis for
Innovation




                  By removing the
                technical restrictions



 We need to
move the wall

                           Then setting the
                            new standards
                                    Copyright © 2011 Targeted Convergence Corporation
                                    All Rights Reserved.
Some Questions to Ponder

             Set-Based Phase   Design   Validation          Customer
                                                     Mfg.
                               Phase    Phase               Usage




Is Set-Based Design a Version of Agile?
       - Both are rapid cycles of learning
       - Both build out the system as you learn

Why does pure hardware development not use Agile?

Is Agile a Version of Set-Based Design?

How about embedded software?
                                                                  Copyright © 2011 Targeted Convergence Corporation
                                                                  All Rights Reserved.

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Michael kennedy set-based decision making taming system complexity

  • 1. Set-Based Decision Making Taming System Complexity Michael Kennedy Founder – Targeted Convergence Corporation michaelk@targetedconvergence.com Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 2. Theory Versus Practice Theory - Is when everyone knows why, but nothing functions. Practice – Is when everything functions, but nobody knows why. German Soccer Coach Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 3. Theory Versus Practice   In theory, phase gates systems should function well.   In Practice, they don’t.   In theory, knowledge management systems work.   In Practice, they don’t.   The Toyota Product Development system functions very well.   Theoretically, it is hard to define why. If you can’t define why it works, how can you achieve it? Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 4. What is the State of Hardware Product Development? Here is what I see over and over:   Schedules and detailed requirements are set early   The system concept is set quickly   This begins wide sets of planned tasks to meet requirements (Phase-Gate Planning)   Eventually the critical knowledge gaps emerge   The loopbacks start and continue for the life of the program Consistent Results: project delays, cost overruns, 70% of engineers firefighting, problems repeat on next projects Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 5. The Fundamental Problem Made and unmade decisions in the “Fuzzy Front End” cause loopbacks! Fuzzy Front-End Concept Planning Design Validation Manufac Customer Phase Phase Phase Phase -turing Usage Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 6. The Fuzzy Front-End, aka: The Land of Little Scrutiny  Start design early to finish on time.  Choose fast and be specific. Product and process decisions are made:  Before customer needs are understood  Before feasibility is proven  Without knowing why past products succeeded or failed Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 7. It Get’s Worse Fuzzy Front-End Concept Planning Design Validation Manufac- Customer Phase Phase Phase Phase turing Usage Fuzzy Front-End Knowledge doesn’t flow between projects. Concept Planning Design Validation Manufac- Customer Phase Phase Phase Phase turing Usage Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 8. What challenge is product development trying to solve? Business Goals Technical Capability Customer Interests   Product development is about innovating a solution that:   Achieves your business goals   Satisfies your customers’ interests   Fits within your technical capabilities The goal is to find that sweet-spot. Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 9. Unfortunately, in the Fuzzy Front End, we have a very fuzzy view of that sweet spot Business Goals Technical ? Capability Customer Interests Fuzzy Front-End   We  have  unclear  visibility  to:   Concept Planning Design Prototype   Our  business  goals   Manufac- Customer Phase Phase Phase Phase turing Usage   Our  customers’  interests     Our  technical  capabili8es     So,  what  do  we  do?     Tradi8onally:    we  GUESS!...   Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 10. Here’s what’s going on Fuzzy Success Front Assured Detailed End Design Does it work? Ramp-up Select one, and hope it works! This Time Frame is Unstable Detailed Specs We call this point based Design Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 11. Toyota is in a Different Paradigm Traditional Toyota Product Specific as possible Rough targets to start. Specs Early as possible. Details evolve with the project. Design Made as early as possible. Delayed as long as possible. Decisions Testing Mostly after design, to fix. Mostly before design, to learn Project Administrative – to manage Technical – to manage knowledge process compliance growth into products Management Innovation New product breakthroughs, but New product concepts Focus mostly subsystem platforms Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 12. The Toyota Philosophy Product development is not about developing cars, it is about developing knowledge about cars. Great cars will emerge from the interaction. Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 13. At Toyota, Product Development looks like this Focused Knowledge Development across projects RAPID CYCLES OF LEARNING Design Phase Validation Phase Launch Phase & CONVERGNCE And the pull of RAPID CYCLES OF LEARNING Design Phase Validationt Phase Launch Phase & CONVERGNCE the knowledge into a cadence of products Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 14. At Toyota, Product Development looks like this Focused Knowledge We call it Development across Set-Based projects Decision SET-BASED Design Phase Validation Phase Launch Phase DESIGN making SET-BASED DESIGN Design Phase Validationt Phase Launch Phase And the pull of the knowledge into a cadence of products Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 15. Set-Based Design looks like this: Captured Knowledge for Future Use! Both Successes & Failures Fuzzy Front End Detailed Confirm it Design Works Ramp-up This Time Frame is Stable and Known Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 16. Set-Based Design looks like this: Captured Knowledge for Future Use! Both Successes & Failures Fuzzy Front End Detailed Confirm it Design Works Ramp-up Success This Time Frame is Stable and Known Detailed Assured Specs Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 17. Set-Based Thinking looks like this: What are These?   Are they System concepts only?   Are they subsystem variations?   Or, are they something else? Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 18. Toyota has taught the answer to that question Tradeoff and limit curves are the visual representation of basic product and process physics and economics They are the Toyota’s engineer’s primary tool to: Safe region   Understand   Communicate and negotiate between specialties and functions   Train new engineers   Record knowledge   Negotiate and communicate between customer and supplier Infeasible   Conduct design reviews   Communicate between developers and managers   Design quality into the product Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 19. Introducing Limit & Tradeoff Curves Tradeoff and limit curves are the visual representation of basic product and process physics and economics They are the Toyota’s engineer’s primary tool to: Safe region   Understand   Communicate and negotiate between specialties and functions   Train new engineers “The most important thing I learned   Record knowledge at Toyota was their dependence onInfeasible   Negotiate and communicate between customer and supplier and the power of limit and tradeoff curves”   Conduct design reviews   Communicate between developers and managers Dr. Allen Ward   Design quality into the product Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 20. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressure Existing Product Noise level Did you learn anything for Prototype 2 future design? Prototype 1 Was that best trade-off Back pressure for customer? Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 21. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressure Noise level Prototype 2 Prototype 1 Back pressure Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 22. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressure So, all you really learned was that one trade-off point! Noise level Is the lesson that you can’t get more quiet than this? Or something in between? Or is the lesson that the smallest backpressure is this? Back pressure Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 23. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressure The Toyota Way: Multiple prototypes are built and tested Noise level to failure Safe region This is Set-Based Thinking! Infeasible Don’t capture points, Back pressure capture sets! Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 24. Set-Based Decision-Making is optimizing tradeoffs between Customer Interests using Set-Based Knowledge from others Existing Product Noise level Detailed Design Infeasible Set-Based Back pressure Decision- Set-Based Making Knowledge Solution Project Team sets Mfg cost Making decisions without understanding the impact Existing Product Production on customers is the major Support cause of loopbacks Back pressure Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 25. Set-Based makes your Knowledge concrete such that…   … it can flow between areas of expertise Existing Product Noise level (collaboration). Detailed Design   … it can flow between projects (reuse). Infeasible   … it can be continuously Back pressure Set-Based Knowledge improved. Solution   … it can make visible sets what needs to be Mfg cost learned to further converge. Existing Product Production Support Back pressure Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 26. Set-Based Knowledge Flow K K Knowledge is created How Set-Based from product VS #2 and Supports Knowledge K K is added to the golden arrow along with Flow K K Knowledge from VS #1 Set-Based Phase Design Validation Customer Mfg. Phase Phase Usage K K PRODUCT #2 Value Stream P Some previous Knowledge is used K K in the next product value stream A Continuous Improvement thru D K K Set-Based Problem Solving C K = Re-useable Knowledge, Set-Based Phase Design Validation Customer Mfg. Curves, Guidelines, etc. Phase Phase Usage Both previous successes as well as failures provide knowledge for future use! PRODUCT #1 Value Copyright © 2011 Targeted Convergence Corporation Stream All Rights Reserved.
  • 27. This was the learning: robust, approved Then they learn some more Then they standardize for Set-Based reuse Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 28. The Limit Curves provide the knowledge foundation CGx vs. Launch Conditions Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 29. The knowledge is also the Basis for Innovation By removing the technical restrictions We need to move the wall Then setting the new standards Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.
  • 30. Some Questions to Ponder Set-Based Phase Design Validation Customer Mfg. Phase Phase Usage Is Set-Based Design a Version of Agile? - Both are rapid cycles of learning - Both build out the system as you learn Why does pure hardware development not use Agile? Is Agile a Version of Set-Based Design? How about embedded software? Copyright © 2011 Targeted Convergence Corporation All Rights Reserved.