The document outlines an effective methodology for new product development (NPD) management, emphasizing a phase gate architecture and various metrics for revenue and execution. It details the need for effective project prioritization, portfolio management, and the importance of aligning NPD efforts with business objectives and strategies. Additionally, it introduces the PDCA cycle for continuous improvement and stresses the value of planning, monitoring, and adapting throughout the NPD process.

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NPD Management
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New Product Development
Management
A.R. Alvarez
2016

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Preamble
 Objective:
 Provide an Effective Methodology for New Product Development
Management
 Included:
 NPD Phase Gate Architecture
 NPD Revenue and Execution Metrics
 Excluded:
 Intensive Project Management Methods*
 Risk, Uncertainty and Scheduling Methodology*
 Problem Solving Methods**
 Detailed NPD Phase Gate Meeting Templates
* Reference: http://www.slideshare.net/ARAlvarez/project-management-cookbook-part-1-ara-feb16
http://www.slideshare.net/ARAlvarez/project-management-cookbook-part-2-ara-feb16
http://www.slideshare.net/ARAlvarez/project-management-cookbook-part-3-ara-feb16-58233717
** Reference: http://www.slideshare.net/ARAlvarez/basic-8d-problem-solving-tools-methods-part-1
http://www.slideshare.net/ARAlvarez/basic-8d-problem-solving-tools-methods-part-2
http://www.slideshare.net/ARAlvarez/problem-solving-tools-methods-part-3

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Roadmap to
Launch
Concept to Customer
Launch to
Product Release
Product Release
to Dollars
New Product Development -
Foundational Value Stream
In Most Companies New Products Drive Revenue and/or
Operating Income Growth
It is a Basic Value Creating Process

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Every Company Has a
New Product Development Management
System
How Do You Make Yours
a Competitive Weapon?

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New Product Development
Basic Questions
1) Is The New Product Development (NPD) Effort Putting Out
Enough Revenue/Margin Dollars to Grow The Business
Profitably? (Independent of Spending)?
2) Is The NPD Effort Meeting Our Business Objectives?
• Quality / Competitiveness
• Timeliness
• Innovation
• Enabling New Markets
3) Is The NPD TTM Predictable & Competitive?
4) Does The NPD Investment Provide an Above Average
Industry Return?

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Deming’s PDCA Quality Cycle
Plan
Do
Check
Act

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PDCA: New Product Development
Plan
(Portfolio Mgt)
Do
(Tactical Reviews)
Check
(Metrics Review)
Act
(Learn & Adjust)

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NPD Portfolio Management
1. The Fuzzy Frontend
2. New Product Project Classification
3. Prioritization
4. Financial ROI
5. Phase Gates

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New Product “Fuzzy Frontend”

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Tie to Strategy
Competitors:
Capabilities & Offerings
Your:
Capabilities, Offerings
& Vision
Customer:
Problems, Needs,
& Aspirations
D.J. Collis, M.G. Rukstad (HBR April 2008) “Can You Say What Your Strategy Is?”

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New Product Portfolio Classification
Product
Complexity
Technology Complexity
HighLow
Low
High
Budgetary Planning
TT$
Resources
Project Cost
Risk
After S. Wheelwright, K.B. Clark, “Creating Project Plans to Focus Product Development”, HBR, March-April 1992

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NPD Temporal Budgetary Planning
Provides NPD TTM “Budget” as Function of Complexity
Budget Set Based on Historical Performance
Allows Quick and Realistic Project Estimates (Prior to Detailed Calculation)
When Performance Improves, Budgets Adjusted Accordingly

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NPD Budgetary Resource Matching
Resources
Model Bottoms-Up Actual
Skill
Matrix
Process 15 12 10
Materials 10 14 4
Tech 5 6 2
Test 7 4 3
Ops 6 3 5
Etc 4 4 6
Total 47 43 30
Machine Time 120 180 80
Time Phasing Required
Prioritization Driven Iteration Usually Required
Resets On “Insertions”

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NPD Project Prioritization
 Many Ways to Prioritize; Recommend Keeping it Simple (2 X 2 Matrix)
 Quantified Methods Utilize Multiple Grading Criteria Matrix (Use a Non-Linear
Scoring Systems If You’re Going to Use This Technique)
 Dot Size & Color Can Indicate Other Characteristic (Product Line, Geography,
Volume, etc.)
Investment
(Time, People, $s, . . .)
Impact
(Revenue, Margin, . . .)
Low High
High
Low

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Finding Your Way

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NPD Goal Hierarchy
 Clear Objectives
 Technical Spec (OTS)
 Customer Value Proposition(s)
 Cost Target
 Timeframe (i.e. Market or Funding Window, …)
 Unambiguous Deliverables / Expectations
 NPD Functions Vital Signs (Keep it Simple)
 S&M
 Engineering (Design, Test, SW, Equip, …)
 Applications
 Technology or R&D
 Operations, Quality, Reliability
 Systems Design
 Project Checklists
 Checklists at Major Phase Gate Can Insure Deliverables Completeness
 Checklists Can Also Provide Method to Capture Learning
Goals /
Objectives
Events:
Vital Signs
Activities:
Checklists
Milestones

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Marketing Request Document
Criteria /
Feature
Mandatory
(Must Have)
Differentiating
Target
Breakthrough
Target
Comments
 MRD Reflects Market Requirements For Targeted:
 Product Features
 Timeframe
 Market Segment or Functional Area (As Appropriate)
 Customer Demographics (If Appropriate)
 Prioritization: Must Have, “Nice to Have”, Will Not Have
 Price Point
 Not All Criteria / Feature Will Have Differentiating Targets,
Very Few Will Probably Have Breakthrough Targets

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Objective Technical Spec Example
 OTS Reflects Agreed Plan of Record Response to MRD
 OTS Reflects Tradeoffs & Constraints: TTM, Cost, …
 Maintains Prioritization: Must vs. Nice to Have vs. Will Not Have & Timeline
 OTS Contains Significantly More Detail Than MRD; i.e. One MRD Feature
Often Breaks Down to Multiple Engineering Specs/Criteria
 Good Practice to Retain Original MRD to Document Original Request vs.
Final Agreement
Criteria /
Feature
Mandatory
(Must Have)
Differentiating
Target
Breakthrough
Target
Engineering
Response
Agreed to
Target (Spec)

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Objective Specs = Lighthouse
There Will Be Storms ……… You Need a Lighthouse

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NPD Project Vital Signs
Parameter Unit
Spec /
MP Target
Sample
Target
Sample
Actual
MP
Actual
Current
Actual
Comment
Product Feature Targets
Clock Freq MHz
Etc.
Operational (Internal) Targets
Yield %
Test Time ms
Cost $
 Vital Signs Are Translation of OTS Into Working Document
 Sets Targets for Engineering (or Prototype) Samples
 Sets Targets fro Mass Production Release (Typically = OTS Spec)
 Provides Format/Framework for Project Updates at Appropriate Intervals
 Can Have Vital Signs For Different Functions; i.e. SW, HW, Test, …
 Consider Triggers For Key Vital Signs at Critical Phase Gates
 Set Balanced Set of Vital Signs: Both External Product Features &
Internal Operational Targets

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PDCA: New Product Development
Plan
(Portfolio Mgt)
Do
(Tactical Reviews)
Check
(Metrics Review)
Act
(Learn & Adjust)

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What You Need to Know
You Need to Know Where You’re Going
You Need to Know Where You Are
You Need to Know if You’re Off Track
How Hard is This to Do?
With a Team ?
By Yourself?

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What You Need to Do
Start With The End in Mind
Define Success Criteria / Vital Signs
Utilize Phase Gate Process
Breakdown Success Criteria into Gates
Track The Path
Develop Leading Indicators for Critical Steps & Tasks

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NPD Phase Gate Structure

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One Size Does Not Fit All
Fit The Solution to The Problem
Simple Project = Reduced Phase Gates
Complex Project = All (or More) Phase Gates
At Any Given PG, Proposal Can Be Made For What The Next Milestone
Should Be (Subject to ‘Decider’ Approval)
If Milestones are Skipped, May Still Need to Be Treated as Combining From
Checklist Deliverables Perspective
PG-1 PG-2 PG-ES PG-4
Marketing Product “Request”
Company
Commit
Engineering Samples Release to Production
• Is product worth considering?
• Is there a strategy fit?
• Will we make money?
• Can we make and sell the product?
• Are we ready to sample?
• Will we make money?
• Is there a clear path to PG-4?
• Are we ready to make it?
• Are we ready to sell it?
• Do we make money?

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Phase Gate Review Meeting
 What Do You Need to Communicate?
 Answers to the Basic Questions For the Phase Gate (Pages 26 & 27)
 Barriers to Meeting Commitments for Next Phase Gate or Milestone
 Highlight Risk Items, Major Areas of Uncertainty, White Spaces, Resource Gaps,
Skill Set Gaps, etc.
 What to Do:
 Focus on Completeness of Deliverables for Current Phase Gate Milestone
 Look Forward to The Next Phase Gate Milestone & Highlight Risk Areas
 Propose Recovery and/or Contingency Plans For Next Phase Gate as Required
 Summarize, Issue Minutes and Update Action Items
 How Long Should it Take: 20 – 40 Minutes
 Who Should Be There: Appropriate Exec Mgt, Project &
Functional Team Leads
 Who Should Run It?
Be Open, Be Clear, Be Concise
Each Phase Gate Review Should Have
Its Own Standard Reporting Template
(10 – 20 Pgs) To Make Meeting Efficient

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NPD Phase Gate Financials
 Rough at PG-1
 Locked at PG-2
 Adjusted at Each Milestone as Required
 Re-Locked at PG-4 (Make Risk Behind Project)
 Tracked for First 18 – 24 Post PG-4 With Special Care
Post-Mortems vs. PG-2 and PG-4

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NPD Phase Gate Checklists
 Why Use Checklists?
 Help Manage Complexity:
 How Many Activities Comprise a Project?
 How Many Different Parallel Paths Have to Come Together?
 How Can You Make Sure That Something Isn’t Being Missed?
 Vehicle to Capture Learning From Experience (Yours and/or Someone Else’s)?
 Memory Management Device
 Can Limit Mistakes Regarding What is Known
 Why Not Use Checklists?
 In Culture of Weak Accountability, Responsibility Shifts From Individual to The
Checklist ( “It Wasn’t On The Checklist” Excuse); Don’t Let This Happen to You!
 If Get Too Long (Items Keep Getting Added, No Priorities); Obscures Rather Than
Illuminates  Can Overwhelm Main Objective
 Poor Checklist: Long, Vague, Hard to Use
 Effective Checklist: Precise, Prioritized, To The Point, Easy to Use
 Each Phase Gate Has a Unique / Specific Checklist
Checklists Manage Activities, Not Projects!

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NPD Project Management
Complicated
Multi-Dimensional
Non-Deterministic
Messy
Critical
What Does This Mean?
If You Just Plan to Make Your Schedule You
Will Always, Always Miss

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NPD Project Mgt Tactics
 Micro-Managing vs. Abdication
 Micro-Managing: Specifying “How” Rather Then “What”, Over-Monitoring
 Abdication: No Follow-up, No Measures, No Help
 Schedules
 Commitment vs. “Best Effort” vs. “Try”
 Ownership
 Speed vs. Quality vs. Cost
 Costs
 Know The Total Project Costs; Nothing Hidden
 Know The Cost Per Day; Buy Time
 Cost Questions Only Gets Asked if You Miss Your Goals
 Risks
 Launch With Best Possible Understanding of Main Risk Points &
Uncertainty
 Plan Contingencies Accordingly
 Communicate Risk & Uncertainty on On-Going Basis
 FMEA Can Be Useful to Highlight Risks & Mitigation Plans; Don’t Overdo
Time
Quality
CostPerformance

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Tactical Reviews
Four Slide Review: Monitor & Coach
1. Coach, Guide, Help
2. Intervene Only When Necessary
3. Look For Proper “AIP” Management
4. Precision Questioning & Answering
5. Short & Sweet

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NPD Project Overview Page
 Focus on Changes: Top Level Milestone, Major Scope Items, Financials
 Customize Milestone Columns to Accurately Reflect Project Deliverables
 Proactively Highlighting Issues
Note: Hypothetical
Example Only

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Current Phase Gate Page
 Use “Sub-milestone” Table Template Applicable to Current Project Phase; May Need
to Have 2 “Current Phase” Pages When Approaching End of One Phase
 Customize “Sub-Milestones” to Accurately Reflect Tasks Leading to Next Milestone
 Sub-Milestones Are Deliverables, Not Activities
 Focus on Issues or Risks & Uncertainty in Achieving Upcoming Milestone
Note: Hypothetical
Example Only

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Two Week (Back/Forward) Plan Page
 Don’t Read Completed Tasks From Previous Two Weeks; Focus on Items Not
Completed and Why, What Does It Mean Moving Forward, and Any Help Needed
 Upcoming Tasks; Focus on Items of Key Importance, Risk, or Where Help Is Needed.
 Consider All Cross Functional Tasks When Prioritizing What to Show/Highlight
Note: Hypothetical
Example Only

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Vital Signs Page
 List Parameters Appropriate to Project (New Product, Productivity, etc.)
 Highlight “Current” Numbers In Yellow or Red If There is a Gap, and Add Comment
 If Current Data is Old or Not Yet Available, Add Comment as to Date of Next Readpoint

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Tactical NPD Mgt Meeting Summary
 What Do You Need to Communicate?
 Make Sure Your Executive Management Grasps Risk Levels to Key Deliverables
and Key Areas of Uncertainty: Schedule, Performance Targets, Quality, etc.
 Barriers to Meeting Commitments That Need Executive Management Attention
 Highlight Risk Items, White Spaces, Resource Gaps, Skill Set Holes, etc.
 What to Do:
 Focus on Deliverables
 Highlight Key Decisions That Need to Be Made
 Highlight Key Areas of Uncertainty, “Creeps”, & Learning Required
 Highlight Any Escalation Required – Get Help (Do it Earlier Rather Than Later)
 Propose Recovery and/or Contingency Plans as Required
 Summarize, Issue Minutes and Update Action Items
 How Often to Hold: Every 2 – 4 Weeks (2 Better Than 4)
 How Long Should it Take: 10 – 15 Minutes (Four Page Template)
 Who Should Be There: Appropriate Exec Mgt, Project Leads
 Who Should Run It?
Be Open, Be Clear, Be Concise

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Weekly NPD Prj Working Meeting
 What are You Looking For?
 Are You on Schedule? That Day? Looking Forward?
 Barriers to Meeting Commitments That Need Team’s or Exec Mgt’s Attention
 Opportunities to Pull in Schedule (To Make Up for Inevitable Unforeseen Problems)
 Highlight Risk Items, Uncertainties, White Spaces, Resource Gaps, Skill Set Holes, etc.
 What to Do:
 Focus on Deliverables, Highlight Key Decisions That Need to Be Made
 Focus and Drive Decision or Path Closure; Which Ones are Not Closing?
 Decide if Escalation Required – Get Help (Do it Earlier Rather Than Later)
 Establish Recovery, Pull-In or Contingency Plans as Appropriate/Required
 Insure Required Cross-Functional Coordination
 Track Action Items, Make Sure Checklists Exist and Are Being Used
 Summarize, Issue Minutes and Update Action Items
 How Long Should it Take: 30 – 60 Minutes
 Who Should Be There: Design, PE, TE; Apps, Yield,
Marketing, ... (As Required)
 Who Should Run It?
Keep Your Schedule Current!

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Brief Word on NPD Scheduling
 Use Cycles-of-Learning (COL) Methodology to Forecast Non-
Deterministic Steps
 Budget Your Cycles
 If Complete Budget, But No Solution Then Reset: Mis-Scoped?, Right
Resources?, Right Frame or Approach?, Other?
 Use PERT (or Favorite Method) to Keep Track of Tasks
 Apply Best Practices (Scrubbing, Schedule Monitoring, Burn-
Charts, etc.) to Minimize Deviations
Conventional Methods Alone Usually Ineffective
Alternative is to Combine COL Forecasting
With Conventional Scheduling Methods
Reference: http://www.slideshare.net/ARAlvarez/project-management-cookbook-part-2-ara-feb16

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Summary of NPD Meetings
 Phase Gate Meetings
 Purpose: Decide Whether Project Meets Phase Gate Criteria
 Type of Meeting: Decision Meeting
 Outcome: Pass / Fail & Appropriate Action Items
 Bi-Monthly or Monthly Tactical Management Meetings
 Purpose: Management Review Meeting & Problem Escalation
 Type of Meeting: Status Update
 Outcome: Varies, Resource Re-allocation, Priority Shift, …
 Weekly Project Working Meetings
 Purpose: Team Coordination
 Type of Meeting: Coordination and Working Meeting
 Outcome: Varies as Required to Keep Project on Track
 Ad Hoc Problem Solving Meetings
 Purpose: Team Problem Solving
 Type of Meeting: Working Meeting
 Outcome: Varies, But Typically an Action or Solution Plan (Experimental,
Information Gathering, …) Outlining the Next Few Steps

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That’s a Lot of Meetings!
Phase Gate
Review
Bi-Monthly or
Monthly Review
Weekly Prj
Team Meeting
Team Working
Meetings
After Agile Game Development With Scrum, C. Keith 2010
Different Measures &
Monitors Keep You On
Track When Driving Same Applies
to Projects
Eyes
Speedometer
Odometer
Map
Are They All
Required?

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PDCA: New Product Development
Plan
(Portfolio Mgt)
Do
(Tactical Reviews)
Check
(Metrics Review)
Act
(Learn & Adjust)

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Metrics Reviews
1. Monthly Light
2. Quarterly Heavy
3. Bi-Annual Post-Mortem Learning
4. Annual Summary

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NPD Revenue Metrics
 The Purpose of NPD is to Output Products That
Generate Profitable Revenue, Not Just Patents
 Many Financial Screens Possible
 Utilize Set That Work Best For Your Business
 Review at Appropriate Time Intervals and Look
Out an Appropriate Time Frame

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NPD Revenue By Intro Date
$
Communicates NPD Revenue Over Time
Each Color Represents Different Year of Product Introductions – Blue is Legacy
Can Also Track Revenue For Products Introduced in Past 18 – 36 Mths as Percentage of Total Revenue
Note: Hypothetical
Example Only

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Phase Gate NPD Revenue Funnel
PG-1 to 2
PG-2 to 3
PG-3 to AS
PG-AS to 4
Communicates Total NPD Revenue by Phase Over Time
Can Also Show Margin Dollars Over Time
$ Note: Hypothetical
Example Only

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NPD Revenue Funnel
Communicates NPD Revenue by Phase
(Each Color Represents Different Class of Project)
$
Note: Hypothetical
Example Only

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NPD Revenue Achievement
Tracks NPD Revenue Achievement vs. Original Commitment
$ %
Note: Hypothetical
Example Only

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NPD Investment
Tracks NPD Investment Over Time
Each Color Represents Different Class of Project or Function
Optional Line Graph Can Represent Resource Use (Machine Time, Wfrs, Etc.)
$
Time
or #
Note: Hypothetical
Example Only

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NPD Execution Metrics
 Profitable Products Tend to Be Those Delivered
On Time; Project Execution is Critical
 Many Execution Screens Possible
 Utilize Set That Work Best For Your Business
 Review at Appropriate Time Intervals and Look
Backward & Forward Appropriate Time Frame

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PG-4 Milestone Achievement
Tracks NPD PG-4 (MP Release) Milestone Achievement
(Each Color Represents Different Class of Project)
Note: Hypothetical
Example Only

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Quarterly Milestone Achievement
Tracks NPD Quarterly (or Monthly) Milestone Achievement
(Each Bar Represents Different Class of Project)
Note: Hypothetical
Example Only

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NPD Resource Capacity
Tracks NPD Resources Over Time
Each Color Represents Different NPD Function
Lines Can Represent Number of Prjs or FTE/Prj
#
FTE
#
Note: Hypothetical
Example Only

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NPD Metrics Matrix Summary
Metric Unit
Qx-1
Actual
Qx
Commit
Qx QTD Qx Fcst Yr x Fcst Comment
PG-4 $ Released (Current Yr) $M
PG-4 $ Released (Prior Yr) $M
PG-4 Plan vs. Actual %
PG-4 $ Released vs. PG-2 Plan %
PG-1 Milestones #
PG-2 Milestones #
PG-X Milestones #
PG-4 Milestones #
PG-2 to AS Delta Time - Median wk
PG-2 to AS Delta Time - Max wk
PG-2 to PG-4 Delta Time - Median wk
PG-2 to PG-4 Delta Time - Max wk
PG-4 “BU/Ops Recalls” #
First Planned Sample Hit Rate #
NPD Project WIP #
Total NPD Project Spend $M
$ per Project $M
Total NPD Resources #
Resources per Project #
Equipment Time And/or Wfrs #
Equip Time And/or Wfrs Per Prj #
RevenueTTMQuality
NPDInvestment
&Capacity
Can Be Tracked By Division or Class
Sample Summary of NPD Metrics
Note: Hypothetical
Example Only

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PDCA: New Product Development
Plan
(Portfolio Mgt)
Do
(Tactical Reviews)
Check
(Metrics Review)
Act
(Learn & Adjust)

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NPD Lessons & Learning
 Continuous Improvement of NPD Process is
Critical to Maintain Competitiveness
 Requires Clear Tracking of Appropriate Metrics
 Requires Collective Project Post-Mortems to
Harvest Prioritized Set of Actionable Lessons
 Requires Periodic External Competitive
Benchmarking

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NPD Milestone Miss Summary
Records NPD Milestone Misses to Enable Learning
Each Color Represents Different NPD Function
More Than One Function Can Contribute to A Milestone Miss
Note: Hypothetical
Example Only

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Milestone Miss Corrective Action
Tracks Milestone Miss Corrective Actions to Enable Learning
Best to Group Into Categories to Optimize Leverage & Learning
Prioritize – Which Corrective Actions Have Real Payback?

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NPD Project Wrap-up
 Formal Closure
 Formal Passing of Final Phase Gate
 Formal Acceptance By Customer or Stakeholder
 Required Documentation (If Use Phase-Gate Templates & Checklist
Deliverables, It’s Built Into Process, So Won’t Be An Issue)
 Archive For Future Retrieval
 Retrospective / Post-Mortem
 It’s About Learning & Improving, . . .
 . . . Not About Punishing/Embarrassing
 Breakdown Learning Into Categories
 Double-Loop Learning (More Than One “Why”)
 Capture & Incorporate Into NPD Process, But . . .
 Not All “Lessons” Worth Capturing; Prioritize
Don’t Wait Until End, Celebrate Interim “Wins”, . . .
But Definitely Have Team Celebration at End

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PDCA: New Product Development
Plan
(Portfolio Mgt)
Do
(Tactical Reviews)
Check
(Metrics Review)
Act
(Learn & Adjust)

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What You Need to Know
You Need to Know Where You’re Going:
Balanced Vital Sign Methodology Does That
You Need to Know Where You Are
Product Development Phase Gates
And COL Driven Scheduling Do That
You Need to Know if You’re Off Track
Good Project Management Does That

62. NPD Management
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