Product Development Process

1. Chapter 2
Development Processes and
Organizations

2. Bringing a new product to life can be challenging.
You have an idea but you aren’t exactly sure how to bring
your product to that market.
This process can become especially difficult if you’ve
never done it before, as you may not even know where to
begin.
Thankfully, a blueprint exists in the
new product development process, which is a
strategy that will help you bring your ideas to
life.
Introduction

3. New product development refers to the process that
goes into bringing a new product to market, from
brainstorming an idea to understanding if it fits into the
market, ironing it out to prototyping to final
commercialization.
Although it can be a rather lengthy process that
sometimes requires iteration, it’s all done to ensure that
your product is the best it can be before it reaches your
customers and solves their needs in the best possible way.
Let’s discuss concept of new product development.

4.  Product: A product is something sold by an enterprise
to its customers
 Product is anything that can be offered to a market
that might satisfy a want or need
 Product development : Covers the complete
process of bringing a new product to market
 Is the set of activities beginning with the
perception(understood) of a market opportunity and
ending in the production , sale and delivery of a
product
 A product development process is the sequence of
steps or activities which an enterprise employs to
conceive(develop), design, and commercialize a
product

5. Some questions for organizations
Is there a standard development process that will work
for every company ?
What role do experts from different functional areas
play in the development process?
What milestones can be used to divide the overall
development process in to phases ?
Should the development organizations be divided into
groups corresponding to projects ?

6.  This chapter helps to answer these and related
questions by presenting a generic development process
and showing how this process can be adopted to meet
the needs of particular industrial situations
 Here highlighting the activities and contributions of
different functions of the company during each phase
of the development process

7. A generic development process
 Its a traditional process of developing new products
 A process is a sequence of steps that transforms a
set of inputs into a set of outputs
 A product development process is the sequence of
steps or activities which an enterprise employs to
conceive(develop), design, and commercialize a
product
 Many of these steps and activities are
intellectual(mind) and organizational rather than
physical

8.  Furthermore, every organization employs a process
at least slightly different from that of every other
organization
 Some time the same enterprise may follow different
processes for each of several different types of
development projects
 It is extremely important to follow a structured
process to develop a new product or a new idea
 Here presented a generic product development
process which can be “fine tuned” for the particular
types of products that your team (or company)
develops

9.  The inputs for a new product normally comes from a
perceived market opportunity or from the
development of a new technology
 New products are broadly categorized as either
market-pull products or technology-push products

10. Market pull
Market Pull is where the market is need of a product, so
designers make a product to meet that need.
The term market pull refers to the need /requirement
for a new product or a solution to a problem, which
comes from the market place
The need is identified by potential customers or market
research

11.  Market pull is when product ideas are
produced in response to market forces
 Examples of market influence include
A demand from consumers for new or
improved products
A competing product is launched by another
manufacturer
A manufacturer wants to increase their share
of the market

12.  The digital camera is the example for market pull
product
 Twenty years ago, there was a ‘market’ requirement
for a camera without a film (saving on developing
films), that could take endless photographs, that
could be viewed almost immediately.
 The technology of the time did not lead to the
manufacture of such a device. However, technology
has a habit of catching up on market needs. Market
pull eventually led to the development of digital
cameras

14. Technology push
Technology Push is where the technology is available and the
designers make a product to use it.
Technology Push is when research and development in new
technology, drives the development of new products.
The firm begins with a new proprietary technology and looks
for an appropriate market in which to apply this technology

15.  Technology Push usually does not involve market
research.
 It tends to start with a company developing an
innovative technology and applying it to a product.
– The company then markets the product.
– Many extremely successful products have arisen
from technology-push development

16. Examples
 Touch Screen technology appeared as published research
by E.A. Johnson at the Royal Radar Establishment UK, in
the mid 1960s.
 The technology began to attract research and
development funding.
 In the 1980s, Hewlett Packard introduced a touch screen
computer.
 1993 hand writing recognition introduced - Apple’s
Newton PDA.
 1996, Palm introduced its Pilot Series.
 Touch screen technology now seen in smart phones

17. Touch screen technology now seen in laptop
also
The process of developing new products
varies between companies, and even
between products within the same
company
Regardless of organizational differences, a
good new product is the result a methodical
development effort with well defined product
specifications and project goals

19. Usefulness of a well-defined
Development Process
A well defined development process is useful
for the following reasons
Quality assurance
Coordination
Planning
Management
Improvement

20. Usefulness of a well-defined
Development Process
A well defined development process is useful
for the following reasons
 Quality assurance
 Coordination
 Planning
 Management
 Improvement

21. Quality assurance
 Quality assurance is a planned system of review
procedures conducted
 So development process specifies the phases a
development project will pass through and the check
point along the way
 When these phases and checkpoints are chosen
wisely following the development process is one
way of assuring the quality of the resulting product
 QA checks have ensured that the equipment used to
manufacture the product, the training of staff, the
selection of quality materials and the manufacturing
processes are to the highest possible standard

22.  Quality assurance is different to quality control
 Quality assurance does not check the quality of the final
product
 If quality assurance is highest standard then quality of
the final product should also be high
 So quality assurance is systematic process of checking
to see whether a product or service being developed is
meeting specified requirements
 Many companies have a separate department devoted
to quality assurance
 Today's quality assurance system emphasize catching
defects before they get into the final product

23.  In other words Quality assurance is an oversight
function to make sure that quality control is being
properly conducted

24. Coordination
 The process of organizing people or groups so that
they work together properly and well
 A clearly articulated development process acts as a
master plan which defines the roles of each of the
players on the development team
 This plan informs the members of the team when
their contributions will be needed and with whom
they will need to exchange information and materials
 Coordination can be thought of as the concept of
appropriate activities being performed in a certain
order at a suitable time

25.  Developing a new product is a complex process that
typically involves contributions of many disciplines
 The more complex the product, the larger the number
 Airbus involved several thousands individual
contributors into the development of its new A380
 Automobiles manufactures typically involve several
hundreds of people in the development
 Several dozens of people in the development of printer,
copy machines and other electronic products
 Considering this many people from different disciplines
need to be involved
 so coordination among them is very important for
success of product

26. Planning
 The process of making plans for something
 Planning means looking ahead and chalking out
future courses of action to be followed
 A development process contains natural milestones
corresponding to the completion of each phase
 The timing of these milestones anchors the schedule
of the overall development project
 Detailed process planning is required for every part,
subassembly and the final assembly
 Planning serves as the basis for decisions through all
process
 So creating a product idea and following through on
it until the product is introduced to the market

27. Management
 The process of dealing with or controlling things or
people
 A well defined development process manages
effectively
 A development process is a benchmark for assessing
the performance of an ongoing development effort
 The role of the management is to move an
organizations towards its purposes or goals by
assigning activities that organization members
perform
 By comparing the actual activities to the established
process, a manager can identify possible problem
areas

28.  Business improved under the management of new
owners
 We’re using new management techniques

29. Improvement
 A thing that makes something better or is better than
something else
 The careful documentation of an organizations
development process often helps to identify
opportunities for improvement
 The ability to develop, test and implement changes is
essential for any individual , group, or organization
that wants to continuously improve
 Improvement has become an important strategy in
improving organizational performance
 So development process is useful in improvement

30. Six Phases of the Generic
Development Process
 The generic product development process consists of
six phases
 The process begins with a planning phase, which is
the link to advanced research and technology
development activities
 The output of the planning phase is the projects
mission statement
 Which(mission)is the input required to begin the
concept development phase and which serves as a
guide to the development team
 The conclusion of the product development process is
the product launch

31.  Best way to think about the development process is
as the initial creation of a wide set of alternative
product concepts
 Then the subsequent narrowing of alternatives and
increasing specification of the product until the
product can be reliable and repeatable produced

32. Six Phases of the Generic
Development Process
0. Planning
1. Concept development
1. System-Level design
1. Detail design
1. Testing and refinement
1. Production ramp-up

33. A Generic Product Development
Process (Cont.)
Concept
Development
System-Level
Design
Detail
Design
Testing and
Refinement
Production
Ramp-Up
Product
Launch
Mission
Statement
Product
Planning

34. 0 Planning
 Often referred to as “phase zero” since it precedes
the project approval and launch of the actual product
development process.
 The phase zero in product development is a approach
for take decision about which products to be
developed
 The output of the planning phase is the project
mission statement

35. 1.Concept Development
- In concept development phase, the needs of the target
market are identified, alternative product concepts are
generated and evaluated, and one or more concept is
selected for further development
- A concept is a description of the form, function and
features of a product and is usually accompanied by a set
of specifications, an analysis of competitive products, and
an economic justification of the project

36. 2. System-level Design
 Includes the definition of the product architecture
and the decomposition of the product into
subsystems and components.
 The final assembly scheme for the production system
is usually defined during this phase.
 The output of this phase is usually a geometric
“layout” of the product, a functional specification of
each of the product’s subsystems, and a preliminary
process flow diagram for the final assembly process

37. 3. Detail Design
 Includes the complete specification of the geometry,
materials, and tolerances of all the unique parts in
the product and the identification of all the standard
parts to be purchased from suppliers
 A process plan is established and tooling is designed
for each part to be fabricated within the production
system
 The output of this phase is the control documentation
for the product
 The documentations may be drawings or computer
files describing the geometry of each part and its
production tooling,

38. 4. Testing and Refinement
 Involves construction and evaluation of several
preproduction versions of the product
 Early (alpha) prototypes are usually built with
production-intent parts (parts with the same
geometry and material properties as intended for the
production version but not necessarily fabricated with
the actual processes to be used in production)
 Alpha prototypes are tested to determine whether
the product will work as designed and whether
product satisfies key customer needs.

39.  Later (beta) prototypes are usually built with parts
supplied by the intended production processes but
may not be assembled using the intended final
assembly process.
 Beta prototypes are extensively evaluated internally
and are also typically tested by customers in their
own use environment
 Beta prototypes used to answer questions about
performance and reliability in order to identify
necessary engineering changes for the final product

40.  Alpha prototypes: Mostly full features, but may
have some scaling. Used for internal testing and
evaluation. In physical prototypes it uses same
material & properties (e.g., design-intent parts), but
different manufacturing processes
 Beta prototypes:Full features and scale, for
comprehensive internal and external evaluation and
testing. Beta prototypes use final production
processes.. Given to customers for testing in the use
environment. Parts are usually made with the actual
production process and supplied by intended parts
suppliers. Assembled by team rather than the
manufacturer

41.  Beta testing is usually shorter than alpha testing
 The reason for this is that the beta testing usually
designed to identify the minute, last minute issues
before the product is launched in the market to the
actual consumer
 Alpha testing can go through many iterations, and
the prototype variants may add or subtract certain
working features
 Once the alpha is fairly functional it moves to the
beta testing
 Beta prototypes are usually much closer to the final
product than alpha
 These are tested by the consumer as well as general
public

42. 5.Production ramp-up
 The product is made using the intended production
system.
 Purpose is to train the work force and work out any
remaining problems in the production processes
 Products produced during production ramp-up are
sometime supplied to preferred customers and are
carefully evaluated to identify remaining flaws
 Transition from ramp-up to normal production is
gradual
 At some point in this transition, the product is
launched and becomes available

43. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Ulrich and Eppinger
2004
Generate mission
statement
(target market,
business goals,
key assumptions
and constraints)
Example
Mission: “design a better hand-held roofing nailer”
Assumptions:
The nailer will use nails (as opposed to adhesives, screws, etc.)
The nailer will be compatible with nail magazines on existing tools
The nailer will nail through roofing singles into wood
The nailer will be handheld.

44. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Ulrich and Eppinger
2004
Identify needs of
target market;
Select several
product concepts for
further development
and testing
Example
Needs of target market:
The nailer inserts nails in rapid succession.
The nailer is lightweight.
The nailer has no noticeable nailing delay after starting tool.
Product concepts:
Rotary motor with spring and single impact
Rotary motor with spring and multiple impacts
Linear motor with a moving mass and single impact

45. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Ulrich and Eppinger
2004
Define product
architecture
Decompose product
into subsystems and
components
Define final
assembly scheme

46. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Ulrich and Eppinger
2004
Complete specification of
geometry, materials and
tolerances of all parts
List of standard parts to be
purchased
Detailed drawings
Process plans for fabrication
and assembly
1) Nails length 25-38mm
2)Max nailing energy 40J/nail
3)Peak nailing rate1nail/s
4) Tool mass less than 4 kg

47. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Building of alpha- and beta-
prototypes
alpha: same material and geometry
- does it work?
- does it satisfy customer needs?
beta: parts supplied by production
process
- tested internally and by customers
- tested for performance and
reliability

48. Product Development Process
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Planning
Concept
Development
System-level
Design
Detail Design Testing and
Refinement
Production
Ramp-Up
Small volume
production to train
workforce and work
out any remaining
problems.
Finally…
LAUNCH!!

49. Who designs products?
It is an interdisciplinary activity requiring
contributions from nearly all the functions of a
firm
However, three functions are almost always central
to a product development project
Marketing
Design
Manufacturing

50. Tasks and responsibilities for each
phase (marketing functions)

51. Tasks and responsibilities for each
phase (Design functions)
Planning
Consider product
Platform and
architecture
Asses new
technologies

52. Tasks and responsibilities for each
phase (Manufacturing functions)
Planning
Identify production
Constraints

53. The Generic Product
Development Process

55. Concept Development (The front –End process)
 Because the concept development phase demands
more coordination among functions than any other so
concept development are detailed more
 We expand the concept development phase in to
what we call the front end process(Starting point)
 The front-end is responsible for collecting input in
various forms from the user and processing it to
conform to a specification the back-end can use
 This is preliminary stage in the product development
process
 Where marketers attempt to obtain initial feedback
about their ideas

56.  The front end process generally contains many
interrelated activities ordered roughly as shown
below
 The dashed arrows reflect uncertain nature of
progress in product development
 At almost any stage, new information may be added
 The results learned which can cause the team to step
back to repeat an earlier activity before proceeding

57. Concept Development Activities
The concept development process includes the
following activities
 Identifying customer needs
 Establishing target specifications
 Concept generation
 Concept selection
 Concept testing
 Setting final specifications
 Project planning
 Economic analysis
 Benchmarking of competitive products
 Modeling and prototyping

58. Identifying customer needs
 Before you start promoting your business you need to
know what your customers want and why
 Good customer research helps you workout how to
convince your customers that they need your
products
 This is the first step
 However good your product or service is, the simple
truth is that no-one will buy it if they don't want it or
believe they don't need it.
 And you won't persuade anyone that they want or
need to buy what you're offering unless you clearly
understand what it is your customers really want.
 Knowing and understanding customer needs is at
the centre of every successful business, whether it
sells directly to individuals or other businesses.

59.  The goal of this activity is to understand customers’
needs and to effectively communicate them to the
development team.
 Output: is a set of carefully constructed customer
need statement, organized in a hierarchical list, with
importance rating for each needs
 An innovative product doesn’t come from a law
passed by the government
 It also doesn’t comer from who looking for a higher
return on an investment

60.  A specification is a precise, measurable detail of what
the product has to do. It consists of a metric and a
value of the metric.
Target specification (e.g. time to assemble < 75 s) consists of a
metric (e.g. time to assemble) and a target (e.g. < 75 s).
 Target spec is a specification set immediately after
identifying the customer needs that is the goal of the
development team.
Establishing target specifications

61. Easy to carry Metric –Total mass, Value-5

62.  Specifications provide a precise description of what a
product has to do. They are translation of the customer
needs into technical terms.
 Targets for the specifications are set early in the
process and represent the hopes of the development
team.
 The output of this stage is a list of target specifications
 Each specification consists of a metric, and marginal
and ideal values for that metric

63.  Getting an idea is the most critical step in product
development – without it there is no design
 Concept generation is a procedure that begins with a
set of customer needs and target specifications and
results in an array of product concept design
alternatives from which a final design will be selected
 Can be a complete solution, a partial solution
 Idea generation is cheap. Doesn't cost much (time,
resources) to generate lots of ideas, so do it
 An effective team will generate hundreds of concepts,
of which 5 to 20 will merit consideration during the
concept selection activity. The team should thoroughly
explore all possible concepts.
Concept generation

64.  This is a creative phase of the design process, where
several ideas or concepts are generated
 It is the divergent phase where many possibilities are
considered without too much judgment.
 After identifying a set of customer needs and establishing
target product specifications, the development team is
faced with the following questions:
How many different ways can we achieve the customer
requirements?
What is the best design concept with which to move
forward?

65.  Concept generation includes a mix of internal and
external search
 Output: Usually a set of 10-20 concepts, each typically
represented by a sketch and brief descriptive text

66.  Concept selection is the decision-making phase of
concept design, where designers evaluate concepts
with respect to customer needs and the designers’
intention.
 This stage also includes comparing the relative
strengths and weaknesses of the concepts, and
determining concepts for further investigation, testing
or development
Concept selection

67.  "Concept Selection" is picking the idea(s) which best
satisfy the Product Design Specification
 Concept selection is the activity in which various
product concepts are analyzed and sequentially
eliminated to identify the most promising concept(s).
 The process usually requires several iterations and may
initiate additional concept generation and refinement

68. Concept testing
 Concept testing is the process of using quantitative
methods and qualitative methods to evaluate
consumer response to a product idea prior to the
introduction of a product to the market
 One or more concepts are tested to verify that the
customer needs have been met, assess the market
potential of the product, and identify any
shortcomings.
 If the customer response is poor, the development
project may be terminated or some earlier activities
may be repeated as necessary

69. Setting final specifications
 The target specifications set earlier in the process are
revisited after a concept has been selected and
tested.

70. Project planning
 The team creates a detailed development schedule,
devises a strategy to minimize development time,
and identifies the resources required to complete the
project.
 Major results of the front-end activities are captured
in a contract book which contains the mission
statement, the customer needs, the detail of the
selected concept, the product specifications, the
economic analysis of the product, the development
schedule, the project staffing, and the budget.

71. Economic analysis
 The team often with the support of a financial
analyst, builds an economic model for the new
product.
 This model is used to justify continuation of the
overall development program and to resolve specific
trade-off among.

72. Benchmarking of competitive
products
 Benchmarking is a technique to measure an
organization against other organizations and identify
opportunities and approaches to improve
 An understanding of competitive products is need to
successful positioning of a new product and can
provide a rich source of ideas for the product and
production process design.

73.  Competitive Benchmarking is the“Production Study”
carried out by comparing its class of its product to
the similar class of product of the competitor.
 This will necessitate establishing the advantages and
positive selling features with respect to performance
over the competitor in the market.

74. Modeling and prototyping
 Every stage of the concept development process
involves various forms of models and prototypes.
 These may include,
Early “proof-of-concept” models, which help the
development team to demonstrate feasibility
Next “form-only” models, which can be shown to
customers to evaluate ergonomics and style
and spreadsheet models of technical trade-offs.

75. Adapting the Generic Product Development
Process to different particular products
 The development process described earlier is generic
 The particular processes will differ in accordance with
a firm’s unique context
 The generic process is most like the process used in
a market pull situation
 So in addition to market pull we have some more
variants those are distinct slightly from generic

76. Market pull products
Technology push products
Platform products
Customized products
High risk products
Quick build products
Complex systems

77. Market pull
 The term market pull refers to the need /requirement
for a new product or a solution to a problem, which
comes from the market place
 The need is identified by potential customers or
market research
 A product or a range of products are developed , to
solve the original need
 Firm begins product development with a market
opportunity and then uses whatever available
technologies are required to satisfy the market need

78.  Market pull is when product ideas are
produced in response to market forces
 Examples of market influence include
A demand from consumers for new or
improved products
A competing product is launched by another
manufacturer
A manufacturer wants to increase their share
of the market
Society has an ever increasing demand for greener
products and therefore products such as recycling
bins, reusable carrier bags, hybrid car, low energy
light bulbs have been developed as a consequence

79.  The digital camera is the example for market pull
product
 Twenty years ago, there was a ‘market’ requirement
for a camera without a film (saving on developing
films), that could take endless photographs, that
could be viewed almost immediately.
 The technology of the time did not lead to the
manufacture of such a device. However, technology
has a habit of catching up on market needs. Market
pull eventually led to the development of digital
cameras

80. Technology push
 Technology Push is when research and development
in new technology, drives the development of new
products.
 The firm begins with a new proprietary technology
and looks for an appropriate market in which to apply
this technology

81.  Technology Push usually does not involve market
research.
 It tends to start with a company developing an
innovative technology and applying it to a product.
 The company then markets the product.
 Many extremely successful products have arisen from
technology-push development

82. Examples
 Touch Screen technology appeared as published research
by E.A. Johnson at the Royal Radar Establishment UK, in
the mid 1960s.
 The technology began to attract research and
development funding.
 In the 1980s, Hewlett Packard introduced a touch screen
computer.
 1993 hand writing recognition introduced - Apple’s
Newton PDA.
 1996, Palm introduced its Pilot Series.
 Touch screen technology now seen in smart phones

83. Platform Products
 A platform product is built around a preexisting
technological subsystem ( a Technology Platform).
 Common design, formula based on which a family of
products is built over time
 Huge investments were made in developing these
platforms, and therefore every attempt is made to
incorporate them into several different products.
 Appliance or equipment .whose basic design and
some components are used in several products of a
product family
 Power tools, personal razors

84. Customized Products
 Products that can be modify or build according to
individual or personal specifications or preference
 Examples: switches, motors, batteries, and
containers.
 Slight variations of standard configurations and
typically developed in response to a specific order by
a customer.
 Development of customized products consists
primarily of setting values of design variables such as
physical dimensions.
Customized Product:
Motor: Many variants available

85.  Uses a flexible production system to deliver a product
to order that matches the needs of an individual
customer or user
 Dell assembles laptop computers to order. Consumers
configure their computer using the company’s
website.
 Lands End offers customized shirts and pants.
Consumers specify style parameters, measurements,
and fabrics through the company’s website. These
settings are saved so that returning users can easily
order a duplicate item

86. High risk products
 The product development process addresses many types
of risk
 These may be
Technical risk(will the product function properly?)
Market risk(will customers like what the team develops?)
Budget and schedule risk(can the team complete the
project on time and within budget ?)
High-Risk Product:
Space Satellite

87.  High risk products are those that entail unusually
large uncertainties related to the technical or market
so that there is substantial technical or market risk
 The generic product development process is modified
to face high risk situations by taking steps to address
the largest risks in the early stages of product
development

88. Quick build products
 Build many trial versions to determine final design
 Features: Multiple design-build-test cycles
 Examples: Computer software; Cellular phones
 For the development of some products, such as
software and many electronics products
 building and testing prototype models has become
such a rapid process that the design-build-test cycle
can be repeated many times
Quick-Build Product:
Computer Software

89. Complex systems
 Decompose complex system into subsystems
 Features: Multiple teams working in parallel
 Examples: Airplanes; Jet engines; Automobiles
Complex System:
Jet Engine

90. Product development process flow
 The product development process generally follows a
structured flow of activity and information flow
 This allows us to draw process flow diagrams illustrating
the process
 The generic process flow diagram depicts the process
used to develop market pull, technology push, platform,
process intensive, customized and high risk products
 Whereas in quick build products enable a spiral product
development process whereby in detail design,
prototyping, and test activities are repeated a number of
times

91.  The process flow diagram for development of
complex systems shows the decomposition into
parallel stages of work on the many subsystems and
components
Once the product development process has
been established within organization, a
process flow diagram is used to explain the
process to everyone on the team

93. Adapting the Generic Product Development
Process to different particular products
 The generic process is most like the process used in
a market pull situation
 In addition to the market pull process several variants
are common
 The characteristics of these situations and the
resulting deviations from the generic process are
summarized in the next slide

94. Variants of Generic Development Process

95. Product Development Organizations
 An organizational structure defines the reporting
relationships in a company i.e who works for who
 Organizations are formed by establishing formal or
informal links among individuals
 Regardless of their organizational links, particular
individuals can be classified in two different ways
1) According to their function
2) According to the projects they work on

96. Functional organizations
 A function (in organizational terms) is an area of
responsibility usually involving specialized education,
training, or experience
 The classic functions in product development
organizations are marketing , design and manufacturing
 Examples: market research, industrial design, human
factors engineering, process development and
operation management
 So in functional organizations, the organizational links
are primarily among those who perform similar
functions
 Here grouped based on specialty or functional area

97.  Group of marketing professionals, all are similar in
training and expertise
 These people would all report to the functional
manager
 The group would have its own budget and the people
would sit in the same part of a building
The authority of a functional manager
flows vertically downwards

98. Project organization
 A project organization is a structure that facilitates the
coordination and implementation of project activities.
 Regardless of their functions, individuals apply their
expertise to specific projects.
 In product development, a project is the set of activities
in the development process for a particular product.

99.  In the project organization, individuals of different
technical/functional expertise are grouped into an
organizational subunit responsible for one product or
Service
 All members report to a team leader
the authority of the project manager flows
sideways

100. Matrix Organizations
 The matrix organization structure is a combination of
two or more types of organization structure, such as
the projectized organization structure and the
functional organization structure
 In the matrix organization, individuals are linked to
others according to both the project they work on
and their function.
 Typically each individual has two supervisors, one a
project manager and one a functional manager.
 In project organizations, the organizational links are
primarily among those who work on the same
project.

101.  This combination helps organizations to achieve higher
efficiency, readiness, and quick market adaptation.
 The authority of a functional manager flows vertically
downwards, and the authority of the project manager
flows sideways. Since these authorities flow downward
and sideways, this structure is called the matrix
organization structure

102.  For example let’s say that you are a mechanical
engineer working in a functional department. Your
organization gets a project and they need a
mechanical engineer to assist the project manager on
certain tasks.
 In this case, you may be assigned to the project for a
short time, or they may transfer you there while your
services are required. If you’re assigned there for a
short time, you will have to report to two bosses.