Making Money with Speed and Flexibility

Don Reinertsen,
Reinertsen & Associates, Author, Managing the Design Factory and co-author of Developing Products in Half the Time

Many companies have recognized that changes late in a product development project are expensive. They try to avoid such changes by emphasizing rigorous up front decision-making and highly structured processes. Unfortunately, these methods can add rigidity to a development process and have unexpected side effects such as:

• Forcing important decisions to occur before good information is available.

Don Reinertsen will discuss the economic tradeoffs motivating companies to adopt more flexible development processes. Extreme process orientation can cause companies to lose their focus on results. Absence of process can cause companies to keep repeating the same painful mistakes. Don will examine the middle path that seeks to combine the benefits of structure and flexibility.

ABOUT DON REINERTSEN
Don Reinertsen is President of Reinertsen & Associates, a consulting firm specializing in the management of the product development process. Before starting his own firm, he had extensive consulting experience at McKinsey & Co. an international management consulting firm, and operating experience as Senior Vice President of Operations at Zimmerman Holdings, a private diversified manufacturing company.

His contributions in the field of product development have been recognized internationally. In 1983, while a consultant at McKinsey & Co., he wrote a landmark article in Electronic Business magazine which first quantified the value of development speed. This article has been cited as the McKinsey study that indicated "six months delay can be worth 33 percent of life cycle profits".

In the past fifteen years, he has gone considerably beyond this early work. He has worked with companies ranging from Fortune 500 Baldrige Award winners to small venture capital backed start-ups. He has developed a number of innovative analytical techniques for assessing the product development process, and changing it.

Don holds a B.S. from Cornell University in Electrical Engineering, and an M.B.A. with distinction from Harvard Business School. He is a member of the IEEE, SME, and ASQC. Don is coauthor of the best-selling book "Developing Products in Half the Time", and author of the book, "Managing the Design Factory: A Product Developer's Toolkit". He writes and speaks frequently on techniques for shortening development cycles, and teaches a popular course at California Institute of Technology on Streamlining the Product Development Process.

Flexibility in New Product Development:
Evidence, Insights and Obstacles From the Field

Alan D. MacCormack,
Lumry Family Assistant Professor of Business Administration, Harvard Business School

Despite significant advances in our understanding of how to manage innovation over the past 20 years, our knowledge of this process still seems to lag the requirements placed upon it by rapidly changing business environments.  It is my belief that much of the dissatisfaction emerging with firms' efforts to innovate can be traced to the conventional processes through which they tend to manage product development - a process founded upon the need for control and discipline, typically implemented via a series of stages and gates that are traversed in a sequential manner.  In some business contexts, such a process handcuffs firms into producing a product that is outdated the day it is released.  In the worst of cases, the product may actually be obsolete.

In my talk, I will present evidence that in uncertain environments, development flexibility can be a huge source of advantage in producing a product that is better matched to evolving customer requirements.  Yet I will also show that flexibility cannot be achieved merely by reacting ex-post to evolutions in customer demands or new technologies.   Rather, it requires purposeful investments (in process and organization) to be made early in development, providing the foundation for a more evolutionary process of learning and adaptation to occur throughout a development cycle.  This evidence illustrates the central "paradox" of flexibility - a flexible process requires significant amounts of structure; however, this structure is designed to achieve different objectives than in a more conventional process.

After providing evidence on the performance impact of a more flexible process, I will break down the key constructs that underlie such a process, providing examples of how these constructs have been implemented in a variety of different industry contexts (e.g., in the software, hardware, telecommunication, automotive and aerospace industries). I will then discuss the greatest barriers to adopting flexible processes, which in my experience, revolve around two major issues: the perceived trade-offs involved in pursuing flexibility as opposed to greater efficiency in development; and the role that senior managers must play in understanding the foundations of a flexible process, facilitating its implementation and changing expectations for the information that is used to monitor (and evaluate) projects.

ABOUT ALAN MACCORMACK
Alan MacCormack is an assistant professor in the Technology and Operations Management area at the Harvard Business School. His research explores the management of technology and product development in rapidly changing environments, such as the internet software industry and the computer workstation and server industry. Professor MacCormack's work has appeared in a number of books and journals, including both the Harvard Business Review and Sloan Management Review. Before coming to Harvard, he worked for five years as a management consultant with both Ernst & Young and Booz, Allen & Hamilton. During this time, he focused on manufacturing and operations related issues for clients in the automotive and aerospace industries. Professor MacCormack received his D.B.A from the Harvard Business School in 1998, where he was a recipient of the George S. Dively Award for distinguished research. He also holds a Masters degree in Management from MIT's Sloan School of Management, and a B.Sc. in Electrical and Electronic Engineering from the University of Bath in England. Professor MacCormack is currently teaching the MBA required curriculum course in Technology and Operations Management.