Organizing the product development process.

High-performing processes today are low-cost, flexible, accurate and fast. They must also be simple because complexity is a breeding ground for errors, delays, high costs and inflexibility. Simple processes must be organized around big work assignments since piecing many little jobs together creates non-value-adding overhead. These big jobs must be assigned to professionals who know how the process works, who understand the business as a whole, who are free to make decisions, and who can work without traditional supervision. As a result, favorite themes in successful new technology companies are connectivity, mobility and interactivity. World-class companies excel in managing concepts, competence, connections and human capabilities.

An effective product development process has:
- divergent phases when different perspectives and opinions are surfaced and explored, and
- convergent phases that involve understanding and agreeing on shared frameworks.

If there isn’t enough convergence and divergence on the front end, then the process takes longer and problems and variations are generated at the back end. To properly control this, project managers need to be skilled in dealing with conflict and able to manage disagreement in a positive way. In addition, key players need to have strong agreement about operating norms and practices from the very beginning of their involvement. Problems and variation are also caused by the organizational context of the product development team - for example when managers are constantly pulling people in and out of projects, or changing the direction and priority of the development effort.

It’s important to put a clearly defined boundary around the product development process. If product development is a project management exercise with overlays from the functional organizations, then it’s essentially a vertical system trying to do horizontal coordinating work.

An increasing number of successful companies are organized around functionality and customer needs instead of around products and functions. They’ve created a horizontal or lateral cross-functional organization for maximum product effectiveness. Wherever people are located in the value chain, they know who they’re linked to and have cooperative agreements with them. Companies invariably end up with strategic alignment problems when there’s not enough lateral teaming up through the hierarchy. The challenge is to develop a process that puts senior managers, who hold the resources, in touch with employees lower down in the organization, who although they know the technology and the customers best, are typically disenfranchised from the strategy process. These parties need to have deep discussions together about opportunity and destiny, unencumbered by the conservatism and lack of expertise of those in between.

Sprinting to market with a next-generation product is more like a rugby match than a relay race. Start with a one-page product description. As soon as top management approves it, set up teams in engineering, marketing and manufacturing, no more than ten people in all. Think of a multidisciplinary team that stays on the project from start to finish, passing the ball back and forth as they move down the field together toward product launch. Designers start work before feasibility testing is finished. Manufacturing and marketing begin gearing up well before the design is completed. These different contributors work together under a program manager. Team members need to be technically excellent, have good interpersonal skills and have a broad enough perspective to be able to understand what others have to say. Reviewing the evolving design regularly saves expensive changes late in the game. However, too many reviews waste time, so the team needs to operate with autonomy. As long as they’re within a pre-agreed range of costs, time and performance characteristics, they should be free to make their own trade-offs without checking in with senior management.

Business units are then organized around the following learning cycle:

• Business portfolio planning - “Do we invest resources to proceed further?”

• Product generation and definition - “Do we invest resources to develop it?”

• Order fulfillment - “Can we make it?”

• Product support process - “Is it a go - or a no-go?”

• Customer experiences the product and comments favorably

• Mature production - “Does it consistently meet specs?”