1. Set-Based Decision MakingTaming System ComplexityMichael Kennedy Founder Targeted Convergence Corporationmichaelk@targetedconvergence.comCopyright 2011 Targeted Convergence CorporationAll Rights Reserved.

2. Theory Versus PracticeTheory - Is when everyone knows why, butnothing functions.Practice Is when everything functions, butnobody knows why.German Soccer CoachCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 3. Theory Versus Practice In theory, phase gates systems should function well. In Practice, they dont. In theory, knowledge management systems work. In Practice, they dont. The Toyota Product Development system functions very well. Theoretically, it is hard to define why.If you cant define why it works, how can you achieve it?Copyright 2011 Targeted Convergence CorporationAll Rights Reserved. 4. What is the State of HardwareProduct 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 meetrequirements (Phase-Gate Planning) Eventually the critical knowledge gaps emerge The loopbacks start and continue for the life of theprogramConsistent Results: project delays, cost overruns, 70% ofengineers firefighting, problems repeat on next projectsCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 5. The Fundamental Problem Made and unmade decisions in theFuzzy Front Endcause loopbacks!Fuzzy Front-EndConcept Planning Design Validation ManufacCustomer Phase Phase Phase Phase-turingUsage 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 Gets WorseFuzzy Front-EndConcept PlanningDesignValidation Manufac-Customer Phase PhasePhasePhaseturingUsageFuzzy Front-End Knowledge doesnt flowbetween projects.Concept Planning DesignValidation Manufac- Customer Phase Phase PhasePhaseturing Usage Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 8. What challenge is product development trying tosolve? 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 capabilitiesThe 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 InterestsFuzzy Front-End We have unclear visibility to: Concept PlanningDesignPrototype Our business goals Manufac- Customer Phase PhasePhasePhase 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. Heres whats going on FuzzySuccess FrontAssured Detailed End DesignDoes it work? Ramp-up Select one, and hope it works!This Time Frame is UnstableDetailed SpecsWe call this point based Design Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 11. Toyota is in a Different ParadigmTraditionalToyotaProductSpecific 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. DecisionsTestingMostly after design, to fix. Mostly before design, to learnProject Administrative to manage Technical to manage knowledge process compliancegrowth into productsManagement Innovation New product breakthroughs, but New product concepts Focusmostly subsystem platforms Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 12. The Toyota PhilosophyProduct development is not about developing cars, it is about developing knowledge about cars. Great cars will emerge from the interaction.Copyright 2011 Targeted Convergence CorporationAll Rights Reserved. 13. At Toyota, Product Development looks like this Focused Knowledge Development across projectsRAPID CYCLES OF LEARNING Design Phase Validation Phase Launch Phase& CONVERGNCE And the pull of RAPID CYCLES OF LEARNINGDesign PhaseValidationt PhaseLaunch 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 KnowledgeWe call it Development acrossSet-BasedprojectsDecision SET-BASED Design Phase Validation Phase Launch PhaseDESIGNmakingSET-BASED DESIGNDesign Phase Validationt PhaseLaunch Phase And the pull of the knowledge into a cadence of products Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 15. Set-Based Designlooks like this:Captured Knowledge for Future Use!Both Successes & FailuresFuzzy FrontEnd DetailedConfirm it DesignWorks Ramp-upThis Time Frame is Stable and KnownCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 16. Set-Based Designlooks like this: Captured Knowledge for Future Use! Both Successes & FailuresFuzzy FrontEndDetailedConfirm itDesignWorks Ramp-upSuccessThis Time Frame is Stable and KnownDetailedAssured Specs Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 17. Set-Based Thinkinglooks 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 questionTradeoff and limit curves are the visualrepresentation of basic product andprocess physics and economicsThey are the Toyotas engineers primary tool to:Safe region Understand Communicate and negotiate between specialties and functions Train new engineers Record knowledge Negotiate and communicate between customer and supplierInfeasible Conduct design reviews Communicate between developers and managers Design quality into the productCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 19. Introducing Limit & Tradeoff CurvesTradeoff and limit curves are the visualrepresentation of basic product andprocess physics and economicsThey are the Toyotas engineers primary tool to:Safe region Understand Communicate and negotiate between specialties and functions Train new engineersThe most important thing I learned Record knowledge at Toyota was their dependence onInfeasible Negotiate and communicate between customer and supplierand thepower of limit and tradeoff curves Conduct design reviews Communicate between developers and managersDr. Allen Ward Design quality into the productCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 20. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressureExisting ProductNoise levelDid you learnanything for Prototype 2 future design?Prototype 1 Was that besttrade-offBack pressurefor customer?Copyright 2011 Targeted Convergence CorporationAll Rights Reserved. 21. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressureNoise level Prototype 2 Prototype 1Back 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 onetrade-off point!Noise level Is the lesson that you cant get more quiet than this? Or something in between?Or is the lesson that the smallest backpressure is this?Back pressureCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 23. Generalizing and Visualizing the Knowledge Muffler: goal is to minimize both noise and back pressureThe Toyota Way:Multiple prototypesare built and testedNoise levelto failure Safe regionThis is Set-Based Thinking!InfeasibleDont capture points, Back pressurecapture 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-BasedBack pressure Decision-Set-BasedMakingKnowledgeSolutionProject Teamsets Mfg costMaking decisions withoutunderstanding the impactExistingProductProductionon customers is the major Support cause of loopbacksBack pressureCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 25. Set-Based makes your Knowledge concrete suchthat it can flow between areas of expertise Existing ProductNoise level (collaboration). DetailedDesign it can flow between projects (reuse).Infeasible it can be continuouslyBack pressure Set-Based Knowledge improved. Solution it can make visible sets what needs to be Mfg cost learned to further converge. Existing ProductProduction SupportBack pressure Copyright 2011 Targeted Convergence Corporation All Rights Reserved. 26. Set-Based Knowledge Flow KKKnowledge is createdHow Set-Basedfrom product VS #2 andSupports KnowledgeK Kis added to the golden arrow along with Flow K KKnowledge from VS #1 Set-Based Phase Design ValidationCustomerMfg. PhasePhase UsageK K PRODUCT #2 Value StreamPSome previous Knowledge is usedK K in the next product value stream A Continuous Improvement thruDKKSet-Based Problem SolvingC K = Re-useable Knowledge, Set-Based Phase Design Validation Customer Mfg. Curves, Guidelines, etc. PhasePhaseUsage Both previous successes as well as failures provide knowledge forfuture use!PRODUCT #1 ValueCopyright 2011 Targeted Convergence CorporationStreamAll Rights Reserved. 27. This was the learning: robust, approvedThen they learnsome moreThen they standardizefor 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 forInnovationBy removing thetechnical restrictions We need tomove the wall Then setting thenew standardsCopyright 2011 Targeted Convergence CorporationAll Rights Reserved. 30. Some Questions to Ponder Set-Based Phase Design ValidationCustomer Mfg. PhasePhase UsageIs Set-Based Design a Version of Agile? - Both are rapid cycles of learning - Both build out the system as you learnWhy does pure hardware development not use Agile?Is Agile a Version of Set-Based Design?How about embedded software?Copyright 2011 Targeted Convergence CorporationAll Rights Reserved.