Product Design and Innovation - Nina Kohnen, Covidien
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Transcript of Product Design and Innovation - Nina Kohnen, Covidien
Product Design & InnovationProduct Design & Innovation Medical Devices Summit – Colorado Springs 2012
Nina KohnenNina Kohnen
Director Operational Excellence, Design ExcellenceDesign Excellence
Agenda
Importance of Achieving Success in InnovationImportance of Achieving Success in Innovation & Product Leadership
A Roadmap for Success
12/3/20122 |
About Covidien• Global manufacturer of medical devices and
pharmaceuticals
• 43,000 employees with 51 manufacturing f iliti l t d i 18 t ifacilities located in 18 countries
• 2012 Sales – $11.9 BillionMedical SuppliesNursing Care, SharpSafety,
Medical Surgical OEM
17%
15%
Medical Surgical, OEM
68%
17%
Medical DevicesEndomechanical, Energy,
Soft Tissue Repair, Airway & Ventilation,
Oximetry & Monitoring, Vascular
PharmaceuticalsSpecialty Pharmaceuticals,
Contrast Products, Radiopharmaceuticals, pActive Pharmaceutical
Ingredients
12/3/20123 |
Achieving Market Leadership
Innovation / Product Leadership
“Best Product”
Apple, Google, Intel, Nike, 3M
Wal-Mart, FedEx, Southwest, Dell Airborne Express, Home Depot, IBM
Operational Excellence Customer Intimacy
Best Total Cost, Ease of UseConvenience etc
“Best Total Solution”
Source: The Discipline of Market Leaders- Michael Treacy
Convenience, etc
12/3/20124 |
There is no Shortage of Advice on How to do it Right
Bring clarity and certainty through analysis
Reduce complexity by focusing on process
Take larger strides to
focusing on process design
a e a ge st des tospeed up the pace of
improvement
Fix execution to accelerate improvement
12/3/20125 |
What is Innovation?
12/3/20126 |
This is one of very few 7 stars hotel in the worldIt was built in only 18 months... And opened its doors in 2003.....
12/3/20128 |
12/3/20129 |
12/3/201210 |
What About These Innovations?
• Apple vs. Rest• DVD vs. Streaming Video• Mobile Phones vs. LandlinesMobile Phones vs. Landlines• E-mail vs. Snail Mail• Paper Maps vs. GPS
12/3/201211 |
My Take on Innovation
• Innovation is the Ability to Invent, Commercialize and Expand a Product or Service Along a Customer’s Dimension of Value.Product or Service Along a Customer s Dimension of Value.
– Invention Requires a System to Generate, Prioritize & Process Ideas
– Commercialization Requires a Robust Product Development Process to Launch Ideas
– Expansion Requires a System to Fully Manage & Exploit Post Launch Utilization of the New Products or Services
12/3/201212 |
Why is Innovation Important?
• Innovation is the Only Competitive Advantage a Company Really Has. Quality Improvements & Price Reductions Can be Q y p &Replicated.
• A Company Should Proactively Make its Own Products ObsoleteA Company Should Proactively Make its Own Products Obsolete Before Competitors Do.
– Creative DestructionCreative Destruction
– Planned Obsolescence
12/3/201213 |
•CHART SETTINGS•Chart Scale•Chart Cursor•OHLC Values•RESET•CHART SETTINGS•Chart Scale•Chart Cursor•OHLC Values•RESET
Netflix
BlockbusterBlockbuster
12/3/201214 |
NFLXNFLXNFLXNFLX
Impact on Investment Value
• Innovation is Important to Financial Markets in Determining the Value of a Company over the Long Term
• About 91% of Executives Surveyed Consider Increasing the Company's Capacity for Innovation was Critical to Creating Future Competitive Advantage and Earning Profits1Competitive Advantage and Earning Profits
• Fortune Magazine: “Secrets of America’s Most Admired Corporations”- New Ideas and New Products are the Key2p y
1 A study by Bain & Co published in Harvard Business Review (Oct 2002)A study by Bain & Co. published in Harvard Business Review (Oct. 2002)2 B. O’Reilly, “Secrets of America’s Most Admired Corporations: New Ideas, New Products.” Fortune
12/3/201215 |
America’s Most Admired Companies
Rank Company
1 Apple2 Google3 Amazon.com4 Coca-Cola4 Coca Cola5 IBM6 FedEx7 Berkshire Hathaway8 Starbucks9 Procter & Gamble9 Procter & Gamble10 Southwest Airlines
Most Admired Linked to Most Innovative!
12/3/201216 |
Source: Fortune, March 2012
Top 10 Most Innovative Companies
Rank 2012 Rank 2011 Company
1 1 Apple2 2 Google3 3 3M4 7 Samsung4 7 Samsung5 4 General Electric6 5 Microsoft7 9 Toyota8 8 Procter & Gamble9 6 IBM9 6 IBM
10 n/a Amazon
Most Admired Linked to Most Innovative!
12/3/201217 |
Source: Booz & Company Inc
How Difficult is Product Innovation?
• Expected Failure Rate is 35% - 45% and Depends on the Industry1
• An Estimated 46% of all Resources Allocated to Product Development are Spent on Cancelled or Failed Products1
• 56% of Products Meet Their Market Objective and About 50% Launch on Time2
• The Consumer Electronics Show (CES) is the Biggest Stage of the Technology IndustryTechnology Industry
– Most of the Products Showcased This Year Will Not See Commercialization!!
Boosting a Steady Stream of Successful New Products is Not an Easy Task.
12/3/201218 |
1 Robert G. Cooper: Product Leadership 2nd edition.2 Behnam Tabrizi and Rick Walleigh “Defining Next-Generation Products” Harvard Business Review.
How Difficult is Product Innovation?
“If we knew what we were doing, it wouldn’t be called research
10,000
3000 Raw Ideas (Unwritten) it wouldn t be called research, would it?” — Albert Einstein1000
Idea
s
300 Ideas Submitted
0
100
umbe
r of I
125 Small Projects
9 Early Stage Development
1
10N 4 Major Development1.5 Launches
1 Success11 2 3 4 5 6 7Stage of New Product Development Process
1 Success
Source: G. Stevens and J. Burley, “3000 Raw Ideas = 1 Commercial Success!” Research•Technology Management, 40(3): 16-27, May-June, 1997.
12/3/201219 |
Agenda
Importance of Achieving Success in InnovationImportance of Achieving Success in Innovation & Product Leadership
A Roadmap for Success
12/3/201220 |
Key Components of Innovation / Product LeadershipMetrics
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
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Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice SharingDesired Goals
12/3/201221 |
Success Through Innovation is Key
• About 50% of Executives Consider Innovation Very Critical1
• More than 54% Indicated Increased Investment in the Last Two Years1
Ab t 90% f E ti C id O i G th Th h• About 90% of Executives Consider Organic Growth Through Innovation Essential to Success2
• About 70% of Senior Executives Say That Innovation in One of theAbout 70% of Senior Executives Say That Innovation in One of the Top Three Drivers of Growth for Their Company in the Next 3-5 Years3
Innovate or Die!
1 Cheskin and Fitch: Worldwide, 2003
12/3/201222 |
2 The Boston Consulting Group, innovation 20053 The McKinsey Quarterly September 2007
The Building Blocks For Innovative Organizations1
• Formally Integrate Innovation Into the Strategic Management Agenda of Senior Leaders
• Create the Conditions That Allow Dynamic Innovation Networks to Emerge and Flourish
• T k E li it St t F t I ti C lt B d T t• Take Explicit Steps to Foster an Innovation Culture Based on Trust Among Employees
– People Understand That Their Ideas are Valuedp
– Trust That its Safe to Express Those Ideas
– Create High Risk – High Reward Environment
– Publicize Important Failures
Innovation is an Important Driver for Growth
12/3/201223 |
1 Leadership & Innovation, The McKinsey Quarterly Jan. 2009
Publicize Important Failures (Internally)Fail-
Forward Culture
D ’t P i hDiscuss Failure Publish Failures Don’t Punish Appropriate Failure
3M reinforces its culture of risk taking by sharing stories of past failures and second chances.
To promote appropriate risk taking, Former Lockheed Martin CEO, Dan Haughton, gathered the company’s manufacturing
Approximately 90 grants of $50K are given to 3M employees each year to pioneer new product ventures. The product champion
One example is Francis Okie’s 1922 attempt to replace razor blades with a new sandpaper product. The product failed as a shaving tool but was ultimately the
executives to discuss his own failures, including the admission that the failure to purchase the Douglas Aircraft company was a costly mistake.
p precruits his / her own team to develop and launch the product.
If the venture does not succeed team members are guaranteed their shaving tool, but was ultimately the
basis for a successful line of fine-grained, waterproof sandpaper products.
gprevious jobs. There is no punishment for a product failing in the market.
Post It notes werePost-It notes were developed by accident. Intolerance for failure likely would have killed the concept.p
Source: Corporate Executive Board, Tuck Business School Center for Global Leadership, 3M Company Website
12/3/201224 |
Covidien’s Strategic Initiatives
• Innovation
• Portfolio Management
• Operational Excellence
• Globalization
• Talent management
Innovation is a Key Component of Covidien’s Strategy
12/3/201225 |
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
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orpo
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S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201226 |
New Product Innovation Strategy
• Without a Sound Strategy, a New Product is Most Likely to Fail
– Successful Companies Implement a Company-Specific Approach Driven by p p p y p pp yBusiness Objectives and Strategies with a Well-Defined Product Innovation Strategy at its Core1
• Innovation Strategy is a Component of the Overall Business Strategy2
Includes Defined Goals that Tie to the Overall Company Strategy– Includes Defined Goals that Tie to the Overall Company Strategy– Includes Deployment Decisions– Includes Attack and Entry Points to Markets– Forms the Basis for Project Selection and Portfolio Managementj g– Well Communicated
12/3/201227 |
1 Booz-Allen& Hamilton, New product management2 Product Leadership, Robert Cooper 2nd ed. 2002
Key Questions to Ask for a Robust Innovation Strategic Plan1Strategic Plan• What Markets Do We/Can We Serve?• In What Segments Do We & Our Competitors Actively Participate?• In What Segments Do We & Our Competitors Actively Participate?• How Large is the Business Opportunity?• What are the Key Value Propositions?• What Will We Establish as the Major Differentiators?• What are the Platforms to Address the Targeted Customer and
Markets?Markets?• What are the Resources Required to Deliver Against the Product
and Technology Strategic Plans?• What is the Expected Business Outcome?• How Will this Strategy Integrate with the Corporate Strategy?
12/3/201228 |
1 Maurice F. Holmes and R.B. Campbell Jr.
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201229 |
Portfolio Management
• Portfolio Management– Focuses on: − New Opportunities, New Products, New Ventures− All Products a Company has in Development or Available for
Customer at any Time
• The Goals are:− Maximize Value
* Net Present Value (NPV)
* Expected Commercial Value (ECV)* Expected Commercial Value (ECV)
* Internal Rate of Return (IRR)
− Balanced Portfolio (Short vs. Long Term, Breakthrough vs. Line
Extension, etc.)
− Strategic Alignment
12/3/201230 |
Portfolio Management PracticesWorst Performers
Alignment with Bus. Strategy
Formal Portf. Mgnt. Process in Place
66
31
46
4Worst PerformersBest Performers
Good Balance Projects/Resources 38
66
12
4
Resource Breakdown Reflects Strategy
Good Project Prioritization
66
418
12
P tf li C t i Hi h V l P j t
Excellent Balance of Projects
38
31
1
19
0 10 20 30 40 50 60 70
Portfolio Contains High Value Projects
12/3/201231 |
Source: Product Development Institute 2010. %
High
Is This a Balanced Portfolio?
High
cess
Potential Stars (Pearls)
hnic
al S
ucc
Bread & Butter
ity o
f Tec
h
Reward (NPV)
024681012$14 M
Pro
babi
li
LowLong Shots (Oysters)
White Elephants
Risk Reward Bubble Diagram
12/3/201232 |
Risk Reward Bubble DiagramCircle Size = Resources (annual)Source: Robert G. Cooper: Winning at
New Products, 3rd edition.
Balance of Products in the Portfolio – Product Life CycleLife Cycle
(2) Cash from ‘B’ used to support (3) Cash from ‘C’ supports growth of ‘D’
Sales The product portfolio – four products in the (1)
(1) ‘A’ is at maturity stage – cash cow. Generates funds for (2)
used to support ‘C’ through growth stage and to launch ‘D’. (3)
supports growth of D and possibly used to finance extension strategyproducts in the portfolio
( )the development of ‘D’
( ) launch D .
‘A’ now possibly a dog?
( ) strategy
“B” Now possibly a Dog?
D
AB C
12/3/201233 |
Time
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201234 |
Product Development Stage Process
• An Operational Map For Moving New Product Projects From Idea to Launchto Launch
• It is Like a Playbook in a Football Game− It Maps Out What Needs to be Done Play by Play Huddle byIt Maps Out What Needs to be Done, Play by Play, Huddle by
Huddle and How to Do it in Order to Win The Game
• Each Stage Has Clearly Defined Deliverablesg y
• Each Stage is Cross Functional− No Department Owns Any One Stage
12/3/201235 |
Typical Stage Gate Process
F Ve
The Five Stages of Product Development
Idea Ge
Feasibility
Devel
erification
Com
mereneration
y of Conc
lopment
n & Valida
rcializatio
Stage Stage Stage Stage Post Launch Stage
n ept
ation
on
2 3 4g
5 Surveillanceg
1
Successful New Product Launches Go Through the Process
12/3/201236 |
Common Errors & Pitfalls in a Gated Process
• Too Many Bad and in Trouble Projects are Sliding Through
• The Stages Have No Teeth: Once Approved Projects Never GetThe Stages Have No Teeth: Once Approved, Projects Never Get Killed
• Resource are Either Not Committed as Projects Move From Stage to St C itt d t T M P j t t TiStage or Committed to Too Many Projects at a Time
• Executive Pet Projects Get Special Treatment and Bypass the Stages
• Deliverables Overkill
• Process is Too Rigid and Not Scalable
Gated Process is Not a Magic Bullet: It is Only One Piece of the Puzzle
12/3/201237 |
g y
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201238 |
Enablers - DFSS Tools
• Help Define Customer Requirements (CTQ’s)
• Result in Significant Improvement to Product Quality & Reliability Levels
C t ib t t R G th C t D li ht M k t• Contributes to Revenue Growth, Customer Delight, Market Share, Volume, Price
• Warranty Cost Reductions y
• Customer Satisfaction / Targets Met
• Focus the product development teams on what is important• Focus the product development teams on what is important
Design for Six Sigma as an Enabler
12/3/201239 |
Why Important?DFSS Tools Used Early in The Process
Traditional Six Sigma & Lean Efforts are Focused HereR
elia
bilit
y
$
DFSS EffortsQua
lity
and
DFSS Efforts are Focused Here
t to
Cor
rect
Research Design Development LaunchPost Launch Performance
Cos
t
Difficult to See/PredictEasy to Fix
Easy to SeeCostly to FixDefects are:
12/3/201240 |
Best $ Opportunities Realized Through Product Design
Application of Lean to Product Development
Approach Description FocusLean Product Largely based on the adaptation Time to marketLean ProductDevelopment System
Largely based on the adaptationof process, organization, and tools used in Toyota Product Development System (TPDS) to
Time to market, development costs, capacity, quality, continuous
develop products better, faster, and cheaper
improvement
Lean Business Application of Lean Principles to Time to market,Lean Business Process
Application of Lean Principles to minimize waste in Business Processes
Time to market,development costs, capacity
Lean Design Elimination of waste from the product design to reduce manufacturing costs
Product cost, quality, customer value
12/3/201241 |
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201242 |
Most organizations are satisfied with their innovation metrics…
…but there is clearly no standard for which innovation metrics are most effective.
% of respondents who use more than 3 innovation metrics, n=633
Approximately 75% of Companies Studied Use Innovation Metrics in Some Form with an Average of Eight Metrics Used
% of respondents who use more than 3 innovation metrics, n=633
Some Form, with an Average of Eight Metrics Used.Source: McKinsey Quarterly
12/3/201243 |
Breakdown of Projects by Project Type (%)
40
45 4040 Best Performers
Worst Performers
30
3528
2527
15
20
25
12
19%
5
10
15
6
0
5
Packg Changes Incremental Improvement
Major Product Revisions
New to the Business/World
12/3/201244 |
Source: Robert G. Cooper: Product Leadership 2nd edition.
Percentage of Revenue and Profits from New Products
40
4538
42.4RevenueProfits
30
3527.5 28.4
15
20
25
9 9 1
%
5
10
15 9 9.1
0Ave. Business Top 20% of
BusinessesBottom 20% of
Businesses
12/3/201245 |
Source: Robert G. Cooper: Product Leadership 2nd edition.
Success, Fail & Kill Rate of New Products
80
79.5Top 20% of Businesse
Bottom 20% of Businesses
50
60
70 Bottom 20% of Businesses
30
40
50 37.6
28.4 25.7
%
10
20
30
8.1 4.3
0Success Failure Late Kill
12/3/201246 |
Source: Robert G. Cooper: Product Leadership 2nd edition.
% On Time & On Budget for New Products
80
79.4 79Top 20% of Businesse
60
70
44 3
Bottom 20% of Businesses
40
5044.3
%
20
3017.2
20.5
15.5
0
10
On Time On Budget Slip rate
12/3/201247 |
Source: Robert G. Cooper: Product Leadership 2nd edition.
On Time On Budget Slip rate
% New Product Projects Meeting Objectives
90
100
77.1 74 5 73 4
Top 20% of Businesse
Bottom 20% of Businesses
60
70
8077.1 74.5 73.4
40
50
60
26.9 29.629.3
%
10
20
30
0
10
Meeting Profit Objectives
Meeting Sales Objectives
Meeting Market Share Objectives
12/3/201248 |
Source: Robert G. Cooper: Product Leadership 2nd edition.
j j j
Top 10 R&D Metrics Used Across Industries
1. R&D Spending as a % of Sales 77%
Metric% Companied Using Metric
2. Total Patents Filed/Pending/Awarded/Rejected 61%
3. Total Current R&D Headcount 59%
4. Current-Year % Sales Due to New Products Released in Past X Years 56%• Many Companies Invest Only in R&D Resources. Product Development is
t J t R&DCu e ea % Sa es ue o e oduc s e eased as ea s 56%
5. Number of New Products Released 53%
6. Number of Products/Projects in Active Development 47%
7 % Resources/investments Dedicated to New Product Development 41%
not Just R&D
• Must Invest in Other Support Functions (QA, Manufacturing, Procurement, Engineering, etc)7. % Resources/investments Dedicated to New Product Development 41%
8. Number of Products in Defined/Planning/Estimation Stages 35%
9. Average Project ROI or Average Projects Payback 31%
10 Percentage Increase/Decrease in R&D Headcount 31%
• A Study by Booz Allen showed no Correlation Between:
− R&D to Sales Ratio, R&D to Sales Growth, R&D to Gross, Net Profits10. Percentage Increase/Decrease in R&D Headcount 31%• However, most Innovative Companies outperformed their peers with respect
to revenue growth, EBITA as a percentage of revenue, and market cap growth
12/3/201249 |
Source: industryweek May 2008
Top 10 Innovators vs. Top 10 Spenders
80
80
67
Top InnovatorsTop Spenders
506070 56 54
42
6
35
p p
304050 35%
01020
Revenue Growth EBIT as % of Revenue
Market Cap Growth
12/3/201250 |
Source: Booz Allen.5-yr CAGR 5-yr Ave 5-yr CAGR
Top 10 R&D SpendersRank 2010
Rank 2009
Company Spend $Billion
% of Sales
1 1 Roche Holdings $9.65 21.1%
2 5 Pfizer $9.41 13.9%3 6 Novartis $9.07 17.9%4 2 Mi ft $8 71 14 0%4 2 Microsoft $8.71 14.0%5 14 Merck $8.59 18.7%6 4 Toyota $8.55 3.9%y7 10 Samsung $7.87 5.9%8 3 Nokia $7.78 13.8%9 11 G l M t $6 96 5 1%
It is not How Much you Spend, It is How you Spend it!
9 11 General Motors $6.96 5.1%10 7 J&J $6.84 11.1%
12/3/201251 |
It is not How Much you Spend, It is How you Spend it!Source: Booz Allen 2011
R&D Spending - Medical Device Companies16%
11.8% 11.6%10.6%
9 3% 9 2%
12%
9.3% 9.2%
7.8%7.2% 6.8%
6.1%4.8%
8%
% of T
otal Sales
0%
4%
0%
• Data for GE, Siemens and Phillips are for their healthcare business only• J&J and Abbott numbers include the pharma spend
June 6, 201252 |
J&J and Abbott numbers include the pharma spend
Top 10 R&D Metrics Used By Industry% C i d
1. R&D Spending as a % of Sales 77%
Metric% Companied Using Metric
2. Total Patents Filed/Pending/Awarded/Rejected 61%
3. Total Current R&D Headcount 59%
4. Current-Year % Sales Due to New Products Released in Past X Years 56%
5. Number of New Products Released 53%
6. Number of Products/Projects in Active Development 47%
7. % Resources/investments Dedicated to New Product Development 41%p
8. Number of Products in Defined/Planning/Estimation Stages 35%
9. Average Project ROI or Average Projects Payback 31%
10. Percentage Increase/Decrease in R&D Headcount 31%10. Percentage Increase/Decrease in R&D Headcount 31%
“If you are Not Keeping Score, you are Just Practicing”
12/3/201253 |
Vince Lombardi
Source: industryweek May 2008
Metrics
Key Components of Innovation / Product Leadership
Customers, Market Environment & Senior Mgt Team
tegy Performance
Goals
Metrics Balanced Scorecard
DFSS & Lean PD TOOLS
ENABLERSENABLERS
542olog
y St
ra
io men
t
trat
egy
OutputsORGANIZATION& PEOPLE
TECHNOLOGY
Stag
e 5
Stag
e 4
Stag
e 1
Stag
e 2
Stag
e 3
n &
Tec
hno
Port
fol
Man
age m
orpo
rate
S Outputs
∑
TECHNOLOGY
Lean/Sigma Design Product Development Process
Inno
vatioC
o
Gaps Between Actual & Desired Goals
Lean/Sigma Design Product Development Process
Best Practice Sharing
Desired Goals
12/3/201254 |
Best Practice for Best Practice Sharing
• Establish a Process for Identifying Individual Best Practices Throughout all Appropriate Areas of the Organization
• Create a Forum or Channel for Sharing Best Practices Formally. Link it to Strategy
• Create a dedicated process/System with Clear Responsibilities
• Review Effectiveness of the Process and Improvep
12/3/201255 |
Must Do For Medical Device Product Development
• Get Clinical Data Pre-Launch Rather Than Post Launch
• Consider Global Product registration Requirements Early in the g q yProcess
• Integrate Package Design, Development and Validation into Product Development ProcessDevelopment Process
• Consider Sterilization Method Early in the Process
• Reimbursement Considerations - second largest barrier to market entrance
• Direct Input from Healthcare ProfessionalsDirect Input from Healthcare Professionals
• Pricing Considerations early in the Process
12/3/201256 |
Summary - Achieving Success in Product Design & Innovation - High LevelDesign & Innovation High Level
• Process Must be Led by Senior Management - Walk the Talk
N P d t I ti d T h l St t i Li k d t• New Product Innovation and Technology Strategies Linked to Corporate Strategy
• Portfolio Management – Alignment of Resources, Projects, Right Markets etc.
• Multi Stage Product Development Process to Ensure:DFSS & Lean PD Tool Usage– DFSS & Lean PD Tool Usage
– Regular Project Progress Reviews– Robust & Reliable Product Designs
• Use a Balanced Score Card to Track Metrics and Provide a Closed Loop System with Periodic System Assessments
• Share Best Practices
12/3/201257 |
Share Best Practices
“The world we have created today as a result of our thinking thus far h bl hi h t bhas problems which cannot be solved by thinking the way we thought when we created them.”
Albert Einstein
Thank youy12/3/201258 |