FEI – Outcomes Outcome 011904 [Read-Only... · FEI – Outcomes FEI - SPI Team Christina Bramante...

FEI – Outcomes

FEI - SPI TeamChristina Bramante (Cabot)Scott Boyce (Rohm and Haas)Cindi Hartz (Dow Corning)Michael Incorvia (International Flavors & Fragrances) Elko Kleinschmidt (McMaster University)Peter Koen (Stevens)Drew Kugler (WelchAllyn)Lorrette Pruden (Inventive Strategies)Becky Seibert (Crompton)Jeff Stirrat (Ethicon)Brenda L.Tollett (The Valvoline Company) January 19, 2004 Status

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Outcomes

z Outcomes measure the overall output of the FEI or section – as appropriateySuccessful outcomes may then be able to correlated with the

subprocess that exists within the FEI and FEI section

Definitions

3

Hypotheses (Overall)

z A successful FEI is positively related to the overall success ofthe NPD Process. (7)

z A company with a successful FEI spends more than 10% of R&D resources in the FEI and more than 10% of these resources on “New-to-the- World” Projects. (7)

z A company with a successful FEI effectively employs double-loop learning to improve the front endyPost mortem and applying (6)

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Hypotheses (Engine)

z A successful FEI has a robust engine which includes:y Optimum involvement of Senior Management (7) y A collaborative and caring culture which does not chastise people for taking risk

and encourages both product and executive champions (7)y Blab blah blah which sets aggressive goals (6-7)y A well articulated and stable innovation vision and strategy (6)y Effective senior management decision making and project portfolio management

5).z A company with a successful FEI has a lot of slack permitting a lot of

unofficial FEI-activities (7)z A company with a successful FEI has top management willing to be

influenced by “new” markets, technologies, resourcesy Willing to change their strategy (7)

z Successful Breakthroughs are positively related to the organization's core competencies/capabilities. (7)

z Integration - Has work performed together by those in the business unit and a central resource (radical innovation hub, or whatever label we want to use) – (i.e. trying to get at the optimum of having all of the responsibility in the business unit vs. all in central R&D vs. joint responsibility & projects) (7)

z Organization has a clear vision and understanding of the company's mission (6)

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Hypotheses (Engine)

z Innovation is embraced and supported across entire organization (6)z Senior management and corporate culture supports innovation. (6)z A company with a successful FEI organization that has a successful FEI has

all executives with FEI incentives. (Engine – 6).z A company with a successful FEI gets strong accountability without over-

managing (Engine – 6)z Companies with a successful FEI resource their projects to succeed (Engine –

5.5) z A successful FEI depends on an integrated portfolio management across all

stages and types of projects (Engine – 5)y (In other words, the FEI portfolio can't be managed independently of the rest of

the pipeline.)

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Hypotheses (Human Factors)

z A company with a successful FEI has a knack for selecting the right people to work in the front end (7)

z There is some 'ideal' ratio of Starter/Finishers in an R&D organization. (6.5)

z A successful FEI depends on active project and executive "champions“ (6)

z A company with a successful FEI recognizes the importance of assigning effective leadership to front end programs (6)

z Companies with a successful FEI use cross-functional project team (5.5)

z A company with a successful FEI has a higher percentage of “successful” inventors (5.5)

z An open (e.g. culture, )leadership style leads to more/better New Concepts (5 +)

z A company with a successful FEI utilizes full time teams on “New-to-the-World” Projects (5)

z The number of NEW NCD teams formed/year is a predictor of fresh approaches and ideas. i.e., mix em up. (5)

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Hypotheses (Culture)

z A company with a successful FEI has a well developed culture which fosters “tacit knowledge creation” which includey Communities of Practice, wide spread use of IT tools which encourage

people-to-people contact, collaborative work space and a “caring” organization (7)

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Hypotheses (Concept Definition)

z A company with a successful FEI develops a extremely proficient “quality” Business Case for all projects in the FEI which require a significant investment prior to spending significant R&D resources (7)

z A company with a successful FEI manages the risk (e.g. clinical,technology, market, regulatory, etc. of high risk technology projects (6 )yUses a process like TSG so that the risk may be evaluated at appropriate

intervalsy Simultaneously supporting alternate approaches

z A company with a successful FEI uses teams of 3-5 people?. y It seems like it would be interesting to gather information on typical

team size/distribution and see if there is a "magic" range that is correlated to success. My gut from my experience is that there is one. (5)

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Hypotheses (Opp Ident and Analysis)

z A company with a successful FEI dedicates significant resources (?) in Opportunity Identification and Analysis in order to envision the future. These include: (Opp Ident and Analysis – 7)y Customer and Technology Trend Analysis, Technology Road Mapping,

Competitive Intelligence Analysis and Scenario Planningz A successful FEI depends on "market-driven" concepts (7)z A company with a successful FEI has developed an effective

method of evaluating opportunities and picking winners (7)z A successful FEI is related to the number of ideas and opportunities

generated in the FEI. (Hypothesis also appears in Idea Generation–6.5)

z A company with a successful FEI utilizes methods which allow thecompany to capture the “tacit” knowledge of the customer including ( Hypothesis also appears in Idea Generation ) -6y Lead User, ethnography, customer archetypes, ….. Approaches.

z Has a larger ratio of opportunities, ideas, and concepts evaluated. (Opp, Ideas & Concepts – 6)

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Hypotheses (Idea Generation)

z A successful FEI is related to the number of ideas and opportunities generated in the FEI. (Hypothesis also appears in Opp Ident and Analysis– 6.5)

z A company with a successful FEI utilizes methods which allow thecompany to capture the “tacit” knowledge of the customer including ( Hypothesis also appears in Opp Ident and Analysis) -6y Lead User, ethnography, customer archetypes, ….. Approaches.


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Hypotheses (Idea Selection)

z A company with a successful FEI has developed an effective method of evaluating ideas and picking winners (Idea Selection – 5)

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Hypotheses (Concept Selection)

z A company with a successful FEI has developed an effective method of evaluating concepts and picking winners (7)


z A successful FEI is ……FEI Project Portfolio Analysis on “New-to-the-World” Projects is being done using an Options approach (4.5)

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Characteristics

z Enginey Recognitionsy Resourced to succeed y Senior management involvement -y Integration – venturing vs. corp. development -y Alliance/partnering -y Incentives -y Quality of management of FEI -y FE process (formal, loose, consistent, etc.) -y Stretch goals – drive success -y Strategy – portfolio strategy, alignment, vision -y Core competency fit – Idea Selection, Opportunity Analysis, Concept Definitiony FE well positioned to deliver strategy y Out-licensing y Human resourced availability –y Organizational structure y Organizational capabilities -y Do you manage your portfolio mix? - Strategy in Engine, NEED TO ADD THIS

NOT CURRENTLY INCLUDE IN THE DRAFT SURVEY QUESTIONS ON ENGINE

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Characteristics

z Human FactorsyDegree of training on FE toolsy Structured, strategic FE skill building process / training programy Cross functional teams – diversity in skills & personalities

z Culturey Cross functionality – collaboration in organizationyOfficial programs vs. “unofficial” programs

z Idea Generationy Source of ideas – change in –yMethod for gaining ideas – change?

z Concept Definitiony “morphing” measures yDo you measure portfolio mix? y% of mix – time to commercialization

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Characteristics

z Idea Generation and Opportunity IdentificationyUnderstanding consumers/ultimate user yOverally tools applied

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Section Status

Overall FEI Outcomes (Bramante, Hartz and Pruden)

Unit of Analysis and Company Demographics (Koen)

Influencing Factors (Koen)

Engine (Pruden and Hartz)

Opportunity Identification and Analysis (Incorvia and Tollett)

Idea Generation and Selection (Kugler and Stirrat)

Concept Definition and Selection (Boyce and Seibert)

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Unit of Analysis

SBU

Assumption: Focus of the study would be on the SBU and Corporate research Unit and would exclude the Business Development and Corporate Venture

Corporate Research

Unit

Section Owner: Peter Koen

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Unit of Analysis

z Product (Internal and External)y Physical entity – not an operational improvement (i.e.

composition of matter as opposed to other)y Including software

z Process (Internal and External)y Process R&D – not operational improvementy Typical 6 sigma project does not fit – though design for 6

sigma doesz Service (Internal and External)y Ex: New ways to look at new or old informationy Excluding a separate service business


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Time Frame

z Issue: The FEI outcomes measured today are the result of the subprocesses being used previously

Study Time Frame Assumption: zWould capture the FEI processes that exist todayz Understand that there is a time lag (probably 2-3 years depending on the company

and industry) before commercialization success is known zWould evaluate if the FEI had changed over the companies product development

period.z Desirable to measure commercialization success in the companies surveyed at 1 year

intervals, possibly with a shorter survey, to capture the effects of the FEI processes studied.


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Unit of Analysis Section Owner: Peter Koen

New unit of analysis. Should we also measure the level of innovativeness for the product, process or service? Have we adequately captured market and technology uncertainty?

Level of Innovativeness

Improvements/ Revisions to

Existing Products

Additions to Existing Product

Lines

New-to-World

RepositioningCost Reductions

New Product Lines

Newness to Market

High

High

Low

Low

New

nes

s to

Co

mp

any

Booz, Allen and Hamilton Product Typology*(Typically easier to use than Radical, Platform and

Incremental)

*Booz, Allen and Hamilton Inc. New Product Management for the 1980’s. New York: Booz Allen and Hamilton, Inc. 1982.

We agreed to add a platform measure

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Company Demographics

z Revenuez Number of Employeesz % of R&Dz Markety Business to business vs.. consumer

z Type of goods offeredy Physical goods vs.. services

z Functional DriversyMarket vs. Technology driven

z TechnologyyHigh Technology vs.. low technology

z Overall Product Development SuccessyGriffen and Paigey Song and Parry

Not refined at May 19 meeting – additional work is needed.


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z Development Program ROIz New Products fit with Business Strategyz % profits from new products (PRTM and Cooper have

measurements which also capture level of investment)z Success/Failure Ratez % Sales from new products (over what years?)z % Sales under patent protectionz % profits under patent protectionz % of ideas entering the NCDz % of concepts existing in the NCDz % of platforms introduced

Overall Product Development Success

Ref: Griffen and Page, JPIM. 1996



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z Overall Profitabilityy Successful product’s profit relative to other new productsy Success of product relative to competitive productsy Success profit relative to expectations

z Salesy Sales relative to other new productsy Sales relative to competitive productsy Sales relative to objective

z Market Sharey Market share relative to other new productsy Market share relative to competitive productsy Market share relative to objective

z Window of Opportunityy Window on other opportunity in terms of new product category for your companyy Window on other opportunity in terms of a new market opportunity for your company

Product Development Success

Ref: Song and Parry, JPIM, 1996,



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FEI Outcome Measures

z Competitive Advantagey New Product Service Programs with sustainable advantagey FEI is positioned for sustainable competitive advantagey Competitive position vs. existing productsy Duration of advantage

z Portfolio Mixy (Mix is defined by Booz Allen (or like) categoriesy Satisfaction with the mix that existed over the last ??? Yearsy Satisfaction with the mix commercialized from NPDy Satisfaction with the mix currently in FEI

z Financialy Sales potential (below, meets or exceeds business plan)

⌧Net of cannibalizationy Margin potential relative to existing products (below, meets or exceeds business

plany FEI spending vs. budgety Spending relative to categories

Section Owner: Christina Bramanta, Cindi Hartz and Lorette Pruden

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FEI Outcome Measures

z Efficiency/Effectivenessy FEI adequately replenishes your development process with

⌧# of ideas⌧value of ideas

y Satisfaction with cycle timey Satisfaction with organizational patiencey Satisfaction with resource efficiencyy Satisfaction with transfer ratey Management commitment to development of FEI

z Opportunitiesy Satisfaction that FEI generates sufficient new opportunities for:

⌧Technologies⌧Markets⌧Products and Businesses

Section Owner: Christina Bramanta, Cindi Hartz and Lorette Pruden

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NCD Model (August 1, 2003 version)

ENGINE

OpportunityIdentification

OpportunityAnalysis

Idea Generation

and Enrichment

IdeaSelection

Concept Definition

Stage Gate

Engine“Controllable”

Core Front End “Activity” Elements

InfluencingFactors

“Uncontrollable”

Tech SG

Concept Selection

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Influencing Factorsz Structural Factors

Ref: Pine, Mass Customization, HBS Press, 1993.y Buyer Powery Degree firm is influenced by economic cyclesy Competitive intensityy Price competition vs. product competitiony Market saturationy Vulnerability to substitute productsy Product life cycle length and predictabilityy Rate of product technology changey Regulatory Issues

z Market Turbulencey Stability of demand for products from unpredictable to stabley Product need is staple or a luxury itemy Difficulty of defining customer needs from easily defined to difficult to ascertainy Rate of change of customer needs (Quickly or slowly)y Price Consciousnessy Quality Consciousy Fashion/style consciousnessy Level of pre and post sale service

It was agreed that we would measure structural factors and market turbulence using a Likert scale. Need to add regulations and how we could influence them.


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Engine

z Engine Outcome Measuresy Leadership⌧Vision

• Clearly Defined Vision • Vision Published to Organization• Employee awareness is high and can articulate their impact• Vision Demonstrates Long term view of NCD efforts vs. short-

term effort that is absence of longer time horizon programs⌧Strategy

• Clearly Defined Strategy• NCD goals of the business linked to overall business goals• Established measures are well defined and tracked, metrics

which are leading indicators in the prediction of weakness in the NCD processes

Section Owners: Lorette Pruden and Cindi Hartz

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Engine (cont’d)

z Engine Outcome Measuresy Leadership⌧Action Alignment of Strategy

• Accountability of NCD teams is monitored & tracked

⌧Style (Open vs. Closed)• Need to choose one to measure

y Culture ⌧ Validated instrument is employed to measure a healthy NCD

culture

Section Owners: Lorette Pruden and Cindi Hartz

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Opportunity Identification

Section Owner: Michael Incorvia and Brenda Tollett

z Assessment of External Environmenty Economic/demographic trends, regulatory shifts, new technologies, alliances between

competitors, drivers of increasing/decreasing demand for products, new business models, patterns of change, etc

z Assessment of Existing Customers and Marketplacey Look at who makes the purchasing decisions and what is their buying behavior)

z Identify Best Growth Opportunitiesy Examine what are your obstacles to growth, market segment, mapping, etc.

z What is Your Competition Doingy Examine their business model, their market strategy and how they respond to competitive

threats - also look at how you respond to competitive threat.z What Are Your Core Competencies

y Can you do in-house, do you have to outsource, can you partner or leverage in some way, how much do you know and how much do you have to learn new)

z Market Attractivenessy What is the size of the space, what is the buying power of the groupy What are predicted trends of the market, is there opportunity for new to the world products,

is there potential for product/service platform development) z Assessment of Technology

y Development of entirely new technology, extend or leverage existing technology, new application of existing technology)

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Opportunity Analysis

z Strategic Fity Does it fit within vision of company?

z Time to Profity Is this a short term or long term opportunity?

z Initial Capital neededy Depreciated expenses, fixed assets)

z Personnel/Other resources neededy Non-depreciated expenses)

z Probability of Market Success y First to market, response of competition, purchase likelihood, etc.

z Competitive Advantage y Can the ideas be protected, technology advances, etc.

z Existing Capabilities y The how much do you have to learn question

z Market Attractiveness y Is this a big opportunity with room for multiple ideas)

z Impact on Current Business y Will it displace existing products or services)

Section Owner: Michael Incorvia and Brenda Tollett

This will be a ranking and a prioritization based on what you identified as opportunities

32Section Owner: Drew Kugler and Jeff Stirrat

Idea Generation and Selection

z What methods does your organization use to generate ideas? z Which of those methods do you find to be most effective? z Do you feel that the best ideas are generated by individuals or groups? yWhy?

z Which of the following information sources do you typically use as input for Idea Generation? (Environmental Scans, Lit. Reviews, Customer visits, etc.)

z Approximately what percentage of ideas are generated by individuals? z Approximately what percentage of ideas are generated internally?z Do you find the best source of ideas to be internal or external

resources? y (could ask them to rate on a sliding scale, or estimate % best ideas from

internal)

33Section Owner: Drew Kugler and Jeff Stirrat

Idea Generation and Selection

zWhat, if any, measurements do you use to evaluate your idea generation activity?

zWhich of the following criteria do you consider when selecting an idea? (IP potential, revenue potential, investment required, etc.)

z In the past year, how many ideas has your business unit generated on a monthly basis on average?y(I think we should ask them to fill in their own number, and bin later to

preserve resolution)z In the past year, about what percentage of the ideas generated are

selected for further work? (concept definition)? zWhat percentage of ideas selected for further work would you say fit the

classification of Market Pull versus Technology Push?

34Section Owner: Scott Boyce and Becky Seibert

Concept Definition:Outcome Measures

z Concepts where the following dimensions are described:y Market Need: General market requirements or need, major customer needs

(vs. wants), impact on customer & overall value chain.y Alignment with Business Mission & Strategy: Breadth of fit & synergy

with core technologies (competencies, facilities, people, supply and distribution channels)

y External Environment: Macroeconomic trends, competitive landscape, regulatory situation, etc.

y Intellectual Property Strategy and Positiony Financial Outcomes: Sales, gross profit, operating profit, etc.y Effect on Overall R&D Portfolioy Gap Analysis: Major areas of technical & commercial uncertainty or risky Plan to Fill Gaps: Resources ($, people, facilities) availability or feasibility of

acquisition, product stewardship (time line, cost). implications of plan on organization


Concept Selection:Outcome Measures

z “Validated” Front-End Portfolio containing the “right programs” to adjust Stakeholder’s future needs.y Validation includes direct feedback from Value Chain participants

(customers/market, suppliers and other “partners”)y Value and risk profile consistent with financial goalsy Strategic fit

z Value Chain partners “understand” the Portfolio Decision Process and Concept Selection criteria

z High level action plan including expectations, roles, and responsibilities of Value Chain partners.

z Programs validated using “Voice of the Customer”z Routine post-mortem (“After Action Review”?) process to examine

program choices (what selected and not selected) and the decision making process.

z “Robust” decision-making processy Maintains/grows the the development pipeliney Follows key selection criteria (see following slide)


Concept Selection:Process Characteristics

z Flexible Selection Processy Deliberate choice of tools, e.g. DFSS, used in selection

z “Right” Peopley Individuals with knowledge of concept and authority to commit resources made

selectionz Specific Criteria

y Strategic Fit, Risk, Reward and Resources, used for selection z Clear Ground Rules

y Followed for group selectionz Priorities

y Gaps or uncertainties which action plan should addressz Mandate and Resources

y Assemble team and prepare for the Gate Review (to enter NPD or TSG)z “Right” Choice

y In retrospect “know why” concept chosen and others not selected.

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