Characteristics of Successful Product Development

From the perspective of the investors in a for-profit enterprise, successful product development results in products that can be produced and sold profitably, yet profitability is often difficult to assess quickly and directly. Five more specific dimensions, all of which ultimately relate to profit, are commonly used to assess the performance of a product development effort:

• Product quality: How good is the product resulting from the development effort? Does it satisfy customer needs? Is it robust and reliable? Product quality is ultimately reflected in market share and the price that customers are willing to pay.

• Product cost: What is the manufacturing cost of the product? This cost includes spending on capital equipment and tooling as well as the incremental cost of producing each unit of the product. Product cost determines how much profit accrues to the firm for a particular sales volume and a particular sales price.

• Development time: How quickly did the team complete the product development effort?

Development time determines how responsive the firm can be to competitive forces and to technological developments, as well as how quickly the firm receives the economic returns from the team's efforts.

• Development cost: How much did the firm have to spend to develop the product? Development

cost is usually a significant fraction of the investment required to achieve the profits.

• Development capability: Are the team and the firm better able to develop future products as a result of their experience with a product development project? Development capability is an asset the firm can use to develop products more effectively and economically in the future.

High performance along these five dimensions should ultimately lead to economic success; however, other performance criteria are also important. These criteria arise from interests of other stakeholders in the enterprise, including the members of the development team, other employees, and the community in which the product is manufactured.

Members of the development team may be interested in creating an inherently exciting product. Members of the community in which the product is manufactured may be concerned about the degree to which the product creates jobs. Both production workers and users of the product hold the development team accountable to high safety standards, whether or not these standards can be justified on the strict basis of profitability. Other

individuals, who may have no direct connection to the firm or the product, may demand that the product make ecologically sound use of resources and create minimal dangerous waste products.

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References and Bibliography

Exercises

A wide variety of resources for this chapter and for the rest of the book are available on the Internet. These resources include data, templates, links to suppliers, and lists of publications. Current resources may be accessed via www.ulrich-eppinger.net

Wheelwright and Clark devote much of their book to the very early stages of product development, which we cover in less detail.

Wheelwright, Stephen c., and Kim B. Clark, Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality, The Free Press, New York, 1992.

Katzenbach and Smith write about teams in general, but most of their insights apply to product development teams as well.

Katzenbach, Jon R., and Douglas K. Smith, The Wisdom of Teams: Creating the High-Performance Organization, Harvard Business School Press, Boston, 1993.

These three books provide rich narratives of development projects, including fascinating descriptions of the intertwined social and technical processes.

Kidder, Tracy, The Soul of a New Machine, Avon Books, New York, 1981.

Sabbagh, Karl, Twenty-First-Century Jet: The Making and Marketing of the Boeing 777, Scribner, New York, 1996.

Walton, Mary, Car: A Drama of the American Workplace, Norton, New York, 1997.