The Idea in Brief
Could anything else go wrong with your company’s product development efforts? You’re running out of money. Products are late. Panicked team leaders are cutting corners. Most alarming, people are squandering scarce resources on “the squeakiest wheels” rather than tackling strategically important products.
How to halt the chaos? Approach product development more systematically—with an aggregate project plan. No single project can define your firm’s future; rather, the set of projects does. An aggregate project plan helps you manage your company’s project mix and allocate scarce resources shrewdly. It categorizes projects based on their contribution to your firm’s competitive strategy and the resources they consume. And it highlights gaps in your development pipeline.
After building an aggregate project plan, most companies eliminate the lion’s share of their existing projects—freeing up resources for their most strategically valuable efforts.
The Idea in Practice
To build your aggregate project plan:
Classify existing projects according to five categories. Each category entails different degrees of product and manufacturing change. The greater the degree of change, the more resources the project consumes.
- needed incremental changes to existing products such as cheaper, no-frills versions, new packaging, or more efficient manufacturing. Relatively few resources .
- needed major changes that create entirely new product categories and markets. Significant resources .
- plan fundamental improvements in cost, quality, and performance over previous generations of products. Though these projects entail more extensive changes than derivatives—and less than breakthroughs—they require considerable upfront effort from numerous functions. Offering significant competitive leverage and the potential to increase market penetration, they should form the core of your aggregate project .
Example:
Sony dominated the personal audio system market with 200+ Walkman models based on three platforms. The models offered something tailored to every niche, distribution channel, and competitor’s product.
- products creation of new materials and technologies that eventually translate into commercial developments. These projects compete with commercial efforts for resources. However, a close relationship between R&D and commercial projects is essential for a balanced project mix and smooth conversion of ideas into .
- resources relationships formed with other companies to pursue any type of project. Many companies fail to include them in their project planning or to provide them with enough .
Estimate the average time and resources needed for each project type based on past experiences. For example, how many engineering months does each project type typically require?
Identify your existing resource capacity.
Determine the desired mix of projects. Include some from every category needed to support your overall corporate strategy, paying special attention to platforms. Example:
Scientific-instrument maker PreQuip strategically allocated 50% of its resources to platform, 20% to derivative, and 10% each to R&D and partnership projects.
Estimate the number of projects your existing resources can support. Allocate available resources according to your strategic product mix.
Decide which projects to pursue. Example:
PreQuip reduced its number of development projects from 30 to 11 (3 derivatives, 1 breakthrough, 3 platforms, 3 R&D, and 1 partnership). Fewer projects meant more work got done; more work meant more products. The company’s commercial development productivity improved threefold.
The long-term competitiveness of any manufacturing company depends ultimately on the success of its product development capabilities. New product development holds hope for improving market position and financial performance, creating new industry standards and new niche markets, and even renewing the organization. Yet few development projects fully deliver on their early promises. The fact is, much can and does go wrong during development. In some instances, poor leadership or the absence of essential skills is to blame. But often problems arise from the way companies approach the development process. They lack what we call an “aggregate project plan.”
