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Creativity or process?
Managing new product development effectively is a trade-off between process and innovation. E&T look at the steps engineering managers can take to make sure that the customer's 'hidden needs' are met.
Companies want to develop new products quickly and efficiently, and this demands that they be process-oriented. But they also want to be creative and excite their customers with innovative ideas. This raises the question of whether creativity and a robust process-orientation can co-exist.
In the 1970s, many organisations did not have a formal process to manage their new product development (NPD). As a result there were problems: projects ran late or over-budget; products were difficult to manufacture, and they failed to meet customer requirements.
In the 1980s, research work by Bob Cooper of McMaster University in Canada identified the essential elements of a product development process. His work led to the 'Stage-Gate' process that has now been adopted by many companies. Product development is broken into a number of stages (such as preliminary investigation) and separated by gates. Management must decide whether progress is sufficient to approve moving to the next stage. An integral part of an NPD process is the set of checks for each threshold, which ensures that every department knows which tasks to complete. Stage-Gate helps coordinate different departments and ensures that every aspect is considered at the right time.
Although Stage-Gate gives a framework for the management process, R&D typically applies systems thinking to determine the architecture that will deliver the requirements. Systems engineering is based on systems thinking - the breaking down of systems into sub-systems and the relationship between them.
The concept of 'decomposition' can be used within a process to aid product development. Customer needs are identified (often referred to as 'requirements capture'), are non-technical and written in a language that the customer understands. These are then mapped to top-level systems requirements, describing in technical terms what the system must do. The system architecture is then derived from the systems requirements.
Next, through decomposing the system into sub-systems, each sub-system undergoes detailed design and manufacture. The sub-systems are individually verified and then constructed into a system for verification against the top-level systems requirements.
Assuming this goes to plan, the completed product is delivered to the customer.
The systems engineering framework promotes a top-down approach, where the solution does not become apparent until the architectural design phase. It addresses customer needs through the user requirements capture process. The big advantages of such an approach are:
- The user requirements are inherent in the process ensuring a solution designed to address customer needs;
- The hierarchical decomposition enables complexity to be addressed and articulated.
This process is called the 'system engineering lifecycle'. Stage Gates can be mapped onto appropriate points of the cycle, often between the key blocks. By including an 'innovation zone', technology insertion can be incorporated into the conventional systems engineering lifecycle.
Parallel to the development of the product, the innovation zone gives the opportunity for creativity and nurturing new technologies to the point where they can be used in the product - the technology insertion process. The initial recognition of the opportunity for a technology insertion typically occurs at the architectural design stage and impacts subsequent stages, i.e. it may require a new manufacturing process. The innovation zone is external to the system engineering lifecycle, but close integration is likely in practice and allows smooth technology insertion.
New products fail
Despite companies following formal new product development processes, many new products still fail. Research shows that this is usually because products are too similar to what is already on the market. How can this be, as both Stage-Gate and system engineering look for customer requirements?
Process-oriented companies typically ask their customers what their needs are, through surveys and focus groups. This is dangerous, as customers are seldom able to articulate their real needs, and so their suggestions are nearly always based on slight improvements to existing products. This leads companies into the 'incremental innovation trap', where there is no real originality in design. Mundane products do not spark the imagination and cannot be 'differentiated'. Process-oriented companies are poor at understanding their customers, because they are over-reliant on focus groups and surveys.
'Customer-focused', 'customer -driven' and the 'voice of the customer' all emerged in the 1980s, when it was thought that customers' opinions were the best source of ideas. The way leading companies listen to their customers is changing, as managers realise that end-users have difficulties articulating their needs. It is not that market research is bad, rather that the way it is conducted is in need of a complete overhaul.
Behavioural sciences such as psychology and ethnography allow us to understand how people think and act. Techniques from these disciplines reveal hidden needs. Techniques include contextual interviews (interviews conducted where products are used), repertory grid technique (a means for probing tacit knowledge), and ethnographic approaches (built on the way ethnographers study culture). Using these techniques in combination identifies hidden needs and can lead to breakthrough products ('Innovation Management: Strategy and Implementation Using the Pentathlon Framework', by K Goffin, K. and R Mitchell).
We still find that the majority of organisations have not succeeded at integrating creative flair into their NPD processes. Perhaps this is understandable, as the best techniques for understanding the customer come from the behavioural sciences, subjects that are not touched in most engineering courses.
However, top companies are recognising that generating a deep understanding of customer needs is an essential capability. R&D managers must ensure that their NPD teams have the right skills to identify hidden needs and this is an enhancement to 'user requirements' processes that already exist in many organisations. The real question is: When will your organisation build the capability to identify customers' hidden needs?
Keith Goffin is with Cranfield School of Management and Ben Allen is with Her Majesty's Government Communications Centre as well as the Department of Engineering Science, University of Oxford
Key points for managers
- Ensure that your organisation is guided by the NPD process and not a slave to it;
- Provide sufficient flexibility for innovation;
- Capture hidden needs and design products that provide solutions to customer issues;
- Make innovation pervasive, occurring within the bounds of the project and beyond it;
- Develop a clear understanding of markets and customers to give you the insights needed for setting a winning strategy.
'Listen and watch' to beat the bugs
Manufacturer Miele has combined a process- and customer-orientation in its development of household goods for people with allergies. Miele has introduced a vacuum cleaner that indicates when the floor is dust-free. A hygiene sensor at the nozzle has a 'traffic light' indicator, which turns from red, through amber, to green as cleaning progresses. This sensor is a breakthrough feature as it allows the user to know when a room is clean, or when a mattress is free of dust and house mites.
Market research for this product was conducted with the Deutscher Allergie- und Asthmabund (German Allergy and Asthma Foundation, DAAB), an association for people with allergies. Through an innovative approach to market research, Miele recognised the need for a hygiene sensor and identified an important new market segment. Because people with allergies also have to be careful with laundry, Miele has introduced a washing machine that has a programme for washing pillows and a rinsing process to remove detergent residues. A tumble drier has been designed to minimise other factors that exacerbate allergies.
Both these products were based on ideas generated from working closely with the DAAB and customer groups. As Olaf Dietrich, marketing and new product development manager vacuum cleaners says: "We are in regular contact with users and have a 'listen and watch' philosophy at Miele. By this, we mean that we realise that it is essential for not only marketing, but also engineers to actually see the issues first-hand. Only if you are present do you really understand the issues." The links established with the DAAB and similar organi-sations also mean that Miele has established a lead over its competitors and is making its innovations harder to copy.
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