Throughout the 1990s, I managed a series of primary research studies that produced two influential white papers. These studies were sponsored by a partnership between Product Development Consulting, Inc. (PDC), The Management Roundtable (MRT), and (in 1993), the Boston Consulting Group (BCG). The 1993 study was featured on page A2 of the Wall Street Journal, July 20, 1993 and later became a key source for a Harvard Business Review article authored by PDC President, John Carter and BCG Principal, Tom Hout. I was the manager of this effort as an employee of PDC and was later hired as a free-lancer by MRT to expand on the work. I authored two white papers for MRT presenting the findings. The first of these white papers was subsequently republished or covered in Managing Automation, CAE, IOMA Journal, Society of Concurrent Engineering National Newsletter, Time-Compression Technologies, Software Strategies, and other trade publications. These white papers are still cited today, most recently at the annual conference of Boston’s branch of the Usability Professionals Association (UPA), May 7, 2012.
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David Vermette Writing Sample: MRT White Paper Excerpt
1. WHITE PAPER EXCERPT
Product Development in the 1990s: Communication and Integration
David Vermette
Senior Associate
Management Roundtable, Inc.
An ongoing study of product development and product definition reveals a clear pattern
of what distinguishes successful from less successful product developers. The more
successful groups, in terms of rapid product development, market share, and market share
growth, tend to encourage communication between functions in their organization;
between suppliers and buyers; between product developers and customers; and between
their own company and other companies. They also have a much greater degree of
integration of the various functions in their organization. They involve non-engineering
functions early in the product development process and allow these support functions to
influence R&D decision-making. They co-locate product development personnel; they
give sufficient authority to project managers to get the job done; and they use intranets to
communicate data across functions and business units.
Contrary to some widely held views, the data do not support the idea that measurement
and control, in themselves, generate product development success. In fact, the less
measurable factors in the process, such as knowledge of the customer and a feel for
changes in the marketplace, seem to have more of an impact on product development
success. Tools and techniques that promise greater control over the product definition
and development process, such as QFD, Design Reviews, or Rapid Prototyping tools, do
not have any observable relationship to success. Some of these practices are contra-
indicated by the study. These findings confirm the “Law of Requisite Variety,” a
principle of cybernetics, which states “the element in a system that has the most
flexibility will be the controlling, or catalytic, element in that system.”1 Those practices
that tend toward flexibility and adaptability are more likely to be the catalytic elements in
product development than those that encourage uniformity.
There is no off-the-shelf solution, no silver bullet for product development success.
However, successful companies increase flexibility in their organizations by fostering a
culture of communication and integration. The answer isn't procedural or operational –
it's cultural.
The Study
Two Boston-area based firms, The Management Roundtable and Product Development
Consulting, Inc. conducted this study using mailer questionnaires. The surveys were
administered annually from 1991 to 1995. The questionnaires were not identical each
year, but were changed and updated according to the knowledge gained in each iteration
of the study. This article concerns areas where there were sufficient data over the course
of the 1990s to draw conclusions over time.
1Ashby, W. Ross: An Introduction to Cybernetics. London: Methuen and Co., 1964. Quoted and cited in
Dilts, Robert: Applications of Neuro-Linguistic Programming. Cupertino, CA: Meta Publications, 1983.
1
2. The following observations apply to five industry groupings: Aerospace & Defense,
Automotive, Computers, Electromechanical Systems, and Medical companies.
Organizations within these categories are not necessarily market competitors. The
groupings represent organizations within a range of products that have a similar
complexity, a similar product development process, including a roughly similar time-to-
market, and which confront similar challenges in developing new products. The five
industry groupings allow a broad enough aggregation of the data from which to draw
conclusions, while avoiding “apples to oranges” comparisons between industries.
The analysis focused on three major success factors: fast product development, market
share, and market share growth. In four of the five questionnaires, the respondents were
asked to provide their average time-to-market – from first full funding commitment to
first ship – in months.2 The median time-to-market was calculated for each industry
grouping, in each year. Those respondents who had a faster than median time-to-market
were placed in the “faster” group; those with an equal to or greater than median time-to-
market were placed in the “slower” group.
The “higher market share” and “lower market share” groups were created using two
questions found in the 1993, 1994, and 1995 questionnaires. The respondents were asked
to rate their market share as either “high,” “medium,” or “low.” In the next question the
respondents were asked to rate how their market share appeared to be changing: “rising,”
“constant,” or “falling.” Those respondents reporting a “high” and “rising” share, a
“high” and “constant” share, or a “medium” and “rising” share (i.e. up and coming
companies) were placed in a “high share group.” Any other combination of responses to
these two questions placed the respondent in the “low share group.”
Comparable product developers were divided into groups based on success factors and
then we observed how these different populations behave. This analysis reports what
they do and not necessarily why they do it. The survey data is best understood as
descriptive rather than prescriptive. However, the study's overall description of
successful product developers is clear, consistent, and compelling.
Summary: Practices of Rapid Product Developers
Fast product developers have a balanced staff, providing sufficient support to engineering
functions throughout the development process. They have an integrated product
development process, involving adequately staffed organizations early in the process, and
maintaining their level of involvement throughout. They do not rely on R&D spending
or technologies to ensure success but foster communication inside and outside of the
organization. They focus on total quality, based on industry benchmarks, across all
aspects of the company.
2 In 1994, the question was simplified. The respondent was asked if his or her company was a faster
product developer than competitors. Those who answered affirmatively were put in the “faster” group;
those answering negatively were put in the “slower” group. After the data for 1994 were analyzed, this was
judged to be a less accurate way of deducing time-to-market, and the previous, more objective way of
asking the question, in terms of time-to-market in months, was reinstated in the questionnaire for 1995.
2
3. Summary: Practices of High Share Product Developers
A clear picture of the high share, high growth company also emerges from the study:
• They don’t use a functional, chimney type of organization but tend to have either
teams or a matrix structure
• They use TQM to create a quality focus and to help manage processes
• They co-locate product development personnel and give sufficient authority to the
project manager
• They use Concurrent Engineering to involve non-engineering functions in the product
development process from the earliest stages of the project
• They transfer data electronically to expedite information exchange across functions
and business areas
• They don’t spend more money on R&D than the competition – they find better and
less expensive ways of working
• They allow non-engineering functions to influence R&D
• They inculcate a flexible approach to R&D strategy, incorporating the best elements
of technological advances from both within and outside of the company
• They encourage joint technology development where applicable
• They have a shorter order-to-delivery cycle thus showing responsiveness to customers
• They focus on developing a feel for changes in the market and a superior knowledge
of the customer
Conclusion
The study concluded that successful product developers were characterized by the
qualities of communication, integration, and flexibility. At a higher level, these qualities
may be united under the banner of relationship. Each of these qualities speaks to the
relationship between one company, function, business unit, plant, and another.
Successful companies are complex systems and behave in ways that reflect the behavior
of other complex systems. Take, for example, biological systems, the evolution of a
species. Two crucial capabilities are mutation and the transmission of these mutations to
offspring. These capabilities are described by the single word: adaptation. Without this,
there can be no evolution. The same seems to apply to the complex species of product
development organizations. They need to have an ability to adapt to changing
circumstances and they need to be able to communicate these adaptations to other areas
of the company. This points back to the Law of Requisite Variety. It is the flexible
elements in a system and not the predictable, uniform elements that matter most.
Another biological analogy applies. For many centuries it was believed that the health of
a system within the human body, such as the digestive or respiratory system, was
indicated by its maintaining equilibrium. Health was tied to predictability. Recent
studies show something quite different. For example, researchers at Harvard Medical
School found that a healthy heartbeat is one that is variable and, within a range,
unpredictable. On the other hand, a uniform and predictable heartbeat is strongly
correlated with cardio-vascular disease.
3
4. “The conventional wisdom in medicine holds that disease and aging arise
from stress on an otherwise orderly and machine-like system – that the
stress decreases order by provoking erratic responses or by upsetting the
body's normal periodic rhythms. In the past five years or so we and our
colleagues have discovered that the heart and other physiological systems
may behave more erratically when they are young and healthy.
Counterintuitively, increasingly regular behavior sometimes accompanies
aging and disease.”3
Health is correlated with variety and not uniformity.
This five-year study seems to confirm the same truths in relation to the complex system
of product development in large organizations. Healthy product developers increase the
variety of functions involved in R&D; they increase the flexibility of information
exchange; they increase the variety of sources of new technology by bringing in new
technologies and developing them jointly; they increase their ability to respond and adapt
to changing circumstances through knowing their customer and cultivating a feel for
market changes.
Product development improvement efforts have tended to focus on decreasing variation
and quantifying processes. This uniformity was intended to generate greater control.
What characterizes successful product developers, however, is something different: they
increase the variety and flexibility in their environment by engendering communication
and integration.
Copyright 1997 David Vermette and The Management Roundtable, Inc. All Rights Reserved.
3Ary L. Goldberger, David R. Rigney and Bruce J. West, “Chaos and Fractals in Human Physiology,”
Scientific American, February 1990: 42-49.
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