NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10th Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 14 Development Team Management 14-2

Options in New Products Organization 1. Functional: work is done by the various departments, very little project focus. Usually a new products committee or product planning committee. Does not lead to much innovation. 2. Functional Matrix: A specific team with people from various departments; project still close to the current business. Team members think like functional specialists. Departments call the shots. 3. Balanced Matrix: Both functional and project views are critical. May lead to indecision and delay. Many firms are making it work successfully. 4. Project Matrix: Team people are project people first and functional people second. People may drive the project even against department’s best wishes. 5. Venture: Team members pulled out of department to work full time on project. These are listed in increasing projectization, defined as the extent to which participants see themselves as committed to the project. Other terms are lightweight vs. heavyweight: “heavier” means greater projectization. 14-3

Examples of Venture Teams Lockheed’s “Skunkworks” was spun outside of the company so that researchers could concentrate on key innovation targets. BMW sent designers from California and Munich to their “Bank” design center in London to learn Rolls-Royce culture and develop the Phantom. The BMW Z4 sport coupe was similarly designed by a dedicated venture team. 14-4

Difficulties with Venture or Matrix Structures Many firms have moved back to a more lightweight approach after finding venture teams were difficult to establish and/or manage. Matrix structures are notoriously difficult to manage, can get very complex, and can incur high overheads (where does first priority lie, with the team or the function?) In the extreme, matrix structures can even be detrimental to innovation. Encouraging cooperation among team members is most important. 14-5

Considerations when Selecting an Organizational Option High projectization encourages cross-functional integration. If state-of-the-art functional expertise is critical to project success (e.g., in a scientific specialty such as fluid dynamics), a functional organization might be better, as it encourages the development of high-level technical expertise. If individuals will be part of the project for only a short time, it might make more efficient use of their time if they were organized functionally. Industrial designers may be involved in any given project for only a short time, so different projects can simply draw on their expertise when needed. If speed to market is critical, higher projectization is preferred as project teams are usually able to coordinate their activities and resolve conflicts more quickly and with less bureaucracy. PC makers often use project teams, as they are under severe time pressure. 14-6

Who Are the Team Members? Core Team: manage functional clusters (e.g., marketing, R&D, manufacturing) Are active throughout the new products process. Ad Hoc Group: support the core team (e.g., packaging, legal, logistics) Are important at intervals during the new products process. Extended Team Members: less critical members (e.g., from other divisions) 14-7

Building a Team Establishing a Culture of Collaboration Team Assignment and Ownership Empowered product champion Selecting the Leader A good general manager Selecting the Team Members Core and extended team members 14-8

Roles and Participants Project Manager Leader, integrator, mediator, judge Translator, coordinator Project Champion Supporter and spokesperson May be the project manager Enthusiastic but play within the rules Sponsor Senior executive who lends encouragement and endorsement to the champion Rationalist The “show-me” person Strategist Longer-range Managerial -- often the CEO Spelled out the Product Innovation Charter Inventor Creative scientist “Basement inventor” -- may be a customer, ad agency person, etc. Idea source 14-9

Myths and Truths About Product Champions The Myths: Champions are associated with market successes. Champions are excited about the idea. Champions get involved with radical changes. Champions arise from high (or low) levels in the firm. Champions are mostly from marketing. The Truths: Champions get resources and keep projects alive. They are passionate, persuasive, and risk-taking. Champions work in firms with or without formal new product processes. Champions are sensitive to company politics. Champions back projects that align with the firm’s innovation strategy. 14-10

Guiding Principles in New Product Process Implementation Clarity of Goals and Objectives Ownership Leadership, at both senior and team levels Integration with business processes Flexibility 14-11

Issues in Team Management Cross-functional interface management Overcoming barriers to market orientation (information flow across functional areas) Ongoing management of the team Team compensation and motivation Monetary vs. non-monetary rewards? Process-based vs. outcome-based rewards? Closing the team down 14-12

Five Conflict Management Styles 14-13

Virtual Teams Teams that are linked electronically using collaboration software. Can communicate despite geographic dispersion. Synchronous or asynchronous mode. Challenges: Team members comfortable with technology Performance measurement and control Poor fit with firm values or cultures Firms may couple traditional plus virtual meetings to avoid some of these issues. 14-14

Managing Globally Dispersed Teams Reasons for growth: Increasing product complexity Accelerated product life cycles Multicultural group should lead to greater creativity and problem solving, as long as communication barriers can be overcome Issues: Levels of language skills among team members Physical distance among team members Cultural differences among team members Difficulties in competing design reviews 14-15

Successful Virtual Global Teams Boeing: used Web-based systems to integrate rocket engine designers and partner firms across several locations worldwide. Xerox uses the Web to integrate designers in Rochester, NY, engineers in Shanghai, and manufacturing plants in Hong Kong. Ford uses global platforms to support multiple brands where each group does the engineering on one system for all vehicles (one group does, for example, the exhaust system for all cars sold globally on the same platform). Ford claims to have achieved 60% savings in engineering costs as well as successful launches. Digital’s global team has members in U.S. (several locations), Switzerland, France, and Japan; uses audio conferencing for early, casual discussion followed by computer conferencing at stages. 14-16

Some Insights on Global Innovation From Senior Executives Idea Generation: Leverage global knowledge. Source ideas from customers, employees, distributors, etc. Product Development: Focus on incremental vs. home run breakthroughs. Share development costs. Use standardization to better manage global operations. Commercialization: Early vs. late entrant decision. Consider local support/local partner. 14-17