1. Product Development Process Murray MacDonald, P.Eng. Copyright © 2010 Murray MacDonald

2. Necessity of Product Development New products are typically highly profitable – study 1 indicates median ROI of 33%, avg of 96% Product life cycles are shrinking – study 2 indicates 4 x reduction in 50 years Competitive pressures Customer expectations New Products is War 1 Cooper & Kleinschmidt 2 A.D. Little

3. Product Development Performance One in 7 concepts are a commerial success 1 One in 4 developed products are successful 1 The Best companies have ~50% of sales 2 from new products (<5 years old) – The rest have 25% new products Estimated 46% of resources spent on failures 3 How to be more successful? 1 A.L. Page 2 A. Griffin 3 PDMA survey

4. Product Development Performance Product Development Performance (Reasons for New Product Failures) Poor Market Analysis Technical Problems or Cost Insufficient Marketing Effort Poor Timing

5. Successful Product Development Doing the project right Doing the right projects dies Based on numerous historical studies Stanford Innovation Project Booz-Allen & Hamilton Song, Montoya-Weiss & Schmidt Cooper & Kleinschmidt

6. New Product Process Goals Quality of Execution Sharper Focus, Better Prioritization Management of Risk Fast-Paced Parallel Processing Cross Functional Team Approach Strong Market Orientation (voice of the customer) Better Homework Up-Front Products with Competitive Advantage

7. Stage-Gate TM Process TM RG Cooper & Associates Stage 1 Scoping Gate 2 Stage 2 Bus. Case Stage 3 Development Stage 4 Testing Stage 5 Launch Gate 3 Gate 4 Gate 5 Post Launch Review(s) Gate 1 Stage 1 Scoping Gate 2 Stage 2 Bus. Case Stage 3 Development Stage 4 Testing Stage 5 Launch Gate 3 Gate 4 Gate 5 Kill Annual?

8. Stage-Gate TM – Gating Defined Gate Keepers (variable per gate?) – with criteria for decision making Concise and visible Deliverables – focus on information for decision making Outputs: 1) Decision – Go/Recycle/Hold/Kill 2) Approved plan for next stage 3) Agreed deliverables for next stage

9. Stage-Gate TM – Risk Mgmt Rule # 1 If uncertainty is high, keep stakes low Rule # 2 Raise stakes as uncertainty reduces Idea Launch Idea Launch Give conditional approvals – additional reviews, more planning Uncertainty Stakes Uncertainty Stakes ?

10. Stage-Gate TM - Implementation Senior management commitment Team for design and implementation – audit exiting, benchmark others Training & communication Metrics – visible, score card IT support Process Manager

11. Stage-Gate TM – Picking Winners Recognize prioritization is a weak area – avoid favourites, be objective Tough decisions based on consistent measures – benefits, portfolio management, financial model – Use scoring or checklist – formal record Project ABC - XYZ Criteria A Criteria B Criteria C Criteria D Criteria E Criteria F

12. Stage 3 – Development & Validation Clear project definition, expectations Quality of execution, records for verification Prioritize and focus Plan work, then work the plan Parallel activities - concurrent engineering – involving Marketing, Manufacturing, Quality,... Customer testing or involvement - prototype vs production

13. Feature Updates Product Development Portfolio Product Development Portfolio (Product/Technology Strategy) Need project mix of risk/resoucre/complexity Need long term strategy or road map – with reviews (annual?) New Existing SimplerComplex Derivatives Technology or Risk New Platforms Restructuring

14. Fuzzy Stage-Gate TM Variations Evolution to 3 rd and 4 th generation S-G Scaling process to match risks – Express/Lite Fuzzy Gates – conditional decisions – with planned follow up(s) – facilitates Concurrent Engineering Incorporate Technology Development

15. Stage-Gate TM Variations TM RG Cooper & Associates Gate 1 Express Stage-Gate Express Stage 1/2 Bus. Case Gate 3 Stage 3/4 Dev.&Test Stage 5 Launch Gate 5 Post Launch Review(s) Stage 1/2 Bus. Case Gate 3 Stage 3/4/5 Dev.&Launch Post Launch Review(s) Lite Stage-Gate Lite Full Stage-Gate

16. Stage-Gate TM Variations Technology Development – fundamental science or technology platform Criteria more strategic than financial Typically spawns multiple commercial projects Gate 1 Stage 1 Scoping Gate 2 Stage 2 Assessment Stage 3 Detailed Investigation Gate 3 Gate 4 To New Product Gate 2 (sometimes Gate 1 or 3)

17. Concurrent Engineering Paralleling activities Multidisciplinary teams Requires:-Stable requirements -Communications -Planning Better Products in Shorter Cycletimes More New Products

18. Concurrent Engineering - Changes Cost of Changes (%) 1 Hawtal Whiting Inc.

19. Concurrent Engineering Activity Product Planning Engg – Feasibility Engineering – Design Testing – New Testing - Validation Manufg – Feasibility Manufg - Tooling Activity Product Planning Engg – Feasibility Engineering – Design Testing – New Testing - Validation Manufg – Feasibility Manufg - Tooling Historical Western Concurrent or Japanese

20. Risk Assessment – formal document/checklist Failure Modes & Effect Analysis (FMEA) Quality Function Deployment (QFD) Planning - MS Project Tolerance Analysis Test Plans – Functional & Stress Failure Analysis Training Required Product Development Tools

21. Risk Assessment Risk is inevitable - the price of innovation Identify Measure Assess Mitigate Manage through the Stage-Gate process – use an assessment tool – reassess at each gate – looking for reductions Part of Process Reporting

22. Risk Assessment Risk ElementValueConfidenceRiskPlan?Mitigation Plan Comments Availability of Technology1....101....4 V x CY/N Supply Issues Time Scales Manufacturing Capability Capital Requirement Market/Customers Competitive Conditions Customer Commitment Pipeline (#,type) Patents/Legal Issues Total Weighted RiskSum (VxC) from RELTEC Corporation

23. Failure Mode & Effect Analysis-FMEA Identify potential sources of failure Assess Probability, Severity and Detection Calculate Criticality or RPN (Risk Priority Number) = P x S x D (each with value 1 to 10) Determine Action Plan as needed Follow up on impact of Actions (if any) – as part of Gating decisions

24. Failure Mode & Effect Analysis- FMEA Failure Mode and Effects Analysis Worksheet Facility:LLS Team Members: x x Document #: CAN00524P - FMEA-R01 Prod. Description/PN: TR1 Cabinet F787720 x x x Date(Orig): FMEA:Design/Process x x x Date(Rev): Facilities Affected:LLS Design Responsibility: Existing Conditions: 0 Resulting Conditions: 0 Item and Function Potential Failure Mode Potential Effect(s) of Failure Severity Potential Cause of Failure Occurrence Design Verification (Control) Detection Recommended Actions/Status Person Responsible Action Taken Severity Occurrence Detection 0 0 0 0 0 0 0 0 0 0 0 0 0 0 from Emerson Network Power

25. Project Planning Project Planning (MS Project) Five Ps – Planning Prevents P... Poor Performance! Using shared tool – across departments – possibly customers and suppliers – MS Project or other PDM Early focus on high level and flesh out later – Add detail at each gate for next stage Tracking and reporting (for Gates)

26. Tolerance Analysis Review of tolerance accumulation/buildup Using one of: - critical only - sub system levels - computerized – statistical Remedial - tighter tolerances - refined process - design change

27. Tolerance Analysis 2 x 4.00 d +/-0.05 +/-0.10 +/-0.35 Total tolerances ~ +/- 1.25

28. Tolerance Analysis ViVi V com R1a +/- %err R1b R2a R2b V o = R1/R2 V i + ~4 x %err V com Differential Amplifier 1 mV ~ 1V ~ V o = 100mV + 40mV 4mV 0.4mV for R1/R2 = 100, Rerr = 1% 0.1% 0.01%

29. Testing Plans Need a Plan – detailed – Reflecting FMEA and Design Reviews input Stress - Abnormal operation - Temperature (accelerated life) - Vibration - Stability Failure Analysis

30. Quality Systems – ISO 9004 Document what you do – formal system Do what you document - auditable Focus on deliverables and records from Gates Reflect Continuous Improvement Retain flexibility (using Express/Lite & Gates) Document retention system

31. Continuous Improvement On agenda of an effective Post Launch Review Create a knowledgebase – and foster design reuse Add teeth to Gates and design reviews Refine process and deliverables Plan Do Review Adjust

32. Summary Formal Stage-Gate New Product Process Effective Gates – with teeth Flexible – process variations, Fuzzy gates Shared tools – using IT Evolve process – continuous improvement Winning at New Products - Accelerating the Process from Idea to Launch by Robert G. Cooper (www.stage-gate.com)

33. Product Development Process Murray MacDonald, P.Eng. Q & A