In 1997, Steve Jobs said that “people don’t know what they want until you show it to them.” More than 20 years later, uncertainty about savvy and highly-demanding customer needs is the norm.
New products are increasingly hard to define and 90% of organizations – as discussed in my prior blog “Individualised Products, the Burning Platform for Future Competitiveness,” feel the pressure of customers who increasingly ask for individualized products. As a result, companies are being buried under levels of product portfolio complexity.
The Spectrum of Complexity
I recently came across the work of Ralph Stacey, a professor at the University of Hertfordshire in the UK. He created the Stacey Matrix, a model to describe organizational and decision-making complexity. I believe this model can be adapted to represent complexity in the new product development and launch process (NPDL).
Figure 1 – Stacey’s Matrix revisited for NPDL Complexity
The model is based on two dimensions:
- The degree of certainty describes the level of understanding of customer needs or demand.
- The level of agreement describes the level of product specs development (eg. features, technology, packaging) necessary to fulfill demand.
At one end of the spectrum, with high degree of certainty and agreement, NPDL decisions are simple to make. For products falling in this area, traditional waterfall innovation methods such as stage-gate are most effective.
As discussed in another of my blogs, “Innovation success rate: why leaders in design for profitability do better,” 44% of organizations use a structured innovation process such as stage-gate. Stage-gate is a highly disciplined process that divides NPDL into stages, separated by decision gates. At each gate, new products are vetted against a number of KPIs and go/kill decisions are made.
At the other end of the Stacey Matrix, there is no certainty and no agreement, generating high complexity, if not chaos and anarchy. When products reside here, traditional NPDL methods are ineffective, because the great deal of unpredictability makes the go/kill decision a guessing game.
Try and map your product portfolio on Stacey’s Matrix. Well, I know most of today’s products will tend to be within the “Complex” area, with few innovations close to or within the “Anarchy” area.
Agile Product Development
A Harvard Business Review article called Agile at Scale discusses how agile organizations can manage an incremental and adaptable path to customer needs.
This is how Elon Musk’s SpaceX mission to Mars is being developed. Musk set the target to begin transporting people to Mars by 2024, and to eventually create a self-sustaining Martian city. SpaceX engineers don’t really know yet how that will happen, but they have a few steps in mind and a vision that it’s possible. An agile product development process, based on a test-and-learn approach, is how SpaceX manages complexity and anarchy.
In his article What’s Next? After Stage-Gate, Robert Cooper – “father” of stage-gate – agrees: “The world has changed a lot since the first stage-gate system was implemented – it is now faster paced, more competitive and global, and less predictable. In this context, stage-gate has attracted a number of criticisms: It is accused of being too linear, too rigid, and too planned to handle more innovative or dynamic projects. It’s not adaptive enough and does not encourage experimentation.”
Cooper believes that next to stage-gate is agile product development, a methodology originally created for software development and based on the Agile Manifesto. “Agile methods break the development process into 1-4 week “sprints,” followed by a team “scrum” meeting. Following each sprint, the project team delivers a working version of the product that can be demonstrated to stakeholders.”
Many large corporations are turning to agile:
- Corning uses an agile approach for special projects – such as Gorilla Glass used as Apple’s iPad screen. They segment the development and testing phases into discrete increments defined in a 60–90-day plan. These are like sprints but they sometimes last months rather than weeks. Within these increments, there are multiple one-day meetings with senior management to review and move the project along. At the end of each increment, there is a major milestone review at which the project team must deliver something that can be demonstrated to stakeholders.
- Samsung has been steadily improving its innovation process for many years, shifting from a low cost electronics manufacturer to a design powerhouse. In 2015, to support the launch of Galaxy S7, the company gave way to the old “Waterfall” method and started to progressively adopt an agile approach. The new method is based on product platforming and the creation of independent agile teams. The objective is to break various aspects of a device development into small parts. When one module is finished, it is tested to make the overall process quicker.
In today’s fast-paced marketplace, where established companies are battling start-ups, agile emerges as the right path forward. However, organizational silos, bureaucracy and scepticism are common challenges to agile implementations. Perhaps the approach adopted by industrial giant Bosch of naming a software engineer to guide the agile transformation effort is the right thing to do.