Toyota introduced the lean manufacturing system over 40 years ago. Lean is a quality management philosophy that eliminates waste to increase predictability and reliability of the final product. This, in turn, improves customer satisfaction. Many of the elements of lean manufacturing have been applied to other business processes, namely new product development (NPD).
The late Allen Ward and Ron Mascitelli have written books that outline the main ideas to implement lean tools into a knowledge building profession, like innovation. Ward and co-author Durward Sobek emphasize a set of process steps to systematize knowledge transfer to reduce waste in the development process. Mascitelli has a greater focus on tools to help NPD teams work through a product design life cycle. Other authors, like Eric Ries and Preston Smith, teach us about minimally viable product (MVP) and how to split development times in half.
While each individual has different views on how to execute Lean NPD, there are three consistent messages throughout all philosophies. These key components of Lean NPD are: (1) maintain customer interactions throughout the design and development effort, (2) maintain flow to improve predictability for balanced resource utilization, and (3) eliminate process waste that interferes with knowledge transfer and fails to add market value.
Maintain Customer Focus
There is no successful NPD process that does not maintain a customer focus throughout the development life cycle. This is the main criticism that agile philosophy proponents make of traditional waterfall processes. However, I argue that it’s not the process that leads to a successful new product, but it is the way the process is implements that leads to customer satisfaction.
My first encounters with NPD systems were within a corporate implementation of Bob Cooper’s Stage-Gate™ system. Of course, the large company where I worked had loaded templates, management approvals, and milestone reviews on top of the primary steps required in a staged-and-gated NPD process. Unfortunately, extra documentation does not eliminate market risk.
Cooper always has included steps in each stage to get customer feedback. And it is with focused customer interactions that we learn what our customers want and need so that we can best features to serve them. Lean NPD raises the level of intentionality of customer interactions so that there is a constant focus on customer needs throughout the product development process.
In particular, Lean NPD includes workshops to understand customer and market needs before the product requirements are specified. Using an underlying cross functional team to observe customers and using tools from open innovation and design thinking, customer actions, issues, and challenges are better understood. Then, as product features are conceptualized, a successful Lean NPD team will test these ideas with customers to get their feedback. We learn the most from direct customer feedback.
As a product development effort progresses, customer interactions include beta testing prototypes, evaluating packaging and marketing campaigns, and full assessments of pricing, especially if the product has different options. After a new product is launched, customer feedback continues. Lean NPD often makes use of a customer advisory board to sustain continued contact with a broad group of end-users and to maintain a current understanding of emerging trends and issues.
Regardless of the underlying NPD process, frequent customer interaction is necessary to be repeatedly successful with new product development. Innovators must sustain continued conversations with existing and potential customers to learn their needs and challenges. Involving customers directly or indirectly in the actual design of a product or service increases satisfaction when the new offering is launched. (See our post on Launching and Landing a New Product.) Lean NPD tools and workshop events drive an organization to increase the focus on customers throughout all phases of an innovation project.
Flow is a concept from lean production and an idea from the mindfulness movement. In lean manufacturing, flow means that the assembly line pace and that parts are available as needed. There are not wasted motions and time is not wasted by waiting. Each station in a factory is positioned to receive goods and is efficiently designed for a worker to minimize movement before the part is passed to the next workstation for further processing. The idea is to get as close to continuous manufacturing as possible.
Similarly, the concept of flow is applied to knowledge workers resulting in ideas of mindfulness, focus, and concentration. You are “in flow” when the work is engaging, time passes quickly, and creativity soars. Problems are easily solved in conflict is minimized. Communication is seamless and designs fall together like pieces in a jigsaw puzzle.
In Lean NPD, flow combines the ideas of manufacturing in mindfulness. Innovation is successful when creative ideas flow among team members and designs click into place. And product development is supported by transferring ideas and design between cross-functional team members to collaborate and build better customer solutions.
While we describe Lean NPD as a cross-functional and multi-disciplinary project management philosophy, the fact remains that some team members have different and varied skills. Lean NPD capitalizes on these unique competencies with project flow. For instance, Lean NPD utilizes a tool called the “Kanban board”. This is an adaptation of a lean manufacturing tool in which production of parts is scheduled so that flow is maintained. My favorite example of lean manufacturing is the Corvette assembly plant in Bowling Green, Kentucky (USA). A car rolls off the assembly line every few minutes, but a new car is not started unless the finished models are completed.
Likewise, in product development, design steps and tasks are not started unless previous activities have been completed. The Kanban board tracks tasks that are not yet started, those in progress, completed designs, design elements undergoing testing, and finished product features. An item cannot be pulled into the “in progress” column, for example, unless another item has moved from “in progress” to “completed design”. In this way, the flow of knowledge building for product development parallels the lean manufacturing process for product assembly.
An important characteristic of flow that is demonstrated by the Kanban board is effective resource utilization. Product development is often chaotic and rushed because resource capacity is not balanced with required work tasks. And it is a well-known statistic within the product development literature that a new product that is hurried to market results in defects and opportunities of missed customer satisfaction. Competition then has a is a highly functioning, improved product and will steal the initial market share.
Ward and Sobek and Mascitelli describe predictability as an outcome of a Lean NPD process. With a tool like the Kanban board, NPD team members know which tasks are upcoming but also can work in flow to complete existing activities. The number of tasks that are “in progress” or “in testing” at any given time are balanced with the available resource capabilities. So, if NPD team members are testing a newly designed feature, no additional testing tasks can be assigned to them. But, as they complete feature testing and mark the activity as “completed”, new tasks will flow from the left to the right of the Kanban board.
Flow and pull resource utilization both reduce waste in the knowledge creation process for innovation. Moreover, NPD team members have predictable work cycles for product design and development, reducing chaos in the work environment and hand-offs among different standalone functions.
Eliminate Process Waste
The third crucial component of Lean NPD that improves time-to-market and yields higher customer success rates is eliminating process waste. As a newly minted chemical engineer, managers at the company where I worked often asked us if there were any “steps to skip”. Step skipping is a foundational concept of lean and can lead to increased efficiency.
Step skipping means eliminating unnecessary and low-value activities. Running a process continually (24/7) is more efficient than running a batch process. Consider, for instance, how long it takes one person to make a cake. She must obtain all the right ingredients and tools, collect them in a single place, mix the ingredients, bake the cake, and clean the dishes. A bakery, instead, can continuously fill mixers that automatically flow to cake pans which bake on a heated conveyor oven and are packaged for sale by robots and machines. From a lean manufacturing standpoint, continuous production – especially skipping steps – can lead to both quality and productivity improvements.
A common tool used in lean systems is called “value-stream mapping”. Here a process is documented in the “as-is” or current state. Through interviews, observation, and discussion activities, process steps are identified as “value-added” or “not value-added”. Then, the process is streamlined by eliminating the not value-added tasks. (Note that some not value-added tasks are retained due to regulatory or legal requirements.)
Keep in mind that “value” is defined by the customer. Since every task performed to create and manufacture a new product costs money (in time or other resources expended), each task must add to the value for which a customer will pay. For example, if customers want a product that operates on a single speed, then adding high-, medium-, and low-speeds is not value-added. It cost the company money to design and build a 3-speed device when customers are only to pay for one speed.
New product development processes themselves often contain a lot of not value-added steps, policies, and procedures. Some examples of waste in Lean NPD process systems include:
- excessive documentation,
- inefficient meetings,
- too much email,
- lack of clarifying decisions,
- rework and redesign, and
- overly specified requirements.
NPD processes are most successful when they are periodically updated and revised. The Lean NPD model uses value-stream mapping to identify steps that do not directly aid development of features and attributes that bring joy to the customer. Any step that is not value-added should be eliminated.
For example, one company with which I worked, identified a five-stage process for new product development. Each stage was followed by a gate review meeting with senior management. Looking through a lean lens, the organization was able to create a streamlined process with only three stages and mid-management approval for new product and process development of simple, lower-risk projects. Steps to prepare a business case and train sales people were eliminated as functional milestones since these products were already part of the marketable portfolio.
Another way in which value-stream mapping is used envisions the future state and creates a strategic pathway to achieve these goals. Future state maps use the same symbols and processes as the current state, but you are starting with a blank piece of paper. Ask the team what the NPD system would look like if there were no resource constraints, absolute risk tolerance, and completely open communication with customers. Then, you will use this future state process map to back into the most critically necessary steps that must be added for regulatory and legal compliance.
The NPD team can also combine the current state value stream map with the future state map to design innovation processes that allow them to take advantage of immediate opportunities. Most organizations find that adding agility and flexibility to the design requirements with team empowerment helps to engage and motivate NPD teams. Bridging between the current state and future state will also highlight the most important process steps to maintain and sustain repeatable product development.
Implementing Lean NPD
Lean new product development typically involves a cultural change at most companies. And while it is uncomfortable to try something new, the lean philosophy has demonstrated success in manufacturing for decades, resulting in higher quality and improved profit margins. Lean NPD can bring greater customer satisfaction and faster time-to-market. Understanding three key components of lean NPD provides a start to streamlining your existing innovation system.
First, any effective NPD system requires frequent and intimate interactions with the customer. Traditional NPD processes gather product requirements at the beginning of a project and design to these specifications. Lean NPD processes test ideas, concepts, and prototypes with customers throughout the product development life cycle, locking requirements at the latest possible stage. In this way, flexibility of the design is maintained to meet changing customer needs.
Second, predictability in the type and pace of work leads to higher quality products in both manufacturing and development. Lean NPD uses the concept of flow to ensure product designers and developers are neither overwhelmed or under-challenged. Resource utilization is more balanced under a lean NPD system and visual tools, like the Kanban board, bring transparency to the development process. Flow supports quality of output and allows team members to increase their focus on knowledge building.
Finally, process waste kills a profitability of any system. In NPD, too many meetings, approval protocols, and extensive review documentation are wastes that can be eliminated. By minimizing steps that don’t add value (from the customer’s perspective), the new product development team can focus on creating and transferring new knowledge. Value-stream mapping is a great technique to understand the current state of the NPD process as well as to remove wasteful steps. Comparing the current state to a desired future state map allows an organization to streamline its processes and reduce unnecessary activities that do not directly contribute to the future to feature designs.
Lean NPD is one step toward a more agile product and process development environment. Open innovation is another way in which NPD teams can harness creativity by using customers inputs as much as their own internal designs. I will be speaking on Open Innovation and providing tools for Design Thinking at the AIChE Spring Meeting in New Orleans on 1 April 2019. I hope you can join me there!
Also, we’re offering a special bundle of classes at the end of April: a one-day Intensive Design Thinking workshop and a two-day Agile NPD workshop (with certificate). Save 15% off the base registration price with code “bundle” at checkout. For more course information, comments, or questions, I can be reached at firstname.lastname@example.org or 281-280-8717. I love helping individuals, teams, and organizations achieve their highest strategic innovation goals!
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