New product development (NPD) is necessary for any organization to survive long-term. Products naturally go through a life cycle and consumers adopt new technologies, displacing aging products. Likewise, markets transition via trends and fads, necessitating different products and services to fill customer needs. (Read more about product life cycles here.)
By definition, new product development is a project. That is, new product development is a time-bound endeavor, creates a unique result, and uses a temporary team. In many cases, NPD is a program in which several projects are executed simultaneously to create a new product, service, or application. Programs incorporate and coordinate projects to serve a larger purpose.
Because product development varies widely, the project management systems for NPD also include many different approaches. Typically, these project management methodologies match an organization’s culture, risk tolerance, and innovation maturity. In the first part of this series, we’ll discuss the impact of culture in managing NPD processes.
Organizational culture is characterized by unwritten rules of how people operate and behave within the organization. While it is very difficult to name a specific culture, the people within an organization can easily describe the traits of their culture.
For example, companies like Google are well-known for a casual culture where people wear jeans and t‑shirts to work, play foosball, and compete relentlessly to prove their capabilities. In contrast, large, multinational corporations, like ExxonMobil or Chevron, endorse formal attire, hierarchical decision-making, and recognize seniority in promotions.
Culture influences the selection of a project management methodology for NPD. A casual culture with high degrees of openness and trust can endorse project management systems with low-level decision authority. Project team members make project decisions, especially technical ones, at the team level. Organizations with lots of hierarchy rely on team members preparing accurate recommendations but reserve decisions for upper management.
While a more Agile approach to NPD works for Google, a staged-and-gated process is more appropriate for ExxonMobil or Chevron. Leadership cultures that support risk-taking and experimentations benefit from Agile processes (like Scrum) while more hierarchical organizations align with staged-and-gated processes.
In Part 2 of this series will begin discussing risk tolerance and choices of new product development project management systems. In the meantime, register for my presentation on Hybrid Project Management Processes in NPD on 25 August 2002 at 12 pm EDT. Click here to register.
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