NPD Management Corner

Leadership’s Obligation in NPD

For any project there are specifications, schedules, plans, engineering documents, tools and an engineering team. All the key ingredients for a successful new product are in place, yet the deck is stacked against flawless execution to a schedule that produces the product revenue and margins that signify a solid victory. Something happens, something always happens that degrades the opportunity from the ideal initial case to something less than what was originally envisioned. The product takes longer, costs more to develop, has lower margin than planned and does not meet the business case volume figures.

At times a project is dissected in an attempt to discover why things did not go as per the plan. Other times it is just chalked up as just being the way it is. Step back for a moment and consider what it takes to really enable a new products success. How does that go – “Insanity is doing the same things and expecting different results”. It’s undoubtedly time to do things differently.

Many know what should be done differently, however changes tend to fall into a small set of typical and generally comfortable tweaks to the development process. Some changes are implemented and some are only wishes to be applied sometime later. The question that must be honestly answered is “How’s that conventional approach been working out?” Most organizations are a slave to the new product development machine, a self-imposed dominance by a system that is viewed as out of reach by any subset of the organization.

Achievement of the next level in new product delivery will require a vision that explores areas that are seldom considered, back to the roots of what makes projects tick. This modern mental picture of new product projects must go beyond the typical success enablers that are routinely perceived as essential; such conventional ingredients have not been facilitating the level of new product success businesses actually require. Nothing is to be considered off limits, absolutely nothing!

The last significant change to the business process for building chips was the adoption of formal project management concepts and personal, well over 15 years back. It is beyond time for a revolutionary change. Consider that the semiconductor business is at a new product development crossroad. One way is a comfortable, known quantity that will provide new product results on par with past years and most of the industry. The other path is a challenging endeavor, where success will carve out a dominating and profitable niche in the marketplace.

If leadership is up to the challenge in revolutionizing the approach to new products it’s game on, otherwise they must be honest about new product execution and quietly accept what is. There is no middle ground here. Demanding improvement without actually enabling it has just not worked, and never will. Leadership is obligated to provide people, money, time, sponsorship, experts, guidance, empowerment and dedicated ownership. This is not rocket science; it’s as simple as put up, or quietly accept. What is it to be?

It’s Time for a Return of Strategic Thinking

The past few years have left our industry with extremely lean workforces, fanatical expense controls, a plethora of bean counter policies and a dangerous near term revenue focus. The cultural shift has produced an unbalanced tactical approach to business, a risk hiatus that must come to an end for the very survival of a business in this competitive landscape. The pendulum must now swing back to a point of balance between long term strategic thinking and the day-to-day tactical approaches to new product development.

A strategic emphasis remains outside the realm of daily activities, allowing it to be unconsciously set aside until it is too late. The last few years have illuminated the battle wounds inflicted by a lacking strategy for many companies, many which were viewed as too big to fail. The irony is that many companies opted to become less strategic for cost reasons at the same time others were experiencing the backlash from years of operating with a strategic deficit. Large or small, a limited strategic culture will one day reveal itself in a fashion that appears abrupt, although it has actually been in the making for many years.

Strategic thinking is best defined as the identification and execution of objectives that will position technology, business processes and products that enable long-term financial and market objectives. Decision practices in this long-term environment will always favor investment philosophies over a pure cost perspective. A balanced strategic culture will exhibit reduced fire-drill management through an emphasis on “how” process improvement strategies in addition to the classic “what” product roadmaps.

It’s common practice to tie long-term objectives to purely tangible deliverables, however that leaves some important goals out of range. The scope of a strategic culture must stretch beyond products and technology to include organizational processes and system enablers. An incessant necessity for urgent near term solutions is definitely a red flag that should highlight a deficiency in a businesses strategic culture, one that is lacking emphasis on the procedural roadmap that will enable strategic products and next generation systems.

It’s time for a return to strategic thinking in the semiconductor business. The industries extreme cost based focus comes from a being a component supplier instead of a system enabler. We must move up the food chain in our thinking and strategically place ourselves dead center in the middle of next generation systems. “How” will we do that? Welcome to strategic thinking!

Productivity – The Next Level is about People

Most everyone expects a continuous stream of tool upgrades in order to produce ongoing productivity improvements for new products. A question I need to ask is why isn’t there that same expectation on advancing the techniques utilized for new product project delivery? Productivity essentially equates to tools in the minds of most, as if there are no other efficiency knobs to tweak. Quite to the contrary, I visualize multiple underutilized productivity knobs.

Some Examples of Under Utilized Productivity Improvements

• Modernizing project management
• Leadership development
• Requirements strategies to reduce rework
• Organizational development – Is the classic matrix approach really working?
• Lean approaches & continuous improvement
• Reuse promotion
• …

The tools and tool flows are definitely not the only productivity solution. I theorize a reason for this technical productivity focus is that the non-tool solutions are people related, and the engineering world just does not do well with such emotional creatures. The communication, conflict resolution and consensus reaching abilities are out of the comfort zone of many. Are we at the point in engineering where we no longer have people, only tools and machines?

Another observation that substantiates people avoidance is significant use of management and conference rooms to fix operational problems that the team is dealing with; I call these conference room solutions. This high level approach to New Product Execution (NPE) issues is similar to diagnosing a circuit problem with purely circumstantial information, an approach most would see fault with. Circuit solutions typically involve ever deepening analysis until the root cause is identified and a solution is “verified”. Why would that not be the case for operational issues also? The circuit solution is technical while the operational issue must be solved through people interaction, an area where engineering skills are not highly honed.

When was the last time you read an article in a semiconductor trade publication where the topic was related to managing people and/or projects? It’s a subject that has limited demand; it’s just not sexy enough. We are engineers and our people management skills leave a lot to be desired. It’s time to pull our heads out of the sand and face this reality.

NPE is unsatisfactory for most organizations today and has been that way for quite some time. Maybe it is time to better address the people component of project delivery. Get away from the monitors, PowerPoint and conference rooms. Talk to the people, better develop people skills and look at better mechanisms for managing people and projects. If we expect to really make a difference in execution it’s time for change, and that change must involve better managing the people component of new products; we must get personal!

New Product Execution is Exactly the way it is Accepted to be

When asked about how new product execution is going for a business everyone will have something they do not like; something they wish was different. The lunch table is always a great place to hear about what’s wrong with New Product Development. Creating a healthy list of symptoms is easy and everyone is quick to add value to the whine list. However, generating solutions for these identified issues is an area where there attention is lacking.

The greatest productivity issue new product organizations face is a lack of emphasis in resolving known, recurring barriers. The fact is that new product execution is exactly the way it is accepted to be. A comfortable smokescreen of limited resources and inadequate funding perpetuates this misplaced acceptance while the true cost of extended tolerance remains veiled.

Let’s be honest – waiting, blaming and accepting is in fact the root of the new product execution efficiency situation organizations face. Anything can be fixed, but only if there is an obvious necessity and the proper emphasis to do so. This means a clear impact must be identified, specific solution ownership is in place and a fully resourced project commitment is engaged.

Clear Impact
The main reason barriers to new product execution go on project after project, year after year is that there is no visibility as to how much it is costing the organization. If a problem cannot be represented in terms of impact to bottom line costs and/or top line revenue, it will not be perceived as a real obstruction. The impact must be quantified in financial terms in order to gain the momentum necessary for engaging a solution. Unclear impact will always lead to a poorly committed solution. If financials can’t justify working on an issue, then it’s not really a problem is it?

Solution Ownership
If there is a problem there is always a solution. The quickest path to a high quality solution, one with staying power, will require that someone take the reigns to make it happen. Solution by committee involves a lot of meetings, time and hypothesis with little result. When ready for a permanent fix, assign the solution leadership to a capable individual. Provide clear objectives and metrics, and then allocate this person the time and resources to make it happen. Set it up properly and then get out of the way.

Full Time Project
In many cases productivity efforts are a part time effort. This typically means they are not a real project, there is limited visibility and it will always be the first effort to be delayed when other more financially attractive activities have a need. How are the “squeeze it in” part time solution approaches to execution glitches working out for your business? Any improvement usually takes far longer than assumed and many times ends up on a slow path to cancellation. If a product execution issue is to be resolved it must be a real project with assigned resources, a plan, visibility, traceability and emphasis. Period!

“You don’t drown by falling in the water; you drown by staying there.”
– Edwin Louis Cole

It is your Responsibility to Rock the Boat

Everyone is probably familiar with the phrases “Don’t rock the boat” and “Don’t make waves”, both used to signify situations where we are being advised to accept things as they are and stay quiet. This is fine for certain situations in our personal lives, however this has no place in New Product Development. The way I see it the water is like a sheet of glass when it comes to product execution, everyone is in a quiet state of accepting what should be unacceptable. Ownership of the difficult and high impact problems float around for months or years while functional project contributors ignore them because of a comfortable belief that the issue resides out of their control.

There is a widespread idea that having formalized project management in place removes the functional teams burden of solving execution issues. Essentially the assumption is that project management is an entity that should become aware of all the execution barriers and has the knowledge, expertise and responsibility to fix all of them. Wow, that sure places project management on a pedestal. The truth is, that kind of thinking is about as anti-Lean principled as you can get. Placing the responsibility for identification and solution of all new product execution barriers on project managements lap is simply not providing optimal results, is it?

If there is something that is impacting you or your organizations ability to efficiently contribute and you fail to take any action, the blame for the continuing issue is all yours! It is well beyond time to stop waiting for someone else to step up to the plate to solve those issues that have been plaguing your projects for months and years. How has waiting for a solution from someone else been working out for you? In this environment it is not safe to wait any longer; those that continually make a difference in the bottom line will prosper, and those that wait for someone else to make a difference will eventually fail.

So take off that shoe and bang it on the table to get some attention – Say what you really need for your success. You know, it’s the issues that are incessantly whined about at the lunch table. Identify the changes that must happen to positively impact your contributions and then help drive the solutions. Whether you are a leader or an individual contributor the time has come to stop making excuses by placing blame out side of your jurisdiction. Rock the boat and make some waves!

Are you Learning from New Product Failures?

Have you ever engineered a new product that made it to production readiness, only to find the revenue figure is way below the plan, maybe even zero? While working on this poor revenue-generating product, other potentially more successful opportunities were put off, further straining the business financials. The bottom line is that it costs a bundle for new product failures; as a result it is essential to continually assess and change the opportunity selection process based on the valuable learning’s an unsuccessful product will provide.

As an example of cost, consider a small-scale project where there is an average of five people working on it for a year. For this example let’s say the fully loaded employee cost is $150K/yr. This gets to a labor only figure of about $750K for a one-year effort. Throw in masks, silicon, packaging, tools and other overhead for another $250K and we can easily hit the $1M mark for a typical small-scale project.

Now consider the lost revenue opportunity. While the team was working on a new product failure, the more lucrative new product opportunity was waiting in queue while that market was drifting away. Considering both development and lost opportunity figures, the outlay for a new product failure can easily be from several million to well into the tens of millions, a very expensive price tag that should demand significant attention. Taking into account the major fiscal impact for a product failure it is essential to pay very close attention to the risk/benefit analysis for any new product opportunity.

Calculated product risk is an important ingredient of a business that needs to grow; think risk intelligence, not risk averse. Gaining insight from past product failures brings a sharp perspective to future risks, when the learning is allowed to occur. To fail and not uncover a takeaway is a grave injustice to the portfolio management process. Go ahead and take calculated new product risk while remaining ever vigilant in learning from those products that did not make a passing grade. Below are some questions to stimulate learning from new product failures:

How solid was the biz case and what assumptions were made that failed to come through?

Were did the risk analysis fail?

Was market timing playing a key factor and if so was it well understood in planning?

Did market intelligence fail?

Was it over featured or under featured? Why?

Was there an error made on a few specific requirements?

Did the requirements elicitation process fail somehow?

Was the development adequately monitored throughout to ensure the scope was still on target for the current market?

Why wasn’t the effort killed before tapeout?

Was the marketing and/or sales channel adequately engaged?

Was there an emotional element to the new product approval? If so, why did that carry through?

If it was a custom product, did the customer have enough skin in the products success?

Was there adequate accountability in the new product definition function?

Accountability is often associated with the design, product engineering, test engineering and production release functions of a new product. What about the functions responsible for defining and proposing a new product effort to the business such as marketing, systems or product definers? How accountable are these functions for delivering on a product that generates the revenue, as per the business case? If products are failing to produce revenue I suggest that there might be some focus lacking on the product definition and the opportunity assessment portion of the new product development spectrum.

Learn from failures and improve the opportunity assessment process, apply better methods for monitoring ongoing projects and learn to kill projects earlier based on solid analysis of current information. Do this well and deliver increasing levels of new product success to the product portfolio. Fail to learn from product failures and expect new product costs to quietly continue limiting the businesses financial success.

Where’s the Strategy in New Product Execution?

New Product Execution – the ability to identify a new product, scope it, build a business case, decide to proceed, finalize requirements, plan, resource and deliver a new product. Execution scope covers the entire chain of activities from initial concept to production revenue and success cannot be claimed unless the entire sequence is a triumph, particularly the revenue objectives. My observation of execution for new products over the years has generated the following four certainties:

The business view of new product execution is much more negative than the engineering teams. This is primarily due to a difference in measurement criteria; the business view is the correct one because it’s tied to money.

There are too many new products that end up failing miserably on meeting business case revenue objectives. Valuable time, resources and money are routinely wasted.

The ability to execute on new products will likely be the same in 12 months as it is today, probably even 24 months out. This means that timing of concept to revenue will remain flat.

Improving new product execution is always under funded and under resourced but never under mandated.

Most businesses have utilized a structured project management technique for over 15 years, an approach that is comfortable because of its well-defined activity sequencing. The majority will stay within a fairly tight set of implementation constraints because things might get worse if it is fiddled with too much. A formalized plan of attack such as this provides an excellent framework for turning the crank on an established project management methodology such as PMBOK or PRINCE2. The problem is that this purely tactical approach is just not delivering the level of success required by the businesses; there must also be execution improvement strategies.

The semiconductor industry tends to focus on the technical strategy for new products while taking a pure tactical approach to handling the execution. Businesses are often forced to decide, “Should we spend money on technical product advancements or improving the new product execution strategy?” The execution strategy always ends up last in any kind of power struggle for money and resources. Since strategy generally equates to spending, money is yet another force at work that keeps a pure tactical project approach in the mainstream.

The semiconductor industry is stuck in a place that demands improvement while the activity and funding level afforded this cause delivers nothing but mediocre results. If attention is to be paid to this dilemma, the costs associated with dysfunctional approaches to carrying out new product development must be identified and brought into full view. Delayed revenue, rework costs, future new product delays, poor ROI, inefficient requirements closure and tool/flow inefficiencies are a few examples of items to utilize in building a cost case. Remember, if there isn’t a notable perceived cost, there will be an assumption that it’s not broken.

Below is my list of execution objectives and challenges that are on most organizations wish lists, and they have been there for many, many years. There simply can’t be an acceptable level of execution while well over 50%, and in some organizations up to 100% of these disruptors are allowed to continue unchecked. Fixing these deficiencies will require a strategic approach to new product delivery; it will require change.

Strategies for Ideal Execution

Plain and simple – new product execution will not get better without a strategic approach to understand what’s broken and fixing it. It will take money, people and a commitment to address, something that has been lacking for a very long time. Strategic execution should be the new mantra for businesses that need to forge into the next generation of embedded system development. Success will not solely depend on new EDA approaches such as EDA360; it must also include next generation concepts, tools and methodologies for managing product development. It’s time to put an end to terminal sameness in new product execution by delivering the strategies so solve the well-known issues that hold teams back every day!

Know What’s Holding Back New Product Productivity

Are your teams striving to be better while the end business results indicate little change? Even with activities providing every appearance of improvement actions, there is a troubling factor with results. The expected change may never materialize, or more often the measurement criterion fails miserably at assessing true business success. Open-ended requirements, misguided success guidelines and misplaced assumptions lay the groundwork for an expensive initiative that provides little or no actual improvement to the product release cycle. Keep in mind the natural stability point for any organization is to keep things as they are.

To be fair this is not necessarily an intentional act, it is the status quo powers at work that strive to keep things in balance, a point where things remain comfortably the same. If you don’t believe this is at work in your organization review some of the past less successful initiatives, paying particular attention to success measurement. They were not likely tied to a solid contribution to top line revenue generation or bottom line costs, providing little motivation to move out of the comfort zone. Noticeable results will require noticeable change.

A truly successful endeavor must have a measurable impact on money. Criteria that flaunt a win based on local success within an organization silo should be a warning sign that the net benefit for the business may be non-existent. Limited measurement scope such as this leaves an organization susceptible to terminal sameness, a disease that quietly stymies advancement in new product development efforts.

Make no mistake – Any person will subconsciously strive to maintain the workflow as it is. Sure, there will be plenty of participation and ideas for change going on where others are concerned, thus keeping the workflow focus elsewhere. Ask anyone how new product execution is going and see where the focal point of the discussion goes. Isn’t it ironic that people and organizational silos actually have been granted the ability to grade them selves on productivity? If positive changes in execution are expected, self-assessment of efficiency has no place in the equation, period. A self-evaluation approach is an incestuous path to guaranteeing terminal sameness!

So I have to ask, is new product execution productivity OK or does it need work? Lip service tells me that it needs work, while actions tell me that it is OK. Are you supporting terminal sameness or are you supporting continuous improvement? There are powers at work to ensure nothing significant changes and you hold the key to weakening its grasp on your organization. Stir the pot and drive greater improvement value by measuring against only money and eliminate internally generated productivity assessments; it is a leadership choice.

Why – The Most Important Question

In the world of new product development our days are loaded with decisions, mostly small and routine with a scattering of financially significant judgments that can make or break programs. Are significant decisions born out of sound judgment and great engineering, or are they largely defined by historic reasons? Questioning and challenging historic reasons for decisions is one of the most important aspects of a learning organization, one that consistently displays industry leadership.

We must never base the future solely on how things are done today. Ask why consistently and discover that the solid reasoning of the past is not necessarily valid today. The businesses that failed to weather the financial storm of the past few years became stale and complacent; they were mired in the ways of the past because they did not question the course they were on. What worked yesterday was not working today, and no one openly questioned the chosen direction, until it was too late.

When considering new products in the chip business there are many questions that must be routinely asked to ensure top-notch products and product execution are the norm. Give the following example questions some thought, real thought and then decide if you should challenge a historic assumption that may be stymieing progress.

The Important “why” Questions of New Product Development

Is a smaller die size at the expense of time to market valid? Why?

Is a finer pitch technology choice valid for minimizing total product cost and risk? Why?

Are new product requirements being driven, or are they just happening? Why?

Are ASP’s really value driven or is cost quietly driving them? Why?

What percentage of new products are losers? Why?

Are design environment customizations hindering or helping? Why?

Is the tool flow for a given technology optimal? Why

Is the cost vs. benefit analysis of offshore activities valid? Why?

Is the magnitude of new product approvals damaging your new product success ratio? Why?

Is product differentiation working? Why?

Are projects under control? Why?

Are new product teams accountable? Why?

Actions that are launched from answers to questions such as these will ensure the status quo does not take root and bear the fruit of complacency in your organization. Challenge assumptions by asking probing questions, never accept historic justifications as suitable answers and in no way allow a lack of facts to imply the routine course is correct. Why, the most important question new product organizations need to ask is the only protection against terminal sameness.

What historic assumption will you be questioning today?