Improving Product Quality in New Product Development

John Holmes General Electric The 2011 Quality Conference

Welcome!
Thanks for coming.

About the presenter.

John Holmes

Learning Objectives
Learn what is important to change to improve the quality of new products emerging from the new product development (NPD) process in your firm. R Recognize th t organizational change i a i that i ti l h is process and how to approach change from a l d hi perspective. leadership ti

Agenda
Overview Quality in NPD Background The Research
Dissertation WCQI R Research h Research by others

Case Study Implementing Change

What to change How to implement the changes p g

Closing Remarks Discussion

Overview Quality in NPD

Products emerging from NPD processes typically have less than 2-sigma quality.1 2 sigma Y t NPD h t create a positive return Yet has to t iti t on investment (implying speed-to-market, low cost, etc.).2 l t t ) What factors can we (our organizations) manipulate to improve the initial q p p quality? y

The Overall Process

Measure Existing NPD Quality Q lit Identify Gaps from Best in Class Cl Manage Changes Using Gap Analysis A l i Celebrate Success

Industry is < 2 sigma

Academic Research can Guide You

Reduce Conflict W/ Team Input

Measure Improvement Over Time

Background The Research

A survey was conducted.
569 total survey accesses 266 valid responses 85 ASQ members participated with valid resp resp.

Phase I of the research investigated Productivity in NPD 3 NPD. Phase II of the research was completed for the WCQI and investigated quality in NPD. CQ

Phase I Productivity in NPD

Phase I was carried out with Northcentral University.3 Phase I investigated the following theoretical framework.
Company Size Senior Management Involvement

Selling P i S lli Price NPD Productivity Project M P j Mngr. Skill Skills

Tollgate Process

Voice of the Customer

Team Experience T E i

Team Size

Phase I Productivity in NPD

The following items were found to correlate with NPD productivity (95% confidence)
Senior Management Involvement (rho=-0.497) Selling Price (rho=0 300) (rho=0.300) Project Manager Experience (rho=0.573) Team Member Experience (rho=0 383) (rho=0.383) Voice of the Customer (rho=0.493) NPD Toll Gates (rho=0.702) (rho 0 702)

An interaction was also found between senior management and t i t d team size. i

Phase II Quality of NPD Products

Used data from phase I plus additional survey questions on quality. Ran factor analysis for data reduction and used principal component scores for analysis. R Results were published i th proceedings lt bli h d in the di of the ASQ 2011 World Conference on Quality I Q lit Improvement.4 t

Phase II Quality of NPD Products

Phase II investigated four approaches to Ph i ti t d f h t the research questions.
1. The th 1 Th theoretical framework (next slide) ti l f k( t lid ) 2. Is there a difference in NPD Quality between ASQ members and ASQ non-members? non members? 3. To what extent is product quality correlated to the NPD team setting up the supply chain, g p pp y setting up quality audits and setting up quality test methods? 4. To h t t t i 4 T what extent is product reliability correlated d t li bilit l t d to the NPD team setting up the supply chain, and setting up reliability audit methods? g p y

Phase II Quality of NPD Products

Theoretical Framework.

NPD Productivity

Senior Management Involvement

Product Performance NPD Product Quality Project Mngr. Skills

NPD Process

Voice of the Customer

Team Experience

Product Strategy

Phase II Quality of NPD Products

The following items were found to correlate with NPD quality (95% confidence)
NPD Productivity (rho=0.513) Project Manager Skills (rho=0 419) (rho=0.419) Product Performance (rho=0.365) Team Member Experience (rho= 0 354) (rho=-0.354) Voice of the Customer (rho=0.442) Senior Management Involvement (rho 0 338) (rho=-0.338)

Phase II Quality of NPD Products

Additional results
Product quality was correlated with the NPI team being responsible for setting up the supply chain, defining the p pp y g production q quality y audits, and setting production quality test methods. Product reliability was correlated with the NPI team being responsible for setting up the supply chain and d fi i th production l h i d defining the d ti reliability audits.

Other Research
Empirical studies by Cole & Matsumiya8
Benner & Tushman found an inverse relationship between number of ISO certifications & number of original p g patents Silicon Valley CTO stated all p j y projects sacrifice quality for time to market

Cole & Matsumiya8

Examples
Affymetrix launched a new generation chip too soon. Result: five months of quality work, new software downloads, new chip release. p Created market opening for startup. Apple Launched initial ipod with only 6 months development. Result: five year later their failure rate was still near 5%.

Cole & Matsumiya8

Take-aways
Time to market is critical for disruptive products Quality is important but may not be top priority in NPD A zero defect culture can create risk aversion and limit innovation

Case 5
Building management system
Monitor energy usage in commercial buildings Track peak time energy rates Adjust energy usage in the building to minimize cost Well defined system cost target

Case 5
Voice of the Customer
Initial concept created Feature definitions added and subtracted based on customer interviews and focus groups

Case 5
Team Experience
Tiger team ( g (100% dedicated) Design engineers average six years experience Design team changed g g three times over the course of the program

Program Manager
Two different PMs Each had 20 years experience

Senior Management
Approves programs at each of four milestones Limited day to day involvement

Case 5
Product strategy
The specification was reissued four times With the market changing R&D was aiming for a moving target target Tiger team forced a frozen spec The product strategy and features were not well understood going into the program

Product performance
Product was well accepted and met customer needs

Case Summary
NPD Productivity PM Experience Team Experience* Product Performance Product Strategy Senior Management
* Yellow due to personnel changes

ROI = 28% 20 Years 6 Years Good Questionable Limited

Voice of the Customer Good

Successful Program Started a New Product Line

Change
So. How do you improve your process?

Implementing Change
Acceptance Process 6
Stability Immobilization Denial

Bargaining

Anger

Depression

Testing

Acceptance

Note: Red processes may require conflict resolution skills. Process developed by Dr. Kubler-Ross

Implementing Change
Acceptance Process 6
Stability Immobilization Resistance to Change Anger Denial

Bargaining

Depression

Testing

Acceptance

Note: Red processes may require conflict resolution skills. Process developed by Dr. Kubler-Ross

Implementing Change
Causes of resistance to change 7
Substantive disagreement Misunderstanding facts Different perspectives Intertia Loss of control Indictment of the past

Implementing Change
Resistance to Change can be Overcome 7
Dont surprise employees Over communicate Don t Provide a channel for the employees voice Communicate early and often during the change process Ensure relationships with supervisors Provide a method for conflict resolution Deal with conflict effectively

What to change
Two categories of improvement opportunity
NPI team responsibilities p Organizational changes

Focus o responsibilities first ocus on espo s b es s

Train each team and require voice-of-the customer techniques on every NPD project Charter each team with the responsibility for setting up
Supply chain S l h i Production quality audits q y Production quality test methods Production reliability audits

What to change
Organizational changes
Update p g p program manager requirements to g q include senior level experience Setup regular pulsing rhythm with senior management to allow senior management to t t ll i tt have visibility yet minimize impact to the team Create metrics and reporting requirements around
NPD productivity NPD quality

Keeping the visibility is critical to understanding what i working d t di h t is ki

How to implement the changes

Stability

Immobilization

Denial

Bargaining

Anger The goal: Minimize these steps! Acceptance

Depression

Testing

How to implement the changes

Avoid forcing new processes and organizational changes: rather manage the quality of the changes
Even if you know the process, participate in process existing meetings, reviews, and activities with the NPD teams. Tell the teams you are considering changes and ask for their input. Be sure to take their input seriously.
Stay in the stability phase while communicating the changes that are coming!

How to implement the changes

Once what to change is identified, and observing and documenting the existing process is complete: perform a gap analysis with the team We W must close the gap from t l th f as is to will be

How to implement the changes

Stability

Immobilization

Denial

Bargaining

Anger Allow these steps to p Acceptance happen during the gap analysis!

Depression

Testing

How to implement the changes

The goal of the gap process: Implement the change in the testing phase!

Closing Remarks Discussion

Industry NPD quality is less than 2 sigma. 1 Strategically decide whether quality or time timeto-market & market disruption is the top priority (both is ideal) ideal). Use research to help identify the critical few attributes to improve NPD quality. tt ib t t i lit Implement a good change management process to improve NPD.

Closing Remarks Discussion

Measure Existing NPD Quality

Identify Gaps from Best in Class

Manage Changes Using Gap Analysis

Celebrate Success

Industry is < 2 sigma

Academic Research can Guide You

Reduce Conflict W/ Team Input

Measure Improvement Over Time

Learning Objectives
Learn what is important to change to improve the quality of new products in your firm. Recognize that organizational change is a process and h d how t approach change f to h h from a leadership perspective.

Dr. John Holmes, P.E., ASQ CRE

Work History
06/1998 Present 08/1987 06/1998 06/1983 08/1987 08/1986 05-1998 General Electric (Engineering & Management) Boehringer Mannheim now Roche Diagnostics Standard Change Makers (Technician & Engineer) Purdue University (Adjunct Professor)

Education
Education: DBA (2011) Northcentral; MBA (2007) Sullivan; MS Electronics (1995) Indiana State; BS Electronics (1986) Purdue; Professional Engineer (1999) Reliability and Safety - GE Expert ASQ Certified CRE Expertise includes: NPI; Leadership; Project Management; Analog, digital, and power electronics; Analog digital Electronics quality and reliability; Software architecture, quality and reliability.

Other Accomplishments
22 US Patents, 3 International Patents others in process 10 P Papers P bli h d & 8 I it d P Published Invited Presentations t ti GE Certified Six Sigma Black Belt (2003) GE Corporate Reliability Council; GE Software PITS Development Team; Chair Elect ASQ Electronics D Industrial Advisory Board Western Kentucky University. Honors: Delta Mu Delta (2010); Phi Kappa Phi ( ( ); pp (1995) )

Email: mailjholmes@yahoo.com

References
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Extended References
Adams, D. & Hublikar, S. (2010). Upgrade your new product machine. Research Technology Management, 53(2), 55-67. Retrieved from ABI/INFORM Global. Agouridas, V., McKay, A., Winand, H., & de Pennington, A. (2008). Advanced product planning: A comprehensive process for systemic definition of new product requirements. London: Springer-Verlag. Retrieved from inspire.IN.gov. Black, T (1999) Doing Bl k T. (1999). D i quantitative research i th social sciences. Th tit ti h in the i l i Thousand O k CA SAGE P bli i d Oaks, CA: Publications I Inc. Boyle, T., Kumar, V., & Kumar, U. (2005a). Concurrent engineering teams I: Organizational determinants of usage. Team Performance Management, 11(7/8), 263-279. Retrieved from ABI/INFORM Global database. Boyle, T., Kumar, V., & Kumar, U. (2006b). Concurrent engineering teams II: Performance consequences of usage. Team Performance Management, 12(5/6), 125-137. Retrieved from ABI/INFORM Global database. Chacar, A., & Surysekar, K. (2009). A survey of new product development: Can decentralization alone deliver? The Review of Business Information Systems, 13(4), 79-87. Retrieved from ABI/INFORM Global. Conover, W. & Iman, R. (1981). Rank transformations as a bridge between parametric and nonparametric statistics. The American Statistician, 35(3), 124-129. Cooper, R. & Edgett, S. (2008). Maximizing p p g ( ) g productivity in p y product innovation. Research Technology Management, 51(2), gy g ( ) 47-58. Retrieved from ABI/INFORM Global database. Cooper, R., & Kleinschmidt, E. (2007). Winning business in product development: The critical success factors. Research Technology Management, 50(3), 52-66. Retrieved from ABI/INFORM Global. Cooper, R. & Kleinschmidt, E. (1986). An investigation into the new product process: Steps, deficiencies, and impact. The Journal of Product Innovation Management, 3(2), 71. Retrieved July 19, 2010, from ABI/INFORM p g , ( ), y , , Global. Ehrhardt, M. & Brigham, E. (2006). Corporate finance: A focused aproach (2nd ed.). Mason, OH: Thomson SouthWestern. Faul, F., Erdfelder, E., Lang, A., & Buchner, A. (2007). G*Power 3: A flexible statistical power analysis program for the , , , ( ), social, behavioral, and biomedical sciences. Behavior Research Methods, 39(2), 175-191. Retrieved from http://www.psycho.uni-duesseldorf.de/aap/projects/gpower/.

Extended References
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Extended References
Reich, Y. & Paz, A. (2008). Managing product quality, risk, and resources through resource quality function deployment. Journal of Engineering Design, 19(3), 249-267. Retrieved from inspire.IN.gov. Robbins, S. & Judge, T. (2007). Organizational Behavior (12th ed.). New Jersey: Pearson, Prentice Hall. Rogers, D., Daugherty, P., & Stank, T. (1995). Benchmarking programs: Opportunities for enhancing performance. Journal of Business L i ti J l fB i Logistics, 16(2) 43 63 R i 16(2), 43-63. Retrieved f d from B i Business S Source P Premier d b i database. Rogers, H., Ghauri, P., & Pawar, K. (2005). Measuring international NPD projects: An evaluation process. The Journal of Business & Industrial Marketing, 20(2/3), 79-87. Retrieved from ABI/INFORM Global database. Samra, Y., Lynn, G., & Reilly, R. (2008). Effect of improvisation on product cycle time and product success: A study of new product development (NPD) teams in the United States. International Journal of Management, 25(1), 175185,200. Retrieved from ABI/INFORM Global database. Sethi, R, Smith, D., & Park, C. (2001). Cross-functional product development teams, creativity, and the innovativeness of new consumer products. JMR, Journal of Marketing Research, 38(1), 73-85. Retrieved August 4, 2010, from ABI/INFORM Global. Stevens, G., & Swogger, K. (2009a). Creating a winning R&D culture I. Research Technology Management, 52(1), 3550. Retrieved from ABI/INFORM Global database. Stevens, G., & Swogger, K. (2009b). Creating a winning R&D culture II. Research Technology Management, 52(2), 2228. Retrieved from ABI/INFORM Global database. Tubbs. M. (2007). The relationship between R&D and company performance. Research Technology Management, 50(6), 23-30. Retrieved from ABI/INFORM Global database. Valeri, S. & Rozenfeld, H. (2004). Improving the flexibility of new product development (NPD) through a new quality gate approach. Transactions of the SDPS, 8(3), 17-36. Retrieved from inspire.IN.gov.