Robustness Development and Reliability Growth: Time, Money, and Risks
- The capabilities, performance, and reliability that are achieved in a product prior to market entry are functions of many activities and decisions during the development process. Physical laws drive product failures. They are also symptoms of implementation problems with plans, resources, methods, and tools. This chapter discusses typical drivers of reliability that are inherent in the way product development is practiced. Later chapters address technical concerns.
- Inherent in discussions about product development are recommendations for process improvements. Assessment models such ISO and CMMI are effective at driving organizations to define their processes and to follow them well. Benchmarking can help even more by enabling the people in your organization to learn firsthand about better methods that they would not have known from internal experiences. You compete with your processes as well as your products and services.
During our years of working in product development we have experienced many projects that had elements that were executed very well. Excellent design concepts were developed. Manufacturing processes were controlled to be stable and aligned with the specifications of design parameters. Cross-functional teams managed parallel work efficiently across all organizations and partner companies. Customers and suppliers were involved early and throughout the process. Timely decisions enabled the critical path, addressed project risks, and managed cross-project conflicts.
However, few projects were managed to execute all of the necessary elements well at the same time. More often than not, the consequences of good work in one domain were compromised by handicaps from other domains. For example, sound designs of robustness experiments were cut short by schedule reductions. The involvement of engineers with customers was canceled on the assumption that they already knew what customers needed. The transfer of new technology into product development was premature and incomplete, imposing risks on product development. Few projects learned how to repeat the successes of previous projects. As new products approached their market entry, crisis management became the norm. Schedules slipped, costs rose, designs were changed, tools were modified, parts inventories were scrapped, resources were kept on the job. Heroes may have saved the product launch date, but often the product itself limped into the market with less-than-acceptable quality, reliability, and costs. Design changes in production were common. These stories are not good!
We expect that your own experiences confirm this concern about the difficulties of executing product development well and consistently. We've known project teams that proclaimed themselves to be best in class without merit. From the viewpoint of both the business and the technologies, their projects were disasters. Often there was great technical work, but with poor business results. Certainly you have experienced examples when everything important worked well once in a while, but not consistently.
A major lesson is that failures become the call to action for major improvements in the way that product development is practiced. One result is a commitment to a development project that has superior strategies, that stays on its plan, and that adapts easily to inevitable changes. It delivers designs that achieve their requirements and are robust. It delivers the new product system to its market gracefully. The product is viewed to be superior to its competition. What a great experience! The challenge is to repeat those successes in follow-on projects. That's when standardized processes employing better practices and well-managed teamwork need to be institutionalized so that they have lasting value for your corporation.
Quality, Costs, and Schedules
"Bottom-line" business metrics usually relate to accounting parameters such as the costs of poor quality, the costs of development or manufacturing, and the costs of schedule delays. "Top-line" growth metrics usually focus on revenues generated from new products, with insights from customers' satisfaction indices and competitive positions that contribute to pricing. Their forecasts are predictors of revenues due to sales and usage volumes. Broadly, they apply to the value generated by the portfolio of new products evaluated over time.
Higher reliability developed in a product may be perceived as a competitive differentiator. It may also be a significant contributor to reduced service and warranty costs. Higher levels of robustness contribute not only to higher reliability but also to reduced manufacturing costs. To the extent that they are achieved earlier in a development project, they contribute to shorter, more predictable development schedules and reduced development costs.
Many contributors to reliability are within the control of the project teams prior to market entry. During this time, the reliability metrics are forecasts of the level and stability of future performance in the hands of customers. Of course, the ultimate measures of success are derived from the actual performance of the new products in the market, the degree to which higher reliability delivers value to customers, and the new product's contributions to your overall business. For customers of non-repairable products, reliability is perceived as the product's usage life. For repairable systems, it is evaluated by metrics such as failure rate, service frequency, availability when needed, percentage of downtime, or other measures relevant to your customers' business or activities.
With product reliability having the potential for being a significant contributor to business success, your product development teams have to align their technical achievements with those elements of value to be returned to the corporation. To the extent that teams are excellent in the execution of robustness development and reliability growth, they may achieve competitive advantages relevant to their rivals in the market. The more that product development teams work in a productive environment, using efficient methods and benefiting from constructive teamwork, the higher will be their probability of success.
Product development is not just a process for engineering teams. "Concurrent engineering" has focused attention on cross-functional activities that develop the product and its manufacturing processes. In addition to engineering leadership teams, effective work groups include representatives of other involved functions to manage the development of their capabilities to launch the product on time, to sell the product, and to provide service and support to their customers. So the management of product development activities must integrate these organizations along with their customers, suppliers, and partner companies.
Product development is a very competitive business. It can be difficult and highly complex. Unfortunately, well-intended processes can be constrained, if not sabotaged, by shortened schedules, late project starts, dysfunctional decisions, inadequate reserves of resources, midcourse changes in portfolio plans, and unresolved conflicts with competing projects. The market rewards good performance but penalizes poor performance, without mercy. If you win, you get to keep your job. If you lose, bad things can happen.
Who differentiates the winners from the losers? Customers do! They vote with their purchases of products and services over time, showing preferences for those companies whose offerings provide superior value in the context of their business, activities, and environments. Customers have options. They choose those products that best meet their needs. Generally, that means those products that provide necessary benefits, in relationship to their costs, better than available alternatives. Everything else follows, such as price, revenues, volumes, competitive position, reputation, and shareholder value.
Companies develop products and services for those business opportunities for which they have competitive advantages. The job of product development is to provide superior solutions to those problems for which customers in target markets are willing to spend their money. Perfection can be elusive, expensive, and time-consuming, but where compromises have to be made, "good enough" must be judged from the viewpoint of customers. Trade-offs represent potential risks for product development, so they need to be made with accurate knowledge of the consequences for customers' value drivers.
The choices that customers have include doing nothing. So there is little forgiveness for not achieving excellence in execution for every functional discipline involved in the project. Customers may be loyal to your company based on a historical relationship. They may cut you some slack, knowing that the products or services are new and understanding that you need to work out some bugs. They may accept your less-than-superior product, knowing that your superior service will compensate, or vice versa. But how long will that last?
The "early bird gets the worm" may be a useful metaphor. Often being "first to market" has its value, since early adopters can set precedents. Products or contracts may commit customers to a long life cycle. Often, however, it's being "right to market" that wins in the end, that is, having the right quality (features, functionality, reliability, usage life) with the right costs at the right time. So if your product is first to market but at a high price or with compromised quality, can your company win in the long run? An old but telling attitude toward product development is "Quality, cost, and delivery schedule—pick two." That implies defeat, a compromise that serves neither your customers nor your company. The business challenge is then to work with a strategy that satisfies all three criteria.
This book does not propose to compromise quality by some clever approach in order to satisfy imposed constraints on development costs or schedule. Customers are not willing to make that trade-off. Likewise, we do not propose that the best product development methods take too long or cost too much for you to adopt them. Companies that are good at product development are also efficient and flexible. They treat product development as an investment in the design of a new or extended business to generate returns that are expected to be superior to alternative investments for the corporation. Otherwise, why would they do it?
There are no magic tricks here. If you lag behind your competitors in a substantial way, we doubt that there are quick fixes that will be adequate. It takes hard work sustained over time with effective implementation of better practices. It takes the right resources at the right time working on technical concepts that are superior to their competition. It takes management working to enable development projects to be successful, having a constancy of purpose over time.
The process does not focus on a specific improvement theme, but rather on the integration of many practices that "winners" do to be successful. Over the past few decades, leading companies have implemented approaches to make their work more efficient, to enable their processes to achieve shorter cycle time, and to develop their technologies to be more robust. Most of these improvements have provided benefits, but none is sufficient alone. They must be integrated into the natural way that people and teams do their work.
The Quality Improvement Movement
Quality training has provided many helpful strategies and methods, from quality circles to an emphasis on analytical problem solving. Many of the approaches use tools that were learned in the past but have been forgotten or were not well applied. Improvement initiatives have encouraged engineers to get closer to their customers and to develop technologies, designs, and processes that are more robust. Project management professionals have pushed sound methods for managing resources and their progress in performing activities and achieving deliverables on predictable schedules. Improved computer-based tools have been implemented to assist analysis, experimentation, and design documentation. Software development has adopted agile methods to embrace late changes that often are imposed by rapidly changing markets. Organizations for software engineering and systems engineering have developed "capability maturity models." Organizational development initiatives have improved the leadership and practices of cross-functional teamwork and of their support from functional management.
Industry studies, conferences, and publications continue to push for improvements. Their agendas have themes such as Design for Six Sigma, lean product development, agile development, risk management, high-performance teamwork, collaborative innovation, and portfolio balance. All of these are important and complementary. The trick is to integrate them in a manner that makes them appropriate for your business model, with implementation that makes them systemic, to become just the way you do business, not a collection of "themes of the month."
It takes "top-down" implementation and "bottom-up" practice. It takes impatience with poor performance and a sense of urgency to improve, with an imperative to achieve the benefits quickly and to remain consistently good over time. It takes creativity to develop new techniques and a flexibility to adapt to changing conditions. It's an ongoing process of improvement.
Companies that "beat" the competition in the market tend to have a knack for integrating resources, processes, and technologies to achieve results that customers judge to be superior. They do it consistently, product after product, to reinforce a reputation in the market for delivering superior value. Often it's that reputation that provides a shortcut to the value judgment, rather than a side-by-side comparison of features or a competitive analysis from an independent assessment. How can the implementation of fundamental improvements be managed?