Your company is unique -- the size and complexity of your NPD operation, your product technologies, your markets’ dynamics, and your company culture all impact your process requirements. It’s unlikely that a process that works at some other company will be a good fit for you. Rather than just copying another company’s process, consider a few basic ideas to help you design one that’s custom tailored for you.

The key to designing an NPD process is realizing that the effects of a process aren’t just benefits, but a mix of benefits and costs. A process that provides a net benefit for a large company will create a costly overhead burden at a small one. Whether you are developing your first process or improving an established one, start by understanding both the costs and benefits of NPD processes and compare them to what you need.

Does your process fit? Whether your company is small with an unwritten NPD process or larger with an established process, you can identify symptoms that your process may not fit.

Understand process benefits and costs. To design a process that fits, start with a look at both the benefits and the costs of NPD processes. Generally, processes reduce development expense and risk by imposing order on the otherwise unruly NPD activity, while process costs stem from reducing development speed, flexibility, and innovation. 

NPD processes reduce development expense by sequencing work to reduce risk of wasted effort and improve efficiency in project support activities. However, there is an associated cost: efficient work sequences usually reduce project speed. For example, waiting until a design is finalized before developing manufacturing test may seem efficient, but having a test engineer working concurrently with design engineers will usually cut schedule time and reduce a product’s manufacturing cost.

NPD processes often dictate more formal and standardized communications surrounding a development project. This provides a benefit by making cross-functional collaboration more efficient, with different projects conforming to a common template. This uniformity also benefits managers who must oversee many different projects and can quickly understand status and grasp issues without having to become familiar with multiple reporting formats.

In the cost column however, formal and standardized communications create overhead for developers who must write status reports, maintain documents, and prepare for review meetings. If your design effort crosses organizational and geographic boundaries, you may need formalized communications to ensure effective collaboration and support. But when your entire NPD team is closely collocated, development will be more effective with less communication overhead. 

Examine your needs. The size and complexity of your NPD organization is a major factor in setting your process needs. Multiple projects, large project teams, and a functional organization structure all drive a need for standardized workflow and formal communications. Companies organized around autonomous development teams will find formal communications to be burdensome compared to person-to-person dialog.

A critical part of understanding your process needs is determining the optimum balance of NPD performance goals that supports your strategy. NPD goals fall along five dimensions: product attributes, development expense, NPD response time, NPD delivery, and innovation (1). These goals compete with each other, and your NPD process determines tradeoffs among them. For example, you might compete on time to market against a competitor with low manufacturing cost. In that case, the process that fits you best is not the one for your competitor. 

It may not be possible to specify an exact, optimum balance among all five NPD goals, and doing so runs the risk of installing an inflexible process that over-constrains project decisions. But to arrive at a well-fitting process, you need to know which goals are firm requirements and which are open to tradeoffs. For example, if reliable schedules are an absolute requirement, your process may formalize project planning and control while leaving product features and manufacturing cost to be managed differently for different projects.

Quality is a product attribute that deserves separate consideration in defining your process needs, because quality considerations run throughout an NPD process. Every company claims to produce products of superior quality, but stringent quality measures built into a process will inhibit development speed and innovation. If your core competitive strength is technical innovation, your process should differ from a company whose core strength is product quality.

Finally, your organizational culture has a significant impact on NPD process needs, which can lead to real problems if ignored in your process design. In a culture based on individuality and creativity for example, you need a process that defines activities at a high level but allows teams the freedom to manage details. But in a company that values operational excellence, the lack of details will seem frustrating and vague. 

Design the process you need.  Just as in product design, there is no simple recipe for the design of an NPD process. But there are a few rules that you can use to arrive at a process that fits your needs.

A vital rule in process design is to avoid thinking that more structure is better. Companies with long established processes find that complexity seems to increase continually over time: The solution to every problem seems to be to add more details. During your process improvement cycles, devote conscious effort to eliminating process structure that no longer adds net benefit. If you’re designing a new process, focus on the specific problems you’re trying to solve, and add only enough structure to address them.

It’s essential that executives participate actively in NPD process design because the process defines their oversight of and interactions with the NPD effort. The more detailed information that executives require, the greater the communication overhead for the development teams. Executives whose egos are invested in their role as gate keepers may have to change their perspective to avoid wasting teams’ effort in preparing for ceremonial review meetings with predictable outcomes.

Custom fit is important. You shouldn’t just copy the NPD processes of another company, no matter how successful that company may be. (And no matter which of your executives used to work there.) Learn from successful companies’ process thinking and principles, but remember that their NPD process is best for them, not for you. Whether you’re defining your company’s first process or improving an established one, custom fit your process to your company.

Notes:

1) For more on the five dimensions of NPD performance, see Silver Nuggets Newsletter, April 2004: Improving R&D Results: Count on the Uncountable
2) More about designing stage-gate processes can be found in Managing the Design Factory, Donald G. Reinertsen, The Free Press, 1997
3) A good reference for agile development methods is Agile Project Management, Jim Highsmith, Addison-Wesley, 2004