Processes are part of intellectual
property and among the most important assets of each organization.
As such, improving business processes is always a priority for
every organization.
This has been acknowledged
by business leaders across all industries. In the Gartner report
“Leading in Times of Transition: The 2010 CIO Agenda,” improving
business processes is ranked as the number one priority of CIOs
in 2007, 2008, 2009 and 2010.
Source:
Gartner EXP (January 2010) http://www.gartner.com/it/page.jsp?id=1283413
In the recent years Business
Process Management (BPM) has become the formal approach for managing
and improving enterprise processes.
BPM, as defined by Object
Management Group (OMG), is a holistic management approach that
promotes business effectiveness and efficiency while striving
for innovation, flexibility, and integration with technology.
Simply put, BPM attempts to improve processes continuously.
Every Business Process
Improvement initiative starts with capturing the processes as
they are, and then trying to optimize, automate and continuously
improving them towards perfection.
This paper provides an
overview and guidelines in taking inventory and modeling NPDI
processes within the BPM paradigm.
Introduction to NPDI
New product development and introduction, or NPDI, is about bringing
the right product to the right customers at the right time and
price.
NPDI is one of the most important processes in many companies as
it drives the revenue, margins and competitive position of a company
in the marketplace. Accordingly NPDI is always a target for Business
Processes Improvement.
Among others, the NPDI
process (or possibly the lack of it) can be responsible for:
-
Development of wrong product or service
- Schedule delays
- Cost overruns
- Feature set mismatch
- Marketing and sales performance issues
Various studies suggest
that between 50 and 80 percent of NPDI programs fail to live up
to management’s expectations. There are many reasons to it, such
as misunderstanding of real customers' needs.
The NPDI process starts
with identifying an opportunity in the market and ends with a
successful launch of the corresponding product or service. This
requires a coordinated effort among many functions, from marketing
to engineering and finance, to manufacturing, suppliers, business
development and sales.
Any miscommunication or
timing mismatch between those functions may result in extra costly
mistakes and delays. Utilizing BPM in NPDI can help in mitigate
many of possible problems sources, while making it more efficient.
Keep in mind: NPDI is a process, a journey, and not a destination.
While at its core NPDI represents one process, its actual activities
are executed in separate sequential or parallel processes.
All these processes need
to be synchronously managed between multi-disciplinary
teams to successfully bring a new product
to market, no matter if the product is an industrial machine with
hundreds of parts or a software system with different components
and modules.
To do so, first the underlying
processes need to be captured. The explicit definition of processes
not only facilitates continuous process
improvement cycles, but also helps with control, visibility and
knowledge retention within organizations.
Contrary to some depictions, being
process oriented doesn’t necessarily mean being rigid and prescriptive. Well
managed processes can anticipate and
provide agility and flexibility in adapting to market and requirement
changes, while fostering cross
functional harmony and effectiveness within organization.
NPDI Processes
The actual NPDI practice
is unique to every company due to its organizational structures,
available resources, information systems and overall capabilities.
Nevertheless the following model closely reflects an end-to-end
NPDI process.
Whether you use Stage-Gate,
PACE (Product And Cycle-time Excellence), DFSS (Design For Six
Sigma) or any other methodology, at the highest level the NPDI
process includes following core activities, each of which represent
a different aspect of NPDI.
- Project Selection
- Technical & Business Validation
- Development & Production
- Marketing & Sales Enablement
In the following sections we will break down and review each of
those aspects as individual subprocesses and activities.
To graphically represent process models all diagrams in this paper
are designed based on “Business Process Modeling Notation” (BPMN
2.0) standard.
For more details on BPMN
please refer to http://www.bpmn.org
Project Selection
This is about selecting the idea that best aligns with business strategy and
objectives.
Sometime also referred
to as “Discovery and Scoping”, this includes activities such as
identifying opportunity, generating or soliciting product ideas,
screening, evaluating and scoring concepts, building business
case, estimating resource requirements and finally selecting a
project to pursue. The objective is to quickly find the closest
match and ensure the technical merits and alignment of market prospects of the project
with corporate strategy.
Depending on the industry
and the company’s culture this might be a predefined, scheduled
process or an on-demand basis - as shown in the sample flows below.
On-demand Model
Scheduled Model
One of the common problems
in this phase is that the selected project does not reflect the
real business objectives and strategy. Including process steps
to formally develop the selection criteria and enforcing the use
of these criteria throughout the process would prevent that type
of problems from happening.
In many BPM models top-level
activities can be decomposed into next level of detail or a “subprocess”.
The concept of subprocess manifests one of the key cornerstones
of BPM; reuse- and repeatability.
In the above example the
“prepare selection criteria” step can be modeled as a subprocess
like the one below.
In this case, for instance,
the same subprocess can also be used to drive M&A (Merger
and Acquisition) considerations.
Typically the selection criteria are defined as a weighted decision
matrix, which is beyond scope of this paper. [See KT (Kepner-Tregoe)
or AHP (Analytic Hierarchy Process) for more details]. A decision
model is used to ensure all objectives are satisfied according
to their importance.
The following example
helps to clarify the approach.
| Objective |
Weight |
Score |
| Profit Margin |
60 |
|
| Time to Market |
30 |
|
| Resource Requirements |
10 |
|
| … |
|
|
| Total |
100 |
|
Technical and Business Validation
Validation is about proving
the concept, both on the technical and the business sides. In-depth
assessment of business viability and technical feasibility are
performed to ensure a valid business case, customer acceptance and financial merit to justify the project, resulting in a refined business plan, financial
projection, competitive positioning and technical requirements.
This phase includes activities
such as competitive analysis, focus group, prototyping, market
research, and maybe budget approval.
In this phase the most
common reasons for NDPI failure are a) the mismatch of product
features with customers’ real needs and b) underestimating the
challenges.
The most effective approach
for addressing those problems is to start with creating a “product
vision box” or “concept in context”. The purpose is to quickly
establish a shared vision among all stakeholders by spelling out
USP (Unique Selling Proposition), benefits, and positioning of
the new product. It will ensure that VOC (Voice of Customer) is
considered throughout the validation process and that challenges
are correctly assessed.
Depending on circumstances and resource availability activities might
be performed in parallel or sequential order. For example tight
engineering resources might result in a rewired process, in which
engineering engages only after business case is validated.
In either case the process can be stopped at any given point to save
time and resources.
Development
and Production
Projects that match corporate
criteria and pass validation will move to the formal development
phase, where specifications are transformed into an actual product
for commercialization.
This starts with design specifications and production planning along with supporting
processes such as documentation, QA, packaging and ends with the
actual product ready for release. The production itself might
follow a formal methodology such as Scrum in software development
or Lean in manufacturing.
Typically in this phase problems happen due
to miscommunication, misinterpretation of requirements and change
management.
In many cases applying
an agile methodology to development process can prevent risk and
dramatically improve the project results. In an agile environment
the development is executed in an incremental and adaptive manner,
including a feedback loop with product management, as illustrated
below.
This approach can help
in minimizing misinterpretation and waste in course correction,
while providing product management with the flexibility to react
to market and requirement changes.
Course correction
approach in traditional vs. agile development process
The actual development process can be broken down further into
specific activities for individual roles as demonstrated below
for a software product.
Marketing
The marketing process covers
activities involved in generating customer interest and demand,
starting from MRD (the Market Requirements Document) to actual
product launch and lead generation. This could include inbound
marketing, outbound marketing, branding and PR related activates.
In product marketing the
most common challenges are cost management (ROI), right targeting
and coordination with sales (imagine that the product is launched,
but inside-sales is not yet trained!).
While the above model might
closely resemble a typical marketing process, one model never
fits all. What if, for example, your organization decides to switch
from as-needed-basis to a fixed budget approach to marketing?
One of the central promises
of BPM is flexibility. In a process oriented environment such
changes are possible and as easy as switching the order of activities,
as illustrated in the following extract.
Key Performance Indicators
All along the NPDI process
execution monitoring relevant data and KPI (Key Performance Indicators)
can help in taking timely corrective actions to minimize cost,
while offering opportunities for process improvement.
One of inherent benefits
of BPM is the ease of access and tracking of KPIs. Applying BPM
principles allows you to define specific goals and means to measure
the performance of processes.
In an automated BPM environment (BPMS)
this can be easily done by non-intrusive interception of work,
which in addition to KPIs can help in risk management, Service
Level Agreement (SLA) and compliance monitoring. The
resulting data is typically available in real-time on management
dashboards as shown in above example.
Conclusion
Applying BPM concepts to
your business processes not only minimizes the common risks associated
with NPDI for current product pipeline, but also facilitates knowledge
retention and repeatable success for upcoming ones.
AUTHOR
Pejman Makhfi
Pejman is a Silicon Valley technology
veteran and serial entrepreneur with more than 18 years of progressive
experience in providing software expertise and best practices
to technology investors, business enterprises, and forward-thinking
startups.
Widely known as a leader in the field
of Business Process Management and Knowledge Modeling, Pejman
has been a key architect of multiple high-profile products, including
Savvion's award-winning BPM platform.
Today, Pejman is the VP of Solutions
at Savvion where he combines his decade of BPM experience with
his expertise as a PMP & Lean Six Sigma Black Belt to incorporate
continuous process improvement into the next generation of Life
Sciences, Banking and Telecom solutions.
His background includes:
CTO position at FinancialCircuit, a
company recognized as the technological innovator for financial
industry and awarded as Silicon Valley's Ninth Fastest-Growing
Private Company in 2003. (Acquired by LPL)
CTO and Director of Business Dev. at
TEN (The Enterprise Network), a top Silicon Valley technology
incubator hosting more than fifty Startups. Pejman managed TEN's
R&D as well as advised startups on the issues and trends affecting
early stage and emerging growth companies. TEN has helped launch
of many companies, including eBay, iPrint, Xros ad Vertical Networks.
Pejman holds a B.S./M.S. degree in
Computer Science from Dortmund University in Germany and is a
Scrum Master (CSM), an internationally certified Project Manager
(PMP) as well as a certified Lean Six Sigma Black Belt (SSBB)
in continuous business improvement.
He is the author of numerous patents and articles, including “Heptalysis
- a methodic approach to venture management” and
is an active contributor to organizations such as "American
Association for Artificial Intelligence" and "American
Society for Quality".
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