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Metrics for Controlling Product Development Risk

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Sponsored by:

QuestOne Decision Sciences

National Center for Manufacturing Sciences

Featured Presentations
Complete descriptions for all presentations

arrowbullet-green.GIF (97 bytes) Moving Your Organization Fast Toward ‘True North’ - Tom Keelin, Senior Managing Director, Navigant Consulting/SDG

Which direction is "true north" – the direction of highest value -- for your organization? With too many compass needles pointing different directions for "north," organizations find themselves unable to make and/or implement good and appropriately fast strategic decisions. The result is wasted value potential. And this often stems from the wrong metrics, metrics that are too confusing, too many metrics, or no credible metrics at all.

This talk addresses a range of metrics approaches that help get organizations moving fast toward "true north" – based on research involving more than 300 companies. Topics include:

  • How to approach improving the metrics used by an organization – from both the technically-sound and organizationally-workable perspectives.

  • Reconciling decision analysis, real options, net present value, and sensitivity analysis to help define and gain alignment around "true north"

  • How to deal with the real-world complexity of projects and portfolios in an appropriately simple, fast, and transparent way

  • Valuing improvements in time-to-market relative to increased risk and other considerations.

  • How to incorporate risk without making analysis unmanageable and without creating counter-productive biases and incentives.

arrowbullet-green.GIF (97 bytes) Assessing Technical Feasibility of R&D Projects in Portfolio Management - Jay Andersen, Senior Research Scientist, Eli Lilly and Co.

Understanding and quantifying the technical feasibility of R&D projects is critical in high risk businesses such as the pharmaceutical industry. However, the collection of relevant information to capture the value of projects on this dimension is not easy. The many hurdles to a quality assessment include team bias, calibration, and organizational resistance. This presentation provides a case study of the implementation of a process for the assessment of technical feasibility in an R&D portfolio. Topics included in the presentation:

  • Assessing risk estimates from project teams and dealing with bias

  • Multiple experts

  • Balancing technical feasibility with other dimensions of value

  • Organizational hurdles

  • Calibration: what can be learned from history?

arrowbullet-green.GIF (97 bytes) Aligning Strategic Metrics with Enabling Metrics - Scott Allspaw, Operating Manager, SENCO Products, Inc.

Learn how SENCO Products, a company highly regarded for its product development process, conducts what it calls hard-soft analysis. Now in place for over eight years, Allspaw explains how SENCO’s metrics program is used throughout the company, by all functions, to re-shoot the business operating plan every 30 days. Senior managers track critical measures, look for exceptions and red flags, and take corrective action. Project managers are at the same time tracking what they need to. The beauty of SENCO’s metrics are that they tie corporate strategy with tactical implementation, they eliminate surprises, they get people talking when necessary, and the whole process is automatic – requiring less than half a day a month.

arrowbullet-green.GIF (97 bytes) No Surprises: Pro-Active Risk Management and Mapping - Preston Smith, New Product Dynamics, co-author, Developing Products in Half the Time

Effective risk management of development projects has two themes:

  1. It is proactive, because this gives us a richer choice or options for mitigating specific risks.2)

  2. It is cross-functional, as most project risks stem from events that fall outside of engineering.

This presentation will show how to put these two themes into play by managing risk as an integral part of the project. We will develop a risk management map and illustrate how to use it as a routine project management tool. Finally, we cover some specifics to watch, such as addressing the tough issues first, employing failures to advantage, and compartmentalizing risky items so that you can give them special attention.

arrowbullet-green.GIF (97 bytes) Reducing Uncertainty in Schedule, Budget and Product Performance at Tellabs - Guy Merritt, Senior Program Manager,Tellabs

In today's development environment, time-to-market is everything. Not only must the product solve a customer's problem, but it needs to be developed on-time, within budget and meet or exceed the customers' expectation for quality. To help manage this fact of life, Tellabs has integrated risk management into its program management methodology to reduce uncertainty in our schedules, budgets and product performance.

This presentation will centered on illustrating the risk management model used at Tellabs with risk based metrics. In addition to an overview of the Tellabs' Risk Management process, several examples will be shared to show how the process was actually used to mitigate risks facing some of our programs.

arrowbullet-green.GIF (97 bytes) Actionable Metrics - Closing the Loop - Erik Boe, Program Manager, Apple Computer

Metrics must link to key areas of business. A driving force for all Apple does is the end customer. Hence, their bias is toward product performance. Erik Boe will briefly discuss how Apple uses metrics across divisions to improve business management, and how the information is used and linked. The focus of the presentation will be on product development: What indicators are used, predictive or lagging, who is using what and why, what systems are used to capture data, processes around metrics interpretation, turning data into action, metrics formats, and success stories.

arrowbullet-green.GIF (97 bytes) Panel: Highlights of 4 industry metrics studies*

1. The Automotive Industry Action Group’s recommendations on 12 key metrics – and when and why to use them; presented by Maurice Klaus, Beacon Consulting

2. 1998 Product Development Metrics Research by Brad Goldense, Goldense Group, Inc. (in conjunction with Management Roundtable)

3. Product Development Consulting’s Benchmark Study of success factors in high-performance new product and service development; and

4. Performance Measurement Group’s R&D Effectiveness Index 1999-2001 Benchmarking Series.

*While the findings are applicable to industry as a whole, they are particularly relevant to those in automotive, telecommunications, semiconductor, medical devices, computer products, electronics, and aerospace.

arrowbullet-green.GIF (97 bytes) Metrics - Tools or Weapons? Cultural and organizational challenges - Paul S. Adler, Professor, Marshall School of Business, University of Southern California

Any program for predictive metrics needs to ensure the commitment of the product development staff. Without this commitment, input data will be distorted, and output interpretation and action will be mired in conflict. The development staff's commitment will be high when they see these metrics as a tool with which to manage their work more effectively; their commitment will be much lower if the staff sees the metrics as a weapon that is used against them by senior management. This presentation summarizes some lessons for ensuring commitment to predictive metrics from best practices in a range of settings.

arrowbullet-green.GIF (97 bytes) Improving Product Strategy and Execution - Kent Harmon, Director R&D Effectiveness, Texas Instruments Semiconductor Group

For the past three years, Texas Instruments' Semiconductor Group has concentrated efforts on improving its product strategy and product development execution. As with any improvement program, the need for metrics to measure progress and focus efforts is apparent. However, the definition and implementation of metrics for product development with its intrinsic uncertainty and creative nature presents extraordinary challenges. This paper describes the metrics and techniques TI employed to define product development metrics that:

  • linked operational performance to strategic business objectives,

  • addressed the needs of diverse business models within organizations,

  • provided predictive as well as results monitoring, and

  • were endorsed as a tool for improvement throughout the organization.

arrowbullet-green.GIF (97 bytes) Hardware Realization Project Effectiveness at Lucent & Bottom-Line Results - Dr. Steve Nygren, Distinguished Member of the Technical Staff, Lucent Bell Labs Advanced Technologies & Wayne Mackey, principal, Product Development Consulting, Inc.

The Lucent Hardware Realization Process Assessment (HRPA) makes a comprehensive examination of process maturity in critical areas of product development. By comparing project performance with factors known to correlate with bottom-line business results, the HRPA can be used to predict business success and to guide improvements in product development activities.

This presentation will review how Lucent built the assessment tool so that it focused on the critical components of product development, case studies of how the tool was used on key projects and what Lucent has learned and done with the information. The tool has been piloted on ten North American and European Lucent projects and recently calibrated outside Lucent with the participation of 18 leading companies.

The assessment's goal is to evaluate project teams’ processes and organizational capabilities, allowing the identification of strengths and areas for improvement. It also compares managers' and non-managers' viewpoints on project goals, constraints, and risks. The assessment measures development practices in detail within eight areas: customer focus, project management, product definition, product development and manufacturing, quality focus, leadership and management, common physical environment and supplier management. After a project is evaluated, the assessment team suggests a specific action plan to drive improvements to the project's hardware realization practices. The objective is to achieve competitive advantage through process excellence by focusing limited improvement resources on the critical few processes. The processes emphasized are the areas of significant impact to overall business performance.

arrowbullet-green.GIF (97 bytes) Wrap-Up: Putting It All Together -
Brad Goldense, President, Goldense Group Inc.

The scope and range of the conference metrics presentations will be mapped against a conceptual framework of possible metrics categories and areas. Coverage of this body-of-knowledge by metrics conference presenters will be illustrated. Industry progress in the late 1990s, versus a decade ago, will be summarized. A possible vision for PD metrics in 10-20 years will conclude this conference wrap-up session.

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