2002 Product Development Book Reviews

 

Creating Breakthrough Products: Innovation from Product Planning to Program Approval Jonathan Cagan and Craig M. Vogel; Upper Saddle River, New Jersey: Prentice Hall, 2002, 302 + xxxii pages, US$ 29.00

Product development pundits and researchers alike lament the paucity of truly innovative products and our tendency to develop me-too products to prop up sagging markets and meet the competition. This is a book about discovering and designing products to counter the me-too product. Written by a professor of mechanical engineering and a professor of industrial design, it focuses on processes and tools to integrate technology with style to satisfy newfound needs of customers.

The authors claim this book applies to all types of consumer and industrial products as well as services, but I found it most pertinent to products that involve clear human interaction. For example, it applies to the keyboard and mouse of a computer, but not to developing its microprocessor or hard drive. They provide many interesting case studies from industry, for both consumer and industrial products, but I found their service industry case studies, such as Starbucks and United Parcel Service, to be unconvincing.

Although Cagan and Vogel mention corporate strategy as a precursor activity, their presumption is that one develops profitable new products by scanning for unmet opportunities in the marketplace, not through portfolio planning or strategic alignment. They also presume that a firm devotes significant effort to developing breakthrough products. In my experience, most companies are totally consumed by correcting products already in the field, filling in gaps in their product lines, responding to customer requests, and countering competitive offerings. For them, it will be a stretch to assign resources to discovering and developing a radically new product.

The basic precept of this book is that "style" and "technology" combine to create "value," which distinguishes a truly breakthrough product. The authors employ a two-by-two matrix with style on one axis and technology on the other, and they emphasize the Upper Right (quadrant), which they claim is the only place where a new product can generate value. In the authors ' view, all of these axes are binary: you either have style, technology, or value or you don 't. I found that the assignment of a specific product to a certain quadrant seemed a bit arbitrary, and I wondered why the particular axes of style and technology had been chosen. I suspect that it has something to do with the design and engineering disciplines of the two authors. Nevertheless, this construct provides a valuable framework for the book.

Style refers to the sensory and ergonomic elements of a product. It determines how well the product connects with the lifestyle of those in the target market. Technology refers to the functionality that enables the product to operate. It can include mechanical, electrical, chemical, or software, and it includes materials and manufacturing choices as well. Finally, value is "the level of effect that people personally expect from products and services, represented through lifestyle impact, enabling features, and ergonomics, which together result in a useful, usable, and desirable product." (Page 57) Useful means that the product satisfies a human need and is cost-effective, usable relates to ease of use, and desirable means that its attributes combine to make people want to own it.

The heart of the book is Chapters 5–7. Chapter 5 describes their process, Chapter 6, the teams and organization needed to execute the process, and Chapter 7, their customer-understanding technique. The process starts with an ongoing scan of what they call SET factors: Social trends, Economic forces, and Technical advances, which open opportunities for new products. For example, the retro trend (social), ample disposable income (economic), and new materials and processes (technology) opened an opportunity that Mazda capitalized on with its Miata sports car. SET factors change constantly, so they can lead to new insights that were not apparent before. Similarly, changing SET factors explain how products go out of fashion and even how a product can appear before its time.

The next step is to detect in the SET factors some Product Opportunity Gaps. These POGs are a discrepancy between what is currently available on the market and what the SET factors suggest. Discovering POGs is part science and part art. When found, they lead to product opportunities.

Cagan and Vogel 's next step is what they call value opportunity analysis, in which they assess each opportunity on 26 criteria in seven categories. For instance, one category is ergonomics, and its three criteria are comfort, safety, and ease of use. They rate each criterion subjectively as high medium, low, or none. A value opportunity chart then gives an overall opportunity picture for a product concept. By going through the same exercise for an existing product, one can see how great an advance the new opportunity offers. This value opportunity analysis appears to be an excellent tool for comparing opportunities by decomposing them into assessable attributes. However, the authors caution that a product 's value is perceived by the user as a whole in a Gestalt sense, so that one must be careful with this kind of analysis.

The book emphasizes that all of this paperwork should be supplemented by early and frequent prototyping. In one case, it illustrates about 75 prototypes used to study shape alternatives for the handle of a tool (Fig. 3.6).

As expected, the chapter on teams (Chapter 6) emphasizes the need for close cross-functional collaboration. Cagan and Vogel consider (industrial) design, engineering, and marketing to be the principal participants. They exclude manufacturing, sourcing, finance, and such functions because they are needed only after product feasibility is demonstrated. One useful tool they provide is a part differentiation matrix. Somewhat like the matrix described earlier, this two-by-two array divides the parts or subassemblies of a product according to whether they are high or low complexity and whether they have primary or secondary lifestyle impact. These distinctions allow developers to plan the type of team that must be assigned to each part or subassembly. For example, the transmission and brakes of an automobile are rated high in complexity but low in lifestyle impact, which means that they can be safely designed by engineering with little design involvement. Parts with low complexity and high lifestyle impact, such as the wheels and grill, can be handled primarily by design. Ones rated high in both complexity and lifestyle impact—the sound system and body panels, for instance—require a true cross-functional team for effective collaboration. Finally, one scoring low on both axes, such as tires and ignition system, are commodities that may be sourced. Notice that in contrast with other authors, who generally say that the more cross-functional a team is the better, Cagan and Vogel focus cross-functionality where it will do the most good.

Chapter 7—on understanding user needs—is the foundation of the book and should really appear earlier. The authors state, "The result of all this [user] research is a growing understanding of the user experience, the emotion surrounding the experience, the product attributes that enable the emotion, and realization of those attributes through physical design." (Page 124) To really understand the user, Cagan and Vogel recommend in-depth ethnographic techniques rather than broad quantitative or statistical methods. The initial ethnographic methods then move into scenario development, in which the team describes in depth a typical user in the target environment and how lack of the envisioned product makes his or her life less satisfying. For instance, they describe Ron, a contractor who has two difficulties in using his pick-up truck at a job site: 1) the tailgate is an inadequate work surface, and 2) he cannot get easy access to tools in the bed of his truck. Unfortunately, the authors do not mention alternative in-depth means of user research, such as an essentially similar technique developed for software products by Alan Cooper [1] or von Hippel 's lead user technique [2], which is aimed specifically at understanding the users of new-to-the-world products. Another break from conventional practice is that they quite consistently mention fulfilling the "needs, wants, and desires" of users, whereas most contemporary voice-of-the-customer techniques emphasize that one should focus on needs, because wants and desires are more transitory.

A strong feature of the book is dozens of actual product examples illustrating the points being made. Four examples—a potato peeler, a mobile radio, a lift truck for warehouse stores, and Starbucks—run throughout the early chapters. Chapter 8 is devoted to various examples, and Chapter 9 focuses on automotive case studies, since automobiles, trucks, and their accessories are a perfect application of these techniques. Unfortunately, with the exception of a radio aimed at rural China, all of these examples are narrowly centered on the United States.

In summary, this book clearly demonstrates—for the types of products to which it applies—the claim made in its foreword: "If a product does not connect with the values of the customer, it will fail. It is not just the utility of a product that 's important. It 's the emotional component—the experience people have with it and the values they want expressed by it—that 's key." (Page xix)

Preston G. Smith, CMC
New Product Dynamics

References

1. Cooper, A. The Inmates Are Running the Asylum. Indianapolis, IN: SAMS, 1999 (reviewed in JPIM January 2001).
2. von Hippel, E, Thomke, S, Sonnack, M. Creating breakthroughs at 3M, Harvard Business Review 1999;77(5):47 —56.

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Effective Risk Management: Some Keys to Success
Edmund H. Conrow (American Institute of Aeronautics and Astronautics, Inc., Reston, VA; 2000; ISBN 1-56347-383-6) $79.95

Edmund Conrow has over 20 years' experience managing risk in product development projects, most of it on large, complex, system-acquisition programs for the U.S. Department of Defense (DoD) and NASA. Consequently, this book centers on a well-established risk-management methodology that the DoD encourages its contractors to use.

Unanticipated and unmanaged risks in development projects lead to schedule slippage and cost overruns in the development phase. They can also cause similar problems in the production phase, as well as product-performance disappointments when the product reaches the field. Such problems make the headlines for large government-funded programs, but they are just as common on smaller commercial ones. As product development processes have become more sophisticated in recent years, project risk management is one area that is receiving a great deal of attention, reflected in the publication of this and other books.

Conrow emphasizes that good risk management is proactive in nature and fundamentally different from the crisis-management or fire-fighting style that many line managers employ and for which they are inadvertently rewarded. Thus, this book, the DoD methodology; and other sources all suggest a process that identifies and handles risks early in the project with an emphasis on risk prevention. But because fire fighting is the prevalent management style in many organizations, implementing an effective risk-management process in an organization can be a challenge. The consultant's role is often to spot reactive behavior and to guide management in becoming more proactive in dealing with risk.

Chapter One introduces the subject, illustrating historically how poorly risk has been managed in major programs. An interesting section on micro-economics outlines the trade-offs among cost, (product) performance, and schedule that occur in managing a program. Conrow observes that DoD and NASA programs traditionally have emphasized performance, even when it is obtained at a high price in money or schedule. Due to cutbacks in defense and space programs in the United States, this balance has shifted some in recent years, and my experience is that the balance is quite different in commercial programs, where cost or schedule has dominated traditionally.

Chapter Two summarizes the DoD risk management process, describing each step. The heart of the book lies in Chapters Three through Eight, each of which comprises considerations regarding a phase of the risk management process. The word "considerations" is apt, because most of this material highlights critical points or weaknesses in existing risk management programs, based on Conrow's deep experience in this field. For example, Table 3.1 lists missing steps in various organizations' risk management processes. Consequently, this material is aimed more at improving an existing process than at implementing a new one.

The book also has 10 appendices. Appendix A compares risk management between commercial projects and ones at the DoD and NASA. It notes that while government programs involve technical and financial risk, commercial ones also involve people and market risks (which are covered only lightly in the book). Even the financial risks can be quite different for low-volume military production versus high-volume commercial projects. The remainder of the appendices are more technical, although there is some excellent material for risk practitioners in appendices G and I. These appendices address the linchpin of risk management-namely, handling qualitative estimates of risk and so-called ordinal scales.

Should you buy this book? Given its price, I found the editing and presentation disappointing. The table of contents and index are meager. Indistinct page design, unclear organizational structure, a chapter that runs for a hundred pages, and sparse graphics contribute to a general unfriendliness. But, Conrow generously provides details from his extensive experience, and these will amply reward the specialist in this field who takes the time to dig into the book.

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The Discipline of Teams: A Mindbook-Workbook for Delivering Small Group Performance
Jon R. Katzenbach and Douglas K. Smith; New York: John Wiley & Sons, 2001, 239 + xvi pages, $29.95

Bionic eTeamwork: How to Build Collaborative Virtual Teams at Hyperspeed
Jaclyn Kostner; Chicago: Dearborn Trade Publishing,
2001, 198 + xx pages, $25.00

In 1993 two important books on teams appeared, The Wisdom of Teams [2] by Katzenbach and Smith, two McKinsey consultants backed by the vast resources of that organization, and Knights of the Tele-Roundtable [3], written by Jaclyn Kostner, a solo consultant presumably drawing from her own Ph.D. research. Wisdom went on to become a business best seller, translated into fifteen languages, and Knights became an underground classic, foretelling the coming shift to dispersed teams. The authors of both books have updated their thinking on teams with these two new books, so this is an opportune time to revisit two quite different views on building effective teams. As you might expect, both of these books now cover dispersed teams and the role of technology in such teams.

Nearly every study of product development effectiveness has listed strong teams as a key factor of success, and almost every organization today would claim to use cross-functional development teams. However, there seems to be considerable opportunity for improvement in how teams operate. A leading researcher of product development success, Robert Cooper, calls many apparently cross-functional teams "fake teams" and lists the earmarks of such dysfunctional teams [1]. These new books on teams would benefit any practitioner wishing to improve product development performance or any researcher desiring to understand important factors in distinguishing effective from weak product development.

The Discipline of Teams is a new book (not a new edition), but it carries forward perfectly from the concepts presented in Wisdom. It will feel quite familiar to anyone who has read Wisdom, but it enters important new ground. Specifically, it makes three advances over Wisdom:

• In presenting this material over the intervening years, the authors found that some concepts, particularly their concept of a working group, were difficult to grasp and often were incorrectly applied, so these concepts have been recast.
• Based on experience they have gained in applying Wisdom, they now provide considerable advice in building a team using their concepts.
• They address the use of dispersed teams, which have arisen since Wisdom appeared.

Bionic eTeamwork is considerably different than Knights, which was a business novel covering the dispersed team of King Arthur and his knights managing Camelot in the sixth century. Bionic has shifted to the style of a how-to book and ratcheted up the energy level from the sixth century to the 22nd century.

These two books offer interesting contrasts and similarities. They are both focused on team performance, but they look at it quite differently. Discipline says, "The most important characteristic of teams is discipline; not bonding, togetherness, or empowerment." (Page vii) In contrast, Bionic states, "It is important that people on the eTeam like each other and bond on a human level." (Page 72) Discipline defines a team quite specifically: "A small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable." (Page 7) In contrast, Bionic is broader and less specific: "A group of two to thousands that must work together and depend on each other, while communicating mostly through technology." (Page xvii)

In Wisdom, Katzenbach and Smith contrasted a working group with a team and suggested that the former might be more appropriate than the latter in certain cases. However, readers had difficulty with this distinction, and -- because teams always seem to be the "right" choice -- could not see a role for a working group. Consequently, in Discipline, the authors change the terminology from a working group to a single-leader discipline and contrast this with a team discipline. In fact, they also employ a third category, an effective group, which includes the basic requirements for any group to work together effectively.

They portray the relationship among the three using the letter Y (their Figure 1.1). At the base of the Y is the effective group. One branch of the Y is the single-leader discipline, while the other is the team discipline. These two branches are options beyond the effective group foundation for those requiring greater performance, each branch having its strengths and its limitations. For example, one category of distinctions is how member roles and responsibilities are handled. According to Katzenbach and Smith, members of an effective group establish clear roles and responsibilities. For the single-leader discipline, the leader sets the roles and responsibilities, often in consultation with the members, but the leader makes the final decision. And for the team discipline, roles and contributions shift over time to satisfy project needs as well as to exploit and develop members' skills. These roles are more flexible but less predictable than in the single-leader discipline.

This may be intellectually satisfying in a book, but it represents a profound change from how most product development teams operate today. Most teams, when they are formed, want to define roles and responsibilities immediately, and if team members do not mention this, management does. No one feels comfortable in the vacuum of not knowing exactly what each member is to do. But the team discipline requires that roles remain fluid to retain flexibility and exploit and develop skills. Although it may not appear so on the surface, Katzenbach and Smith are describing a team that is far more advanced than most are today, and roles and responsibilities are only one facet that is different than today's practice.

Another difference between single-leader and teams, which will be a stretch for many, is the notion that individuals on the team cannot fail; only the team can succeed or fail, since all members are locked into common goals, purpose, and work products. In fact, the authors state that "Mutual accountability for shared purpose and goals may be the hallmark of the team discipline." (Page 10)

Setting up such shared goals and living with the discomfort they may entail is a burden that may not be compensated for by increased performance, so the choice of a team discipline is often not warranted. In general, the team discipline will yield a performance bonus over the more common -- and comfortable -- single-leader discipline only777 when the goals require joint work products (which is often the case for product development projects). The authors caution that unless the group can identify important, required collective work products, the team discipline should not be used.

Another rather contrarian approach in Discipline is advice to avoid consensus, which often means settling on compromise. Instead, the authors suggest that the topic in question be discussed until the objector(s) fully understand the opposing view and why it has support. This converts unenlightened disagreement into enlightened disagreement without stymieing the team. Note that in the single-leader discipline, this issue would never arise, because the leader would decide.

Discipline is structured crisply. After some initial chapters that introduce the three types of groups and related fundamentals, the authors proceed methodically through the definition of a team, word by word, describing "small number" (fewer than ten) of "people with complementary skills" in Chapter 5, "committed to a common purpose, performance goals, and approach" in Chapter 6, and "hold themselves mutually accountable" in Chapter 7. Chapter 8 (and Chapter 2) focuses on dispersed teams, and Chapter 9 provides helpful advice for getting unstuck when a team inevitably encounters a roadblock. Each chapter provides a "mindbook," providing the concepts, approaches and tools, and a "workbook" with exercises to reinforce the mindbook.

In contrast. Bionic is more of a stream-of-consciousness work, perhaps owing to Kostner's assertion that she used speech-recognition technology to write the book, not entering a single keystroke herself (Page xix). Each of her chapters ends with two items, a so-called checklist, which is more of a chapter summary in a format so standardized that I found it not too helpful, and a table of "things you can do today," broken into three columns: eLeaders, eTeams, and Individuals. As you can see, Kostner coins many e-words and uses others in futuristic ways. For example, the title word, bionic, is explained as "using technology in ways that break through human limitations." (Page xii)

Although she clearly loves technology, Kostner devotes relatively little space to it directly and is relatively cautious about overemphasizing it. She agrees with Katzenbach and Smith that the technology is only an enabler, not a solution in itself: "Bionic eTeamwork is not about technology. Technology will always be in the picture. Bionic eTeamwork is about how people use technology to motivate, involve, and interact in very human ways." (Page 37) As Katzenbach and Smith see it, "Technology is an enabler of both disciplines, not a substitute for either" (Page 28), adding that technology will not provide the necessary discipline. They also note that "Technology reinforces natural biases toward the single-leader, instead of the team, discipline, often at the expense of performance results." (Page 152)

Discipline describes three characteristics of technology that have potentially both positive and negative effects on team effectiveness: expanded access, asynchronous participation, and disembodied communication (loss of the human element). For example, expanded access increases the team's access to outside information, but it also tends to expand the team beyond an effective size (fewer than ten) and threatens the privacy of team communication.

Bionic suggests three stages in becoming adept at using the technology. First is disabled, which either ignores the technology or is averse to it; for example, the leader still hops on a plane whenever she needs to communicate with someone. The second stage is mechanical, which uses the technology, but only to automate older routines. Third is -- you guessed it -- bionic, in which members discover how to exploit the technology to exceed their own human performance.

Both books address training, and they agree that it should be done on a just-in-time basis as it is needed. Discipline emphasizes team skill training and coaching focused on the team's immediate performance challenge, and Bionic focuses on technology training, suggesting that it should be provided in small doses with time for members to try what they have learned in the actual team context.

However, these books differ on the purpose of face-to-face meetings. Discipline advises, "Group sessions should rarely be held for the purpose of bonding or togetherness; those are by products of performance. Instead, such sessions should have a clear purpose related to the performance results required." (Page 78) In contrast, Bionic counsels, "For Bionic eTeamwork, people travel to create rapport more than to do the work." (Page 56)

Similarly, they differ on whether dispersed teams require a different approach than co-located ones. Bionic is emphatic: "If you want faster decisions . . . faster anything related to human teamwork or performance -- you won't get it if you stay in methods designed for another era." (Page 178) Discipline -- true to its belief in the constancy of its disciplines -- agrees that dispersed teams offer markedly different challenges than co-located ones, but believes that the same two disciplines apply equally in the new context.

These fundamental differences in approach as to how teams should be managed suggest to me that we still have much to learn about high-performance teams.

Preston G. Smith CMC
New Product Dynamics

References

1. Cooper RG. Winning at new products. Cambridge, Massachusetts: Perseus Books, 2003. p. 119.
2. Katzenbach JR. and Smith DK. The wisdom of teams. Boston, Massachusetts: Harvard Business School Press, 1993.
3. Kostner J. Knights of the tele-roundtable. Denver, Colorado: Excalibur Press, 1993.

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Winning at New Products: Accelerating the Process from Idea to Launch, Third Edition
by Robert G. Cooper (Perseus Publishing; Cambridge, Massachusetts; 2001; ISBN 0-7382-0463-3) US$27.50

Robert Cooper is probably the leading authority on effective product development practices, and Winning at New Products as been a best seller in the product development field for years. This edition replaces one published in 1993. Professor Cooper has studied over 2000 new-product projects in 450 companies, many countries, and countless industries since 1975. His research theme has been consistent throughout: what distinguishes the winners (commercially successful products) from the losers? All of his earlier publications are based on this research, but in this new edition, he starts to share with us his actual consulting experience in applying the research to real companies. If your consulting practice involves new product development, this is the premier reference available on "best" practices in this field.

Despite its 438 pages, the book is easy to read because of Cooper 's lively, irreverent style for an academic. He describes dysfunctional cross-functional teams as "fake teams," and one section is headed, "Lame Excuses for No Action." Unfortunately, the comprehensive endnotes are done in normal academic style to substantiate the points made, so they provide few leads to alternative viewpoints or other sources of enrichment.

The core of this book, as you might expect, deals with Cooper 's voluminous research findings (Chapters 2 –4). I found these bewildering, because he presents so much material that he slices in so many ways to produce apparently conflicting lists of main causes, weaknesses, key factors, critical success factors, and key drivers. As I distill it, his conclusion is that about 2/3 of new products that enter the development phase are failures, and 46 percent of the resources devoted to product development in the U.S. result in product failures. This waste occurs, Cooper claims, mainly because activities critical to success are skipped or executed poorly, activities such as

• Preliminary market assessment
• Detailed market study
• Prototype testing with the customer
• Test marketing
• Preliminary technical assessment
• Detailed business analysis.

Cooper 's prescription is to install a well-defined, consistently executed development process, which he has coined Stage-Gate^®. Such sequential processes are very popular with management, being used today by 68 percent of firms, by Cooper 's estimate. If you would like to install such a gated process, this book is the place to start. Chapters 5, 6, 7, 9, and 10 describe the stages in detail. As intended, these gated processes bring order to chaos, and many companies find that quality of execution improves, the waste of rework diminishes, and consequently, cycle time will likely shorten.

However, I find that gated processes also have side effects that receive less attention. One is that they play into many managers' command-and-control style, which does not empower the development team or encourage members to think for themselves. Basically, what happens is that the team produces deliverables, which management approves at the gate, whether or not these deliverables are the best way to bring a particular new product to market. The process is an attempt to inspect quality into the product, which is something we are trying overcome in modern manufacturing.

My other concern with gated processes is that they have inherent speed limitations, because they are sequential and gated. Object-oriented software development, which formerly used a sequential "waterfall" process, is now moving to an intentionally iterative process. In fact, MIT Professor Steven Eppinger and his colleagues are showing that a natural characteristic of innovation (product development) processes is iteration, and when we deny the iteration, it appears disruptively late in the process (see Harvard Business Review, January 2001, pp. 149 –58). Thus, the mantra of do-it-right-the-first-time chanted by Cooper and many others is at odds with innovation.

This edition reflects some additions to and new insights on the Stage-Gate process. One is a new stage, Discovery, added to the front of the process, although unfortunately, many of the diagrams in this edition, including a critical one on the end paper, still omit the new stage. Discovery activities should go a long ways toward strengthening what Cooper calls doing the "solid upfront homework" that his studies show to be critical to winning. Another addition is a package of six Fs intended to speed up the process: flexibility, fuzzy gates, fluidity, focus, facilitation, and forever green. However, Cooper warns not to apply these advanced techniques until the basic process is well established.

Chapter 11 is perhaps the most valuable part of this new edition. It provides detailed advice on implementing a gated process in an organization. Implementation consultants will love it, because the author trades in his mortarboard for a consultant 's cap and offers hard-hitting advice from his personal experience:

• "For every dollar and every hour you spend designing your new product process, expect to spend ten times that amount on implementation." (p.323)

• "One serious trap . . . is failure to keep the rest of the organization informed." (p. 326)

• "Getting (senior management) signoff at this point is absolutely critical; you 're wasting your time without it." (p. 329)

• "If people have not had a hand in crafting the process, there 's not much likelihood that they 'll willingly adopt it!" (p. 329)

• "My personal observation is that there has never been a successful implementation of a formal new product process without the commitment and dedication of top management." (p. 334)

He also offers excellent advice on documenting the process, naming it, marketing and selling it, and training people in the hard and soft skills involved. In case all of these gems escape you, he closes the chapter with "Ten Ways to Fail!"

All of the above deals with tactical matters, or what product developers call "doing the product right." "Doing the right product" is just as important, and Cooper covers this in Chapter 8: Portfolio Management. His research here shows that the least-successful companies rely on financial analysis to assess projects, which is particularly dangerous early in the project, when such models are most likely to be used. Financial models are inappropriate because their input data is subject to large errors and because the models do not reflect the sequence of the decision-making process; options pricing theory is much more appropriate. For more on portfolio management, see Cooper 's 1998 book, Portfolio Management for New Products.

In his earlier writings, the portfolio management process was an appendage that didn 't seem to fit into the gating process, but Chapter 8 now suggests two ways of marrying the two smoothly: either let the gate reviews dominate, or let the portfolio reviews dominate. Along these lines, the last chapter of the book covers innovation and technology strategies, but these are not integrated into the other processes covered in the book. This is a perhaps a good place to end with the "areas for further research" for the fourth edition being to link all of this into corporate strategy.

Reviewed by Preston G. Smith CMC

(Reviewed in Consulting to Management, September 2002, pp. 54-56.)

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Winning at New Products: Accelerating the Process from Idea to Launch Third Edition
Robert G. Cooper; Cambridge, Massachusetts: Perseus Books, 2001, 425+ xiii pages, US$27.50

This title has been a mainstay of the product development literature for fifteen years. The 1986 First Edition summarized Cooper 's initial studies of product development process factors that distinguish between successful and unsuccessful new products. The Second Edition, which appeared in 1993, expanded these studies and introduced his popular Stage-Gate^TM product development process. This 2001 edition adds still more studies, integrates Cooper 's more recent project selection and portfolio management processes into Stage-Gate, and offers valuable advice on implementing a product development process.

Although Winning is written by an academic, is based on countless research studies, and generally follows an academic style, the market for this book is clearly the product development manager. Cooper started his career as a chemical engineer, but this material applies to all types of new products and even to the development of new services.

For over 25 years, Professor Cooper has focused on identifying the factors that distinguish winning new products from losers. His research covers over 2000 new products from about 450 companies. He notes that 46 percent of product development resources are spent on losers, but this drops to only 20 percent for the best companies. Cooper 's aim is to establish product development processes that allow any c+ompany using them to operate at this desirable level.

Chapters 2 and 3 summarize his research, as well as the research of many others, on this theme of winners versus losers. In fact, he presents so many findings from so many sources that I found it somewhat bewildering. There are lists of "main causes of new product failure," "important deficiencies," "drivers of performance," and "critical success factors" that exhibit little correlation with each other. One process weakness that shows up often is "lack of up-front homework," but Figure 2.5 indicates that successful companies actually devote less effort to the front end of the project and more to later stages.

Cooper proposes a Stage-Gate development process to overcome deficiencies suggested by his research, and such processes have become very popular in recent years (68 percent of companies use them, according to Cooper). The heart of Winning—Chapters 5–7, 9, and 10—covers Stage-Gate in considerable detail.

New to this edition is an initial stage, the Discovery Stage, to which Chapter 6 is devoted. This chapter provides valuable information on various tools that can be used here, such as Voice of the Customer and lead-user research. Cooper also clarifies an apparent contradiction connected with the Discovery Stage. Most companies have more new-product ideas than they can develop, and this typically leads to the serious problem of project overload or multitasking. Thus, it would seem that companies should not be trying to find still more product ideas but should instead concentrate on narrowing the ones they have. However, Cooper emphasizes that a major driver of product success is a unique superior product. Thus, extra front-end effort is warranted to discover such products, but, in tandem, management must have effective ways of discarding mediocre ones.

Curiously, the Discovery Stage is not fully integrated into Stage-Gate yet. It does not have a stage number, nor does it appear on the Stage-Gate chart appearing on the endpaper or on most of the other process diagrams in this book.

Cooper calls the current Stage-Gate a third-generation process. He describes the first-generation process as the sequential, functional one existing before he adopted the term Stage-Gate. Thus, his Stage-Gate was the second generation. New to this edition is a third-generation process, which incorporates what he calls the six Fs:

• flexibility,
  
• fuzzy,
  
• fluidity,
  
• focus,
  
• facilitation,
  
• forever green.

The first three Fs relate to rendering the process less rigid, enabling it to be scaled to various size projects and enabling stages to be overlapped and approved conditionally. "Focus" means that the process is tied to a strategy that provides a focused vision. "Facilitation" connotes a specific role for a gate meister or process keeper, who ensures that the process is followed properly. Finally, "forever green" suggests that the process should be improved continuously. Overall, these six Fs allow a more sophisticated process, but they also invite more abuse of the process. Consequently, Cooper advises that newcomers start with a second-generation process and work into the third generation only after institutionalizing the basic process.

This book 's subtitle is Accelerating the Process from Idea to Launch. The six Fs are aimed at speeding up the process, although the second edition carried the same subtitle and lacked the six Fs. In addition, pages 258 –63 offer some general approaches for accelerating the process, such as "do it right the first time," "prioritize and focus," "use flow-charting," and "worship the time line." These pages also carry a warning about "the dark side —f accelerated product development." Overall, the book 's acceleration theme appears more to be one of not delaying the process by committing mistakes than of explicitly accelerating it. Acceleration topics such as calculating your cost of delay, aligning the product 's architecture for speed, or redesigning the development process for speed [see 3] are not mentioned. Another way of looking at this distinction, suggested by Don Becker, Vice President of Xerox Engineering Systems, is whether management regards themselves as traffic cops or a police escort.

Chapter 8 covers project selection and portfolio management, which is an outgrowth of Cooper 's Portfolio Management for New Products [1]. Winning integrates portfolio management with Stage-Gate nicely for the first time. He illustrates that you have two alternatives when combining Stage-Gate with portfolio management: either Stage-Gate can dominate, with portfolio management taking a secondary role, or vice versa. He shows how each approach can be implemented and lists the pros and cons of each.

An important point that Cooper emphasizes in this chapter is the fallacy of relying on financial measures to select and assess projects in early stages. Such financial criteria are used primarily—often solely—by the poorest performing companies in his research. The difficulty with applying financial tools early in the process is that the data going into them are highly uncertain, leading to poor decisions. The best performing firms use a variety of assessment techniques, on average 2.4 different methods.

Cooper also provides an illuminating discussion of discounted cash flow (DCF) methods, showing that they discriminate unfairly against new projects, because they overstate the costs and undervalue the benefits. As an alternative, he suggests options pricing theory (OPT). OPT fits product development better than DCF, because the latter assumes that the whole investment is committed at once, as required for a factory or a truck, for example. In contrast, new product investments are progressive, with the early stages being relatively cheap. OPT fits such progressive investments. Furthermore, Stage-Gate processes dovetail with OPT, because the gates are ideal points to consider the next phase of investment.

Such progressive commitments are considered a major advantage of Stage-Gate processes. In principle, management remakes a decision to continue the project at each gate, and if a project 's prospects are a net negative at a gate, it is simply terminated there. In practice, seldom is a termination decision this easy. Moreover, I have found that there are difficulties with viewing projects in this progressive way that Stage-Gate allows and OPT further encourages:

• It encourages developers to focus myopically on simply providing the current stage deliverables, rather than satisfying the customer.
  
• It discourages making a personal commitment to the project, since the current phase is all that is certain.
  
• It divides projects into distinct phases, making it difficult to accelerate them by overlapping phases.
  
• It promotes reactive thinking (fire fighting) about the project, rather than proactively planning ahead for problems and opportunities in future phases [2].

The difference between viewing projects progressively rather than holistically is fundamental. For example, on page 236, Cooper suggests that gatekeepers for early phases could be a few lower level managers, because investments in early stages are small. In contrast, others suggest that these early stages are where senior management has their greatest strategic leverage [4].

For anyone who is planning to implement a Stage-Gate process or improve an existing one, Chapter 11 is perhaps the most valuable one in the book. In contrast to the Second Edition, Stage-Gate is a mature process in this edition, and Cooper takes full advantage of this to share his experience in implementing the process. He describes the importance of senior management commitment, communicating to gain buy-in, training staff, providing clear documentation, having a process manager, and establishing metrics, and he offers suggestions for these activities. For those who learn in other ways, he restates this advice as a list of "ten ways to fail."

This is a book that should be on every serious product developer 's ready-reference shelf. You cannot afford to be unaware of this material. While I have expressed some differences of opinion with a few of Cooper 's approaches, such distinctions are possible to elucidate only because of the clarity that Cooper 's work has brought to product development methodology.

Preston G. Smith, CMC
New Product Dynamics

References

1. Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio Management for New Products. 2^nd ed. Cambridge, Massachusetts: Perseus Publishing, 2001.
2. Smith PG, Merritt GM. Proactive Risk Management. New York: Productivity Press, 2002.
3. Smith PG, Reinertsen DG. Developing Products in Half the Time. New York: John Wiley, 1998.
4. Wheelwright SC, Clark KB. Leading Product Development. New York: The Free Press, 1995.

(Reviewed in the Journal of Product Innovation Management, July 2002, pp. 324-326.)

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The Art of Innovation: Lessons in Creativity from IDEO, America 's Leading Design Firm
Tom Kelley with Jonathan Littman; New York: Doubleday, 2001, 308 + xii pages, US$26.00

Over the past ten years, IDEO has won the prestigious Industrial Design Excellence Award (sponsored by the Industrial Designers Society of America and Business Week) more times than any other product development firm. Indeed, one could rank IDEO as the best product development firm in the United States, perhaps in the world. Tom Kelley is the General Manager of —DEO —nd the brother of the firm 's founder and leader, David Kelley. The book is Tom Kelley 's explanation of IDEO 's success formula.

This book is for anyone who wants to know what makes for prolific product innovation and what they can do to improve their own innovativeness. It would be useful to managers in almost any industry—high- or low-tech, product-based or service-based —who would like their organizations to become more innovative. Easy to read and filled with a broad variety of short examples, it would also be an excellent introduction to industrial innovation for any lay-person interested in how new products come into being.

First, a little about IDEO. David Kelley started the firm in 1978 as David Kelley Design, and their initial success was the first mouse for Apple Computer. They now have 350 employees, with a head office in Palo Alto, California, and nine others worldwide. Over the years, they have developed over three thousand products for hundreds of clients. Their output ranges from toys to medical instrumentation. Some of their best-known projects are the Palm V personal digital assistant, the Crest Neat Squeeze stand-up toothpaste tube, Amtrak 's Acela train, and a shopping cart developed in four days to illustrate innovation on prime-time television.

Kelley intends that "This book will help you to arrive at insights that are directly relevant to you and your company." (Page 4) However, he warns, "It 's not a matter of simply following directions. Our "secret formula" is actually not very formulaic. It 's a blend of methodologies, work practices, culture, and infrastructure." (Page 5) Their methodology, which Kelley cautions is interpreted very differently for each project, is a common-looking five-step process:

1. Understand the market, the client, and the technology.
2. Observe real people in real-life situations to understand how they might relate to the proposed product.
3. Visualize new-to-the-world concepts and the customers who will use them.
4. Build, evaluate, and refine prototypes quickly and iteratively.
5. Commercialize the new concept.

Observe, however, that this process is far more front-loaded, customer-focused, breakthrough-oriented, and cut-and-try than the typical stages-and-gates process.

Each chapter explains a facet of the IDEO formula. For example, Chapter 3 describes how the observation in step 2 above starts with a healthy dose of skepticism: "Plenty of our well-meaning clients duly inform us what a new product needs to do. . . . Of course, we listen to these concerns. Then we get in the operating room, so to speak, and see for ourselves." (Page 26) For example, in observing how little children brush their teeth, they noticed the "fist phenomenon" in which all fingers wrap around the handle, in contrast with older kids, who point fingers up the shaft. Consequently, they designed Oral-B 's Squish Grip youngster toothbrush with a large, toy-like handle. Fertile ground for observing, Kelley notes, are the rule breakers: users who make the product do something the manual says it can 't do.

Chapter 4 delves into the "religion" of brainstorming at IDEO, and Kelley starts right off stating that the problem with it is that everybody believes they already brainstorm. We quickly learn that we are novices relative to IDEOers. To them, brainstorming is a complex skill, more like playing a piano than tying one 's shoes. Just like a manual skill, brainstorming requires frequent practice. If we only practice it once a month, we become mentally flabby compared to those who exercise twice a week. Also, brainstorming doesn 't just happen on product concepts at the beginning of a project. If the team becomes stuck on anything midway through a project, rather than waste time spinning their wheels, they convene a brainstormer (brainstorming session) and get unstuck again within an hour. Kelley provides plenty of positive tips for brainstorming, but more illuminating perhaps is his list of "Six Ways to Kill a Brainstormer," which includes letting the boss speak first, doing it offsite, and writing everything down.

Chapter 5 deals with teams, which Kelley calls the heart of the IDEO method. Rather than the traditional jargon of "high-performance teams," Kelley calls them "hot groups." What is a hot group? "It 's the difference between administering a trust fund and making an MTV video." (Page 70) As opposed to common practice, in which management assigns members to teams, IDEOers pick their teams and their team leaders.

IDEO puts great emphasis on team facilities. Each team is expected to build its own "neighborhood," and as Kelley notes, if you can 't tell when you are moving from one neighborhood to another, you don 't have neighborhoods. One team bought a DC-3 wing to decorate the ceiling of its neighborhood. Neighborhoods draw members in and encourage interaction. They get the team close to the hardware it is working on and facilitate holding quick, spontaneous meetings. Finally, they recognize the primacy of the project.

Notice that the way in which IDEO looks at workspace opposes the current trend toward working "virtually" in characterless cubicles. Given the very high cost of office space in downtown Palo Alto, where IDEO houses most of its workers, it is clear that they value productive workspaces highly. They believe that great spaces celebrate teamwork, and they invest accordingly.

Chapter 6, on prototyping, is perhaps the best of the book. At IDEO, prototyping is a culture and a language, a state of mind. Their "Boyle 's Law" (after one of their team leaders, Dennis Boyle): Never go to a meeting without a prototype. "Quick prototyping is about acting before you 've got the answers, about taking chances, stumbling a little, but then making it right." (Page 107) Prototypes force decision-making; they can persuade. In short, a good one is worth a thousand pictures. There are many ways of making prototypes, and modern computerization has reduced the cost of many of these processes tenfold, opening up new prototyping strategies. IDEO exploits the advantages of making numerous relatively cheap but crude prototypes early in the project to move ahead faster and more surely. This is in line with other recent literature [1, 3, 4] but in conflict with the "do it right the first time" mantra of many managers.

Being part of the IDEO culture, prototyping pervades the whole book. In Chapter 11, for example, Kelley cites two competitors to IDEO in a soapbox derby race that they entered against other Silicon Valley firms. These competitors were both more expert in the theory of building cars than IDEO, so they went with their "expert" theory without prototyping to test it. In both cases, their theory failed miserably in the real world against IDEO on the track.

Much of the last half of the book reinforced the concepts in the first half but did not add new dimensions. For example, Chapter 12 covers risk taking, but few of the examples concern IDEO, and it is largely an alternative way of expressing their prototyping philosophy in Chapter 6. Chapter 10 (the users ' experience) and Chapter 13 (user interfaces), likewise, were other perspectives on the material in Chapter 3 on user observation but lacked many IDEO examples.

IDEO is fast to market, and because I have a personal interest in this subject, I was anticipating some gems in Kelley 's Chapter 11, "Zero to Sixty." The initial paragraph seemed to set the chapter 's objective: time to market "leap-frogs established players before they can get off the ground." (Page 221) However, the rest of the chapter was about speed of a racing car, not speed of development, totally missing the point that I was anticipating!

By coincidence, I read The Art of Innovation just after completing the new edition of Cooper 's Winning at New Products [2]. Cooper claims, and independent research corroborates, that 60 percent of manufacturers use a version of his Stage-Gate^TM process and that there is strong correlation between use of such processes and product development success. Thus, one could conclude, statistically, that such processes are the route to successful product development. By other measures, IDEO is an exemplary product developer.

I was struck by the dramatically different ways in which Cooper 's firms and IDEO attain product development success. For example, the two authors agree on the fundamental importance of teams; but Cooper devotes about five4 pages to "the right organizational structure, design, and climate," (page 95) and does not even list teams in his index, while Kelley devotes at least two chapters and nearly a full column of his index to IDEO 's hot groups. They agree on the importance of customer input, but go about obtaining it much differently, Cooper using mostly formal methods, mainly carried out by marketing, and Kelley by getting designers themselves informally into the users ' shoes. In other areas they are even more divergent. Cooper says, "Do it right the first time," (Page 110) while IDEO says, "Fail often to succeed sooner." (Page 232) In short, one approach stresses predictability, the other passion. Interestingly, Cooper 's first critical success factor (of fifteen) is "a unique superior product." (Page 83) Kelley 's whole book—brainstorming, hot groups, prototyping, customer observation, and interface design—is about achieving this.

As you might suspect, The Art of Innovation is a work of art itself. It has an understated, embossed dust jacket, is stylishly typeset on elegant paper, and employs a page layout that is both appealing and conveys the theme of design. This book is beautifully illustrated with color and black-and-white photos (not a single piece of line art). Don 't miss the photo on page 119 of an IDEOer skateboarding through the team neighborhood! Unfortunately, this polished, finished aura doesn't seem to allow Kelley to illustrate some of the quick, crude, dumb prototypes that he espouses, so he doesn't quite "walk his talk" on prototyping philosophy.

You have several options for proceeding with this book. You can just read and enjoy it. You can buy it and place it on your coffee table—or your boss 's—and hope for osmosis. You can attempt to implement some of its teachings yourself. Or you can work with IDEO onsite to absorb their approach to product development. They offer and encourage several avenues for this, including IDEO U: see www. ideo.com. Although IDEO may be the most prestigious firm in this business, they have several very able competitors that would probably also be quite willing to work with you to develop your product and simultaneously transfer their techniques to your organization (although IDEO seems to be less concerned about client secrecy than the others, thus more open to visits). I am amazed that so few companies exploit this combined opportunity to have IDEO develop their product while improving their own development methods.

Preston G. Smith, CMC
New Product Dynamics

References

1. Clay GT, Smith PG. Rapid prototyping accelerates the design process. Machine Design 2000;72(5):166 –71.
2. Cooper RG. Winning at New Products. 3rd edition. Cambridge, Massachusetts: Perseus Publishing, 2001.
3. Schrage M. Serious Play: How the World 's Best Companies Simulate to Innovate. Boston: Harvard Business School Press, 1999.
4. Thomke S. Enlightened Experimentation: The New Imperative for Innovation. Harvard Business Review 2001;79(2):66 –75.

(Reviewed in the Journal of Product Innovation Management, January 2002, pp. 101-03.)

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