Product-Service Information Systems Designing New Products Univ.-Prof. Dr.-Ing. Wolfgang Maass Chair in Economics Information and Service Systems (ISS) Saarland University, Saarbrücken, Germany WS 2011/2012 Fridays, 10:00 11:30 a.m. Room HS 020, B4 1
Agenda 1. Introduction 2. Design Science in Information Systems 3. Nature of Products 4. Guest Lecture: Product Design 5. New Product Development (NPD) 6. Nature of Services 7. New Service Development (NSD) 8. Nature of Product-Service Systems (PSS) 9. Product-Service Information Systems 10. Designing PSS (1) 11. Designing PSS (2) 12. Empirical Evaluation of PSS (1) 13. Empirical Evaluation of PSS (2) 14. Advanced Topics: Design Science of PSS Slide 2
Product Development Product development is the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of a product. (Ulrich & Eppinger, 2011, p. 2) Assessing the performance of product development 5 dimensions 1 Quality of resulting product regarding satisfaction of customer needs and reliability 2 Costs of product concerning manufacturing 3 Development time 4 Development costs 5 Development capability of the firm Slide 3
Personnel, Time & Costs Interdisciplinary teams; three central functions: marketing, design and manufacturing Exemplary team for electromechanical product of modest complexity; e.g., coffee maker Rollerblade In-Line Skater Boeing 777 Airplane Annual production time 100.000 units/year 50 units/year Sales lifetime 3 years 30 years Sales price $150 $260 million Number of unique parts 35 parts 130.000 parts Development time 2 years 4,5 years Internal development team (peak size) 5 people 6.800 people Development cost $750.000 $3 billion Slide 4
Product Development Process A product development process is a sequence of steps or activities that an enterprise employs to conceive, design, and commercialize a product. (Ulrich & Eppinger, 2011, p. 12) Challenges of Product Development Trade-Offs: management of trade-offs that maximizes success of the product Dynamics: decision making in an environment of constant change Details: many decisions to be made even for products with modest complexity Time pressure: product development decisions must usually be made quickly and without complete information Economics: for a reasonable ROI, resulting product must be both appealing to customers and realtively inexpensive to produce Slide 5
Product Development Process Why are well-defined development processes important? Quality assurance phases and checkpoints Coordination roles and contributions Planning milestones Management benchmark for performance Improvement documentation and reviews Generic product development (PD) process Slide 6
Variants of Generic Product Development Process Product Type Description Distinct Features of PD Process Examples Generic (marketpull) products Starting with market opportunity and selecting appropriate technologies to meet needs Generic PD process Furniture Technologypush products Starting with new technology, then finding appropriate market Matching technology with market in planning phase; given technology in concept development Gore-Tex rainwear Platform products New product will be built around established technological subsystem Given technology platform in concept development Consumer electronics Processintensive products Characteristics of product highly constrained by production process Either production process must be specified or both product and process from the start Snack foods Customized products New products = slight variations of existing configurations Similarity of projects allows streamlined PD process Cars High-risk products Technical or market uncertainties create high risk of failure Analysis and testing as early as possible Pharmaceuticals Quick-build products Rapid modeling and prototyping enables many design-build-test cycles Phases are repeated a number of times Software Complex systems Systems must be decomposed into several subsystems/components Parallel development by many teams; then integration and validation Airplanes Slide 7
Brainteaser 5 Minutes Draw a process for planning and cooking a family dinner. Is your process similar to the generic product development process? Is cooking dinner analogous to a market-pull, technology-push, platform, process-intensive, customization, high-risk, quick-build, or complex system process? One student will present his solution! (papers will be collected) Slide 8
Product Development Process 0. Planning Phase zero -- launch of PD process Identification of opportunities guided by corporate strategy Assessment of technology developments and market objectives An opportunity is a product description in embryonic form, a newly sensed need, a newly discovered technology, or a rough match between a need and a possible solution. (Ulrich & Eppinger, 2011, p. 34) Output: project mission statement consisting of specification of target market for product, business goals, production constraints etc. Slide 9
Product Development Process 0. Planning Types of Opportunities Knowledge of Need New need/market Existing need/ market that we do not address Existing need/ market that we currently serve Exploration into new markets Adjacent growth Improvements, extensions, variants, cost reductions Next generation products snd services for core markets New-category products and service Exploration with new solutions, approaches Knowledge of Solution (Terwiesch & Ulrich, 2009) Slide 10
New Development Process (Schilling & Hill, 1998; p. 67) Slide 11
Product Development Process 0. Planning How to Identify Opportunities? Identifying set of opportunities and select subsets for further development Often, hundreds or thousands of raw opportunities are considered for one commercial success Selection of subsets by filtering processes to gain exceptional opportunities (Terwiesch & Ulrich, 2009) To be effective: Generate large number of opportunities High quality of opportunities High variance in quality of opportunities Slide 12
Product Development Process 0. Planning How to Identify Opportunities? Step 1: Establish a charter (closely analogous to the mission statement of a product) Create a physical product in the cat toy category that we can launch to the market within about a year through the existing retail sales channel. Step 2: Generate and sense many opportunities Focus on (organization-) internal and external sources of opportunity Structured techniques for generating opportunities: e.g., imitate, but better approach exploiting solutions by other firms and considering alternative solutions that address the same/alternative needs Step 3: Screen opportunities (cf. VanGundy, 1998) Eliminate opportunities unlikely to result in creation of value Focus on opportunities worthy of further investment How? 2 methods: web-based surveys and workshops with multivoting ( dots ) Slide 13
Product Development Process 0. Planning How to Identify Opportunities? Step 4: Develop promising opportunities Resolve greatest uncertainty at the lowest cost in time and money Developing a few of the opportunities Investigation concerning existing solutions; informal discussion with potential customers; concept generation; quick prototypes; customer interviews Step 5: Select exceptional opportunities Handful of opportunities; uncertainty resolved; pick exceptional few opportunities Real-Win-Worth-it (RWW) method (Day, 2007) summarizes 3 questions: (1) Is the opportunity real?; (2) Can you win with this opportunity?; (3) Is the opportunity worth it financially? Step 6: Reflect on the results and the process Slide 14
Product Development Process 0. Planning How to Identify Opportunities? Real-Win-Worth-it (RWW) method (Day, 2007, p. 115) Slide 15
Product Development Process - 1. Concept Development Mission statement Development plan Perform economic analysis Benchmark competitive products Build and test models and prototypes Slide 16
Product Development Process - 1. Concept Development Establish Target Specifications What? Customer needs expressed in language of customers to much margin for subjective interpretation, e.g., the notebook boots fastly Specifications spell out in precise, measureable detail what product has to do = unambigous agreement on what the team wants to achieve in order to satisfy customer needs, e.g., the average time for booting is less than 120 seconds Specification consists of metric (e.g., average time for booting) and value (e.g., less than 120 seconds) labeled with unit When? After identifying customer needs setting of target specifications that represent hopes and aspirations of the team After selection of product concept, target specification have to be refined to final specifications (later subphase in concept development) How? 1 Prepare list of metrics 2 Collect competitive benchmmarking information 3 Set ideal and marginally acceptable target values 4 Reflect on the results and the process Slide 17
Product Development Process - 1. Concept Development Establish Target Specifications 1 Prepare list of metrics - Example simple needs-metrics matrix represents relationship between needs and metrics Key element of House of Quality, graphical technique used in Quality Function Development (QFD) (Hauser & Clausing, 1988; Rawasamy & Ulrich, 1994) Need/ Metrics High speed processor Highly portable Low weight Processor faster than 4GHz Dimension max. 25 x 15 cm Max. 500g 2 Collect competitive benchmmarking information - Example Competitive benchmarking chart with rows = customer needs and columns = competitive products Compare customers perceptions of relative degree to which products satisfy their needs (Urban & Hauser, 1993) More dots greater perceived satisfaction of needs Slide 18
Product Development Process - 1. Concept Development Mission statement Development plan Perform economic analysis Benchmark competitive products Build and test models and prototypes Slide 19
Product Development Process - 1. Concept Development Generate Product Concepts Subproblems Subproblems New Concepts Integrated solutions Existing concepts Slide 20
Product Development Process - 1. Concept Development Generate Product Concepts Example: accessible syringe doser that gives dosed syringe combined with audiovisual output Concept classification tree of subproblem syringe dosing Concept combination table Slide 21
Product Development Process - 1. Concept Development Mission statement Development plan Perform economic analysis Benchmark competitive products Build and test models and prototypes Slide 22
Product Development Process - 1. Concept Development Select Product Concept(s) Two-stage concept selection methodology Several iterations Both stages follow six-step process 1 2 3 4 5 6 Preparing matrix Rate concepts Rank concepts Combine and improve concepts Select one or more concepts Reflect on results and process Exemplary screening matrix (Pugh, 1990, 1996) (Alger & Hays, 1964; Ulrich & Eppinger, 2011) Slide 23
Product Development Process Further Phases 2. System-level design Definition of product architecture, decomposition of product into subsystems and components, design of key components Output: geometric layout of product, functional specification of subsystems, process flow diagram of assembly process 3. Detail design Complete specification of geometry, materials etc. of all parts, identification of standard parts to be purchased Output: control documentation for product, i.e. drawings describing geometry, production tooling, process plan for fabrication and assembly Slide 24
Product Development Process Further Phases 4. Testing and refinement Construction and evaluation of multiple preproduction versions of product Output: beta prototypes evaluated internally and tested by customers in their own environment 5. Production ramp-up Product is made using the intended production system, training of workforce in production processes gradual transition from ramp-up to ongoing production, launch of product and widespread distribution Slide 25
Outlook 1. Introduction 2. Design Science in Information Systems 3. Nature of Products 4. Guest Lecture: Product Design 5. New Product Development (NPD) 6. Nature of Services 7. New Service Development (NSD) 8. Nature of Product-Service Systems (PSS) 9. Product-Service Information Systems 10. Designing PSS (1) 11. Designing PSS (2) 12. Empirical Evaluation of PSS (1) 13. Empirical Evaluation of PSS (2) 14. Advanced Topics: Design Science of PSS Slide 26
Literature Books: Alger, J. and Hays, C. Creative Synthesis in Design, Prentice Hall, 1964. Kepner, C. H. and Tregoe, B. B. The Rational Manager, McGraw-Hill/Irwin, 1965. Pugh, S. Creating Innovative Products Using Total Design, Addison-Wesley, 1996. Pugh, S. Total Design, Addison-Wesley, 1990. Terwiesch, C. and Ulrich, K. Innovation Tournaments: Creating and Selecting Exceptional Opportunities, Harvard Business School Press, 2009. Ulrich, K. T. and Eppinger, S. D. Product Design and Development, McGraw-Hill/Irwin, 2011. Urban, G. L. and Hauser, J. R. Design and Marketing of New Products, Prentice Hall, 1993. VanGundy, A. B. Techniques of Structured Problem Solving, Springer Netherlands, 1988. Papers: Day, G. S. "Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio," Harvard Business Review (85:12), 2007, pp. 110-120. Hauser, J. R. and Clausing, D. "The House of Quality," Harvard Business Review (3), 1988, pp. 63-73. Ramaswamy, R. and Ulrich, K. T. "Augmenting the House of Quality with Engineering Models," Research in Engineering Design (5), 1994, pp. 70-79. Melissa A. Schilling; Charles W. L. Hill Managing the new product development process: Strategic imperatives The Academy of Management Executive; Aug 1998; 12, 3, pg. 67. Slide 27
Univ.-Prof. Dr.-Ing. Wolfgang Maass Chair in Information and Service Systems Saarland University, Germany Univ.-Prof. Dr.-Ing. Wolfgang Maass