Challenging conventional wisdom about success

InTech, Oct 1997

Communication and integration are the true common denominators of market leaders.

A clear pattern of behavior that challenges traditional beliefs about practices that separate the best from the rest has been identified in an ongoing study of product development conducted by the Management Roundtable, Waltham, Mass.

Based on five years of data from annual surveys, this study includes more than 100 companies from the aerospace and defense, automotive, electromechanical systems, and medical devices industries. Successful groups were identified as those achieving strong market share and market share growth.

While many firms invest dollars and focus efforts on the measurement and control of development processes, this study points to more intangible aspects of corporate culture-communication and integration-as the true common denominators of market leaders.

Some of the key characteristics of successful product developers identified in this study include involving nonengineering functions early in the product development process; allowing support functions to influence R&D decision making; colocation of product development personnel; providing sufficient authority and empowerment to project and team leaders; and using e-mail, intranets, and other tools to communicate across functions and business units.

The data does not support the idea that measurement and control of processes, in themselves, generate product development success. While such methods may have incremental value, this study indicates that less measurable factors in the process, such as knowledge of the customer and having a feel for changes in the marketplace, have a more significant impact.

What distinguishes high-share from low-share companies is the way high-share companies integrate the various functions involved in product development and create environments that foster communication and collaboration. In analyzing the behavior of successful developers, the following themes emerged:

Relationship to the market is more important than individual process control or tools and technology. Rather than fixating on individual processes, winners rely more on their feel for changes in the market and their superior knowledge of the customer. Tools and technologies that promise greater control over the product development process, such as QFD, design reviews, or computer-driven rapid prototyping, while valuable, don't have any observable relationship to success. Communication and integration of the organization are more important than money. Successful developers don't spend more money on R&D than the competition. They find better ways of doing things rather than throwing money at the problem. They allow nonengineering functions to influence R&D, and they use intranets and e-mail to expedite information exchange across functions and business areas. Colocated, empowered teams come out on top. Winners colocate product development personnel and give sufficient authority to the project leaders. They use concurrent engineering to involve nonengineering functions in the product development process from the earliest stages of the project.

Editor's note

For more information, contact Management Roundtable, Universit Office Park, 95 Sawyer Road, Waltham, MA 02154. PH: 617/891-8080; FX: 617/8911711; e-mail: info@roundtable.com.