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CLASS 16:Medtronic
AGENDA
• Platforms and the Aggregate Project Plan (**)
• Medtronic (**)
The Role of Product Platforms in the Aggregate Project Plan
Motivation: Three Nightmares
• Unexpected Delays: Coming to the market with the right technology at the wrong time
• Unexpected Consumer Needs: Coming to the market with the wrong technology at the right time
• Unexpected Success: Coming to the market with a single version of a technology which turns out to have multiple potential uses
The Aggregate Project Plan is a tool for pursuing a portfolio approach to product development…
Radical
Off the shelf
Producttechnology
Breakthrough
Platform
Derivative
ProductSupport
Entirely newbenefit Improvement No change
Marketing Impact
A Technology Platform Provides a Linkage from Breakthrough Technology to Derivative Products through Investment in a Common Architecture
B
B1
B2
B3b30 b31
b40
X1*
X2A*X2B*
Do Platforms Help Address Product Development Problems?
PROBLEM
Unexpected Delays
Unexpected Consumer Needs
Unexpected Success
Does a platform help? Examples
A Platform-Based Approach Might Address Some of the Key Incentive Problems in Product Development…
The Problem
Engineering Enthusiasm
Reporting Failure?
Short-Term Managerial Focus
Responsive Salesforce
How does a platform-oriented approach help?
Platform strategies are designed to facilitate diffusion, effective commercialization, and standard-setting
Diffusion Strategy
Commercialization
Standard-Setting
Does a platform help? Examples
Product development must be aligned with (and responsive to) overall firm strategy and positioning….
Key Issue Firm A Firm B Firm C
Strategy First mover withinnovative, highperformanceproducts
“Best Overall” High variety atlow cost: focuson marketniches,customization
Timing, Rhythm FAST!12-18 months?
Moderate:Generationslast 3-5 years
Fastcustomization
Capability High poweredtechnical team
Linkingcustomers andopportunities
Understandingcustomer needsin depth
While most platform development has taken place under a “traditional” stage gate approach, recent work emphasizes a more flexible process of iteration and coordination
Concept Development
Launch
Lead Time
Traditional Approach
Concept Development
Launch
Flexible Approach
“Internet Time” Product Development yields at least three key benefits….
KEY BENEFITS
Sensing the Market
Testing Technical Solutions
Integration
How? Examples
We’ve Got Rhythm!
What Went “Wrong” at Medtronic?
Other Examples?Problem Source
A New Management Philosophy
What? How?
Sacred Commitments
A Sense of Urgency
Productive employeesare happy (not reverse)
Managing means responsibility, not status
You only get what you measure
Focus on market share
Measuring Product Development Performance
Measure? Accuracy?
Speed
Cost
Innovativeness
Product Quality
A New Incentive Scheme
Implementation Challenge?
IncentiveScheme
Goal
Product Concept Definition
• Environmental Assessment• Technological Assessment (Unarticulated Customer Needs)• Environmental Assessment (Articulated Customer Needs)• Brady Business Objectives (??)
Feature Definition Process
• Feature Tradeoff Process• Market Value Assessment• Feasibility Assessment Process• System Definition
A “Balanced” Product Design Process
Processes & Practices
Benefits Implementation Challenges
Speed
Platform Strategy
Documentation
Phase Definition
Rhythm!
Market Input
How did the Medtronic plan change?
Radical
Off the shelf
Producttechnology
Breakthrough
Platform
Derivative
ProductSupport
Entirely newbenefit Improvement No change
Marketing Impact
A Strong Platform Strategy Enables…
• A Novel Customer Value Proposition….
• In New (and Fast-Growing) Markets….
• Protected from Direct Rivalry….
• Achieved at an Effective Cost….
• And Reducing the Cost of Future Development Activities…
Does Medtronic’s strategy encourage cumulativeness?
ExampleTypes of Cumulative Innovation
Encouraged by Platform Strategy?
Managerial Implications Cool-Down!!
• Over the past two decades, platform-based strategies have become powerful weapons for leveraging innovation investments across markets, facilitating diffusion and commercialization strategy
• Rather than a focus on budgets or technical details, platform strategy links resource allocation, platform architecture and firm strategy
• Overall, development strategy should encourage "ownership“• Translating new technology into competitive advantage requires linking
commercialization to the firm’s overall strategy• NB: Derivative innovation results in, at best, incremental profit.
• Challenge lies in implementation• Using a strategy to make choices requires commitment to a process and
philosophy at the most senior levels• Effective product development requires sacrifice in effort, risk, and design
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