R&D is essential for developing a continuous stream of new products that generate top line growth at healthy margins. In most cases short term investor demands for profit are at odds with funding of new product development and long term business sustainability. R&D is a line item often caught in tug-a-war.
Is it possible to reduce time to market of new products by 20% while lowering R&D cost burden 10%? Yes, using four proven strategies that will create VAST growth in revenue and profits.
– Vision / Product Road Map
– Standards / Core Building Blocks for Technology
– Team Productivity
1. Vision / Product Road Map
Almost every company has a vision statement. What is more rare is a vision and product road map specifically for R&D that inspires. Often this is more word of mouth than cemented in writing and distributed to the wider team. Instead many questions remain: What is the next break out technology?; What applications will fuel growth three years out?; Which new customers will be targeted?; What product families will be aided through M&A? … The vision will generate excitement and set the course of direction. The product road map will define specific technology, targets and scope of portfolio. Here are two examples to bring more clarity (both purposely kept brief):
Vision: One global R&D team focused on the development and launch of sensors and controls for medical applications. Highly talented and efficient, we innovate using scientific discovery, concurrent design, core building blocks and validation to achieve ultra high reliability, leading performance and financial targets. Our customers’ choice partner and a bench mark for leading organizations to emulate.
Product Road Map (broken into four categories):
New Technology (launched 1 – 5 years) – New core technology building blocks that will fuel future growth and profitability.
Core Growth (current production and launched < 2 years) – Next generation product design (lower cost / improved function), proliferation of derivative products to grow with new customers.
Sustaining – Profitable business in portfolio but nearing end of life, limit development costs and changes, support existing customers.
Exit – Unprofitable or end of life businesses with a planned exit strategies.
Product road maps should be very clear on teams, schedules, technologies, product families and strategies for excellent alignment (purposely omitted here). Once a product road map is set, it eliminates wasted time on quoting and engineering initiatives that are not plan priorities.
Alignment to the vision, product road map and within a project (extending to customers / suppliers) are absolutely critical in R&D. Too often misalignment among extended team members or individuals can drain teams with clouded direction, extraneous activities and redundant efforts. Even worse, multiple team leaders with different agendas or paths can stall progress to a crawl.
Alignment doesn’t mean forsaking critical though or constructive debate. On the contrary, its focusing on what’s most important while simultaneously finding a common path to move forward efficiently. For example, a project was delayed 3 months due to misalignment on the type of wire bonding (an electrical interconnect) to be used; gold ball vs aluminum wedge bond. Both had merits for the application and were used extensively within the electronics industry with great success. The misalignment stemmed from unclear leadership, a company expert being obtrusive, fear, numerous meetings with no decision and egos. A better approach would have been to have a healthy debate, if necessary run some tests and select a direction within 1 – 2 weeks.
3. Standards / Core Building Blocks for Technology
Reinventing the wheel happens constantly within R&D. Standards and core building blocks of technology are an excellent alternative. For materials, designs and processes that are common, clear documented standards should be accessible and consistently used by the global R&D team. When possible, follow industry standards (IPC 610 – Acceptability of Electronics Assemblies) and have clear guidelines on when to do so. Some examples of where standards can be used are electrical (connectors, plating systems) and mechanical (threads, springs) interfaces. Furthermore, internal standards and simulation methods can be developed for products capturing critical lessons learned and placed in a product data library for repeated use. Tools for efficient quoting with bill of material pricing of existing products should also be readily available. This includes a tool that calculates product cash flow and automatically imports critical metrics into PowerPoint for management approval. This alone can save a team 16 hours of work.
Equally important are core building blocks of technology. That is having a technology module that can be applied to a derivative product (without major changes) to meet new applications. The iPhone and iPad are great examples of shared technology modules (chips and materials) yet packaged differently for specific applications. Sensata Technologies also does this extremely well with their ceramic capacitive and micro-fused strain gauge pressure sensing technologies. These technology sensing modules are applied in numerous pressure sensor applications where mainly the customer interfaces (connector, mating pressure port) change. Both companies have stellar financial performance. Hence the key to new technology introductions is developing core technology building blocks that have excellent performance and appeal over a wide range of high volume applications.
4. Team Productivity
Team productivity is significantly increased with alignment and use of standards and core technology building blocks. However, there are unique aspects to productivity that require separate discussion. These include proper leadership, positive attitude, competence, validation and empowerment. Most issues and delays that arise stem from poor leadership either at the management or individual level. This includes poor decisions, consistently delayed decisions, burdensome procedures and not providing necessary tools in a timely manner. For example, a team lost 1-month of time because a burdensome management procedure required three quotes for all bids regardless of the order price when all the team needed was a $300 manifold. Poor leadership (management and technical staff) should be addressed first with consistent evaluation from peers, subordinates and management, mentoring and change. Furthermore good leaders take time to listen to staff and make necessary adjustments from input. Its encouraged for VP’s to have round tables with staff without direct supervisors present and no consequences for sharing information. It is amazing how much can be learned and changed quickly to increase productivity.
Competence for R&D staff is a given but lack of competence in areas can be concealed for some time especially when individuals excel in specific but limited areas. All too many times experts fail to solve problems because they knew the answer before they started and their perceptions influenced misguided theories. Its important for executive leaders to dig into the details and converse with staff at all levels to discover this as soon as possible and address.
Negative attitudes are poison to progress and are highly infectious killing moral. Instructions for Ikea products are brilliant; no words and it starts with a picture of a person with a poor attitude with a large “X” through it and a positive team as the starting point.
Testing products early, often and with attention to detail is crucial. Often times I have seen engineers run simulation after simulation with no testing in between to validate real world conditions. Other times, testing is performed too late and does not allow for required design changes to ensure product robustness. Furthermore, when details of the tests are overlooked and mistakes are made this can cause weeks in delays due to necessary retesting or even worse unforeseen field failures. These are all recipes for disaster.
Lastly, empower the team with rewards and accountability. Too many times, a project stalls because an item cannot be purchased without several levels of approval. In one instance, over 15 signatures were required for a purchase < $25,000. Instead, provide reasonable sign off limits of $5000 (manager), $10,000 (director) and $100,000 (VP) or more. Provide meaningful budgets to directors for travel, training and materials. When held accountable, almost all will hit their numbers. When team members are not meeting performance targets, its often better for the individual to make a change at the company’s prompting. Experience has shown ~5% of R&D staff are not performing at required levels including some senior technical staff. When necessary change is done in a respectful manner with a little generously, it is often mutually beneficial.
VAST is a proven method for companies to realize faster time to market and lower R&D costs. When the four elements are working in harmony, 20% improvement in time-to-market of innovative products can be achieved with rapid yet sound judgment, clear alignment, core building blocks, standards and road blocks removed. Furthermore, these greater efficiencies can reduce costs 10% with less head count and eliminated redundancies in design, process, validation and materials.