New Product Development (NPD) becomes a core competency for many industries. In automotive companies, for example, it creates a larger ‘strategic differentiation’ even more than their manufacturing proficiency (Morgan & Liker 2006, p.8). An excellence study conducted by Arthur D. Little in 2005 revealed that “top innovators have 2.5 times higher sales of new products and get more than 10 times higher returns from their innovation investments” (Little 2005, p. 13). In this context, productivity is measured as the output of new product (sales or profit) divided by the input (time and cost) (Cooper 2006).
What makes a difference between these companies? Cooper studied these variations and identified seven principles that can be used to increase NPD productivity (Cooper 2006; Cooper 2008; Cooper & Edgett 2008). The seven principles of lean for rapid and profitable NPD are (Cooper & Edgett 2008):
- Customer focused
- Front-end loaded
- Spiral development
- Holistic approach driven by effective cross-functional teams.
- Metrics, accountability and continuous improvement
- Focus and effective portfolio management
- NexGen Stage-Gate® process
By looking at these principles, it can be argued that they are driven by lean principles and project management concepts as well.
In a series of articles, the impact of lean and project management on the efficiency and productivity of the NPD will be analyzed. In this article, I will start by illustrating what does lean mean and how can we utilize its principles in NPD.
What does Lean Mean?
Lean is a term that was used in the context of lean production by Krafcik in 1988 and later by Womack, Jones and Roos in their book ‘The Machine that Changed the World’ in 1990 (Matthias 2007). Womack et al. in that book provided a five-year study aimed at examining the various problems that the automobile industry was facing at that time.
Basically, they investigated the differences between Henry’s Ford mass- production system in North America and Europe, and lean production system in Japan, and concluded that lean production is applicable for every industry, and the efforts that companies shall take to adapt Lean Principles will be rewarded and “changed the world” (Womack et al. 1990, p.8).
So what is lean? Lean is a combination of principles and ideas developed by
Toyota and described earlier by Ohno under what is called Toyota Production System (TPS) to promote the elimination of the non-added value activities, i.e. waste (Khan et al. 2013).
Womack and Jones (1996, p.16) in their famous book ‘Lean Thinking’ illustrated this philosophy and provided five general lean principles which are (Haque & James-Moore 2004):
- Specify value;
- Identify the value stream and eliminate waste;
- Make the value flow;
- Let the customer pull the (value) process; and
- Pursue perfection.
How Could Lean Be Utilized in New Product Development
In order to apply lean philosophy to NPD, the concept of ‘waste’ should be elaborated further because the operations in the manufacturing field are completely different than the NPD field.
The scope in the manufacturing field is bounded, work is repeated, requirements are fixed, tasks are sequential with a fixed starting and ending date and finally, queues are visible. On the other hand, the scope in NPD is unbounded, work might not be repeated, requirements are adjustable, tasks are non-sequential with flexible starting and ending date, and queues are invisible (Reinertsen 2005). Accordingly, the identification of waste will be different.
In a manufacturing plant, waste exists because of the physical objects (people, machines, materials…etc.), while in NPD, waste is related to the usage of information and decisions (Gudem et al. 2014). Scholars such as Haque and James-Moore (2004), Reinertsen (2005), McManus (2005), Morgan and Liker (2006) and Ellis (2016) (2016) provided examples for what can be considered as waste in NPD process. Below is a summary for three approaches.
The application of Lean in NPD has been studied for different purposes. For example, Khan et al. studied the various sources of lliterature about Lean Product Development from 1996 to 2009 and summarized five approaches. Please refer to (Khan et al. 2013) for more details. In this article, I will present the 13 principles that were examined by Morgan and Liker (Liker & Morgan 2006), which will be used later in the subsequent articles.
Cooper, R., 2006. Formula for Success. Marketing Management, 15(2), pp.18–24.
Cooper, R.G., 2008. Perspective: The Stage-Gate ® Idea-to-Launch Process—Update, What’s New, and NexGen Systems. Journal of Product Innovation Management, 25(3), pp.213–232.
Cooper, R.G. & Edgett, S.J., 2008. Maximizing Productivity in Product Innovation. Research Technology Management, 51(2), pp.47–58.
Ellis, G., 2016. Project Management in Product Development: Leadership Skills and Management [E -Book] 1st ed., Amsterdam: Elsevier Ltd. Available at: Online resource; title from PDF title page (EBSCO, viewed September 30, 2015).
Gudem, M., Steinert, M. & Welo, T., 2014. From Lean Product Development To Lean Innovation: Searching for a More Valid Approach for Promoting Utilitarian and Emotional Value. International Journal of Innovation and Technology Management, 11(02), pp.1–20.
Haque, B. & James-Moore, M., 2004. Applying Lean Thinking to New Product Introduction. Journal of Engineering Design, 15(1), pp.1–31.
Khan, M.S. et al., 2013. Towards Lean Product and Process Development. International Journal of Computer Integrated Manufacturing, 26(12), p.1105 1116.
Liker, J.K. & Morgan, J.M., 2006. The Toyota Way in Services: The Case of Lean Product Development. Academy of Management Perspectives, 20(2), pp.5–20.
Little, A., 2005. Innovation Excellence 2005: How Companies Use Innovation to Improve Profitability and Growth, Available at: http: //www.adlittle.com/downloads/tx_adlreports/ADL_Global_Innovation_Excellence_Survey_2005.pdf.
Matthias, H., 2007. The Genealogy of Lean Production. Journal of Operations Management, 25(2), pp.420–437.
McManus, H., 2005. Product Development Value Stream Mapping (PDVSM) Manual Release 1.0, Available at: http://www.metisdesign.com/docs/PDVSM_v1.pdf.
Morgan, J. & Liker, J., 2006. The Toyota Product Development System 1st ed., New York: Productivity Press.
Reinertsen, D., 2005. How Lean Product Development Sparked a Revolution. Industrial Engineer: IE., 37(6), pp.40–45.
Womack, J. & Jones, D., 1996. Lean Thinking: Banish Waste and Create Wealth in Your Corporation, London: Touchstone.
Womack, J., Jones, D. & Roos, D., 1990. The Machine that Changed the World 1st ed., New York: Rawson Associates.