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Leading thinking
for lasting results
How to Make Money
- From Operational Excellence
in Global R&D
“Global R&D in China” - Nanjing
28 May 2005
www.prtm.com
PRTM is the leading management consulting company that helps
clients deliver strategic transformation
Focus
PRTM was founded in 1976 with a
unique focus
 Technology-based companies
 “Results not reports”
Glasgow
•
••
Oxford
Paris
•
Frankfurt
Detroit
Waltham
Chicago
• • •• Stamford
Mountain View •
•
Costa Mesa• •
Washington DC
Dallas
•
• Tokyo
Hong Kong
Experience
More than 1100 technology-based clients
 Over 5,000 successful implementation projects
 90% level of repeat business
 Proven methodologies
We have offices across the US
Europe and Asia to serve our global clients
Telecommunications
Automotive
Depth
More than 400 consultants

Semiconductor
Software
A&D and Industrial
Life Sciences
Computers &
Electronic
Equipment
Success
Chemicals & Materials
Our clients are the leading companies in each technologybased industry segment
© Copyright 2003 PRTM

Technical backgrounds with practical
experience, and MBAs from top schools
Low staff/director ratio, ensuring senior
involvement in projects
We have grown at 30% per year for the past
ten years
 Controlled growth despite much higher
demand for our consulting services
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PRTM credentials in product development
and lifecycle management
Setting the PACE® in Product Development:
A Guide to Product And Cycle-time
Excellence
Michael E. McGrath, Editor (1996
Butterworth-Heinemann)
Next Generation Product Development: How to
Increase Productivity, Cut Costs, and Reduce Cycle
Times
Michael E. McGrath, expected publishing date April
2004, McGraw-Hill
Focus:
Cross-Functional Project Excellence
Pipeline Management
Technology Management
Focus:
The Future of Product Development when Fully Enabled by
Enterprise Development Systems, Including Resource
Management, Networked Teams, and Enterprise Project
Management
Product Strategy for High-Technology
Companies, 2nd edition, by Michael E.
McGrath (2000: McGraw-Hill)
PRTM’s Performance Measurement
Group is the premier source for reliable
quantitative performance benchmarks on
product development and supply chain
management
Focus:
Core Strategic Vision
Planning and Managing Platforms
Portfolio Management
Product-Line Planning
700
PRTM has conducted close to 700 product
development process implementations
600
500
Voices into Choices: Acting on the
Voice of the Customer Christina
Hepner-Brodie and Gary Burchill
(1997 Joiner)
Cumulative
Experience
300
200
100
Focus:
Customer-Inspired Design
Customer-Inspired Strategy
© Copyright 2003 PRTM
400
0
'87- '89
'88
2
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
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PMG, a PRTM subsidiary holds the benchmark
database that contains over 1000 organizations
Aerospace & Defense
Consumer Goods
Electronic Equipment
Product Development - 48
Product Development - 48
Product Development - 55
PLM - 3
PLM – N/A
PLM - 8
Supply Chain - 18
Supply Chain - 167
Supply Chain - 183
Automotive & Industrial
Telecommunication
Equipment
Medical Device &
Equipment
Product Development - 93
Product Development - 66
PLM – N/A
PLM – N/A
Supply Chain - 195
Supply Chain - 66
Computers & Storage
Semiconductors
Product Development - 41
Product Development - 81
PLM – N/A
PLM - 5
Supply Chain - 125
Supply Chain - 70
Product Development – 38
PLM - 29
Supply Chain - 107
Chemicals & Applied
Materials
Product Development - 39
PLM – N/A
Supply Chain - 162
© Copyright 2003 PRTM
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Illustrative PRTM services in product development
management
Project Excellence




Portfolio Excellence
Integrated development process and project
team/decision-making structures
Customer-inspired ideation and requirements
management
Critical project recovery
Project and knowledge management systems





Resource Management




Integrated market, product, and platform strategies
Portfolio balancing and prioritization
Cross-portfolio solution management
Portfolio process implementation
Portfolio management systems/tools
Co-Development Excellence
Pipeline rationalization
Project resource capacity planning and utilization
management
Resource management process
Resource management systems/tools





Development chain and partner strategies
Partner management process
Co-development project methodologies/structures
Co-development project facilitation/recovery
Collaborative development systems/tools
Product Development Operations





© Copyright 2003 PRTM
Requirements management process
Configuration and change management
Design excellence practices
Supplier and component management
Product development operations systems/tools
4
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Product Development capability tends to progress in
distinct maturity stages (from PRTM’s PACE© Model)
Successfully mastering each stage delivers a stepchange in business performance!
Stage 0
Informal
Management
Informal practices
based on individual
experience
© Copyright 2003 PRTM
Stage 1
Functional
Excellence
Excellence within
functions, but not
across functions
Stage 2
Project
Excellence
Functions aligned for
effective execution
from concept to
market
Managing
Across Functions
Stage 3
Portfolio
Excellence
Processes aligned to
achieve
platform leverage,
portfolio balance, and
excellence in project
selection and
execution
Managing
Across Projects
5
Stage 4
Collaborative
Development
Excellence
Core processes
linked across
internal and
external business
partners for
maximum leverage
Managing Across
Portfolios and Partners
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The business performance improvements associated
with advancing is clear and demonstrable
Performance
Stage 3
Portfolio
Excellence
Stage 4
Collaborative
Development
Excellence
Stage 2
Project
Excellence
TTM Index:
2.0
1.0
0.8
?
Growth Index:
0.7
1.0
1.6
?
Stage 0
Informal
Stage 1
Functional
Source: Performance Measurement Group LLC (a PRTM company)
© Copyright 2003 PRTM
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Increase in Co-Development is apparent in many
industry segments
Example: The World of Telecommunications Equipment
OLD
NEW

Vertically integrated

Huge web of co-developers

Few customers

Many customers

Few products

Exploding portfolio

Component solutions

System solutions

“Sell a switch”

“Sell a network”

Long lead times

Short lead times

Comprehensive test

Early betas

“Not-invented-here”

Acquisitions and merger mania

R&D

Development web
Source: Marco Iansiti, Harvard Business School
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Co-development offers many significant business
opportunities
Outsource
Selectively
• Cost
reduction
Current
Revenue
from
R&D
© Copyright 2003 PRTM
• Flexible
capacity
Improve Strategic
Focus
Capture
Technology
• Make vs. buy
• Shift R&D
to suppliers
• Technology
access
• Optimize
value chain
Offer Complete
Solutions
• Expand offer
definition
• Expand
business
definition
Achieve Break-out
Innovation
• Enable
innovation
incubators
Co-Development
Growth Potential
Revenue from R&D
Co-Development Value Creation
Potential
Revenue
from R&D
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Real Example
A Stage 3 IT company used to delivering great new products
quickly and reliably with a stable roadmap and revenue adopts a
partnering approach for a major new product line
It’s aim was faster TTM and new functionality based on
combining its existing technology and new functionality
developed with a new Chinese partner
Six months after the Executives have completed the due
diligence work with their new partner and the job of delivering
results has been transitioned to the best product development
teams, the performance of the development programs crashes.
The first high-profile projects predict delivery slippage of 100%,
account managers reduce revenue forecasts and the
development team reports big differences with the partner on
development flow, management process, the use and content of
technical control documentation, quality levels and IP sharing
(despite clear legal agreements).
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Miss-match in the partners process meant that
together, their maturity level was much lower
Initial Performance
of partnership
equivalent to ~ 3
years ago
Stage 0
Informal
Management
Informal practices
based on individual
experience
© Copyright 2003 PRTM
Stage 1
Functional
Excellence
Excellence within
functions, but not
across functions
Stage 2
Project
Excellence
Functions aligned for
effective execution
from concept to
market
Managing
Across Functions
Stage 3
Portfolio
Excellence
Processes aligned to
achieve
platform leverage,
portfolio balance, and
excellence in project
selection and
execution
Managing
Across Projects
10
Stage 4
Collaborative
Development
Excellence
Core processes
linked across
internal and
external business
partners for
maximum leverage
Managing Across
Portfolios and Partners
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Stage 4 Best-practices structures the approach to
investing in Collaborative Development Excellence…
What is our core vision, and
what role will our partners
play?
What are the criteria for
success, and how will
decisions be made?
With whom should we
partner and at what level?
Strategy
Development
Chain
Design
Partner
Selection &
Management
How will teams be
structured; how will they
synchronize processes?
Execution
How will IT support
co-development, and
when/how do we deploy?
Governance &
Metrics
Teams &
Processes
How will teams leverage IT
tools to maximum advantage?
Infrastructure
IT Roadmap
IT Tools
Foundational Elements
© Copyright 2003 PRTM
Situational Elements
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…And its implementation must respect the many
types of relationships that global companies have
Internal
Long
Mergers and
acquisitions
Duration of Commitment
Alliances/Strategic Partnerships
Minority
investments
Co-development
Market Exchange
Competitive
suppliers
Licensing
Co-production
Outsourcing
agreements
Co-marketing
Joint ventures
Preferred
suppliers
One-off, arm’s
length purchase
Short
None
Extent of Joint Decision Making
Extensive
Source: Adapted from Benjamin Gomes-Casseres, Third International PDMA/MRT Congress on Co-Developing Products, January 2004
© Copyright 2003 PRTM
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