A software client asked an interesting question last week that got me thinking about managing the impact of uncertainty on product development. The  gist of the question was, “How do you deal with projects that have elements of both discovery and well understood tasks?”

Project Planning

The first element of uncertainty in any new product project is basic schedule uncertainty. When is the project likely to be finished? Critical Chain is the most effective tool out there for managing  schedule uncertainty with users reporting up to 95% of projects finishing on time.

One of the most important elements of Critical Chain is a project buffer that protects the due date from unexpected problems while also reducing the overall project duration. (click here for more on CC) Unfortunately, the basic methods for sizing the project buffer weren’t created for highly variable tasks like invention and discovery.

The primary way that CC buffers project is with time. You can compensate for highly uncertain tasks by adding more time buffer to the overall project. The problem I have with this is that  tasks with widely varying degrees of uncertainty are protected by the same buffer while separating them could cause unwanted procrastination at the task level.

It’s also possible to buffer with scope. In fact, scope is a de facto buffer in almost all new product development projects. In software, if we aren’t going to meet the scheduled release date, the less important features or elements of features are pushed into the next release.  The same thing happens with physical products. As long as it doesn’t compromise the overall product functionality, we relax the product requirements whenever the date approaches faster than we are progressing.

Unless you make the scope buffer (the features that are optional) explicit, this is really just complicity in pretending that the project finished on time. And if you do make it explicit as to which ones are optional, why wouldn’t you leave them for the next release and get to market sooner anyway.  That has the best impact on cash flow and follows the approach of finding small wins. The scope buffer approach also doesn’t account for the economic costs of multiple releases which has more impact in physical products but isn’t free in software either.

That’s why I like the approach of buffering with iterations. If your discovery and invention could be done in as few as three experimental iterations, build a project plan that includes six (or whatever number the degree of uncertainty might call for). In this case, each iteration should be treated as a determinant task so that it is not buffered in the overall plan. Then when you have a solution mark all six complete.

However, it is also important to avoid so called apple polishing and make sure that further experimentation stops (at least for this project) when a solution is found. The temptation here is that if you give a researcher 6 iterations and it only takes 4, they may want to keep going to explore space beyond the solution because they know they are unlikely to get a chance to come back to it later.

Workflow Management

The question that inspired this post initially did so in the context of a Kanban visual workflow approach.  (see more on Kanban here) The client wanted to know how to deal with dramatically different workflows depending the level of discovery or invention required for the feature being developed.

While separate groups to handle discovery vs. basic engineering projects can be helpful, it isn’t always practical.  So using a Kanban visual workflow approach, you can manage projects that require discovery by using a separate “swim lane” on the Kanban board. These tasks move at a different pace and require iteration so a separate lane helps keep the issues from being tangled up with more straightforward engineering projects. It is also critically important to conduct feasibility and discovery work as early as possible. That way projects that aren’t feasible can be culled out early before constrained development resources are wasted.

Guts – That’s what it takes to disrupt your own core business.

That and a clear strategy for where you are headed – that is if you have any hope of surviving.

A recent example that’s been fascinating to watch is Netflix, as CEO, Reed Hastings, navigates the transition from snail mailing DVD’s to streaming movies.  Hasting’s actions over the last year have sometimes left both customers and investors scratching their heads, but last week’s moves give much clearer insight into their strategy.

One of the key lessons from Christensen’s “Innovator’s Dilemma” is that disrupting your own business is nearly impossible. Organizations are built to sustain and will repel disruptive change like white blood cells going after an invading virus. Similarly, existing customers, the ones that in this case like the DVD model, aren’t necessarily interested in trading-off variety and selection for instant gratification.

Hastings seems to have recognized that danger and is borrowing a page out of the IBM playbook to protect his disruptive business – the one that he sees as generating the most value in the future. While focusing Netflix on streaming, they are splitting off the DVD by mail business as a separate Qwikster business.

That same approach was how IBM was able to disrupt it’s own mainframe business. The mainframe business naturally saw PC’s as either a threat or a useless hobby and would have, in either case, starved it for resources. To get around this IBM leadership set up the PC business as a completely separate entity located in a separate Boca Raton, Florida location and reporting directly to the CEO.

Ultimately, IBM disrupted itself and created a new business worth several billion dollars while still being able to capture as much of the value as they could from the declining mainframe business. A lesson for any company facing new technology that could disrupt it’s core business.

PS – Two weeks ago when I wrote this it looked as if Netflix’ irrational behavior might be part of a clever disruptive strategy. Now, with the announcement to drop the Qwikster split, either CEO Reed Hastings never understood the disruptive strategy, or they didn’t pull the trigger fast enough and the online business is being held captive by the old line customers. What are your thoughts?

Almost everyone’s heard of the 80/20 rule. Unfortunately, few really understand what it can do to improve the focus of their businesses – even in the area of new product innovation. You only have to look to all of the project multi-tasking that goes on to know how true this is.

Boiling 80/20 down to the basics,* a relatively small percentage of your effort (20%) accounts for a majority of your results (80%). Further, a large portion of your effort (40%) will deliver no result. This so called 40/0 distribution is nothing magical – it’s just an outcome of the same power law or longtail distribution of outcomes that creates the 80/20 effect and is seen throughout business and nature.**

Are the distributions exactly 80/20 and 40/0? No, not exactly. Unless you are aggressively managing the results, they will be pretty close and they can actually be much worse – as bad as 80/10 and 50/0 (ie – 50% of your new product launches deliver no real sales thoughput). But the exact numbers are not what’s important. What is important is that you can refocus a significant amount of your resources elsewhere for much better results.

The result of all of this is that the top 20% of your actions are 16 times more effective than the rest [(80/20)/(20/80)]. But as powerful as the 80/20 principle can be in improving your new product development results – or for that matter the results of any process – it doesn’t necessarily tell you where you should focus your improvement efforts. That’s where the Five Focusing Steps of TOC come in. TOC is like putting the 80/20 theory on steroids because it shows you where 100% of your improvements will come from. ***

All too often, continuous improvement efforts work by spreading the improvement, like peanut butter, across the entire process. But the 5 focusing steps of TOC (Identify, Exploit, Subordinate, Elevate, Repeat) help you cut out the wasteful activity and focus your efforts. Since even the most complex process is usually limited by one step, all of your improvements will come from efforts at your system’s constraint. That means that if you are having a hard time finding attractive new product opportunities, investing in developing better solutions is more likely to be a 40/0 activity for you. That is not where you should invest at this time. Instead you should be focusing your improvement efforts on better front end marketing and ideation projects.

Skeptical? That’s only natural. But a study done at Sanmina SCI, a $12B electronics component manufacturer, showed that a TOC focusing approach increased the effect of lean and six-sigma programs by a factor of 20 with 89% of the improvement in their 21 plants coming from their 6 TOC focused plants [(89/11)*(6/15)].

Focus on the right areas if you want to see real improvement, and the Five Focusing Steps can guide you to the highest leverage areas where you’ll get the most result for your effort.

* If you want to get into depth on 80/20, I’d suggest Richard Koch’s excellent book The 80/20 Principle: The Secret to Achieving More with Less.

** 80/20 is based on independence so it does not apply to the dependent tasks within most projects. While 20 % of your projects deliver 80% of your value, you can’t get 80% of the value by only finishing 20% of any project.

*** Even within the efforts focused on your constraint, you are still likely to see an 80/20 effect.  If you have ten possible efforts you can undertake, the top six will deliver most of the benefit. So keeping the number of efforts to a manageable number based on their potential impact will deliver even better results.

It’s rare to find an exec who hasn’t read Goldratt’s The Goal, while few have read Ohno’s Toyota Production System, or anything at all on Six-Sigma. But few companies have adopted TOC as a focusing approach while Lean and Six-Sigma are widely used.

Arguably, Theory of Constraints is a poor description from a marketing perspective. Some folks just relate to theory as being theorectical or hypothetical. But putting that aside, Goldratt’s own analysis of what it takes for a new technology to be adopted might be useful to examine how this can be changed. 

1.       What is the power of the new technology?

The data  shows that TOC increases the effect of lean and 6-sigma by a factor of 15 so power doesn’t seem to be the issue.

 2.       What current limitation or barrier does the new technology eliminate or vastly reduce?

TOC is all about reducing limitations – especially the limitation of what you can do with your existing resources and investment.

 3.       What usage rules, patterns and behaviors exist today in order to deal with the limitation and how can the new technology be applied in a way that will enable the above change without causing resistance?

Here, is where I think TOC runs into resistance to broader acceptance. Lean (not in its original TPS form, but in its common usage) and SS can be implemented with little change required on the part of top management. However, TOC requires change from the top in the form of policies, decisions making (global instead of local optimization), resources allocation and measurement (from activity to productivity). It even requires a different method of managerial accounting that forgoes traditional allocation based cost accounting.  No wonder some CEO’s don’t automatically embrace TOC or only embrace it superficially.

So the important question here is what approach is most effective in reducing the resistance to the change required with TOC? Of course, Goldratt offers the layers of resistance concept to address the logical or cerebral component of selling change, while others like Kotter, the Heaths and Sinek offer approaches that complete the picture with the emotional or limbic aspects of change.

As part of the adoption process at an individual company level, these all add up to understanding the leadership’s pain and aspirations, getting their agreement on the direction any solution needs to take, envisioning what their business could look like, and demonstrating that the TOC solution focuses their organization to deliver the impact they want to see without negative consequences.

And this is how many practitioners deal with selling TOC. Simple enough for dealing with individual companies, and maybe it’s only a matter of reaching the tipping point. But it still seems like there should a way to approach this resistance at an industry wide level.  

 The More Impact Question

What are your thoughts and ideas on how TOC could deal with the resistance on a broader industry level and gain even wider acceptance? Please share them in the comments.

Are you taking advantage of the benefits that focus can provide your organization? If you are clear on your growth strategy and new product strategy, one key way that focus can deliver results is pipelining.*

Here’s an example of how pipelining works:

• You have four projects that that need to be completed
• The projects are similar in resources required and expected financial return
• The project customers each want to take delivery as soon as possible
• Each project will require three months of dedicated effort by your entire staff and if you split the staff into 4 teams it will take 12 months to do all four projects at the same time.

Of course this last bullet assumes that there are no shared resource contentions that would hinder concurrent execution, or if there are, you can workaround them without multi-tasking – a highly questionable assumption given the powerfully negative effect multi-tasking has on the amount of work that gets done.

Here’s what the typical concurrent execution would look like with all of the projects finishing at the end of 12 months. Of course this assumes that all the projects were finished on time which is highly unlikely – click here if you’ like to read more about getting things done on time):

In a pipelined approach the work is completed in 12 months as shown here. In reality, concurrent will take much longer because it demands multi-tasking:

The results of pipelining:

• Requires no more resources, but delivers 3 of the projects far earlier – one in 25% of the time, one in 50% and one in 75%
• Provides faster realization of the financial benefits with projects beginning to pay of in 3 instead of 12 months
• Makes 3 project clients happier while 1 is no less happier than with concurrent execution
• Cuts the cycle time by 75% (3 months vs. 12 months) and the average delivery time in half with an average of 6 months vs. 12months for concurrent execution
• Provides strategic flexibility since priorities aren’t frozen at the start and can instead be examined at the completion of each project.

With these benefits, why is pipelining the exception and not the rule? Pipelining is one of those common sense approaches that is often only obvious in hindsight. In fact until you see it laid out graphically it might even feel counter-intuitive. So let’s hope that exposing more leaders to this approach will result in it being more commonly practiced.

* Pipelining is an outgrowth of the late Eli Goldratt’s Theory of Constraints and Critical Chain methodologies

The single biggest problem companies struggle with in both creating and executing growth strategy is having too many priorities at the same time. Even after elaborate prioritization exercises, the natural inclination is to want to figure out how to work on them all. As a result, both execution speed and quality suffer.

But early on, I learned it doesn’t have to be that way. Years before learning about the Theory of Constraints (TOC) and starting my quest to change industry’s approach to new product innovation, I had been assigned as the business lead for a project team to change the way my employer did business. The team developed a scope and plan for the change project and then presented it to company leadership. But that’s where things came to a screeching halt…

The CEO, who was new to the role at the time, looked at the team and said, “Thank you all for the time you’ve put into this plan and the presentation. You’ve given us everything we need to understand what it will take to execute.”

OK, everything is flowing well so far, next comes the part where they push back on the cost and the due dates, but we get the thumbs up…

“But at this time, I’ve decided to put this project on the back burner while we focus on other priorities.”

Wait – had we heard that wrong? This had always been a company where you could get any attractive program accepted. But here the CEO was saying thanks – but no thanks.

He could see our disappointment, so he continued to clarify that while indeed the project was attractive, he had other key long term priorities that needed to be completed first. In addition to day-to-day needs, the company just didn’t have the resources to do everything at the same time.

Of course, we weren’t going down without swinging and countered that our plan ingeniously included freeing up resources from various parts of the company to allow all of the programs to move ahead. But he wasn’t interested in moving his priorities ahead – he was interested in getting them done as soon as possible. He knew that execution was a problem. He smiled knowingly and explained while we might have operated that way in the past, if resources were available elsewhere they would be focused on moving the key  programs even faster.

He had correctly identified that spreading limited resources even thinner was not going to move the top priorities along as fast as he needed. Even with a strong leadership team, adding more to the agenda would only be a distraction. And he was right as our earmings growth nearly doubled in the period he ushered in.

Recently, some Theory of Constraints practitioners have begun to refer to what the CEO had identified as the “constraint of management attention.” While management’s bandwidth isn’t actually the system’s constraint, it can certainly be one of the things that prevent you from fully and effectively exploiting the system’s constrained resource.

Spread the management team too thin and execution speed and quality suffer.  That in turn creates new issues they must deal with, and in a negative reinforcing loop, they have even less attention available for what should be their number one focus – determining the best use of the company’s constrained resources.

Dealing with this issue isn’t easy. It takes leadership clarity around the strategy. It also takes guts and discipline on the part of the leader.

In my case, the CEO made sure that the team felt respected, but he also made it clear that executing the current strategy was the number one priority. Gone was the idea of compromises and trade-offs in order to grease the skids and be well liked. Though many people respected him even more because of the clarity he brought to the company.

The more impact bottom line

While it didn’t feel that way at the time, having that project proposal turned down was a blessing. Had it been accepted, we would have constantly been struggling for resources and making compromises.  Instead, I learned a lesson every leader needs to know – the importance of resisting the allure of doing it all so that you can nail the things that are really critical to your success.

While Kotter’s “Leading Change” is still a favorite and one of the most comprehensive works on change, I give authors Chip and Dan Heath high marks for this contribution to the field with ”Switch – How to Change Things When Change is Hard.”

Organizational and personal change is a complex subject, but the Heath brothers offer a framework  that certainly helps simplify the process by identifying three key leverage points. While the book’s roots aren’t based in Theory of Constraints,they’ve definitely identified some powerful constraints in their framework:

1. Lack of clarity – What looks like resistance is often a lack of clarity – Can’t just tell them to change – they have to know to what to change and how to effect the change.
2. Mental exhaustion of trying to change - What looks like laziness is often exhaustion – Exercising the mental discipline necessary to do something differently is a lot of work, especially if the emotional side of the brain is not on board.
3. Leaving temptations in place – What looks like a people problem is often a situation problem – Give a reformed multi-tasking junkie a smartphone with an unlimited data package and how long will it be before they fall off the wagon?

So how do these concepts apply to improving new product innovation? Well getting more out of any innovation requires organizational change so think about what you can do to address these constraints.

1. Lack of Clarity - Involve your innovation improvement team in determining potential changes and then pick no more than a handful that can be communicated to the rest of the new products team. Kanban is a particularly effective way to help visualize them visualize the workflow and the changes.
2. Mental exhaustion of trying to change - You may have a compelling vision and the changes you want to make might be easy to explain intellectually, but have you gotten people on board emotionally? The best way I know to do that is to involve them in identifying the problem and the obstacles to getting around it. They may not come up with the improvements you would have, but they’re more likely to be committed to the ones they developed. Emotional commitment trumps mental fatigue every time.
3. Leaving temptations in place - Do you find people in your constrained resource area still working on new product projects under the radar? Even after you agreed to stop asking them to multi-task? Have you made it clear to the rest of the organization that they shouldn’t be tempting folks in the bottleneck area.  In other words, if they can’t help then at least get out of the way by helping limit distractions.

On June 11^th, 2011, the world lost Eli Goldratt – a true leadership hero.

Many call him a management visionary because of his Theory of Constraints – a management and improvement focusing approach that in retrospect most see as “just common sense.”  A fact that he accepted as praise.

But, or maybe in addition, I call him a leadership hero because of one of the fundamentals underlying his work – his assertion that people are good.

As a business leader for many years, I know how easy it can be to blame problems in a business on the people doing the work. “If we just had smarter, harder working, more careful people. If people just did what we wanted them to do, everything would be fine.”

But the fact is that as managers, we often attribute the problem to people when it’s really a situation or a policy issue. Goldratt referred to this in his early work as a policy constraint. Policies are not physical constraints, like a production bottleneck, but they still act to constrain the system’s bottleneck.

For example, if we fail to plan new product projects and then communicate the plans should we expect people to just know what the best use of their time is? Or when they should stop and move on to something else? If we laud multi-tasking as a valuable skill, is it any surprise when multiple projects suffer and nothing gets done on time.

But Eli’s one little assertion, that people are basically good and want to do the right thing, leads us to first ask how the policies we have put in place, both formal and informal, cause people to act. If we start with that assumption, what can we do to put people into situations where it is obvious what doing the right thing means.

Of course, it can be a big bad world out there, and no manager should be so naïve as to think that there aren’t exceptions – Eli certainly wasn’t. But rather than building our policies around the exceptions, let’s build them instead around what Eli knew was true – that the vast majority of your employees want to do the right thing, and as leaders it’s our role to put them in situations where they can do just that.

Just read an interesting study from Dan Ariely’s book, Predictably Irrational, that adds an extra layer of value to the argument for pipelining your new product development projects – as if faster cycle time and earlier cash flow weren’t enough.

If you aren’t familiar with the idea of pipelining, working on projects sequentially rather than in parallel means that more projects get done sooner.  Here’s an example:  Let’s say you have 4 different customer projects  A, B, C, and D.  And let’s say that each will take 3 work months to complete. If we break them into one month chunks and work in the ABCDABCDABCD sequence, the best we could hope to accomplish is to finish A after 9 months, B after 10, C after 11 and D after 12 months.

Pipelining, or completing one project before starting the next in the sequence  AAABBBCCCDDD, allows us to deliver to the first client after 3 months, the second after 6, the third after 9 and the fourth after 12.  Bottom line – three of our clients see their work earlier than they otherwise would have and the fourth sees no difference.

But there’s more to it as we learn from Ariely’s work on procrastination. His studies show their is also a big quality benefit to pacing commitments  – even if he doesn’t call it pipelining. In the study, he describes three classrooms of students each give three assignments to be completed over a three week period:

• Students in Class A were required to hand in all three at the end of three weeks.
• Students in Class B were required to choose different deadlines for all three assignments before beginning any work.
• Students in Class C were given no choice – One assignment was due at the end of each week.

The students that did the best work were in classroom C with  B earning the next highest grades and A performing the worst.

What happened was that the students in Class C, while probably still procrastinating (come on they’re still students), pipelined their work – working on one project at a time until its due date.

Most of the students in Class B recognized the value of spreading the deadlines out and chose one deadline per week, but their average was brought down by the “clever” students who chose to have all three projects due in the final three days.

The students in Class A got the deadliest mix of all – multi-tasking and the student syndrome- which caused many of them to do poorer since they tried to cram three projects into the last week.  Interestingly enough, they could have still worked the same as class C or B but without any perceived downside they procrastinated.

So many lessons for managing new product development projects here – in fact lessons that apply to almost any type of project.

Part 3 in a Series – Click here for Part 1 or Part 2

Click here if to view a PDF of this article

While TOC has provided the Critical Chain approach for the planning and execution of projects, this doesn’t help determine which projects, especially for new products, present the best opportunities.

Here Eli Schragenheim writes about the six questions for evaluating new product ideas based on the constraints or limitations that they remove for potential customers as well as the constraints to selling them.  Goldratt developed these while he and Eli where writing Necessary but Not Sufficient, together with Carol Ptak.

The six questions are:

1. What is the power of the new technology?
2. What current limitation or barrier does the new technology eliminate or vastly reduce?
3. What policies, norms and behavior patterns are used today to bypass the limitation?
4. What policies, norms and behavior patterns should be used once the new technology is in place?
5. In view of the above, what changes/additions to the new technology should be introduced?
6. How to cause the change?

The rest of the article will unpack each of the six questions in more detail.

Question 1: What is the power of the new technology?

The first question is the only one from the perspective of the technology developer.  Its objective is to gather the basic information for the later questions.  Here we expect a clear list of the capabilities in order to be able to answer the other questions.

Question 2:  What current limitation or barrier does the new technology eliminate or vastly reduce?

This is a key question.  Actually it is a clear verbalization of a practical need.  If there is a practical need, then there has to be a barrier for something. Now there is a solution which eliminates that barrier.

Some examples:

The technology of cellular phones eliminated the need of someone away of home to find a phone to make a call.  Note that, from the user point of view, the fact that cellular phones are built upon wireless radiation is not important.  The basic capability, as might have been expressed in the answer to the first question, is really using wireless connection, rather than cables.  But, the value to the user is eliminating the barrier of having to find a phone, because at that time all phones were tied to a location.  Another barrier is the possibility to get calls anywhere while, without that technology, it is not possible.

Another example highlights the difficulty in pinning down the main barrier – the DVD as a new technology replacing the VHS tapes.  One might come up with a barrier of low picture and sound quality which is upgraded (the barrier is reduced) by the DVD technology.  But, it seems that the most valuable barrier is the size. The DVD technology vastly reduced the space required for a having a library of movies at home, or even at a library.  Thinking more about the limitation of weight and size of the old VHS tapes might have led the developers to be faster in introducing the portable DVD. It now faces competition with laptop computers.  The alternative smaller files required to watch movies on the move with acceptable quality for the size of screen allows loading high number of movies on laptops and provide a way to watch a selection of movies while travelling.

The most important point is to force the developers to verbalize the practical need of the users at the very early stage of the idea.  This is the first step in establishing the value to the user.  We are not there, yet.  We would need two more answers to questions to establish the possible value.

By the way, did Microsoft have a very clear idea what barrier would be eliminated or reduced by Vista?

Question 3:  What policies, norms and behavior patterns are used today to bypass the limitation?

The first aspect this question deals with is to set the comparison between the current situation and the suggested future one.  The previous question already defined the main limitation, but this does not mean that there are no other ways to deal with the imposed limitation.  Before the time of the cellular phones public phones were in use to allow access of travelers to phone calls, and beepers made it possible to know that someone was looking for you. The ability to find a public phone made it possible to bypass the limitation of phones being tied to one place.

So, the real added value of the cellular phones is not simply making it possible to call from anywhere and getting called almost anywhere, but by making it immediate and easy.  Before the age of the DVD we had the heavy and bulky (we had not thought much about it being bulky until we saw the DVD) VHS tapes, and we had to choose the movies we would like to have in our library more carefully because the shelves at home could not hold very many.

Goldratt emphasizes the need to analyze the behaviors required to bypass the limitation the new technology tackles and warns us to take real care in understanding those behaviors.  In the VHS era, we had to have more discretion and we often recorded another movie replacing older ones which we assumed we would not be watching again.  With the DVD it seems less important and the demand for erasable DVD was not very large. As a result, this feature did not last very long.  Maybe there is a lesson to learn from that.  The ability to re-record a movie was useful because we could not afford to have too many cassettes, and not in order to save some money.  Once there is no problem in handling many DVDs, noting the current bags where you can easily store 25-50 DVDs, there is no need to consider re-recording. What for?

Before the era of the cellular phones, we also had to learn to behave in a certain way.  People going on a long trip used to leave a list of locations, each with the appropriate phone number, with their spouses as well as with their business associates.  Moreover, whenever you were in such a trip and arrived at a location with a phone, you used the opportunity to call people who might have tried to reach you.

The point about analyzing the current behaviors in view of a limitation that might be eliminated is that old behaviors do not necessarily stop once the causes for these behaviors cease to exist.  It takes time to understand the new paradigm and its behavioral ramifications.

Inquiring about policies, norms and behaviors is even more relevant for organizations, because it is much more difficult to change a policy in an organization than to change the behavior of a person.  This will become even more important when we examine the next question.

Question 4:  What policies, norms and behavior patterns should be used once the new technology is in place?

This question closes the definition of the relevant information regarding the practical need that is addressed by the new technology and how to valuable it.  Now we have the key for comparison:  in the current situation, it is how you address the needs given the existence of the limitation. You probably get only a partial answer to that need and compare it to the suggested future situation where the limitation is gone or reduced. You realize that you really get a full answer for that need.  This comparison is the heart of the added value that could be gained by the new technology.  If the current ways cannot really achieve anything of the need, then the potential value is as high as one recognizes the need to be.  If the current ways achieve part of the need, while the new technology, plus following the new policies and behaviors achieve much more of it, then it is the difference in the answer to the need that generates the added value.

Let’s demonstrate the comparison in a very fictional technology, so all our intuition is based on the current limitation.  Suppose there is a new technology that could take us from any place to any place in the globe within one hour!  This new technology is personal:  you decide to move from New York to Hong-Kong and in an hour you are there.

What limitation is vastly reduced? Mostly the time it takes to move from one point on earth to another.  After all, one can easily get from Hong-Kong to New-York.  However, it might take 24 hours, or even more, recognizing that there are a limited number of flights a day, it takes time to go to the airport, go through check-in, passport control and security, then go through similar activities at your destination and, finally, a ride from the airport to the specific destination.

So, the real difference in the limitation is between 24 hours and one hour.  Is that all?

Let’s analyze our behavior patterns considering that currently it takes at least 24 hours from a decision to go from Hong-Kong to New York until arrival.  Usually such a decision is taken well ahead of time due to work and family considerations, unless it is an emergency.  Currently planning such a trip has to include what should be done in Hong-Kong during the time of absence, which is usually much longer than one day.  At the time of planning the trip more missions to be done in NY are considered on top of the one that has caused the need to go.

Considering now the new behavior patterns when the new technology is in place, we can imagine a substantial change:  one can easily and simply decide to go, do whatever is required, and come back.  If the whole trip takes only few hours, no need to extend the stay and no need to plan what the other people do during your absence.  After all such a trip would be the same as driving for an hour, doing what needs to be done, and driving back.  No big deal.

Now we can appreciate more the practical value of such a new technology.  Sorry, the author has no idea how to materialize such a miraculous technology.

But, did we consider the new policies, norms and behaviors only to make the comparison and make sure the value gained is truly substantial?

Let’s continue with the fairy-tale about being able to go from Hong-Kong to New York in one hour. Let’s make the reasonable assumption that one still needs a passport for such a trip.  In this particular example, there is even a need for a visa.  This means that in order for  you to draw the full value of the new technology, you must have your passport with a valid visa in your possession at all times – much like you have your driving license with you at all times.  Being that easy to go everywhere in the world without spending too much time would allow you many more business, maybe even personal, opportunities. So, it is also expected that you’d go to many more places in the world much more often than you do today.  You definitely would be able to hire people living elsewhere in the world to work for you or with you, as the direct touch with them is no longer problematic. You might also realize that similar opportunities would be open for other people all over the world and thus you might have many more visitors. All in all, we can feel that such new technology would make a huge change on your policies at work, on your norms of life and behavior.  You better prepare yourself as early as possible for those changes.

An observation:  the fourth question does not clearly encourage looking for the negative branches of the new technology.  But, the author asserts that it should be an important part of evaluating the new set of policies and behaviors.  It is certainly a part of the required comparison between the current state and the future state.  For instance, moving through the world with huge speed might have medical impact on our body leading to the possibility that only healthy people could take that type of transportation.  It is thus imperative that analyzing and preparing the answers for question 4 should include a full analysis of the all the negatives.  The analysis of the negatives of the new technology is also valuable to the following question as the reader shall see.

After giving good answers to the first four questions two important categories of information have been achieved.  One is a better idea of the value to the clients and the other is the challenge of moving from one set of policies, norms and behaviors to another set.  The latter understanding is a key in the answers for the next question.

Question 5: In view of the above, what changes/additions to the new technology should be introduced?

In other words, what features should be included in the developed technology that would support the use of the policies, norms and behaviors that draw the best value from the new technology?

Question no. 5 comes back to the project planning and focuses it on what is truly necessary.  Certainly the negative branches of the new technology should be addressed and a way to eliminate them should be searched.

A missing analysis of the current relatively new technology of searching the internet might have delayed us from getting the full value of it.  The author strongly believes that we are NOT searching the internet enough for information that is truly valuable for us.  The value that could have been drawn, mainly in business but also for personal life, from searching the internet is enormous.  The problem is that the current search engines are not focused, thus providing huge numbers of “hits”, most of them not relevant to the user.  This should have been analyzed as a significant negative branch of the current methods. The other problem is that the search is not friendly. If the need for a search of information had been more thoroughly analyzed, then it could be that we’d already have a much more effective search. The change in behavior would have been faster and most organizations would rely much more on really good information critical to the business.

Question 6:  How to cause the change?

Actually this question is targeted at what Marketing has to do, either before the launch of the new technology or afterwards.  It is the duty of Marketing to accelerate the speed of change in behaviors that would enhance the use of the new technology and, by that, enhance the perception of value of the new technology.  Marketing here has a formidable challenge to wipe away the notion of “it is too early for the users to grasp the value”.  We did in the past have inventions that took a very long time until they were properly appreciated, For instance, the infrastructure for the Internet existed long before the mid-90s where it really started to grow.  This demonstrates that inventing a new technology is still far away from having most people appreciate its value.  The questions are all geared to make it happen much sooner.

Conclusions: The value of the six questions

The guidelines of the six questions are not a product and certainly not a technology.  It is just a verbalization of a thinking process that could be valuable in a huge number of cases, especially by companies struggling to develop a profitable next product/technology.

There are three different values that can be obtained by using the above guidelines for new product development:

1. Having better assessment of the added value of the new product.
2. Focusing the development on the issues that truly contribute to draw the most value of the new product/technology.
3. Focusing the marketing and sales efforts to achieve the required high perception of value of the users.

The above procedure could be much enhanced by publishing actual analyses of new ideas that use the guidelines of the six questions.  The author believes we need the documentation of analyses that led to stopping the idea/project as well, of course, to analyses where the project has been developed so we can realize how the development and marketing were impacted by the analysis.

Special thanks to Eli for sharing his enlightening views on identifying and unlocking the potential in any new product.

About the author:

Eli Schragenheim is Associate Managing Director at Elyakim Management Systems Ltd. and an international expert in the Theory of Constraints (TOC) and its links to other management philosophies. He is the author of Management Dilemmas, co-author (with Carol Ptak) of ERP: Tools Techniques and Applications for Integrating the Supply Chain, co-author (with Bill Dettmer) of Manufacturing at Warp Speed, co-author (with Eliyahu M. Goldratt and Carol Ptak) of Necessary But Not Sufficient, and co-author (with Bill Dettmer and Wayne Patterson) of Supply Chain Management at Warp Speed.