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Www.prtm.com Leading thinking for lasting results How to Make Money - From Operational Excellence in Global R&D 28 May 2005 “Global R&D in China” - Nanjing.

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Presentation on theme: "Www.prtm.com Leading thinking for lasting results How to Make Money - From Operational Excellence in Global R&D 28 May 2005 “Global R&D in China” - Nanjing."— Presentation transcript:

1 Leading thinking for lasting results How to Make Money - From Operational Excellence in Global R&D 28 May 2005 “Global R&D in China” - Nanjing Graphic

2 © Copyright 2003 PRTMXXXXXX—00/00/03 Telecommunications Automotive Computers & Electronic Equipment Software Life Sciences A&D and Industrial Chemicals & Materials Semiconductor Stamford Detroit Washington DC Chicago Hong Kong Oxford Paris Frankfurt Glasgow Mountain View Costa Mesa Dallas Waltham Tokyo We have offices across the US Europe and Asia to serve our global clients Our clients are the leading companies in each technology- based industry segment Experience Depth Focus PRTM was founded in 1976 with a unique focus  Technology-based companies  “ Results not reports” More than 1100 technology-based clients  Over 5,000 successful implementation projects  90% level of repeat business  Proven methodologies More than 400 consultants  Technical backgrounds with practical experience, and MBAs from top schools  Low staff/director ratio, ensuring senior involvement in projects Success We have grown at 30% per year for the past ten years  Controlled growth despite much higher demand for our consulting services PRTM is the leading management consulting company that helps clients deliver strategic transformation

3 © Copyright 2003 PRTMXXXXXX—00/00/03 2 PRTM credentials in product development and lifecycle management Product Strategy for High-Technology Companies, 2nd edition, by Michael E. McGrath (2000: McGraw-Hill) Focus: Core Strategic Vision Planning and Managing Platforms Portfolio Management Product-Line Planning Setting the PACE ® in Product Development: A Guide to Product And Cycle-time Excellence Michael E. McGrath, Editor (1996 Butterworth-Heinemann) Focus: Cross-Functional Project Excellence Pipeline Management Technology Management Voices into Choices: Acting on the Voice of the Customer Christina Hepner-Brodie and Gary Burchill (1997 Joiner) Focus: Customer-Inspired Design Customer-Inspired Strategy PRTM’s Performance Measurement Group is the premier source for reliable quantitative performance benchmarks on product development and supply chain management 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: The Future of Product Development when Fully Enabled by Enterprise Development Systems, Including Resource Management, Networked Teams, and Enterprise Project Management

4 © Copyright 2003 PRTMXXXXXX—00/00/03 3 PMG, a PRTM subsidiary holds the benchmark database that contains over 1000 organizations Aerospace & Defense Product Development - 48 PLM - 3 Supply Chain - 18 Chemicals & Applied Materials Product Development - 39 PLM – N/A Supply Chain Computers & Storage Product Development - 41 PLM – N/A Supply Chain Consumer Goods Product Development - 48 PLM – N/A Supply Chain Medical Device & Equipment Product Development - 66 PLM – N/A Supply Chain - 66 Semiconductors Product Development - 81 PLM - 5 Supply Chain - 70 Telecommunication Equipment Product Development - 93 PLM – N/A Supply Chain Automotive & Industrial Product Development – 38 PLM - 29 Supply Chain Electronic Equipment Product Development - 55 PLM - 8 Supply Chain - 183

5 © Copyright 2003 PRTMXXXXXX—00/00/03 4 Illustrative PRTM services in product development management Portfolio Excellence n Integrated market, product, and platform strategies n Portfolio balancing and prioritization n Cross-portfolio solution management n Portfolio process implementation n Portfolio management systems/tools Co-Development Excellence n Development chain and partner strategies n Partner management process n Co-development project methodologies/structures n Co-development project facilitation/recovery n Collaborative development systems/tools Resource Management n Pipeline rationalization n Project resource capacity planning and utilization management n Resource management process n Resource management systems/tools Project Excellence n Integrated development process and project team/decision-making structures n Customer-inspired ideation and requirements management n Critical project recovery n Project and knowledge management systems Product Development Operations n Requirements management process n Configuration and change management n Design excellence practices n Supplier and component management n Product development operations systems/tools

6 © Copyright 2003 PRTMXXXXXX—00/00/03 5 Product Development capability tends to progress in distinct maturity stages (from PRTM’s PACE © Model) Informal Management Stage 0 Informal practices based on individual experience Functional Excellence Stage 1 Excellence within functions, but not across functions Project Excellence Stage 2 Functions aligned for effective execution from concept to market Portfolio Excellence Stage 3 Processes aligned to achieve platform leverage, portfolio balance, and excellence in project selection and execution Collaborative Development Excellence Stage 4 Core processes linked across internal and external business partners for maximum leverage Managing Across Functions Managing Across Projects Managing Across Portfolios and Partners Successfully mastering each stage delivers a step- change in business performance!

7 © Copyright 2003 PRTMXXXXXX—00/00/03 6 Stage 3 Portfolio Excellence The business performance improvements associated with advancing is clear and demonstrable Stage 1 Functional TTM Index: 2.0 Growth Index: 0.7 Stage 0 Informal Performance Stage 2 Project Excellence 1.0 Source: Performance Measurement Group LLC (a PRTM company) Stage 4 Collaborative Development Excellence ????

8 © Copyright 2003 PRTMXXXXXX—00/00/03 7 Increase in Co-Development is apparent in many industry segments OLD  Vertically integrated  Few customers  Few products  Component solutions  “Sell a switch”  Long lead times  Comprehensive test  “Not-invented-here”  R&D NEW  Huge web of co-developers  Many customers  Exploding portfolio  System solutions  “Sell a network”  Short lead times  Early betas  Acquisitions and merger mania  Development web Example: The World of Telecommunications Equipment Source: Marco Iansiti, Harvard Business School

9 © Copyright 2003 PRTMXXXXXX—00/00/03 8 Co-development offers many significant business opportunities Revenue from R&D Current Revenue from R&D Co-Development Growth Potential Potential Revenue from R&D Offer Complete Solutions Outsource Selectively Capture Technology Improve Strategic Focus Achieve Break-out Innovation Expand offer definition Expand business definition Cost reduction Flexible capacity Make vs. buy Technology access Shift R&D to suppliers Optimize value chain Enable innovation incubators Co-Development Value Creation

10 © Copyright 2003 PRTMXXXXXX—00/00/03 9 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).

11 © Copyright 2003 PRTMXXXXXX—00/00/03 10 Miss-match in the partners process meant that together, their maturity level was much lower Informal Management Stage 0 Informal practices based on individual experience Functional Excellence Stage 1 Excellence within functions, but not across functions Project Excellence Stage 2 Functions aligned for effective execution from concept to market Portfolio Excellence Stage 3 Processes aligned to achieve platform leverage, portfolio balance, and excellence in project selection and execution Collaborative Development Excellence Stage 4 Core processes linked across internal and external business partners for maximum leverage Managing Across Functions Managing Across Projects Managing Across Portfolios and Partners Performance Slide Initial Performance of partnership equivalent to ~ 3 years ago

12 © Copyright 2003 PRTMXXXXXX—00/00/03 11 Stage 4 Best-practices structures the approach to investing in Collaborative Development Excellence… Infrastructure Execution Strategy Foundational ElementsSituational Elements Development Chain Design Partner Selection & Management Governance & Metrics IT ToolsIT Roadmap Teams & Processes How will teams be structured; how will they synchronize processes? What is our core vision, and what role will our partners play? With whom should we partner and at what level? What are the criteria for success, and how will decisions be made? How will teams leverage IT tools to maximum advantage? How will IT support co-development, and when/how do we deploy?

13 © Copyright 2003 PRTMXXXXXX—00/00/03 12 Licensing Outsourcing agreements Preferred suppliers …And its implementation must respect the many types of relationships that global companies have Source: Adapted from Benjamin Gomes-Casseres, Third International PDMA/MRT Congress on Co-Developing Products, January 2004 Competitive suppliers Mergers and acquisitions Minority investments Joint ventures Co-development Co-production Co-marketing One-off, arm’s length purchase Market Exchange Internal Alliances/Strategic Partnerships Extent of Joint Decision Making Duration of Commitment Short Long NoneExtensive


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